Can anyone help with this accounting project?

Can anyone help with this accounting project?

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Accounting 301 Project
Due December 5, 2013
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

Inventory – items shown in Exhibit 5 (valued at Lower of Cost or Market, FIFO) (see
Exhibit 5)
Below are other items to consider for adjusting entries:

The company has a note with TP Bank for $250,000 that is due on July 1, 2016.
The note
has an interest rate of 10%, which is payable on June 30
th
of each year.

Employees earn $1,024 per day and have received payment through January 28
th
, so they
are owed 3 days wages.
There was no salary accrued as of December 31, 2012.

The payment for health and all other benefits is $6,125 every two months.
In December,
the company issued the payment and it cleared in January.
No payment was made in
January.

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The prepaid insurance balance is for an annual property and liability policy with an
annual cost of $36,000, which was purchased on July 1, 2012 and expires on June 30,
2013.

The company visited Big Corporation on January 31
st
and held an instructional course for
a team-building activity for Big Corporation.
Zippy charges $10,000 for the class, but
has not been paid, prepared the invoice or recorded the revenue.

The accrued expense of $2,125 on December 31, 2012 represented unpaid consulting
bills.
The company paid the consultant $1,575 on January 14
th
and has an estimated
balance of $3,250 open as of January 31, 2013.

The company uses straight-line depreciation.
The depreciation periods are 20 years for
the building, 10 for the equipment and 5 for office equipment.
There is no salvage value
for any of the property, plant and equipment assets.
Requirements
1.
Prepare a bank reconciliation and any journal entries.
2.
Prepare a trial balances as of January 31, 2013
3.
Calculate the allowance for doubtful accounts, inventory, monthly depreciation, interest,
cost of goods sold etc., and prepare all necessary adjusting entries for the month of
January.
4.
Prepare an adjusted trial balance for the month of January.
5.
Prepare the financial statements for the month of January (income statement, statement of
retained earnings, balance sheet and statement of cash flow (either direct or indirect
basis).
EXHIBIT 1
Below is a list of accounts with their balances as of January 31, 2013 and December 31, 2012:
Account Number
Account Name
January 31, 2013
December 31, 2012
1000001
Cash
60,660
$45,125
1000002
Accounts receivable
27,200
17,500
1000003
Allowance for doubtful accounts
1,500 CR
1,500 CR
1000004
Inventory
33,150
33,150
1000005
Supplies
21,300
21,300
1000006
Prepaid insurance
18,000
18,000
1010001
P,P & E –Store Equipment
178,000
178,000
1010002
Accumulated depreciation – Store Equipment
17,800 CR
17,800 CR
1010003
P,P & E –Office Equipment
25,000
25,000
1010004
Accumulated depreciation – Office Equipment
5,000 CR
5,000 CR
1010005
P,P & E – Building
617,500
617,500
1010006
Accumulated depreciation – building
30,875CR
30,875 CR
2000001
Accounts payable
34,410 CR
31,525 CR
2000002
Accrued expenses
2,125 CR
2,125 CR

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