Question

Beginning balances of FRS Company’s accounts as of January 1, 2018 as given below:

	Beg Balance
Account Title	Debit	Credit
Cash	365,800
Accounts Receivable	42,500
Supplies	13,000
Prepaid Insurance	0
Inventory	18,000
Equipment	46,000
Accumulated Depreciation-Equipment		20,000
Accounts Payable		82,500
Salary Payable		16,000
Unearned Sales Revenue		25,000
Capital		341,800
Withdrawals	0
Sales Revenue
Sales Returns& Allowances
Sales Discounts
Cost of Goods Sold
Insurance Expense
Depreciation Expense-Equipment
Supplies Expense
Salary Expense
Total	485,300	485,300

During January 2018, FRS Company completed the following transactions:

• Jan 1: Paid 6 months insurance in advance for $10,800.
• Jan 2: Purchased 400 units of inventory for 32,000$ from Great Company, on terms, 3/10, n/eom.And paid $2,000 of commissions and freight charges for the purchase from Great Company.
• Jan 4: Purchased 150 units of inventory from Deluxe Company on account with terms 2/5, n/30. Total invoice is $13,500.
• Jan 5: Paid accrued salary of the December 2016, $16,000.
• Jan 13: Paid to Great Company.
• Jan 15: Sold 600 units of goods to Shine Company for $90,000 ($150 each) on account with terms 2/10, n/30.
• Jan 17: Received 50 units of goods back from Shine Company (Returned goods are from $85 of cost each).
• Jan 20: Received payment from Shine Company, settling the amount due in full.
• Jan 23: Sold 40 units on account, $6,000 ($150 each) to Bridget Company.
• Jan 27: Purchased supplies for cash of $13,000.

On January 31, 2018 FRS Company completed following adjusting entries:

• Expiration of prepaid insurance for one month
• Depreciation of equipment for the month, $8,500
• Supplies used, $12,000
• Unearned sales revenue still unearned, $12,000.
• Accrued salary of the January 2017 is $16,000 which will be paid on the 5^th of February.

Requirements:

1. Journalize and post the January transactions. (Open T-accounts for each of the accounts given in trial balance, do not forget to write beginning balances) (2 points each)
2. Prepare FIFO schedule to calculate the Cost of Goods Sold (COGS) on the Jan 15^th, and 23^th. (Beginning inventory as of January 1 include 225 units $80 each which totals $18,000 as given) (19 points)
3. Prepare unadjusted trial balance as of January 31, 2018. (10 points)
4. Journalize and post the adjusting entries. (3 points each)
5. Prepare adjusted trial balance as of January 31, 2018. (10 points)

Answer 1

Answer:

Journal Entry:

Date	Account Titles	Debit ($)	Credit ($)
Jan.01	Prepaid insurance	10,800
	Cash		10,800
Jan.02	Inventory	34,000
	Account payable - Great Company		32,000
	Cash (Freight)		2,000
Jan.04	Inventory	13,500
	Account payable - Deluxe Company		13,500
Jan.05	Salary expense	16,000
	Cash		16,000
Jan.13	Account payable - Great Company	32,000
	Cash		31,040
	Inventory		960
Jan.15	Account receivable	90,000
	Sales revenue (600 units × $150 each)		90,000
Jan.15	Cost of goods sold (225 × $80) + (375 × $85)	49,875
	Inventory		49,875
Jan.17	Sales return and allowance (50 × $150 each)	7,500
	Account receivable		7,500
Jan.17	Inventory (50 × $85 each)	4,250
	Cost of goods sold		4,250
Jan.20	Cash	80,850
	Sales discount (82,500 × 2%)	1,650
	Account receivable (90,000 - 7,500)		82,500
Jan.23	Account receivable	6,000
	Sales revenue (40 units × $150 each)		6,000
Jan.23	Cost of goods sold (25 × $85) + (15 × $90)	3,475
	Inventory		3,475
Jan.27	Supplies	13,000
	Cash		13,000
Jan.31	Insurance expense (10,800/6)	1,800
	Prepaid insurance		1,800
Jan.31	Depreciation expense	8,500
	Accumulated depreciation		8,500
Jan.31	Supplies expense	12,000
	Supplies		12,000
Jan.31	Unearned sales revenue	13,000
	Sales revenue		13,000
Jan.31	Salary expense	16,000
	Salary payable		16,000

Note: Perpetual Inventory system has been used to solve.