Reference no: EM132505184

On January 1, 2020, ABCCo had the following account balances.

Cash $18,200

Accumulated Depreciation- Equipment $ 3,000

Notes Receivable 2,700

Accounts Receivable 7,500

Accounts Payable 6,100

Inventory 16,000

Owner's Capital 68,900

Prepaid Insurance 1,600

Prepaid Rent 2,000

Equipment 28,000

Supplies 2,000

During January, the company completed the following transactions.

1. Jan 07 Received $3,600 cash from customers in payment of account from last year's balances.
2. Jan 12 Purchased merchandise on account from XS Co. $12,000.
3. Jan 17 Sold merchandise on account $16,000. The cost of the merchandise sold was $10,000.
4. Jan 19 Paid salaries $2,200.
5. Jan 22 Paid due balance to XS Co
6. Jan 26 Received collections in full from customers billed during the month.
7. Jan 31 Received $2,700 cash from customers in payment of account.

Additional Information:

1. The company grants credit terms 2/10, n/30 for any sale transaction above $15,000 and 1/10, n/30 for sales transactions below $15000.
2. The company enjoys 1/15, n/30 credit terms with its suppliers
3. The Equipment was purchased one and a half years ago
4. Insurance was paid for 12 months 8 months ago
5. Prepaid rent was created upon signing two year's contract for $24,000 12 months ago
6. Physical count shows that $500 worth of supplies were used during January

Instructions

Question a. Journalize the January transactions. (Assume a perpetual inventory system.)

Question b. The statement from First National Bank on January 31 showed a balance of $21,630.

A comparison of the bank statement with the Cash account revealed the following facts.

a. The bank collected a note receivable of $2300 for GF Co on January 15. The note included interest of $100.