Question

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.
April 2	Paid $1200 cash for a 2-year insurance policy, effective April 1, 2020.
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).
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.
April 5	Bought $300 worth of supplies from Malik’s Bookshop by paying cash.
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.
April 12	Sold 2 candles to a walk-in customer for a total of $26 cash. The cost of each candle was $7.
April 13	Gary returned 5 deformed candles to Occitane. (Exclude freight charges in your calculation)
April 14	Gary paid Occitane what it owes.
April 17	Gary withdrew $1000 for his personal use.
April 17	Gary Paid $600 cash to its 2 employees.
April 18	Gary paid $200 for advertising on Facebook.
April 18	Forever Bliss returned 10 candles as they were not ordered (Exclude Freight charges in your calculation).
April 19	Forever Bliss paid in Full.
April 23	Sold 3 candles for $13 each for cash. The cost of each candle was $7.
April 26	Gary purchased a used delivery Truck for $7000 Cash.
April 26	Bought 300 candles from Occitane for $8 each, FOB Destination, terms 3/10-n/30. The responsible party paid $10 transportation fee.
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.

Answer 1

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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