Prepare an adjusted trial balance for the month of January.Zippy Lines, Inc. is a small company based in Colorado. Zippy Lines, Inc. sells specialty outdoor sporting goods and equipment used by mountain climbers.

Zippy Lines, Inc. is a small company based in Colorado. Zippy Lines, Inc. sells specialty outdoor sporting goods and equipment used by mountain climbers. Zippy Lines sells its goods to outdoor adventure firms and holds instructional classes. It is in its second year of operation.

Kirk Krazen, the accountant for the company was hurt in a climbing accident and the company has requested that you prepare the monthly close for January 2013, including preparation of the monthly financial statements. The company s fiscal year coincides with the calendar year. The monthly financial statements should include a balance sheet, income statement and cash flow statement for the month.

The company s president, Al Titude, has provided you with access to all of the company s books and records and you have gathered the information that is discussed below.

The company has one bank account in which all of its operating expenses are paid and all of its cash receipts are deposited. The company s general ledger records the cash disbursement transactions, and reflects the cash receipts. Exhibit 1 is a list of accounts and balances as of January 31, 2013 taken from the general ledger.

Exhibit 2 is a list of all of the transactions shown on the general ledger account for cash (Account 1010001).

A copy of the company s bank statement for January is provided in Exhibit 3.

The company maintains a subsidiary ledger for accounts receivable. All of the company s accounts receivable balances have been updated to reflect the cash receipt, and a journal entry to the cash account and the accounts receivable has been made. There are 20 outdoor adventure firms that have accounts with Zippy with terms N30, 10 of these firms had an open balance as of January. A copy of the accounts receivable subsidiary ledger is provided in Exhibit 4. The allowance for doubtful accounts was $1,500 as of December 31, 2012. The allowance is based on estimated default rates and set at 1% of balances currently due and balances past due less than 30 days, 2% on balances past due 30 to 60 days, 15% on balances past due over 60 but less than 90 days, and 30% of balances past due more than 90 days.

The company uses lower of cost or market to value its inventory. The company uses a periodic inventory system and applies FIFO cost flow assumption. Exhibit 5 contains information on its inventory.

The monthly adjusting entries have not been prepared. The following information has been gathered to support the closing process. The staff has done a physical count of inventory and supplies and found the following balances as of January 31, 2013:

– Supplies – $17,250


 

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