Problem - Victoria Company's statement of ?nancial position at December 31, 2015, is presented below.
Victoria Company Statement of Financial Position December 31, 2015
Inventory 9,400
Share capital-ordinary 20,000
Accounts receivable 19,780
Retained earnings 12,730
Allowance for doubtful accounts (800)
Accounts payable 8,750
Cash 13,100
Total Assets 41,480
Total Equity and Liabilities 41,480
During January 2016, the following transactions occurred.
Jan. 1 Victoria accepted a 4-month, 8% note from Leon Company in payment of Leon's 1,500 account.
Jan. 3 Victoria wrote off as uncollectible the accounts of Barker Corporation (450) and Elmo Company (330).
Jan. 8 Victoria purchased 17,200 of inventory on account.
Jan. 11 Victoria sold for 25,000 on account inventory that cost 17,500.
Jan. 15 Victoria sold inventory that cost 780 to Joe Haribo for 1,200 cash.
Jan. 17 Victoria collected 22,900 from customers on account.
Jan. 21 Victoria paid 16,300 on accounts payable.
Jan. 24 Victoria received payment in full (330) from Elmo Company on the account written off on January 3.
Jan. 27 Victoria purchased supplies for 1,400 cash.
Jan. 31 Victoria paid other operating expenses, 3,218.
Adjustment data:
1. Interest is recorded for the month on the note from January 1.
2. Bad debts are expected to be 5% of the January 31, 2016, accounts receivable.
3. A count of supplies on January 31, 2016, reveals that 470 remains unused.
INSTRUCTIONS: (You need to set up T-accounts to determine ending balances).
(a) Prepare journal entries for the transactions listed above and adjusting entries.
(b) Prepare an adjusted trial balance at January 31, 2016.
(c) Prepare an income statement and a retained earnings statement for the month ending January 31, 2016, and a classified statement of financial position as of January 31, 2016.