Riley’s Discount Videos, Inc. Company Information
David and Richard Riley started up a company that sold DVDs and videos at a discount. They bought videos that were out of date in bulk, allowing them to sell them at low prices. They started out by just selling them online through their website and eventually grew to where they had a small store front.
They originally formed the company as a partnership, but when they decided to expand and have a store front, they incorporated and sold stock to some of their business associates to help finance their growth.
Operations:
Riley’s buys videos and DVDs in bulk. When they opened up their store front, this allowed them to carry larger inventories and increase the volume of shipping. Riley uses perpetual inventory method on a first-in-first-out basis. Since everything is bought in bulk consisting of a variety of different movies, Riley makes no attempt to differentiate by type (DVD or VHS) or movie name.
Though the store front increased sales, the majority of sales come over the internet. There are not any consistent sales prices. Each movie sells at a different price, depending on demand. Riley also sells many movies on different auction sites. Thus, the prices can vary drastically.
In-state sales are charged a 6% sales tax. Out-of -state sales over the internet are not charged sales tax. Riley’s also has started selling items to local stores who want to sell their products. Sales to other businesses for resale are not charges sales tax.
In order to deal with the volume of business, the brothers had to hire a few employees. They pay salaries only twice a month on the 15th and he 30th or 31st of each month, except February, which is on the 28th or 29th. Withholdings and sales taxes are paid before the 15thof the following month.
Riley’s has a calendar year end. You are to record the transaction for January, the first month of the new fiscal year, prepare the monthly adjustments prepare the financial statements.
Directions:
1. Record the transactions for January.
2. Post the transactions for January
3. Prepare the Trial Balance (you may prepare the worksheet instead of a formal Trial Balance).
4. Record Adjusting Entries
5. Prepare an Adjusted Trial Balance (On worksheet if you choose the worksheet)
6. Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable
7. Prepare Income Statement, Balance Sheet, and Statement of Changes in Stockholders’ Equity for the month ended January 31, 2009 in good form.
There are two documents, Directions and Transactions (Word) and Forms (Excel). You can print off everything and do everything by hand, or you can enter everything into Excel. Excel is the preferred method. Actually, everything can be done quicker on Excel. Excel allows you to copy and paste.
Reports need to look professional. You do not have to use the forms provided to do your reports. If you do not use the forms provide, make sure they are professional in appearance.