Question

College Coasters is a San Diego-based merchandiser specializing in logo-adorned drink coasters. The company reported the following balances in its unadjusted trial balance at December 1. $ 9,600 1,920 500 480 620 110 1,400 300 Cash Accounts Receivable Inventory Prepaid Rent Equipment Accumulated Depreciation Accounts Payable Salaries and Wages Payable Income Taxes Payable Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Rent Expense Salaries and Wages Expense Depreciation Expense Income Tax Expense Office Expenses 5,800 2,600 15, 380 8,280 880 2,000 110 1,200 The company buys coasters from one supplier. All amounts in Accounts Payable on December 1 are owed to that supplier The

Answer 1

College Coasters Journal entries Date Account 1-Dec Inventory Accounts Payable Credit Debit $ 208 Calculation -400*0.52 $ 208 b $ 495 =900*0.55 2-Dec Inventory Accounts Payable $ 495 $ 1,760 =1,600*1.10 3-Dec Accounts Receivable Sales Revenue $ 1,760 $ 818 =(1,000*0.50)+(500*0.52)+(200*0.55) 3-Dec Cost of goods sold Inventory $ 818 $ 990 4-Dec Cash Accounts Receivable $ 990 e $ 1,410 18-Dec Accounts Payable Cash $ 1,410 23-Dec Salaries & Wages Payable Salaries & Wages expense Cash $ $ 300 170 $ 470 8 31-Dec No Journal Entry required Revenue is recognzed only when goods reach buyers port in case of FOB destination sale h Adjusting entries 31-Dec Office expense Accounts Payable $ 160 $ 160 i $ 9 31-Dec Depreciation expense Accumulated Depreciation $ 9 j 31-Dec Salaries & Wages expense Salaries & Wages Payable $ 100 K $ 80 -480/6 months 31-Dec Rent expense Prepaid Rent $ 80 I $ 700 31-Dec Income tax expense Income Taxes Payable $ 700 m No Journal Entry required No Journal Entry required

College Coasters Account Names Cash Accounts Receivable Inventory Prepaid Rent Equipment Accumulated Depreciation Accounts Payable Salaries & Wages Payable Income Taxes Payable Common Stock Retained Earnings Sales Revenue Cost of goods sold Rent expense Salaries & Wages expense Depreciation expense Office expense Income tax expense Totals Adjusted TB-Dec 31 Debit Credit 8,710 2,690 385 400 620 119 853 100 700 5,800 2,600 17,140 9,098 960 2,270 119 1,360 700 27,312 27,312

College Coasters Income Statement For year ended December 31 Sales Revenue 17,140 9,098 8,042 Gross profit Operating Expenses Rent expense Salaries & Wages expense Depreciation expense Office expense Total Operating expenses Operating Income Income tax expense Net Income 960 2,270 119 1,360 4,709 3,333 700 2,633 Statement of Retained Earnings For year ended December 31 Beginning balance Net Income Ending Balance 2,600 2,633 5,233

College Coasters Balance Sheet As of December 31 Assets Cash Accounts Receivable Inventory Prepaid Rent Total Current Assets Liabilities & Stockholders Equity Current Liabilities 8,710 Accounts Payable 2,690 Salaries & Wages Payable 385 Income Taxes Payable 400 12,185 Total Current Liabilities 853 100 700 1,653 Property, Plant & Equipment Equipment Accumulated Depreciation Total Property, Plant & Equipment Stockholders Equity 620 Common Stock (119) Retained earnings 501 Total Stockholders Equity 5,800 5,233 11,033 Total Assets 12,686 Total Liabilities & Stockholders Equity 12,686

Ratios Inventory Turnover Ratio Cost of goods sold/ Average Inventory =9,098/((500+385)/2) Inventory Turnover Ratio 20.6 times per year Days to Sell 365 days/ Inventory Turnover Ratio =365 days / 20.56 17.8 days Days to Sell