Reference no: EM132223956
Question - Taurus, Inc. is in the business of buying and selling pool tables. Brock Lee is the CEO and President of the company. At the beginning of January of 2019, the company had the following balances in its accounts:
Account Balance at Beginning of Month
Accounts Payable 7,200
Accounts Receivable 9,400
Cash 6,100
Common Stock 10,000
Inventory 19,200
Notes Payable 10,000
Retained Earnings 8,700
Supplies 1,200
The inventory at the beginning of the month consisted of 8 Pinnacle pool tables that cost $2,400 each. The accounts payable balance was for 3 of these tables. Taurus uses the perpetual method of accounting for the purchase and sale of inventory.
During January of 2019, Taurus experienced the following events:
1) Purchased 4 pool tables on account from Royal Billiards for $2,800 each. The merchandise was delivered under terms of FOB Shipping Point and 2/10, net 30.
2) Paid $200 to the freight company for delivering the Royal tables.
3) Sold one of the Pinnacle tables to a customer for $2,800 and collected the cash at the time of sale.
4) Paid $600 of wages to its employees for worked performed during the month.
5) Received payment of $5,200 from customers who had purchased 2 pool tables in December of 2018. (there is no sales discount applicable on this collection)
6) Sold two Royal tables for $3,700 each to a customer on account. The terms are FOB destination and 1/10, net 30. (Don't forget to factor in the freight on the purchase of these tables when computing Cost of Goods Sold)
7) Paid $50 to the freight company to deliver these two Royal tables.
8) Paid $7,200 to Pinnacle for the tables purchased in December. (not paid with the discount period)
9) Paid $250 for advertising on the local television station.
10) Sold two Pinnacle tables for $3,000 each and collected the cash at the time of the sale.
11) Paid $2,060 to the bank. $2,000 of this is a repayment of principal on the Note Payable and the other $60 is interest on the note for the month.
12) Collected $100 of rent from a customer who rented one of the tables for a weekend party. (the table was returned unharmed)
13) Used $320 of the supplies.
14) Paid $280 for utilities used during January.
15) Paid $1,000 of dividends to the owners of the corporation.
Use the preceding information to record the transactions and prepare the adjusting entries for the month and then prepare in good form a multi-step income statement, a statement of changes in stockholders' equity, and a balance sheet for the company for the month of January 2019.