Reference no: EM132186547

Question - Can someone please help me with the following questions?

Transaction Analysis - Polly's Cards & Gifts Shop had the following transactions during the year:

a. Polly's purchased inventory on account from a supplier for $8,000. Assume that Polly's uses a periodic inventory system.

b. On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18 month, 8% note was signed for the remainder.

c. Polly's returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received.

d. Polly's paid the balance due on the purchase of inventory.

e. On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800.

f. Polly's sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed.

g. Sales for the year were $120,000 of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31.

Required:

1. Identify and analyze the effect of transactions a through g.

2. Assume that Polly's accounting years end on December 31. Identify and analyze the effect of any necessary adjusting journal entries.

3. What is the total of the current liabilities at the end of the year?