You are the controller at Star Wars, Inc., a wholesale distributor of lightsabers and other interstellar weaponry. The corporation was founded in a galaxy far, far away a long time ago. The company has 420,000 shares of common stock authorized with a par value of $18. Currently, 28,000 shares are issued and outstanding. In your role as a controller, you are responsible for the company's accounting records, financial statement preparation, and ensuring that the company has adequate internal controls. You also support management at Star Wars by providing required financial reports. You supervise a staff that takes care of the other aspects of accounting, but ultimately you oversee all the functions of the accounting department. Star Wars, Inc. maintains a calendar year-end (the books are closed on December 31 of each year). Adjusting entries are only prepared annually. Therefore, when you prepare the adjusting entries, they will need to be for the entire year, not just for December. In order to complete this practice set, you will need to record all regular transactions for the month of December 2014 (all other regular transactions have already been recorded for the year) and all of the year-end adjusting entries. You will journalize all transactions and adjustments in the general journal, post them to the general ledger accounts, prepare an adjusted trial balance, prepare the financial statements, prepare closing entries, and finally a post-closing trial balance for the year ended December 31, 2014.

The following information pertains to the various accounting practices applicable to Star Wars, Inc.
1. Star Wars, Inc. maintains inventory using the perpetual method. All inventory costs are tracked using    last in, first out (LIFO) cost flows. (See the cost of goods sold sheet for details regarding inventory) 2. Purchases of inventory are recorded at the net amount (discounts are recognized on the date of purchase, if applicable) The purchase terms are different for each supplier. Forfeited discounts are recorded separately as cost of goods sold. 3. Sales on account are subject to terms 2/15, n/40 and are recorded at gross value. 4. The company utilizes a general journal and general ledger but also tracks detailed information on suppliers and customers in accounts payable and accounts receivable subsidiary ledgers, respectively. You will need to maintain the subsidiary ledgers. 5. Salaried employees are paid monthly at the end of the month (on the last day of the month). Hourly employees are paid every two weeks. Each two week pay period ends on Friday of the second week.   6. The Company's chart of accounts is listed on the right side of this spreadsheet. 7. The Company uses the Allowance Method of accounting for bad debt. The Company calculates bad debt expense at the end of the fiscal year at 5% of ending A/R (using the % of receivables method).
Check Figures:
Net Income		$           1,236,435
Total Assets		$           5,883,794
COGS		$                963,300	For December
		$           4,093,302	Total COGS

1 Dec. Paid off the balance of $45,800 owed to Ewok Inc. No Discount applies.

1 Dec. Sold 250 units to Storm Troopers Unlimited on account for $800 each.

2 Dec. Received a check in the amount of $23,569 from Jango Fett Inc. in full payment of an invoice dated November 27 in the amount of $24,050.

2 Dec. Paid bill of $2010 to Star Destroyer in payment of fighter repairs. No impact on A/P ledge

3 Dec. Sold 200 units to Vader enterprises on account for $805 each.

3 Dec. Paid Greedo Inc. $59,420 in full payment of an A/P balance

6 Dec. Purchased 500 units from

Calrissian's Components on account for $360 each, terms net/45

6 Dec Paid $65471 to wamp Rat, co. If full payment of the invoice from nov.

6 Dec Received a notification that Bosk Co’ declared bankruptcy and collection of the amounts bosk co. Owes is unlikely. The accounts receivable balance should be written off.

7 Dec Received a check in the amount of $45000 from R2D2 computers-in partial payment of the balance they owe (no discounts apply) from a Nov. 15 sale of 95900

7 Dec Received a check in the amount of $49294 from C3PO Co. In full payment of a sales invoice dated Nov. 27 for 50,300

7 Sold 185 units to Jango Fett, Inc. on account for the amount of $810 each.

9 Dec Received payment of 72,863 from Jabba’s Huts Inc in full payment of an invoice dated Nov. 30 for 74350

9 Dec Sold 300 units to Wookie Inc. on account for 810 each

10 Dec Paid 720 for special efforts consulting. Use misc. expenses

10 Dec Purchased 400 units from land speeder, inc on account for $365 each, terms n/30

11 Dec Paid bi-weekly wages via payroll checks. The payroll summary is below:

Employee wage (gross) 5210

FICA taxes withheld 399

Federal Income taxes withheld 980

State income taxes withheld 240

Net Pay 3591

Employers payroll taxes:

FICA tax 399

(no FUTA or SUTA)

11 Dec Received payment of 22000 from C3PO Co. In full payment for an invoice dated Nov. 14th. No discount applies.

11 Dec Sold 305 units of 815 each on account

12 Dec Sold 165 units to R2D2 computers on credit for $815 each

12 Dec Paid invoice dated Nov. 12 in the amount of $37,829 (no discounts apply). The supplier was counted Dooku consulting.

