You have been hired as an accountant by Russell Industries on December $31,2023.$ Upon arriving on

your first day, you are handed a trial balance by the CEO.

Russel Industries

Trial Balance

December $31,2023$

Debit Credit

Cash $$1,082,000$

Accounts Receivable $1,295,000$

Allowance for Expected Credit Losses $$13,000$

Prepaid Expenses $11,000$

Inventory $454,330$

Equipment $66,000$

Accumulated Depreciation $-$ Equipment $26,400$

Building $516,000$

Accumulated Depreciation $-$ Building $103,200$

Land $150,000$

Long$-$term investments $10,000$

Accounts Payable $138,000$

Salaries Payable $14,000$

Bank Loan Payable $200,000$

Share Capital $1,000$

Retained Earnings $2,586,230$

Dividends Declared $16,000$

Sales Revenue $2,800,000$

Sales Returns and Allowances $224,000$

Purchases $1,300,000$

Insurance Expense $24,000$

Interest and Bank Charges Expense $5,500$

Salaries Expense $728,000$

$5,881,830$

After reviewing the trial balance and other accounting records you discover the following:

a$)$ The company uses a periodic inventory system with a FIFO cost flow method. A count of

inventory on December $31$ st showed $97,000$ units on hand. Russell Industries only sells one

product.

b$)$ Below is a summary of the inventory purchases for the year ended December $31,2023$

Date Units Cost$/$Unit

Jan $1566,0004\mathrm{.}44$

Mar $2214,0004\mathrm{.}24$

July $19106,0004\mathrm{.}16$

Sept $3035,6404\mathrm{.}00$

Nov $1682,0004\mathrm{.}44$

c$)40,000$ units of inventory were shipped by the supplier on December $31,2023$ fob shipping point

at a cost of

$3,449.$ This shipment is

not included in the above listing, or the physical inventory count. No adjustment has been

recorded for this purchase.

d$)$ The CEO provides the following collectability information for accounts receivable. He also

mentions that included in the over $120$ days balance is $$52,000$ owing from a company that has

since gone bankrupt. No collection is expected.

Age Balance Estimated collectible $\%$

Under $60$ days $$767,00092\%$

$61-90$ days $$435,00088\%$

$91-120$ days $$27,00080\%$

Over $120$ days $$66,00044\%$

No adjustments have been recorded to the allowance for doubtful accounts.

e$)$ Bank fees of $$472$ for the month of December have not been recorded. Outstanding cheques

total

$15,000.$ The bank made an error when

cashing a cheque on December $15$th$.$ The cheque was written for

$652.$ The

bank account balance per the bank statement is $$1,100,501$ at December $31$st$.$

f$)$ Annual depreciation of

$20,640$ on the building has not yet been

recorded.

g$)$ The bank loan payments are as follows:

a$.$ May $31$st$,2024-$ $$50,000$

b$.$ November $30,2024-$ $$50,000$

c$.$ May $31,2025-$ $$50,000$

d$.$ November $30,2025-$ $$50,000$

Required:

$1)$ Prepare any necessary adjusting entries.

$2)$ Calculate the value of ending inventory and cost of goods sold.

$3)$ Prepare a bank reconciliation at December $31,2023$

$4)$ Prepare Russell Industries income statement and statement of changes in equity for the year

ended December $31,2023.$ Prepare a classified statement of financial position as at December

$31,2023.$

$5)$ Prepare the closing entries for the year ended December $31,2023.$

$6)$ Prepare the post$-$closing trial balance.

$7)$ It was discovered that the ending inventory count missed $5,000$ units of inventory. Discuss

how this error would impact the financial statements.

Answer rating: 100% (QA)

Russell Industries Year End Adjustments December 31 2023 1 Adjusting Entries a Inventory Purchase Inventory 3449 40000 1379600 Accounts Payable 137960... View the full answer