I only would like to verify the adjusting entries, the totalbalance is supposed to be $122,002. Current balance $121,274.00 butIm off by $728.

Account Balances as of December 31^st

		Debit Balance		Credit Balance
100000	Bank Account	$277,518
110100	Accounts Receivable (Direct Posting Account)	92,670
110150	Allowance for Bad Debts			2,500
200600	Inventory-Operating Supplies	8,832
200900	Inventory-Raw Materials (Direct Post)	52,000
200910	Inventory-Finished Goods (Direct Post)	281,298
200920	Inventory-Trading Goods (Direct Post)	66,474
210000	Prepaid Insurance	5,000
212000	Prepaid Advertising	1,100
220110	Land (Direct Post)	425,000
220210	Production Machinery, Equip & Fixtures (Dir.Post)	915,000
220310	Accumulated Depreciation-Machinery (Direct Post)			305,000
300200	Accounts Payable (Direct Posting Account)			48,000
300700	Payables-Salaries and Wages			94,313
300800	Accrued Expenses			1,200
320000	Accrued Tax – Output			3,000
329000	Common Stock			1,000,000
329100	Additional Paid-in-Capital			52,870
330010	Retained Earnings (Direct Posting)			618,009

Events During January

Event              Date                                    Descriptionof Event

1	January 3	Employees are paid monthly on the first business day of themonth for work done in the previous month. (Ignore payroll taxesfor this assignment.) Accounting wrote and distributed thepaychecks.
2		GBI received $60,000 in safety product inventory and $40,000 inraw materials from Dallas Bike Basics.  This inventorywas ordered on December 28.  The payment terms for theinvoice total of $100,000 are net 10 days.  GBI paid theCWX shipping company $500 with a manual check for the shipment ofthe goods. The bill of lading showed that the safety productinventory arrived in 6 boxes with a total weight of 50 lbs. and theraw materials came on a pallet and weighed 60 lbs.
3		Windy City Bikes in Chicago, IL ordered $22,000 of bicycleaccessories from GBI.  The cost of the accessories (toGBI) is $15,000.  The goods were shipped to Windy Cityimmediately via UPS using Windy City’s UPS shippingnumber.  The terms of payment for Windy City’s order are3/10 net 30 days.
4	January 7	GBI received payment of $14,000 from Northwest Bikes in Seattle,WA for the balance due on their account.
5	January 10	GBI’s account on the utility company website is updated at theend of each month when the meter is read.  GBI uses thisdata to accrue the expenses at the end of each month (in this caseon December 31st.)  This allows recognition ofthe expense in the correct period.  Expenses are usuallyaccrued at the end of the month as “Accrued Expenses”. GBI paid theDecember utility bill via the company’s automatic electronic billpay program.
6		GBI’s advertisement in the English language edition of ItalianCycling Journal was published today.  This ad was prepaidat the end of July for six months of advertising, August throughJanuary, (Five months of advertising have already been used.)
7	January 11	The office manager in San Diego ordered $432 of office(operating) supplies from Staples. While on the way back from adelivery, one of the warehouse staff picked up the Staples orderand brought it to GBI’s office.  GBI has an account withStaples and payment terms are net 10. Operating supplies expense isfigured at the end of the month determined by the amount ofsupplies used during the month.
8		GBI ordered $75000 in raw materials from Space Bike Compositesin Houston, TX. Terms of payment to Space Bikes are net 30.
9		GBI received payment from Windy City Bikes for their order fromJanuary 3. Windy City paid the invoice amount less the discount forpaying within 10 days.
10	January 12	GBI paid $92,820 via bank transfer for the inventory order thatthey received from Dallas Bike Basics January 3.
11	January 13	In order to better track inventory, GBI ordered a bar-coding andtracking system which will be installed and tested by ComputerSpecialists, Inc. (CSI). The system will allow employees to trackinventory using mobile devices and special software which will linkinto their new computerized accounting system. The barcode systemcosts $6,000 (including sales tax) and CSI will charge GBI $1,300for the installation and tests. GBI paid a deposit of $2,000 on thesystem and the remainder is due and payable when the system isinstalled. GBI will classify the bar-coding system as “ProductionMachinery, Equipment and Fixtures”.
12	January 17	GBI paid an invoice from Lightbulb Accessory Kits for orderedgoods that were received on December 20.  The amount ofthe invoice from Lightbulb is $15,890 due net 30.
13		The city of Denver will be hosting a decathlon at the end ofFebruary. The event is expected to create demand for high qualitybikes. Rocky Mountain Bikes in Denver, CO placed an order with GBIfor $128,000 worth of bicycles to be delivered immediately. RockyMountain will pay the shipping. The bikes cost GBI$78000.  GBI shipped the order immediately so that RockyMountain can start promoting the bikes. Because Rocky Mountain is agood customer, GBI is giving them special terms of net 45 days onthis order.
14		GBI received raw materials inventory ordered from Space BikeComposites January 11. Shipping charges of $600 were included inthe invoice from Space Bike.
15		GBI received notice that Bunky’s Bicycle Emporium had declaredsection 13 bankruptcy which meant GBI would not be able to collectthe $3,350 that Bunky’s owed them.
16	January 18	GBI received a $90,000 funds transfer from Silicon Valley Bikesin Palo Alto for the balance due on their account.
17	January 19	GBI paid Staples for the office supplies they received January11.
18		SoCal Bikes in Irvine, CA placed an order for $2500 in bicyclehelmets for a special event in February. The merchandise cost GBI$1,300. SoCal sent a truck to the GBI distribution center in SanDiego, CA and picked up the merchandise directly from GBI’swarehouse. Terms of payment are net 30. (Don’t forget to chargesales tax of 6.25% for this order.)
19	January 24	Beantown Bikes in Boston, MA placed an order with GBI for$27,000 in bicycles.  The cost of the bicycles is$17,000. Beantown Bikes is a new customer.  Its buyerssaw GBI’s booth at a trade show. Because Beantown is a newcustomer, they must either wait until their credit can be approvedor pay for the order before GBI will ship the bikes to them.
20	January 25	GBI has been offered the opportunity to advertise in the BicycleTimes online magazine for a reduced price if they pay for threemonths in advance. In light of the upcoming Tour de France, theadvertising is a great opportunity for GBI to get additionalrecognition. The advertising will start in February. GBI wrote acheck for $9,000 for three months of advertising.
21	January 26	GBI received notification from their bank that Beantown Binkeshad transferred funds into their account for their prior order, soGBI’s warehouse personnel shipped Beantown’s order. Beantown willbe responsible for paying Fed-X $400 for shipping the order.
22	January 27	The county approved GBI’s building plans for their newwarehouse. Estimated building costs are $1,100,000 which will befunded via a mortgage from Bank of America. GBI plans to breakground on the new building April 18th of this year.
23		GBI sent a $31,000 check to Night Rider Aluminum Products for anorder of bicycle parts GBI received December 30th.
24		Big Apple Bikes in New York City is expanding to anotherlocation in New York and needs to stock the new location. GBIreceived a phone order from Big Apple for $230,000 in bicycles and$108,500 in bicycle accessories and safety gear at special discountprices. The cost of the bicycles in this order is $170000 and thecost of the accessories is $65,000.  Big Apple will havea contract trucking company pick up the order when it is ready. Theorder is sent to GBI’s warehouse for picking and packing, which maytake a couple days. Payment terms to Big Apple for this order arenet 30.
25	January 31	GBI pays sales tax once a quarter via the state’s electronicfiling and payment system. GBI filed its return and paid its salestax for the quarter ending December 31.
26		GBI paid February’s rent of $4,000 for the office and warehousespace in San Diego.
27		CSI installed and tested the new barcode system. The warehousemanager approved the installation and commented that she thinks itworks great. GBI wrote a check to CSI for the balance owed and gaveit to the installer.
28		Big Apple’s truck arrived at GBI’s warehouse and picked up theorder from January 27th.

