In: Accounting
C7-2 Recording Inventory Transactions, Making Accrual and Deferral Adjustments, and Preparing and Evaluating Financial Statements (Chapters 4, 6, and 7) [LO 4-2, 6-3, 6-4, 7-3, 7-5] (General Ledger)
College Coasters is a San Antonio–based merchandiser specializing in logo-adorned drink coasters. The company reported the following balances in its unadjusted trial balance at December 1. |
Cash | $ | 10,005 |
Accounts Receivable | 2,000 | |
Inventory | 500 | |
Prepaid Rent | 600 | |
Equipment | 810 | |
Accumulated Depreciation | 110 | |
Accounts Payable | 1,500 | |
Salaries and Wages Payable | 300 | |
Income Taxes Payable | 0 | |
Common Stock | 6,500 | |
Retained Earnings | 3,030 | |
Sales Revenue | 15,985 | |
Cost of Goods Sold | 8,900 | |
Rent Expense | 1,100 | |
Salaries and Wages Expense | 2,000 | |
Depreciation Expense | 110 | |
Income Tax Expense | 0 | |
Office Expenses | 1,400 | |
The company buys coasters from one supplier. All amounts in Accounts Payable on December 1 are owed to that supplier. The inventory on December 1, consisted of 1,000 coasters, all of which were purchased in a batch on July 10 at a unit cost of $0.50. College Coasters records its inventory using perpetual inventory accounts and the FIFO cost flow method. |
During December, the company entered into the following transactions. Some of these transactions are explained in greater detail below. |
1. |
Purchased 500 coasters on account from the regular supplier on 12/1 at a unit cost of $0.52, with terms of 2/10, n/30. |
2. |
Purchased 1,000 coasters on account from the regular supplier on 12/2 at a unit cost of $0.55, with terms of 2/10, n/30. |
3. | Sold 2,000 coasters on account on 12/3 at a unit price of $0.90. |
4. | Collected $1,000 from customers on account on 12/4. |
5. |
Paid the supplier $1,600 cash on account on 12/18. |
6. | Paid employees $500 on 12/23, of which $300 related to work done in November and $200 was for wages up to December 22. |
7. |
Loaded 100 coasters on a cargo ship on 12/31 to be delivered to a customer in Hawaii. The sale was made FOB destination with terms of 2/10, n/30. |
Other relevant information includes the following at 12/31: |
8. |
College Coasters has not yet recorded $200 of office expenses
incurred in December on account. |
9. |
The company estimates that the equipment depreciates at a rate
of $10 per month. One month |
10. | Wages for the period from December 23–31 are $100 and will be paid on January 15. |
11. | The $600 of Prepaid Rent relates to a six-month period ending on May 31 of next year. |
12. | The company incurred $789 of income tax but has made no tax payments this year. |
13. | No shrinkage or damage was discovered when the inventory was counted on December 31. |
14. |
The company did not declare dividends and there were no
transactions involving common I JUST NEED THE GENERAL JOURNAL |