Question

Carla Vista Co.'s balance sheet at December 31, 2021, is presented below. 

During January 2022, the following transactions occurred. Carla Vista uses the perpetual inventory method.

Jan. 1 Carla Vista accepted a 4-month, 8% note from Betheny Company in payment of Betheny's $3,600 account. 

3 Carla Vista wrote off as uncollectible the accounts of Walter Corporation ($400) and Drake Company ($300). 

8 Carla Vista purchased $15,770 of inventory on account. 

11 Carla Vista sold for $26,900 on account inventory that cost $16,660. 

15 Carla Vista sold inventory that cost $720 to Jack Rice for $1,100. Rice charged this amount on his Visa First Bank card. The service fee charged Carla Vista by First Bank is 3%. 

17 Carla Vista collected $24,800 from customers on account. 

21 Carla Vista paid $14,990 on accounts payable. 

24 Carla Vista received payment in full ($300) from Drake Company on the account written off on January 3. 

27 Carla Vista purchased advertising supplies for $1,320 cash. 

31 Carla Vista paid other operating expenses, $3,510.

Adjustment data:

 1. Interest is recorded for the month on the note from January 1.

 2. Bad debts are expected to be 6% of the January 31, 2022, accounts receivable.

 3. A count of advertising supplies on January 31, 2022, reveals that $550 remains unused.

 4. The income tax rate is 30%. (Hint: Prepare the income statement up to Income before taxes and multiply by 30% to compute the amount; round to whole dollars.) 

(You may want to set up T-accounts to determine ending balances.)

 Prepare journal entries for the transactions listed above and adjusting entries. (Include entries for cost of goods sold using the perpetual inventory system.) (Round answers to O decimal places, e.g. 1,250. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Prepare an adjusted trial balance at January 31,2022 . (Round answers to 0 decimal places, e.g. 1,250 .)

Prepare an income statement for the month ending January 31, 2022. (Round answers to 0 decimal places, e.g. 1,250.)

Prepare a retained earnings statement for the month ending January 31, 2022. (Round answers to 0 decimal places, e.g. 1,250.)

Prepare a classified balance sheet as of January 31, 2022. (List Current Assets in order of liquidity. Round answers to O decimal places, e.g. 1,250.)

Answer 1