Case study for GBI to prepare journal entries and general ledgers.

9 January 11 GBI received payment from Windy City Bikes for their order from January 3. Windy City paid the invoice amount less the discount for paying within 10 days. 10 January 12 GBI paid $92,820 via bank transfer for the inventory order that they received from Dallas Bike Basics January 3. 11 January 13 To better track inventory, GBI ordered a bar-coding and tracking system which will be installed and tested by Computer Specialists, Inc. (CSI). The system will allow employees to track inventory using mobile devices and special software which will link into their new computerized accounting system. The barcode system costs $5,995 (including sales tax) and CSI will charge GBI $1,200 for the installation and tests. GBI paid a deposit of $3,000 on the system and the remainder is due and payable when the system is installed. GBI will classify the bar-coding system as “Production Machinery, Equipment and Fixtures”. 12 January 17 GBI paid an invoice from Lightbulb Accessory Kits for ordered goods that were received on December 20. The amount of the invoice from Lightbulb is $17,010 due net 30. 13 January 17 The city of Denver will be hosting a decathlon at the end of February. The event is expected to create demand for high quality bikes. Rocky Mountain Bikes in Denver, CO placed an order with GBI for $128,130 worth of bicycles to be delivered immediately. Rocky Mountain will pay the shipping. The bikes cost GBI $79,441. GBI shipped the order immediately so that Rocky Mountain can start promoting the bikes. Because Rocky Mountain is a good customer, GBI is giving them special terms of net 45 days on this order. 14 January 17 GBI received raw materials inventory ordered from Space Bike Composites January 11. Shipping charges of $802 were included in the $100,220 invoice from Space Bike. 15 January 17 GBI received notice that Larry’s Bicycle Emporium had declared section 13 bankruptcy which meant GBI would not be able to collect the $1,610 that Larry’s owed them. 16 January 18 GBI received a $89,960 funds transfer from Silicon Valley Bikes in Palo Alto for the balance due on their account. 17 January 19 GBI paid Staples for the office supplies they received January 11. 18 January 19 SoCal Bikes in Irvine, CA placed an order for $2,300 in bicycle helmets for a special event in February. The merchandise cost GBI $1,380. SoCal sent a truck to the GBI distribution centre in San Diego, CA and picked up the merchandise directly from GBI’s warehouse. Terms of payment are net 30. (Do not forget to charge sales tax of 8.75% for this order.) 19 January 24 Beantown Bikes in Boston, MA placed an order with GBI for $27,450 in bicycles. The cost of the bicycles is $17,092. Beantown Bikes is a new customer. Its buyers saw GBI’s booth at a trade show. Because Beantown is a new customer, they must either wait until their credit can be approved or 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 Bicycle Times online magazine for a reduced price if they pay for three months in advance. Considering the upcoming Tour de France, the advertising is a great opportunity for GBI to get additional recognition. The advertising will start in February. GBI wrote a check for $15,000 for three months of advertising. Based on these prepare journal entries and general ledgers for the above information.

Solution

To prepare journal entries and general ledgers based on the provided information, we need to analyse each transaction and classify them into appropriate accounts. Here are the journal entries and general ledgers:

1. • Credit: Cash

2. January 10: Paid Dallas Bike Basics for inventory order.

3. • Debit: Bar-coding and Tracking System

   • Credit: Cash

5. • Debit: Accounts Payable - Lightbulb Accessory Kits

   • Credit: Cash

7. • Debit: Accounts Receivable - Rocky Mountain Bikes

   • Credit: Sales Revenue

9. January 17: Recorded uncollectible debt from Larry's Bicycle Emporium.

   • Debit: Bad Debt Expense

11. January 19: Paid Staples for office supplies.

    • Debit: Office Supplies
12. • Credit: Sales Revenue

    • Credit: Sales Tax Payable
13. • Credit: Sales Revenue

14. January 25: Paid for advertising in Bicycle Times magazine.

Cash:

Accounts Receivable:

Sales Tax Payable:

Cost of Goods Sold:

Note: The general ledgers for Accounts Receivable, Sales Revenue, and Accounts Payable may have additional entries that are not shown in the given information. The values marked as "X" represent missing or incomplete information that needs to be filled based on the actual figures.