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(Solved) CHAPTER 3 The Accounting Information System HANDOUT POINTS 18 Points BACKGROUND Harriet's Hats is a hat retailer who buys hats from a hat...


If anyone has or knows about Intermediate Accounting 1 at KU's Chapter 3 "Harriet's Hats" assignment, I need help getting started with the general journal. 

CHAPTER 3 The Accounting Information System
HANDOUT
POINTS 18 Points BACKGROUND Harriet’s Hats is a hat retailer who buys hats from a hat manufacturer and then sells them in its stores.
The following information includes the company’s December 31, 20Y6 balance sheet and the details of
transactions occurring during 20Y7. REQUIRED Using the template provided on Blackboard, complete the following:
1. Record the transactions in the General Journal. Be sure to label each transaction according to its
number below.
2. Post the transactions from the General Journal to the General Ledgers (t-accounts).
3. Prepare any necessary closing entries. Be sure to record them in the General Journal and post
them to the General Ledgers.
4. Prepare the balance sheet, retained earnings statement, and income statement for Harriet’s Hats,
Inc. for the year ended December 31, 20Y7. HINT: Read through the entire assignment at least twice to become familiar with all of the important facts before
beginning to do any work.
TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 20Y7 1. Sales and Accounts Receivable
a.
b.
c.
d. The sales price of each hat was $30. All sales were made on account.
Cash collections on account amounted to $42,000.
The company identified $350 of receivables as being uncollectible and wrote them off.
The company follows a percentage-of-receivables approach to estimate its accounts receivable that will become
uncollectible. As of the end of 20Y7, the company estimates that 12% of its receivables will be uncollectible. 2. Inventory a. The company began 20Y7 with 500 hats which had a cost of $8 each. The following purchases (all on account) were
made during 20Y7:
(1) January 15th – 405 hats @ $10.00 each
(2) March 23rd – 310 hats @ 12.00 each
(3) July 2nd – 525 hats @ $14.00 each
(4) October 31st – 430 hats @ $15.00 each
b. Employees physically counted 530 hats remaining in the warehouse at the end of 20Y7. The company uses a
periodic LIFO inventory system to cost its inventory.
c. The company made cash payments to inventory suppliers totaling $21,500. 3. Property, Plant and Equipment a. Straight-line depreciation is used for all store fixtures and office equipment.
b. Below is a schedule of the store fixtures and office equipment the company had in place at the end of 20Y6.
FIXTURES AND EQUIPMENT (as of December 31, 20Y6)
ID #
1256
1876
4299 Historical Cost
$12,000
$1,700
$22,000 Useful Life
10 years
5 years
5 years Salvage Value
$1,200
$300
$1,000 Date Acquired
Jan. 1, 20Y1
Jan. 1, 20Y3
Jan. 1, 20Y6 TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 20Y7 (CONT’D)
c. On January 1, new store fixtures were purchased for $3,000 in cash. The company expects the fixtures to have a 5
year useful life and a $500 salvage value.
d. On July 1, office equipment (ID#1876) was sold for $620. 4. Debt a. On September 1, 20Y7, the company paid-off the note payable that was outstanding at the beginning of the period.
The note had an 8% interest rate, had been issued on September 1, 20Y6, and required semiannual interest
payments on February 28 and August 31.
b. Also on September 1, 20Y7, the company borrowed $4,000 on a new note payable. The new note carries a 5%
interest rate with similar payment terms as the note that was just paid-off. 5. Operations a. Two rent payments of $1,800 were made during 20Y7 (on March 1 and September 1). The payments were for rent
on the store building and were prepaid for six months each. The balance in the prepaid account at the end of 20Y7
represents the rent for January and February 20Y8.
b. Cash paid out for wages during 20Y7 totaled $12,200. Records indicate that salaries for the last week of December
amounted to $300 and would be paid at the end of the first week in January (a two-week pay period).
c. Other expenses (paid in cash) totaled $2,150. 6. Income Taxes a. The company paid its 20Y6 income taxes in March of 20Y7.
b. The company has a 30% income tax rate for both 20Y6 and 20Y7. 7. Common Stock a. Dividends of $3,600 were declared and paid during 20Y7.
b. New common stock was issued for $10,000 during 20Y7.
BALANCE SHEET as of DECEMBER 31, 20Y6
Assets
Cash
Accounts Receivable
5,000
Less: Allowance for Bad Debts
(500)
Net Accounts Receivable
Prepaid Rent
Inventory
Total Current Assets
Property, Plant, and Equipment
35,700
Less: Accumulated Depreciation
(11,800)
Net Property, Plant, and Equipment
Total Assets
Liabilities and Owner’s Equity
Accounts Payable
Wages Payable
Interest Payable
Income Taxes Payable
Notes Payable
Total Current Liabilities
Common Stock
Retained Earnings
Total Liabilities and Owner’s Equity $15,000 4,500
500
4,000
24,000 23,900
$47,900 $2,500
170
64
900
2,400
6,034
20,000
21,866
$47,900
CHAPTER 3 HANDOUT | PAGE 2

 


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