One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash $ 18,620 Accounts Receivable 9,650 Allowance for Doubtful Accounts 900 * Inventories 2,800 Deferred Revenue (30 units) 4,350 Accounts Payable 1,300 Note Payable (long-term) 15,000 Common Stock 5,000 Retained Earnings 4,520 * credit balance. The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $145 per unit. OTP’s January 1 inventory balance consists of 35 units at a total cost of $2,800. OTP’s policy is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $4,350 payment for 30 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,300 was unpaid and recorded in Accounts Payable at December 31. OTP’s note payable matures in three years, and accrues interest at a 10% annual rate. January Transactions Included in OTP’s January 1 Accounts Receivable balance is a $1,500 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $1,500 balance at this time. On 01/01, OTP arranges with Jeff to convert the $1,500 balance to a six-month note, at 12% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year. OTP paid a $500 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. OTP purchased an additional 150 units of inventory from a supplier on account on 01/05 at a total cost of $9,000, with terms n/30. OTP paid a courier $300 cash on 01/05 for same-day delivery of the 150 units of inventory. The 30 units that OTP’s customer paid for in advance in December are delivered to the customer on 01/06. On 01/07, OTP received a purchase allowance of $1,350 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c). Sales of 40 units of inventory occurring during the period of 01/07–01/10 are recorded on 01/10. The sales terms are n/30. Collected payments on 01/14 from sales to customers recorded on 01/10. OTP paid the first 2 weeks’ wages to the employees on 01/16. The total paid is $2,200. Wrote off a $1,000 customer’s account balance on 01/18. OTP uses the allowance method, not the direct write-off method. Paid $2,600 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. OTP recovered $400 cash on 01/26 from the customer whose account had previously been written off on 01/18. An unrecorded $400 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. Sales of 65 units of inventory during the period of 01/10–01/28, with terms n/30, are recorded on 01/28. Of the sales recorded on 01/28, 15 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP charges sales returns directly against Sales Revenue. On 01/31, OTP records the $2,200 employee salary that is owed but will be paid February 1. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP’s accounts receivable fall into a single aging category, for which 8% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) Accrue interest for January on the note payable on 01/31. Accrue interest for January on Jeff Letrotski’s note on 01/31 (see a). need journal entries

One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash $ 18,620 Accounts Receivable 9,650 Allowance for Doubtful Accounts 900 * Inventories 2,800 Deferred Revenue (30 units) 4,350 Accounts Payable 1,300 Note Payable (long-term) 15,000 Common Stock 5,000 Retained Earnings 4,520 * credit balance. The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $145 per unit. OTP’s January 1 inventory balance consists of 35 units at a total cost of $2,800. OTP’s policy is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $4,350 payment for 30 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,300 was unpaid and recorded in Accounts Payable at December 31. OTP’s note payable matures in three years, and accrues interest at a 10% annual rate. January Transactions Included in OTP’s January 1 Accounts Receivable balance is a $1,500 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $1,500 balance at this time. On 01/01, OTP arranges with Jeff to convert the $1,500 balance to a six-month note, at 12% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year. OTP paid a $500 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. OTP purchased an additional 150 units of inventory from a supplier on account on 01/05 at a total cost of $9,000, with terms n/30. OTP paid a courier $300 cash on 01/05 for same-day delivery of the 150 units of inventory. The 30 units that OTP’s customer paid for in advance in December are delivered to the customer on 01/06. On 01/07, OTP received a purchase allowance of $1,350 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c). Sales of 40 units of inventory occurring during the period of 01/07–01/10 are recorded on 01/10. The sales terms are n/30. Collected payments on 01/14 from sales to customers recorded on 01/10. OTP paid the first 2 weeks’ wages to the employees on 01/16. The total paid is $2,200. Wrote off a $1,000 customer’s account balance on 01/18. OTP uses the allowance method, not the direct write-off method. Paid $2,600 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. OTP recovered $400 cash on 01/26 from the customer whose account had previously been written off on 01/18. An unrecorded $400 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. Sales of 65 units of inventory during the period of 01/10–01/28, with terms n/30, are recorded on 01/28. Of the sales recorded on 01/28, 15 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP charges sales returns directly against Sales Revenue. On 01/31, OTP records the $2,200 employee salary that is owed but will be paid February 1. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP’s accounts receivable fall into a single aging category, for which 8% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) Accrue interest for January on the note payable on 01/31. Accrue interest for January on Jeff Letrotski’s note on 01/31 (see a). need journal entries

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31:


Cash	$	18,620
Accounts Receivable		9,650
Allowance for Doubtful Accounts		900	*
Inventories		2,800
Deferred Revenue (30 units)		4,350
Accounts Payable		1,300
Note Payable (long-term)		15,000
Common Stock		5,000
Retained Earnings		4,520

* credit balance.

The following information is relevant to the first month of operations in the following year:

OTP will sell inventory at $145 per unit. OTP’s January 1 inventory balance consists of 35 units at a total cost of $2,800. OTP’s policy is to use the FIFO method, recorded using a perpetual inventory system.
In December, OTP received a $4,350 payment for 30 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,300 was unpaid and recorded in Accounts Payable at December 31.
OTP’s note payable matures in three years, and accrues interest at a 10% annual rate.

January Transactions

Included in OTP’s January 1 Accounts Receivable balance is a $1,500 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $1,500 balance at this time. On 01/01, OTP arranges with Jeff to convert the $1,500 balance to a six-month note, at 12% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year.
OTP paid a $500 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense.
OTP purchased an additional 150 units of inventory from a supplier on account on 01/05 at a total cost of $9,000, with terms n/30.
OTP paid a courier $300 cash on 01/05 for same-day delivery of the 150 units of inventory.
The 30 units that OTP’s customer paid for in advance in December are delivered to the customer on 01/06.
On 01/07, OTP received a purchase allowance of $1,350 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c).
Sales of 40 units of inventory occurring during the period of 01/07–01/10 are recorded on 01/10. The sales terms are n/30.
Collected payments on 01/14 from sales to customers recorded on 01/10.
OTP paid the first 2 weeks’ wages to the employees on 01/16. The total paid is $2,200.
Wrote off a $1,000 customer’s account balance on 01/18. OTP uses the allowance method, not the direct write-off method.
Paid $2,600 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense.
OTP recovered $400 cash on 01/26 from the customer whose account had previously been written off on 01/18.
An unrecorded $400 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then.
Sales of 65 units of inventory during the period of 01/10–01/28, with terms n/30, are recorded on 01/28.
Of the sales recorded on 01/28, 15 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP charges sales returns directly against Sales Revenue.
On 01/31, OTP records the $2,200 employee salary that is owed but will be paid February 1.
OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP’s accounts receivable fall into a single aging category, for which 8% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.)
Accrue interest for January on the note payable on 01/31.
Accrue interest for January on Jeff Letrotski’s note on 01/31 (see a).

need journal entries

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