Randiddle Co Is A Merchandising Business Their Account Balan

Randiddle Co Is A Merchandising Business Their Account Balances As

Randiddle Co. is a merchandising business. Their account balances as of November 30, 2012, include various asset, liability, equity, revenue, and expense accounts. The company uses a perpetual inventory system and the Last-in, First-out (LIFO) costing method. They also utilize the Allowance Method for bad debts. During December, a series of transactions occurred, including sales, purchases, payments, returns, and adjustments. The tasks include updating ledgers, journalizing transactions, preparing financial statements, and making necessary adjusting and closing entries. The comprehensive accounting cycle involves recording daily transactions, posting to subsidiary ledgers, preparing schedules, adjusting entries, and creating formal financial statements for the fiscal year ending December 31, 2012.

Paper For Above instruction

Introduction

Effective financial management and accurate record-keeping are essential for a successful merchandising business like Randiddle Co. Proper application of accounting principles ensures that the company's financial statements accurately reflect its financial position and operational results. This paper provides a detailed analysis of Randiddle Co.'s December transactions, including journal entries, ledger updates, and financial statement preparation, following the specified accounting procedures and standards.

Company Overview

Randiddle Co. operates in the merchandise sales industry, primarily selling microwave ovens of various wattages. The company maintains detailed records of receipts, disbursements, inventory, and receivables to ensure effective management and reporting. The use of a perpetual inventory system with the LIFO method allows for real-time updates of inventory cost flow. Additionally, the allowance method for bad debts helps estimate and account for uncollectible accounts accurately.

December Transactions and Journal Entries

The series of transactions conducted during December encompasses sales, purchases, payments, returns, and adjustments. Each transaction must be accurately journalized, considering the specific accounts impacted. For instance, sales transactions involve debits to cash or accounts receivable and credits to sales revenue, with associated returns and discounts adjusting the amounts accordingly. Purchases are recorded with debits to inventory and credits to accounts payable, factoring in purchase discounts. Payments reduce cash and liabilities. Returns and allowances require adjusting both revenue and inventory or receivables, contingent upon the sale terms.

Updating Ledgers and Subsidiary Accounts

Following each transaction, the accounts receivable and accounts payable subsidiary ledgers are updated to reflect individual customer and supplier balances. The inventory control sheet is also adjusted to track stock levels and costs continuously. This synchronization ensures that the general ledger outcomes are supported by detailed subsidiary records, essential for accuracy in financial reporting and audit readiness.

Schedule Preparation and Trial Balance

After completing the transaction entries, the schedules of accounts receivable and payable are prepared to reconcile totals with the respective general ledger accounts. The unadjusted trial balance then confirms that all debits equal credits before adjustments. It serves as the foundation for the subsequent year-end adjusting entries.

Adjusting Entries and Year-End Adjustments

Year-end adjustments include inventory valuation, accrued expenses, depreciation, and bad debt estimation. The inventory is adjusted based on a physical count, and the inventory balance is decreased or increased accordingly. Insurance and store supplies adjustments reflect the expired or used-up portions. Depreciation of store equipment is calculated using the straight-line method, spreading the cost over its useful life. Salaries payable are accrued to match expenses with the period. The interest expense on the note payable is recognized for one month at 8%. Bad debts are estimated to adjust the accounts receivable to their net realizable value, considering the age and collectibility of receivables.

Financial Statements

Using the adjusted figures, the company prepares a multiple-step income statement, which separates operating revenues and expenses from non-operating items. Expenses such as cost of goods sold, salaries, advertising, depreciation, and supplies are detailed explicitly. The statement of owner’s equity reflects the owner's capital, withdrawals, and net income. The classified balance sheet presents assets, liabilities, and owner’s equity, highlighting the current and non-current classifications for better financial analysis.

Closing Entries

The closing process involves transferring temporary account balances—revenues, expenses, and withdrawals—to retained earnings or capital accounts. This resets these accounts for the next period, ensuring clarity in financial reporting. After closing, a post-closing trial balance confirms that only permanent accounts remain, and balances are carried forward.

Conclusion

Accurate and timely recording of all transactions, along with proper adjustments and closing procedures, ensures the integrity of Randiddle Co.'s financial statements. Following best practices in accounting not only complies with generally accepted accounting principles (GAAP) but also provides valuable insights for management decision-making and stakeholder confidence. Continuous monitoring and updating of subsidiary ledgers and control sheets allow the company to maintain precise records, essential for compliance, financial analysis, and strategic planning.

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