Question
In: Accounting
Gary Whitmore opened his new retail business of selling scented candles called Flavia Scent Inc., on...
Gary Whitmore opened his new retail business of selling scented candles called Flavia Scent Inc., on April 1, 2020 with a cash investment of $15,000. Flavia Scent Inc. follows the fiscal year starting April 1 and adjusts monthly.
The following activities/transactions occurred during the month of April 2020:
|
April 1 |
Gary invested $18,000 cash to start the business. |
|
April 1 |
Gary paid $6000 cash for 6-months’ rent extending from April 1 till September 30, 2020. |
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April 2 |
Paid $1200 cash for a 2-year insurance policy, effective April 1, 2020. |
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April 2 |
Hired 2 salespeople for $300 each one, payable on a biweekly basis every other Friday for the 12 days’ work, Monday till Saturday. |
|
April 3 |
Paid for Decoration and equipment through a bank note from NBAD Bank for the amount of $70,000. The note is for 5 years and charges 8% interest. (Consider the partial month as a full month). |
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April 4 |
Flavia Scent bought 200 candles from Occitane for $7 each, FOB Shipping point, terms 3/10-n/30. The responsible party paid $50 transportation fees. |
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April 5 |
Bought $300 worth of supplies from Malik’s Bookshop by paying cash. |
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April 10 |
Sold 150 candles to Forever Bliss Wedding Planners for $12 each, FOB Destination, terms 1/10-n/60. The responsible party paid $10 shipment fees. |
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April 12 |
Sold 2 candles to a walk-in customer for a total of $26 cash. The cost of each candle was $7. |
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April 13 |
Gary returned 5 deformed candles to Occitane. (Exclude freight charges in your calculation) |
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April 14 |
Gary paid Occitane what it owes. |
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April 17 |
Gary withdrew $1000 for his personal use. |
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April 17 |
Gary Paid $600 cash to its 2 employees. |
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April 18 |
Gary paid $200 for advertising on Facebook. |
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April 18 |
Forever Bliss returned 10 candles as they were not ordered (Exclude Freight charges in your calculation). |
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April 19 |
Forever Bliss paid in Full. |
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April 23 |
Sold 3 candles for $13 each for cash. The cost of each candle was $7. |
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April 26 |
Gary purchased a used delivery Truck for $7000 Cash. |
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April 26 |
Bought 300 candles from Occitane for $8 each, FOB Destination, terms 3/10-n/30. The responsible party paid $10 transportation fee. |
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April 28 |
Sold 100 candles for $10 each for a private dinner party terms 1/10- n/30, FOB shipping point. The cost of 1 candle is $8. The responsible party paid $20 for the shipment. |
|
April 30 |
Gary invested another $8000 cash in the business. |
Journalize the entries on the General Journal of Flavia Scent Inc. It uses the Perpetual Inventory System.
Solutions
Expert Solution
| Journal Entries in the Books of Flavia Scent Inc | |||
| Date | Particulars | Debit $ | Credit $ |
| 1st April | Cash A/c | $18,000 | |
| To Capital A/c | $18,000 | ||
| (Being cash invested in business) | |||
| 1st April | Rent A/c | $6,000 | |
| To Cash A/c | $6,000 | ||
| (Being 6 Months Rent Paid) | |||
| 2nd April | Insurance A/c | $600 | |
| Prepaid Insurance A/c | $600 | ||
| To Cash A/c | $1,200 | ||
| (Being 2 year insurance policy is taken so one year debited as prepaid) | |||
| 2nd April | Salaries A/c | $600 | |
| To Salary Payable A/c | $600 | ||
| (Being Hired 2 People paid on other Friday) | |||
| 3rd April | Decoration & Equipment A/c | $70,000 | |
| To 5 Year Notes Payable A/c | $70,000 | ||
| (Being paid for decoration & equipment through NBAD Bank Notes) | |||
| 3rd April | Interest on Notes Payable A/c | $467 | |
| To Bank A/c | $467 | ||
| (70000*8/100*1/12) | |||
| (Being interest on Notes Paid for full month) | |||
| 4th April | Purchases A/c | $1,400 | |
| Transportation A/c | $50 | ||
| To Occitane A/c | $1,450 | ||
| (Being 200 Candles Purchased) | |||
| 5th April | Supplies A/c | $300 | |
| To Cash A/c | $300 | ||
| (Being supplies purchased for cash) | |||
| 10th April | Forever Bliss A/c | $1,790 | |
| Transportation A/c | $10 | ||
| To Sales A/c | $1,800 | ||
| (Being 150 Candles Sold) | |||
| 12th April | Cash A/c | $52 | |
| To Sales A/c | $52 | ||
| (Being 2 Candles sold to walk in customer) | |||
| 13th April | Occitane A/c | $35 | |
| To Purchase Return A/c | $35 | ||
| (Being 5 Candles Returned) | |||
| (7*5) | |||
| 14th April | Occitane A/c | $1,373 | |
| To Cash A/c | $1,373 | ||
| (1450-35)*97% | |||
| (Being amount paid to Occitane) | |||
| 17th April | Drawings A/c | $1,000 | |
| To Cash A/c | $1,000 | ||
| (Being amount withdraw for personal use) | |||
| 17th April | Salary Payable A/c | $600 | |
| To Cash A/c | $600 | ||
| (Being cash paid to people hired on Friday) | |||
| 18th April | Advertising A/c | $200 | |
| To Cash A/c | $200 | ||
| (Being advertisement done on FB) | |||
| 18th April | Sales Return A/c | $120 | |
| To Forever Bliss A/c | $120 | ||
| (10*12) | |||
| (Being sales return of 10 Candles) | |||
| 19th April | Cash A/c | $1,653 | |
| To Forever Bliss A/c | $1,653 | ||
| (1790-120)*99% | |||
| (Being amount received from Debtor) | |||
| 23rd April | Cash A/c | $39 | |
| To Sales A/c | $39 | ||
| (Being 3 candles sold) | |||
| 26th April | Truck A/c | $7,000 | |
| To Cash A/c | $7,000 | ||
| (Being Truck Purchased) | |||
| 26th April | Purchases A/c | $2,400 | |
| Transportation A/c | $10 | ||
| To Occitane A/c | $2,410 | ||
| (Being 300 Candles Purchased) | |||
| 28th April | Debtor A/c | $980 | |
| Transportation A/c | $20 | ||
| To Sales A/c | $1,000 | ||
| (Being 100 Candles sold to private dinner party) | |||
| 30th April | Cash A/c | $8,000 | |
| To Capital A/c | $8,000 | ||
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