29 Jun Monthly Accounting Transactions
Question
Monthly Accounting Transactions
Next, you will be reviewing a series of events that have occurred during the month of January 20YY and recording and posting as appropriate the necessary journal entries.
DESCRIPTION OF EVENTS OCCURRING during January, 20YY
#
Date
Description of Event
1
January 2, 20YY
Employees are paid on the first day of the month for work performed during the previous month (because of the New Year’s holiday, this month they are paid on the 2nd). Total wages paid on this date were $38,000. (Ignore payroll taxes for this assignment.)
2
January 2, 20YY
Cottonwood paid rent for the current month. The amount of the payment was $10,000.
3
January 4, 20YY
Cottonwood signed and paid for an annual advertising agreement with the PRCA for banner ads on the PRCA website. Cottonwood’s advertisements will be posted to the website starting in April 20YY and run until March 31, 20YY+1. The amount of the agreement is $7,000.
4
January 7, 20YY
Cottonwood receiveda shipment of event merchandise from the Rodeo Outfitters Company. This merchandise was ordered on December 15th and was delivered by Viking Freight. Rodeo Outfitters paid Viking for the shipping charge of $812. Cottonwood is to pay Rodeo Outfitters $96,000 based on terms of net 30.
5
January 8, 20YY
Cottonwood received an order from the FFA rodeo in LaJunta Colorado, (LJ FFA), for $17,000 in event merchandise. The Cottonwood customer service representative confirmed that the LJ FFA Rodeo’s account was paid current and they had sufficient credit available to cover the new sale. The order was then sent to the warehouse where it was picked and prepared for shipping. The merchandise was shipped via UPS at a cost of $215, which was paid by Cottonwood. Cost of the merchandise shipped was $12,500. Terms of the sale are net 30.
6
January 12, 20YY
Alamo Conference Center in Texas placed an order with Cottonwood via email. Cottonwood’s sales rep wrote up the order, checked their credit and sent the order information to the warehouse for shipping. The sale amount was $108,100, which included $90,320 in resale merchandise and $17,780 in event merchandise. The cost of the resale merchandise was $60,418 and the cost of the event merchandise was $13,953. The goods were shipped that day. Cottonwood paid the shipping expense of $897. Payment terms for the order are net 15.
7
January 14, 20YY
Cottonwood paid the invoice for the items from Rodeo Outfitters received on January 7th.
8
January 16, 20YY
After extensive collection effort including having a collection agency contact the party, Cottonwood was notified today that the Fly-by-Knight Rodeo has gone out of business. They owed Cottonwood $2,000 on account. Cottonwood now deems that debt as being uncollectible and removes it from their books. Note the company uses an Allowance for Doubtful Accounts account.
9
January 19, 20YY
Cottonwood received customer checks totaling $13,110 for payment on outstanding accounts.
10
January 20, 20YY
Cottonwood remitted (paid) any sales tax collected in the prior quarter to the State of California. (Note: Sales tax is collected and paid quarterly).
11
January 23, 20YY
The FFA Rodeo in LaJunta Colorado (January 8th) returned $5,000 in event merchandise as excess merchandise. The merchandise was inspected and restocked. FFA is given a credit to their account for the returned merchandise. The credit is for the $5,000 minus a 10% restocking fee. The cost of the goods is $2,500. FFA LaJunta paid the return shipping of $58. (Note: Restocking Fees are ac
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