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.
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101
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Cash
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230
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Interest Payable
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106
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Accounts Receivable
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301
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Common Stock
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126
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Inventory
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350
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Retained Earnings
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128
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Prepaid Insurance
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405
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Sales Revenue
|
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131
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Prepaid Rent
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406
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Sales Discounts and Allowance
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135
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Prepaid Advertising
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501
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Cost of Goods Sold
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|
163
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Office Equipment
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520
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Utility Expense
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164
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Mixing Barrels
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525
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Wage Expense
|
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165
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Factory Equipment
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530
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Interest Expense
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|
190
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Accumulated Depreciation
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535
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Rent expense
|
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201
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Accounts Payable
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545
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Insurance Expense
|
|
215
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Notes Payable
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560
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Depreciation Expense
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220
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Line of Credit
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565
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Advertising Expense
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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 $4,000 increments, vendor pays shipping. Terms are N/15. Gene pays all bills at the last minute.
• All depreciation is straight-line with no residual value.
o Office equipment is expected to last 5 years
o Factory Equipment is expected to last 4 years
o Mixing barrels are expected to last 10 years.
• Round all answers to the nearest dollar
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Grandpa's Cough Inc.
Balance Sheet
As of December 31, 2014
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Assets
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|
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Current Assets
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|
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Cash
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$ 20,000
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Accounts Receivable
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10,000
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Inventory
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50,000
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Prepaid Insurance
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375
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Prepaid Rent
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1,400
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Total Current Assets
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$ 81,775
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Fixed Assets
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|
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Office Equipment
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$ 3,500
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Mixing Barrels
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4,500
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Factory Equipment
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15,000
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Less: Accumulated Depreciation
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(19,860)
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Total Fixed Assets
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$ 3,140
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Total Assets
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$ 84,915
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Liabilities and Stockholders' Equity
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|
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Current Liabilities
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|
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Accounts Payable
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$ 25,000
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Current Portion of Long Term Debt
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1,600
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Total Current Liabilities
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$ 26,600
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Long Term Debt
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|
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Notes Payable
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16,000
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Total Long Term Debt
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16,000
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Total Liabilities
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$ 42,600
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Stockholders' Equity
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|
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Retained Earnings
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$ 28,210
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Common Stock
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14,105
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Total Stockholders' Equity
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42,315
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Total Liabilities and Stockholders' Equity
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$ 84,915
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•
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Date
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Transaction
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January 1, 2015
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Gene Autry invested $25,000 Cash and office equipment worth $6,000 in return for common stock of Grandpa's Cough Inc.
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1
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Purchased Mixing Barrels worth $3,000 and Other Factory Equipment worth $600 on credit, N/30
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1
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Purchased Inventory on credit for $72,000with terms N/15
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1
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Paid Vendor $15,000 for prior month purchases
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2
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Paid $4,500 for annual premium on insurance coverage starts at the end of the month.
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3
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During the grand opening of the store GCI sold 256 Bottles of Cough Syrup.
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4
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A wholesale customer ordered 100 cases, GCI shipped the order and billed the customer 2/5 N/10
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5
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Received payment from customer from prior month sale $5,000.
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6
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Sold 300 Bottles of Cough Syrup through the store.
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7
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Received half the payment for sale of goods on January 4
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10
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Paid $4,200 for three months' rent for store front starting on January 1, 2015.
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13
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Sold 400 Bottles of Cough Syrup through the store
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15
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Shipped order for another wholesale customer 500 cases N/10
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15
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Received and paid Utility Bill for $500
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18
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Shipped order of 300 Cases to a wholesale customer N/10
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|
20
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Sold 625 Bottles of Cough Syrup through the store
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|
25
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Shipped order to wholesale customer 1,000 cases 2/10 N/30
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|
26
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Paid for mixing barrels and equipment purchased on January 1
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27
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Sold 1,000 bottles of Cough Syrup through the store
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|
30
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Paid wages under the table to employees of $15,000
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|
31
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Paid $2,000 for 12 month advertising campaign through local radio stations
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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.