Rileys Discount Videos Inc Company Information David And Ric

Rileys Discount Videos Inc Company Information David And Richard Ri

Rileys Discount Videos, Inc. was founded by David and Richard Riley, who initially started the business by selling discounted DVDs and videos purchased in bulk, focusing on out-of-date inventory. The company initially operated online through its website, but later expanded to include a physical storefront to increase sales volume and inventory capacity. The company was originally a partnership but later incorporated by selling stock to business associates to facilitate growth. Operations involve purchasing videos in bulk, maintaining perpetual inventory on a first-in-first-out basis, and selling via the internet, auction sites, and in-store. Sales pricing varies depending on demand, and sales tax applies to in-state internet and in-store sales, but not to out-of-state internet sales or sales to other businesses for resale. Riley’s employs staff paid twice monthly, with withholding taxes and sales taxes remitted accordingly. The accounting period is monthly, with detailed transactions recorded for January—a period of business expansion involving sales, purchases, expenses, payroll, and other financial activities requiring adjustments, financial statement preparation, and analysis.

Paper For Above instruction

Introduction

Rileys Discount Videos Inc exemplifies a small but dynamic retail enterprise operating in the multimedia industry, with diversified sales channels including online, auction, and physical store retail. This paper documents the accounting processes for January, the first month of a new fiscal year, covering journal entries, postings, trial balances, adjustments, financial statements, and supporting schedules. The aim is to illustrate accurate handling of complex transaction flows within a retail operation, emphasizing inventory management, sales tax applications, and expense recognition.

Transaction Recording for January

Riley’s retail operations involved multiple types of transactions, including sales, purchases, expenses, payroll, and capital investments. Recording commenced with sales entries, reflecting cash and online revenue streams, and captured sales tax collections where applicable. For instance, internet sales of 150 units were recorded at $1,380, with the appropriate tax considerations, and in-store sales of 55 units at $600.

Purchase transactions included acquiring 5,000 DVDs from KLD Video, recorded at the net amount after considering discounts and freight charges, in accordance with Riley’s policy to recognize discounts and potential discount lost expenses. Particularly, the purchase of office equipment for $2,000, with accumulated depreciation of $800, was recorded upon disposal at a loss, recognizing asset depreciation and loss on sale.

Expenses incurred included rent, postage, utilities, advertising, supplies, and shipping costs, each registered upon receipt or invoice date, ensuring alignment with accrual accounting principles. payroll entries encompassed salaries, wages, employer taxes, and related withholdings, with remittances processed on time.

Additional transactions such as issuance of stock, investments in marketable securities, and write-offs for uncollectible accounts were journalized correspondingly. The transactions also involved payments on account, bills, and accruals for taxes, which needed to be recognized as liabilities until remittance.

Postings and Trial Balance Preparation

All journal entries were posted to respective ledger accounts, ensuring debits equaled credits. The resulting trial balance provided a snapshot of the account balances, with assets such as cash, inventory, office equipment, and marketable securities, liabilities including accounts payable, accrued expenses, and notes payable, and equities comprising common stock and retained earnings.

Adjusting Entries

Adjustment entries were necessary to portray an accurate financial position at period-end:

- Expired insurance of $200 was recorded as an expense.

- Shipping supplies on-hand of $5,300 and office supplies of $520 were adjusted.

- Allowance for doubtful accounts was increased by $600 to reflect likely uncollectible receivables.

- Depreciation expense was accrued for store equipment ($500) and office equipment ($250).

These adjustments guarantee the financial statements conform with accrual basis accounting standards.

Adjusted Trial Balance

The adjusted trial balance incorporated all posting and adjustment entries, serving as the basis for preparing financial statements. It ensured classification accuracy across assets, liabilities, equities, revenues, and expenses, facilitating transparency and comparability.

Schedules of Receivables and Payables

The accounts receivable schedule listed all outstanding customer balances at January 31, including amounts from regular internet and store sales, after considering write-offs for bad debts. The payable schedule summarized all outstanding supplier invoices, including payments processed during the month.

Financial Statements

The Income Statement displayed total revenues from sales, less returns, discounts, and sales tax remittances, yielding net sales. Cost of goods sold was calculated using inventory data and FIFO, leading to gross profit. Expenses such as salaries, rent, utilities, advertising, supplies, and depreciation were deducted to obtain net income.

The Balance Sheet reported assets in order of liquidity, including cash, receivables, inventory, and fixed assets net of depreciation. Liabilities encompassed accounts payable, accrued expenses, taxes payable, and notes payable. Equity reflected the initial stock issuance and retained earnings for the fiscal period.

The Statement of Changes in Stockholders’ Equity detailed stock issuance and retained earnings adjustments, aligning with the net income reported.

Conclusion

The comprehensive recording and reporting of Riley’s transactions for January demonstrate the integration of accrual accounting, inventory management, tax compliance, and financial reporting. Proper execution in these areas ensures transparent financial statements that inform management decisions and comply with accounting standards.

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