Reference no: EM132919628
Question - Kerry-Ann Cupid is an extraordinary baker and marketing entrepreneur who has a panache for selling any and everything. But her love is for pastries. She decided to open a pastry shop in February 2021, specializing in sourcing and distributing the most delicious cakes, candies, and pastries. She rented a shop by Sovereign North Downtown and commenced business on February 1. The following transactions took place during the month.
Feb 1 Kerry-Ann invested the following assets into the business: cash, $80,000; office furniture, $20,000, bank balance, $5,000
Feb 1 Transferred $25,000 of the cash to the bank.
Feb 2 Paid rent for February by cheque $15,000.
Feb 2 Purchased delivery van on credit from Mona Motors Ltd. for $40,000.
Feb 3 Bought a refrigerator from Ashley Electronic Store, paying by cash $15,000.
Feb. 3 Bought merchandise for resale by cash $35,000.
Feb 3 Sold merchandise to Candy Craze, for cash $10,000 and on credit to Just Cakey $60,000.
Feb 5 Sold merchandise on credit to Simply Yummy $6,500.
Feb 6 Just Cakey settled their account with cash receiving a 3.5% cash discount.
Feb 6 Merchandise valued at $950, to Simply Yummy on February 5, was returned to Kerry-Ann, the wrong order went out. A credit note was issued.
Feb 7 Bought merchandise on credit from Sweetopia $25,000.
Feb 8 Sold merchandise on credit to Chocolate Delights Ltd $38,000.
Feb 11 Bought custom packaging and cards (classified as an expense) for Valentine's Day for cash $7,500.
Feb 12 Bought merchandise on credit from Fruits, Nuts and More $8,500.
Feb 13 Returned $600 worth of merchandise to Fruits, Nuts and More. They had accidentally sent extra merchandise she did not order.
Feb 13 Bought additional merchandise, strawberry flavored heart-shaped cupcakes from Cakes by Lila, on credit $20,000.
Feb 13 Purchased fuel $10,000 cash for the delivery van, in order to do the deliveries to customers free of cost on Valentine's day.
Feb 14 Sold merchandise collecting via the debit card machine amounting to $20,500
Feb 14 Sold merchandise collecting cash, $32,000. After all it is Valentine's day!!
Feb 18 Lodged cash of $35,000 to the business bank account.
Feb 20 Paid Sweetopia $23,800 in full settlement of the balance outstanding by cheque having received a discount of $1,200.
Feb 23 Commission was received by cash, $5,200 from Just Hot Buns Ltd for outstanding sales on February 14th.
Feb 25 Paid wages and utilities by cash $10,500 and $16,800 respectively.
Feb 26 Kerry-Ann took pastries for her daughter's 5th birthday party amounting to $7,000.
Feb 27 Paid Cakes by Lila before the due date receiving at 10% discount, we paid her via a direct bank transfer to her account.
Feb 28 Chocolate Delight, deposited $13,000 to our bank account as part payment of their outstanding balance.
REQUIRED -
Journalize each of the above transactions. Narrations are not required.
Post the above transactions in the General ledger (please use only the general ledger)
Extract an unadjusted trial balance as at February 28, 2021.
Journalize the following adjusting entries using the following information:
-Because the sales on Valentine's Day was great. Kerry decided at the end of the month to accrued $5,000 in additional wages for her staff members. In addition, a miscalculation of overtime hours had the employees being over paid Five hundred dollars $500 for the month of February as it relates to wages.
-Two hundred dollars ($200) of the commission received related to the month of March 2021.
-Of the amount paid for rent approximately two thousand dollars ($2,000) was prepaid.
-For the first month of business, depreciation is calculated at 10% per annum on the straight line basis on the refrigerator and office furniture; and 20% per annum on the Delivery Van; depreciation is charged to the accounts on a monthly basis.
-Of the remaining balance owed by Chocolate delights, 10% must be written off as bad debts.
Note: when doing the adjusted T accounts only the accounts that have been affected need to be done
Post the above adjusting entries to their respective accounts in the general ledger creating additional accounts as the journals would dictate.
Prepare the adjusted trial balance with the inclusion of the above balances.
Prepare the statement of profit or loss and the statement of financial position for the period under review. For use in the financial statements, closing stock amounts to $1,500 at the end of the month.