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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.
Cash $ 8,400
Accounts Receivable 1,640
Inventory 320
Prepaid Rent 540
Equipment 890
Accumulated Depreciation 90
Accounts Payable 1,340
Salaries and Wages Payable 300
Income Taxes Payable 0
Common Stock 5,700
Retained Earnings 3,000
Sales Revenue 12,440
Cost of Goods Sold 7,300
Rent Expense 990
Salaries and Wages Expense 1,600
Depreciation Expense 90
Income Tax Expense 0
Office Expense 1,100
The company buys coasters from one supplier. All amounts in Accounts Payable on December 1 are owed to that supplier. The inventory on December 1 consisted of 800 coasters, all of which were purchased in a batch on July 10 at a unit cost of $0.40. College Coasters records its inventory using perpetual inventory accounts and the FIFO cost flow method.
During December, the company entered into the following transactions. Some of these transactions are explained in greater detail below.
a. Purchased 800 coasters on account from the regular supplier on 12/2 at a unit cost of $0.45, with terms of n/60.
b. Sold 1,600 coasters on account on 12/3 at a unit price of $1.00.
c. Collected $910 from customers on account on 12/4.
d. Paid the supplier $1,280 cash on account on 12/18.
e. Paid employees $400 on 12/23, of which $290 related to work done in November and $110 was for wages up to December 22.
f. Loaded 90 coasters on a cargo ship on 12/31 to be delivered the following week to a customer in Kona, Hawaii. The sale was made FOB destination with terms of n/60.
g. Purchased 900 coasters on account from the regular supplier on 12/2 at a unit cost of $0.45, with terms of n/60.
Other relevant information includes the following at 12/31:
h. College Coasters has not yet recorded $160 of office expenses incurred in December on account.
i. The company estimates that the equipment depreciates at a rate of $8 per month. One month of depreciation needs to be recorded.
j. Wages for the period from December 23–31 are $100 and will be paid on January 15.
k. The $540 of Prepaid Rent relates to a six-month period ending on May 31 of next year.
l. The company incurred $700 of income tax but has made no tax payments this year.
m. No shrinkage or damage was discovered when the inventory was counted on December 31.
n. The company did not declare dividends and there were no transactions involving common stock.
Prepare the journal entries to record the transactions (a) through (n). Review the accounts as shown in the General Ledger and Trial Balance tabs.

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anthougo

College Coasters will record the transactions with the following journal entries:

General Journal Entries:

12/2 Debit Inventory $360

Credit Accounts Payable $360

  • To record the purchase of inventory on account, terms of n/60.

12/3 Debit Accounts Receivable $1,600

Credit Sales Revenue $1,600

  • To record the sale of goods on account.

Debit Cost of goods sold $680

Credit Inventory $680

  • To record the cost of goods sold ($0.40 x 800 + $0.45 x 800).

12/4 Debit Cash $910

Credit Accounts Receivable $910

  • To record the receipt from customers on account.

12/18 Debit Accounts Payable $1,280

Credit Cash $1,280

  • To record the payment to suppliers on account.

12/23 Debit Wages Payable $110

Debit Wages Expense $290

Credit Cash $400

  • To record the payment of wages.

12/31 Debit Accounts Receivable $90

Credit Sales Receivable $90

  • To record the sale of goods, FOB destination with terms of n/60.

12/31 Debit Inventory $405

Credit Accounts Payable $405

  • To record the purchase of goods on account.

Adjusting Journal Entries:

12/31 Debit Office Expenses $160

Credit Office Expenses Payable $160

  • To accrue office expenses for the month.

12/31 Debit Depreciation Expense $8

Credit Accumulated Depreciation $8

  • To record depreciation expense for the month.

12/31 Debit Wages Expense $100

Credit Wages Payable $100

  • To accrue wages expense.

12/31 Debit Rent Expense $90

Credit Prepaid Rent $90

  • To record rent expense for the month.

12/31 Debit Income Tax Expense $700

Credit Income Tax Payable $700

  • To accrue income tax expense.

Data Analysis:

12/2 Inventory $360 Accounts Payable $360

terms of n/60.

12/3 Accounts Receivable $1,600 Sales Revenue $1,600

Cost of goods sold $680 Inventory $680 ($320 + $360)

12/4 Cash $910 Accounts Receivable $910

12/18 Accounts Payable $1,280 Cash $1,280

12/23 Wages Payable $110 Wages Expense $290 Cash $400

12/31 Accounts Receivable $90 Sales Receivable $90

FOB destination with terms of n/60.

12/31 Inventory $405 Accounts Payable $405

12/31 Office Expenses $160 Office Expenses Payable $160

12/31 Depreciation Expense $8 Accumulated Depreciation $8

12/31 Wages Expense $100 Wages Payable $100

12/31 Rent Expense $90 Prepaid Rent $90

12/31 Income Tax Expense $700 Income Tax Payable $700

Thus, the General Ledger and Trial Balance tabs are not provided herein for review.

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