Sheet $1$: Case Introduction

Case: Hike Away $-$ Student Copy

Hike Away

Hike Away sells outdoor sporting equipment. You have been working for the company since its inception a few years ago and have been promoted to be their accounting manager. They use the perpetual inventory system and use the weigted average method to determine value for the inventory.

The opening balances for the month of September are as follows:

Hike Away

Balance Sheet

As at September $30,2023$

Assets

Liabilities

Cash

$$9,480$ Accounts Payable

$$10,500$

Accounts Receivable

$16,000$ Bank Loan

$18,000$

Merchandise Inventory

$15,000$ Total Liabilities

$$28,500$

Equipment

$160,000$ Shareholders' Equity

Accumulated Depreciation

$-18,000$ Common Shares

$50,000$

Retained Earnings

$103,980$

Total Assets

$$182,480$ Total Liabilities & Shareholders' Equity

$$182,480$

The inventory figure includes $300$ units purchased at $$50$ each.

$1500030050$

The Chart of Accounts $($GL no$.)$ is shown below:

Account Description Account # Account Description Account #

ASSETS

REVENUE

Cash

$101$ Sales Revenue $400$

Petty Cash

$105$ Sales Discounts $405$

Accounts Receivable

$110$ Sales Returns and Allowances

$410$

Merchandise Inventory

$120$ Interest Revenue

$420$

Prepaid Insurance

$125$ EXPENSES

Equipment

$140$ Cost of Goods Sold $500$

Accumulated Depreciation

$145$ Employee Benefits Expense

$510$

LIABILITIES

Depreciation Expense

$515$

Accounts Payable

$200$ Insurance Expense

$520$

Interest Payable

$205$ Interest Expense

$525$

CPP Payable

$220$ Office Supplies Expense

$530$

EI Payable

$225$ Rent Expense

$535$

Income Tax Payable

$230$ Salaries Expense

$540$

Salaries Payable

$235$ Bank Charges Expense

$545$

Unearned Revenue

$240$ Maintenance Expense

$550$

Bank Loan

$245$ Entertainment Expense

$555$

SHAREHOLDERS' EQUITY

Common Shares

$300$

Retained Earnings

$305$

Required:

$1.)$ Record transactions in the general journal

$2.)$ Post journal entries to the ledger accounts

$3.)$ Using the journal entries from part $1,$ complete the inventory valuation page

$4.)$ Complete the bank reconciliation and related journal entries

$5.)$ Prepare the income statement, statement of retained earnings and balance sheet

$6.)$ Calculate ratios and answer related questions

Sheet $2$: Transactions

Transactions for the month of October:

$500555510070951424565$

Oct $1$ Bought inventory from Outdoor T$-$Shirts on account, invoice #$5455$; $700$ units at $$60$ each. Terms of the purchase were $4/10,$ net $30.$ Update the inventory table after each purchase.

$70042000$

$60$

Oct $2$ Sold goods to Outback Karen, $500$ units at $$90$ each with invoice #$4565.$ The invoice terms were $5/10,$ net $30.$ Update the inventory table after each sale.

$50045000$

$90$

Oct $5$ Paid $$500$ with cheque #$145$ to Outdoor T$-$Shirts for an amount owing from last month.

$500$

Oct $5$ Bought inventory from Camping Retailers with cheque #$146,500$ units at $$55$ per unit.

$27500$

Oct $7$ Returned $100$ defective units to Camping Retailers and received cash.

$1005500$

Oct $8$ Received $$500$ from Woodsman Bill for a sale on account last month.

$500$

Oct $10$ Outback Karen paid invoice #$4565$ O$12$ and took advantage of the early payment discount.

$225042750$

Oct $31$ Prepared the payroll for October. Gross pay is $$7,200,$ CPP is $$356,$ EI is $$135$ and income tax is $$1,440.$ The employer matches CPP contributions and pays $1\mathrm{.}4$ times the EI deduction. Use the general journal to record this. The cheque will be prepared later.

$7200$

$1)$ Record the transactions above in the general journal.