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C7-2 Recording Inventory Transactions, Making Accrual and Deferral Adjustments, and Preparing and Evaluating Financial Statements (Chapters...

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
of depreciation needs to be recorded.

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
stock.

I JUST NEED THE GENERAL JOURNAL

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