Accounting Project: Item Possible Score Sales Journal

Accounting Projectnameitempossiblescoresales Journal 10ca

Analyze a comprehensive set of accounting transactions and processes for Randiddle Co., a merchandising business, including journal entries, subsidiary ledgers, inventory control, adjustments, financial statements, and related accounting procedures, based on data as of December 2012.

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In this academic analysis, we examine the detailed accounting practices of Randiddle Co., a merchandising business, as they pertain to their fiscal activities during December 2012. The purpose is to demonstrate an understanding of core accounting principles through practical application, including journal entries, ledger management, inventory control, financial statement preparations, and adherence to accounting standards.

Firstly, the transactions from December highlight the use of proper journalization within different journals such as the sales journal, purchases journal, cash receipts, cash payments, and the general journal for miscellaneous transactions. These entries reflect standard accounting treatments for sales, purchases, cash disbursements, and miscellaneous adjustments, and they form the basis of ledger updates. For instance, the sale of microwaves is recorded in the sales journal, with corresponding entries to accounts receivable and inventory, adhering to the perpetual inventory system and FIFO costing method used by Randiddle Co. The precise recording of these transactions ensures the accuracy of financial reporting and inventory valuation.

Journal entries for sales involve recognizing revenue and reducing inventory through Cost of Goods Sold entries, which are crucial in calculating gross profit. The use of the Last-in, First-out (LIFO) method influences inventory valuation, and the explicit mention to ignore transportation-in and purchase discounts simplifies the process but still illustrates typical recordkeeping. Purchases are documented in the purchases journal, with subsequent postings to the general ledger and subsidiary ledgers, ensuring the accuracy of accounts payable and inventory levels.

The transactions also demonstrate the application of the Allowance Method for bad debts, which involves estimating uncollectible receivables based on aging and net realizable value considerations. This process impacts the accounts receivable subsidiary ledger and the Bad Debt Expense account, ensuring compliance with GAAP and providing a realistic picture of receivables’ collectability.

The adjustments required on December 31 encompass several critical areas. Merchandise inventory adjustments involve physical counts and the valuation of ending inventory to be reported at $1,090, along with insurance expenses that have expired during the year, store supplies on hand, and depreciation calculations for store equipment. The straight-line depreciation method is applied over a useful life of ten years, which results in a systematic allocation of depreciation expense, impacting the income statement and accumulated depreciation accounts.

Salaries payable are accrued at year-end based on the provided figures, reflecting accrued liabilities that must be recognized even if payments are made in the subsequent period. The note payable interest, accrued for one month at 8%, is calculated to reflect the interest expense incurred during December, illustrating the accrual method’s importance in matching expenses to revenues accurately.

The existence of a bankruptcy claim for Marie Co. necessitates a write-off of her receivable, following accounting standards for uncollectible accounts. The issuance of a debit memo aligns with proper handling of damaged merchandise returns, and the crediting of the seller's account resolves the transaction appropriately.

The preparation of financial statements constitutes a crucial component of this project. The unadjusted trial balance serves as a preliminary check, verified by the sum of debits and credits, followed by adjusting entries that update inventory, expenses, depreciation, and accruals to reflect true financial position as of December 31, 2012. The adjusted trial balance is then used to prepare a multiple-step income statement, a statement of owner’s equity, and a classified balance sheet, providing comprehensive and organized financial data in accordance with accounting principles.

The general ledger and subsidiary ledgers are maintained diligently throughout the process, with all transactions posted appropriately to ensure balance and compliance. The schedule of accounts receivable and payable verifies the accuracy of individual accounts against the general ledger, and the post-closing trial balance confirms that all temporary accounts have been closed, and only permanent accounts remain balances.

In conclusion, this detailed accounting project encompasses all critical facets of financial recordkeeping for a small to medium merchandising enterprise. It illustrates adherence to accounting standards, proper handling of inventory, receivables, payables, depreciation, and income statement preparation. Moreover, it emphasizes the importance of internal controls and accuracy in annual financial reporting, forming a practical exemplification of professional accounting practice based on the scenario provided for December 2012.

References

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  • AccountingTools. (2023). Allowance Method for Bad Debts. https://www.accountingtools.com/articles/allowance-method.html
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