Adjustment information as of January 31, not already given inthe original transaction(s):

1.   Based on prior experience, GBI estimatesthat approximately 2 % of the accounts receivable balance willbecome bad debt. GBI writes off bad debts as they occur andrecognizes bad debt expense based on analyzing accounts receivableas an adjusting entry each month.  

2.   As a control measure, physical inventoriesare taken on a periodic basis alternating between the raw materialsinventory, finished goods inventory and trading goods inventory.Physical inventory of the finished goods inventory was taken at theend of January. It was determined that the value of thefinished goods merchandise on hand was$17,000.

  

3.   GBI counted the office (operating) supplieson hand after the close of business on the last day of the monthand determined the cost of the unused office supplies to be$1000.

4.   Production Machinery, Equipment and Fixtureswere placed in service on January 1, 2013, with no salvage value.The useful life of the Machinery, Equipment and Fixtures is 15years. The bar-code system has a 5-year life and no salvage value.GBI depreciates fixed assets on a straight-line basis and thoseassets acquired in the first half of the months are depreciated forthe entire month, while fixed assets placed in service during thelast half of the month are not depreciated until the second month.Depreciation is rounded to the nearest dollar and assets aredepreciated on a monthly basis (i.e. number of days in the month isnot of consequence).

5.   GBI used the Internet to review the monthlycharges for utilities the business consumed during January. Basedon the Internet report, the amount to be billed by the utilitiescompany for January usage is the same as was billed forDecember.

6.   Liability insurance for the six-month periodending on February 28 was paid last September on the first of themonth. Liability insurance is assumed to be utilized uniformly overthe six-month policy period.

7.   GBI needs to recognize the wages expense forthe month.  Since all employees are paid salaries and nochanges have been made, this amount is the same as the previousmonth salaries. (For purposes of this assignment, ignoremanufacturing and assume all labor costs will be expensed.)