Journalize the following transactions, post to T-accounts, balance the T-accounts, Prepare a trial balance, journalize adjusting entries, prepare adjusted trial balance, journalize closing entries, and finally prepare Income Statement, Statement of Retained Earnings, Balance Sheet,and Statement of Cash Flows. Please use the following Chart of accounts.
101
Cash
230
Interest Payable
106
Accounts Receivable
301
Common Stock
126
Inventory
350
Retained Earnings
128
Prepaid Insurance
405
Sales Revenue
131
Prepaid Rent
406
Sales Discounts and Allowance
135
Prepaid Advertising
501
Cost of Goods Sold
163
Office Equipment
520
Utility Expense
164
Mixing Barrels
525
Wage Expense
165
Factory Equipment
530
Interest Expense
190
Accumulated Depreciation
535
Rent expense
201
Accounts Payable
545
Insurance Expense
215
Notes Payable
560
Depreciation Expense
220
Line of Credit
565
Advertising Expense
Additional information:
·
Grandpa’s Cough Inc. (GCI) sells a uniquely flavored cough syrup either wholesale or through its own storefront.
·
Cases contain 24 bottles. Each bottle costs the company $2 to make and the company sells bottles for $4.5. Each case is sold for $90 the cost to ship is paid for by the customer. Customers pay at the last minute of their terms unless otherwise noted.
·
Gene has a revolving line of credit with a local bank, if the cash balance drops below $15,000 then Gene will draw money against the line of credit in $5,000 increments, until the balance is above $25,000. Simple interest rate on the line is 3.4%.Interest accruesdaily and paid at the end of each month.
·
The company maintains inventory at $72,000, and will purchase materials every time the inventory drops below that amount in $4,000 increments, vendor pays shipping. Terms are N/15. Gene pays all bills at the last minute.
·
All depreciation is straight-line with no residual value.
o
Office equipment is expected to last 5 years
o
Factory Equipment is expected to last 4 years
o
Mixing barrels are expected to last 10 years.
·
Round all answers to the nearest dollar
Grandpa's Cough Inc.
Balance Sheet
As of December 31, 2014
Assets
Current Assets
Cash
$ 20,000
Accounts Receivable
10,000
Inventory
50,000
Prepaid Insurance
375
Prepaid Rent
1,400
Total Current Assets
$ 81,775
Fixed Assets
Office Equipment
$ 3,500
Mixing Barrels
4,500
Factory Equipment
15,000
Less: Accumulated Depreciation
(19,860)
Total Fixed Assets
$ 3,140
Total Assets
$ 84,915
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 25,000
Current Portion of Long Term Debt
1,600
Total Current Liabilities
$ 26,600
Long Term Debt
Notes Payable
16,000
Total Long Term Debt
16,000
Total Liabilities
$ 42,600
.
Journalize the following transactions, post to T-accounts, balance t.docx
1. Journalize the following transactions, post to T-accounts,
balance the T-accounts, Prepare a trial balance, journalize
adjusting entries, prepare adjusted trial balance, journalize
closing entries, and finally prepare Income Statement,
Statement of Retained Earnings, Balance Sheet,and Statement of
Cash Flows. Please use the following Chart of accounts.
101
Cash
230
Interest Payable
106
Accounts Receivable
301
Common Stock
126
Inventory
350
Retained Earnings
128
Prepaid Insurance
405
Sales Revenue
131
Prepaid Rent
406
Sales Discounts and Allowance
135
Prepaid Advertising
501
Cost of Goods Sold
163
Office Equipment
520
Utility Expense
2. 164
Mixing Barrels
525
Wage Expense
165
Factory Equipment
530
Interest Expense
190
Accumulated Depreciation
535
Rent expense
201
Accounts Payable
545
Insurance Expense
215
Notes Payable
560
Depreciation Expense
220
Line of Credit
565
Advertising Expense
Additional information:
·
Grandpa’s Cough Inc. (GCI) sells a uniquely flavored cough
syrup either wholesale or through its own storefront.
·
Cases contain 24 bottles. Each bottle costs the company $2 to
make and the company sells bottles for $4.5. Each case is sold
for $90 the cost to ship is paid for by the customer. Customers
pay at the last minute of their terms unless otherwise noted.
3. ·
Gene has a revolving line of credit with a local bank, if the cash
balance drops below $15,000 then Gene will draw money
against the line of credit in $5,000 increments, until the balance
is above $25,000. Simple interest rate on the line is
3.4%.Interest accruesdaily and paid at the end of each month.
·
The company maintains inventory at $72,000, and will purchase
materials every time the inventory drops below that amount in
$4,000 increments, vendor pays shipping. Terms are N/15. Gene
pays all bills at the last minute.
·
All depreciation is straight-line with no residual value.
o
Office equipment is expected to last 5 years
o
Factory Equipment is expected to last 4 years
o
Mixing barrels are expected to last 10 years.
·
Round all answers to the nearest dollar
Grandpa's Cough Inc.
Balance Sheet
As of December 31, 2014
7. $ 84,915
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 25,000
Current Portion of Long Term Debt
1,600
Total Current Liabilities
$ 26,600
8. Long Term Debt
Notes Payable
16,000
Total Long Term Debt
16,000
Total Liabilities
$ 42,600
10. ·
Date
Transaction
January 1, 2015
Gene Autry invested $25,000 Cash and office equipment worth
$6,000 in return for common stock of Grandpa’s Cough Inc.
1
Purchased Mixing Barrels worth $3,000 and Other Factory
Equipment worth $600 on credit, N/30
1
Purchased Inventory on credit for $72,000with terms N/15
1
Paid Vendor $15,000 for prior month purchases
2
Paid $4,500 for annual premium on insurance coverage starts at
the end of the month.
3
During the grand opening of the store GCI sold 256 Bottles of
Cough Syrup.
4
A wholesale customer ordered 100 cases, GCI shipped the order
and billed the customer 2/5 N/10
5
Received payment from customer from prior month sale $5,000.
6
Sold 300 Bottles of Cough Syrup through the store.
7
Received half the payment for sale of goods on January 4
11. 10
Paid $4,200 for three months’ rent for store front starting on
January 1, 2015.
13
Sold 400 Bottles of Cough Syrup through the store
15
Shipped order for another wholesale customer 500 cases N/10
15
Received and paid Utility Bill for $500
18
Shipped order of 300 Cases to a wholesale customer N/10
20
Sold 625 Bottles of Cough Syrup through the store
25
Shipped order to wholesale customer 1,000 cases 2/10 N/30
26
Paid for mixing barrels and equipment purchased on January 1
27
Sold 1,000 bottles of Cough Syrup through the store
30
Paid wages under the table to employees of $15,000
31
Paid $2,000 for 12 month advertising campaign through local
radio stations
Additional information:
Prior Period Prepaid Rent was for the factory as of December
31, 2013 the balance had two months remaining.
Prior Period Prepaid Insurance was for an annual policy that
expires at the end of January.
The Note was borrowed on December 31, 2014 and holds
interest of 3%. Interest is accrued at the end of the month. The