Reference no: EM131727185

Fargo Homework Assignment

The July 31, 2014 adjusted trial balance of Fargo Company is presented below. Notice that the total debits and credits for each account are listed (including the beginning balances) rather than the usual account ending balance. Fargo's fiscal year end is June 30. All adjusting entries have been made for the month of July 2014, except the adjustment for inventory.

ACCOUNT	DEBIT	CREDIT
Cash	$68,500	$54,600
Accounts Receivable	58,000	54,400
Allowance for Credit Losses	700	1,100
Inventory	60,000
Prepaid Advertising	1,200	400
Office Supplies	2,200	1,300
Office Equipment	22,000	1,500
Accumulated Depreciation	400	7,600
Accounts Payable	31,900	40,000
Salaries Payable		800
Interest Payable		100
Dividends Payable	3,500	8,200
Notes Payable	3,000	30,000
Common Stock		14,200
APIC - C/S		20,000
Retained Earnings	7,200	19,900
Sales Revenue		61,000
Sales Returns	2,200
Sales Discounts	500
Purchases	42,000
Purchase Returns and Allowances		900
Purchase Discounts		400
Salaries Expense	9,200
Office Supplies Expense	1,300
Insurance Expense	700
Advertising Expense	600
Bad Debt Expense	500
Miscellaneous Expense	400
Depreciation Expense	300
Interest Expense	300
Gain/Loss on Sale of Equipment		200
Totals	$316,600	$316,600

Using the trial balance of gross balances for Fargo and the additional information given below, answer the following questions about the operations of Fargo. Put answers in box when given. Show all work for credit. Complete the general ledger T-Accounts on the Excel schedule to support your answers.

1. Compute the amount of interest paid in July. At June 30, 2014, none was payable.

2. What was the amount of cash received on the sale of office equipment?

3. Assuming that the office equipment has a five year estimated life, no estimated salvage value, and no depreciation is taken during the month of purchase or sale, how much office equipment was acquired during the month?

4. How old is the office equipment that was neither sold nor acquired during the month?

5. How much cash was paid on accounts payable during the month? Assume the beginning balance in Accounts Payable for July was zero.

6. What is the amount of Accounts Receivable written off during the month?

7. What is Fargo's net realizable value of Accounts Receivable at July 31, 2014?

8. If the beginning balance in Notes Payable was $20,000, how much new debt did Fargo incur in July?

9. How much debt did Fargo pay off in July?

10. If all vendors sell to Fargo on terms of 2/10, n/30, what was the total amount of purchase discounts that were lost in July? Assume that no purchases were made in the last 10 days of July?

11. If there was no prepaid advertising at the beginning of the period, what was the total cash outlay for advertising in July?

12. How much cash was used to pay salaries during the month? Assume the balance in Salaries Payable on July 1 was zero.

13. What was the balance of Retained Earnings at the beginning of the fiscal year?

14. If office supplies valued at $300 were on hand at the beginning of the month, what were the total purchases of office supplies during the month?

15. What journal entry does Fargo make to record the purchase of office supplies?

16. The beginning balance in Dividends Payable on July 1 was $1,000. What amount of cash dividends were paid during the month?

17. Of the cash dividends paid, how much related to dividends declared in the current period?

18. What are net sales for July?

19. If 90% of sales are made on credit and all returns relate to credit sales, what was the beginning balance in Accounts Receivable on July 1?

20. How much cash was received on accounts receivable in July?

21. Does Fargo record purchases of inventory using the gross method or net method? How is this determined?

22. What was the beginning balance in Inventory at July 1?

23. What are net purchases for July?

24. Fargo performed a physical count of inventory at July 31 and valued it at $70,000. What is the cost of goods sold for the month of July?

25. Provide the journal entry to adjust inventory at July 31.

26. Provide the closing journal entry (ies) to close the books at July 31.

27. After recording these final journal entries, what is the ending balance in Retained Earnings on July 31?