Question

NAME: Harriet's Hats, Inc. Harrict's Hats is a fictional company. The following information includes the balance sheet as of December 31, 2016, and the details of the transactions that occurred during 2017 Background: Harriet's Hats is a hat retailer (in other words, Harrict's buys hats from a hat manufacturer and then sells them in their stores). Transactions for 2017 are representative of such a company's business activities. HINT: Read through the entire assignment at least twice before beginning to do any work. This will help you familiarize yourself with all of the important facts. Transactions for 2017: Sales and Accounts Receivable a. Harriet's hats during 2017 had a sales price of $80 per hat. All sales were made on account. b. Cash collections on account amounted to $980,000 c. On July 1, 2017, Harriet's identified $40,250 of receivables as being uncollectible and wrote them off. d. Harriet's follows a percentage-of-receivables approach to estimate their accounts receivable that will become uncollectible. As of the end of 2017, Harriet's estimates that 10% of their receivables will be uncollectible. Inventory a. Harriel's began 2017 with 1,900 hals which had a cost of $40 each. Employees physically counted 2,690 hats remaining in the warehouse at the end of 2017. Harriet's uses a periodic LIFO inventory system to cost their inventory. The following purchases (all on accounl) were made during 2017: i. January 15th - 4,250 hats @ $43.00 each ii. March 22nd - 2,900 hals a $45.00 each iii. August 54 - 3,420 hats @ $47.00 each iv. October 26th - 6,020 hats @ $50.00 each b. During 2017, Harriet's made cash payments to inventory suppliers on the following dates: i. January 290 - $146,200 ii. April 16th - $156,600 iii. October 2nd - $160,740 iv. November 300 – $270,900 3. Property, Plant and Equipment a. Harriet's uses straight-line depreciation for all of its store fixtures and office equipment. b. Below is a schedule of the store fixtures and office equipment Harriet's had in place at the end of 2017. FIXTURES AND EQUIPMENT (as of December 31, 2017) ID # 1 Historiaa! Estimated Estimated Date acquired Cost Useful Life Salmge Value 1256 $60,000 12 years SO Jan. 1, 2007 1876 $100,000 10 years $15,000 Jan 1, 2008 4299 $92,000 15 years $5,000 Jan 1, 2009 c. On April 1, 2017 new store fixtures were purchased for $42,000 in cash. Harriet's expects the fixtures to have a 10 year useful life and a $4,000 salvage value. d. On October 1, 2017 office equipment (ID#1876) was sold for $16,825.
I am having a hard time with this assignment, can you solve it from start to finish including the journal entries and t accounts? Thank you!

Answer 1

Journal Entries :