12 Dec Paid. 75250 to Ewok Inc for an invoice dated Nov. 28

13 Dec Received payment from Endor limited for an invoice dated November 15th in the amount of 27120

13 Dec Sold 250 units to Vader enterprises on account for 820 each

14 Dec Received payment from Jango Fett Inc from the Dec 7th sale. Fett Inc qualifies for the discount

14 Dec Storm Troops Unlimited receives a sales allowance for $41000 for damages units. This relates to the Dec 1 sale.

15 Dec Received payment from wookie inc for the Dec 9 sale net of the discount

17 Dec Paid off purchase from Dec 10 to land speeder inc.

17 Dec Yoda, Inc. agrees to convert its overdue $20000 A/R balance into a 12% note due in 10 months

18 Dec Purchased a new supercomputer from Palpatine Computing Co. for $38000. A down payment of 5,000 was paid immediately, the remainder is owed within 45 days (n/45). Use the equipment account.

18 Dec Purchased 400 units of product from Tattooine ltd. For $375 each on credit terms (n/60)

19 Dec Purchased 100 units from Tattooine Inc. for $376 each on credit terms (n/60)

20 Dec Cash sales for 310 units was $800 each

20 Dec Paid $877 telephone bill Use Misc. Expenses

20 Dec Received payment from Princess Leia Co. from the Dec. 11 sale

20 Dec Paid federal withholding taxes of $13,521 and FICA withholdings of $3,825 to the US treasury department. These amounts were previously recorded as liabilities, The amounts were paid with one check

21 Dec Sold Store Troopers Unlimited 320 units of product for $825 per unit on credit

21 Dec An uninhabitable moon orbiting the planet of star wars incs Headquarters is acquired by issuing 20,000 shares of unissued common stock. The moon has a fair value of 1,200,000. The moon is immediately used for operations. The moon is considered land.

21 Dec A bill from Han solo Esquire is received for legal services performed related to the acquisition of the moon. The total of the bill is $7000 and is paid immediately

24 Dec Purchased office supplies from Naboo stationery co for $3227 in cash Treat the supplies as an asset

24 Dec Purchased 200 units of inventory from Calrissian's components for $380 each on credit terms net/45

26 Dec Sold 235 units of product to Jango Fett Inc for $825 each on credit

26 Dec R2D2 Computers agrees to convert a $50900 overdue A/R balance into a 13% note due in 6 months. The original sale was from a Nov. 15 sale. Previously, R2D2 paid $45000 of the balance off.

26 Dec Paid $375 for postage costs Use Misc expenses

27 Dec Paid bi-weekly wages via payroll checks. The payroll summary is below:

Employee wages (gross) 6120

FICA Taxes withheld 468

Federal income taxes withheld 1567

State income taxes withheld 355

Net pay 3730

27 Dec Star wars inc repurchase 1,000 shares of its own stock from an investor for $45 per share. The repurchase is recorded as Treasury stock at its repurchase cost

27 Dec Paid $10,500 for ordinary repairs and maintenance on starships

28 Dec Star Wars Inc Sold a used star destroyer to Chewbacca and sons co for $30,100 cash. The original cost of the star destroyer was $200,000 with a salvage value of $25,000 a useful life of 10 years and accumulated depreciation of $100,000 through the end of last fiscal year. Note: you will need to depreciate assets for 1/2’s year's Depreciation for this year before recording the sale (the company policy is to depreciate assets for 1/2 year in the year of acquisition and disposal) Star wars inc uses the straight-line method to depreciate star destroyer Note: record depreciation expense first then the disposal

28 Dec Paid the A/P balance to Tatooine inc from the 12/19 purchase. No discount applies

28 Dec The board of Directors of star wars inc declares a $2.50 per share cash dividend to be paid in January of the next year. You will need to determine the number of share outstanding. See instructions for the beginning amount and don't forget to take into account previous transactions involving new shares issued. Take the amount directly out of retained earnings.

28 Dec Paid the bill for advertisement run on Dec 15th The bill was for $9,150

28 Dec Received payment from Vader Enterprises from the Dec 13 sale No discount applies

30 Dec Purchased 280 units of product from Hyperspace unlimited for $385 per unit on credit terms (n/30)

31 Dec Paid monthly salaries via payroll checks The payroll summary is below

Employees salaries (gross) $53,300

FICA taxes withheld 4078

Federal income taxes withheld 8154

State income taxes withheld 1817

Net Pay 39,251

FICA tax $4,078

(no FUTA or SUTA)

31 Dec Sold 180 units to Vader Enterprise for $830 each on

31 Dec The petty cash custodian perform the month-end reconciliation and totals the receipts as follows

Postage stamps used 58

Courier cost 73

Company lunch costs 61

Office decorations 30

68 of cash remained on hand Record the entry to reimburse the petty cash fund. Book any overage or shortage to Petty Cash Overage/Shortage. Use Misc. expenses for all costs noted above.

31 Dec Deposited $30,000 in a bond sinking bond (related to paying back bonds payable) Use the other assets account for the debt.

31 Dec Record the journal entry to decrease the petty cash fund to $250 from $300