Prepare a trial balance and journalize adjusting entries

Assignment Help Financial Accounting

Reference no: EM131071699

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
Stockholders' Equity
Retained Earnings	$ 28,210
Common Stock	14,105
Total Stockholders' Equity	42,315
Total Liabilities and Stockholders' Equity	$ 84,915

•

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
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 first principle payment is due in the month of March.

Reference no: EM131071699

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