Date	Account	Debit	Credit
	Account Recievables A/c….Dr	$ 1,264,000.00
	To Sales A/c		$ 1,264,000.00
	Cash A/c……Dr	$      980,000.00
	To Account Recievables A/c		$      980,000.00
	Allowance for Doubtful Debts…Dr	$        18,700.00
	To Bad Debts Expenses		$        18,700.00
	Bad Debts Expense….Dr	$        21,550.00
	To Accounts Recievables A/c		$        21,550.00
1/15/2017	Purchases A/c….Dr	$      182,750.00
	To Accounts Payables A/c		$      182,750.00
3/22/2017	Purchases A/c….Dr	$      130,500.00
	To Accounts Payables A/c		$      130,500.00
08-05-17	Purchases A/c….Dr	$      160,740.00
	To Accounts Payables A/c		$      160,740.00
10/26/2017	Purchases A/c….Dr	$      301,000.00
	To Accounts Payables A/c		$      301,000.00
01/29/2017	Accounts Payables A/c …Dr	$      146,200.00
	To Cash A/c		$      146,200.00
04/16/2017	Accounts Payables A/c …Dr	$      156,600.00
	To Cash A/c		$      156,600.00
10-02-17	Accounts Payables A/c …Dr	$      160,740.00
	To Cash A/c		$      160,740.00
11/30/2017	Accounts Payables A/c …Dr	$      270,900.00
	To Cash A/c		$      270,900.00
04-01-17	Furniture and Fixtures….Dr	$        42,000.00
	To Cash A/c		$        42,000.00
10-01-17	Depreciation A/c….Dr	$          6,375.00
	To Accumulated Depreciation A/c		$          6,375.00
10-01-17	Cash A/c…..Dr	$        16,825.00
	To Equipment # 1876 A/c		$        16,825.00
10-01-17	Loss on Sale of Equipment A/c…Dr	$              300.00
	To Equipment # 1876 A/c		$              300.00
12/31/17	Depreciation A/c…..Dr	$        13,650.00
	To Accumulated Depreciation A/c		$        13,650.00
	Rent A/c…..Dr	$        25,200.00
	To Prepaid Rent A/c		$        25,200.00
	Prepaid Rent A/c….Dr	$        51,000.00
	To Cash A/c		$        51,000.00
	Rent A/c…..Dr	$        21,250.00
	To Prepaid Rent A/c		$        21,250.00
	Wages Payable A/c….Dr	$        18,000.00
	Wages A/c………………..Dr	$      124,000.00
	To Cash A/c		$      142,000.00
12/31/2017	Wages A/c….. Dr	$        25,000.00
	To Wages Payable A/c		$        25,000.00
	Other Expenses A/c…. Dr	$        38,000.00
	To Cash A/c		$        38,000.00
12-01-17	Dividend A/c…..Dr	$        35,000.00
	To Cash A/c		$        35,000.00
01-01-17	Cash A/c…..Dr	$      100,000.00
	To Common Stock A/c		$      100,000.00
01/31/2017	Interest Payable A/c… Dr	$          3,750.00
	To Cash A/c		$          3,750.00
07/31/2017	Interest Expense…..Dr	$          5,250.00
	To Cash A/c		$          5,250.00
	Notes Payable……Dr	$        90,000.00
	To Cash A/c		$        90,000.00
	Cash A/c……Dr	$      120,000.00
	To Notes Payable A/c		$      120,000.00
	Interest Expense…..Dr	$          1,800.00
	To Interest Payable A/c		$          1,800.00
3/15/2017	Income Taxes Payable….Dr	$        32,500.00
	To Cash A/c		$        32,500.00
12/31/17	Income Tax Expense…Dr	$        79,012.00
	To Income Tax Payable		$        79,012.00

Income Statement :

Harrier Hats
Income Statement
For Year Ended 31 December 2017
Particulars	Amount
Sales	$ 1,264,000.00
Less: Cost of Goods Sold	$      741,020.00
Gross Profit	$      522,980.00
Operating Expenses
Rent Expense	$        46,450.00
Interest Expense	$          7,050.00
Bad Debts Expense	$        64,625.00
Depreciation Expense	$        20,025.00
Wages Expense	$      149,000.00
Other Operating Expenses	$        38,000.00
Total Operating Expenses	$      325,150.00
Other Gians / Losses
Gain / Loss on sale of equipment	$            (300.00)
Income before Income Taxes	$      197,530.00
Less: Income Taxes	$        79,012.00
Net Income	$      118,518.00
Basic Earnings per Share	$                   7.90

Statement of Retained Earnings :

Harrier Hats
Statement of Retained Earnings
For Year Ended 31 December 2017
Particulars	Amount
Beginning Retained Earnings	$          194,350.00
Add : Net Income	$          118,518.00
Less : Dividend	$             35,000.00
Ending Retained Earnings	$          277,868.00

Balance Sheet :

Harrier Hats
Balance Sheet
As of 31 December 2017
Assets
Cash	$            74,760.00
Accounts Recievables	$         430,750.00
Less : Allowance for doubtful debts	$            43,075.00
Net Accounts Recievables	$         387,675.00
Prepaid Rent	$            29,750.00
Inventory	$         109,970.00
Total Current Asstes	$         602,155.00
Property , Plant and Equipment	$         294,000.00
Less: Accumulated Depreciation	$         192,925.00
Net Property ,Plant and Equipment	$         101,075.00
Total Assets	$         703,230.00
Liabilities and Owners Equity
Accounts Payable	$            94,550.00
Wages Payable	$            25,000.00
Interest Payable	$              1,800.00
Income Tax Payable	$            79,012.00
Notes Payable	$         120,000.00
Total Current Liability	$         320,362.00
Common Stock ( 10,000 shares O/s $10 Par)	$         100,000.00
(5000 Shares o/s $1 Par)	$              5,000.00
Retained Earnings	$         277,868.00
Total Liabilities and Owners Equity	$         703,230.00