Accounting Assignment 3: Intelligent Toys, Inc. Trial Balance

Intelligent Toys, Inc

Trial Balance

As at 28 February 2021

Account No.

Account Title

Debit

Credit

($)

($)

201

Accounts Payable

420,000

112

Accounts Receivable

675,000

152

Accumulated Depreciation - Building

745,200

154

Accumulated Depreciation - Equipment

570,000

156

Accumulated Depreciation - Motor Vehicle

664,668

113

Allowance for Doubtful Accounts

20,250

151

Building

9,720,000

101

Cash

1,001,520

291

Dividends Payable

120,000

153

Equipment

990,000

115

Interest Receivable

144,000

140

Long-term Investment

750,000

121

Merchandise Inventory

975,000

155

Motor Vehicle

832,500

114

Notes Receivable

2,700,000

131

Prepaid Insurance

18,000

320

Retained Earnings

2,077,212

241

Salaries Payable

105,300

311

Share Capital – Ordinary

$1 par value, 10,000,000 shares authorized,

6,000,000 shares issued

and 5,977,500 shares outstanding

6,000,000

312

Share Capital – Preference

5%, $100 par value, noncumulative,

100,000 shares authorized,

60,000 shares issued and outstanding

6,000,000

313

Share Premium – Ordinary

840,000

314

Share Premium – Preference

300,000

315

Share Premium – Treasury

9,000

132

Supplies

9,360

330

Treasury Shares (22,500 shares)

  56,250  

  17,871,630  

  17,871,630  

Mar.

1(a)

Purchased children laptop toys from Esorbma Limited, $95,000, terms 1/10, n/30, FOB shipping point. (b)The responsible party paid the freight charges of

$500. The goods were collected by the shipping company on 1 March and arrived at ITI’s warehouse on 4 March.

1(c)

Sold 22,500 Treasury shares at $2 each.

1(d)

Purchased 10% shareholding in Charlie Limited, a supplier, as a long-term investment. The fair value of the 10% shareholding was $2,900,000 as at 1 March. The purchase consideration included a $2,700,000 note receivable due from Charlie Limited and the related interest receivable balance of $144,000,

$140,000 cash and a motor vehicle owned by ITI. The motor vehicle was originally obtained at $120,000. ( for depreciation details, refer to note (c) of additional information.)

1(e)

Sold remote control helicopters valued at $298,000 to TnecNiv Limited, a wholesaler, terms n/20, FOB destination. The appropriate party paid delivery charges of $600. The goods were shipped on 1 March and arrived at the warehouse of TnecNiv Limited on 3 March.

2

A 10% share dividend was declared when the market value per share was $2.1.

3

Cash is received from TnecNiv Limited for the remote-control helicopters shipped on 1 March and arrived at the warehouse of TnecNiv Limited on 3 March.

4

Sold kids ride on cars to Vinga Limited, $140,000, terms n/30, FOB shipping point, 2% trade discount. The appropriate party paid freight charges of $400. The goods were shipped on 4 March and arrived at the warehouse of Vinga Limited on 6 March.

5

The management determined that the amount due from a customer, MYTOM Limited, $50,000 is uncollectible as the company has closed down.

6

Purchased supplies of $4,100 on account from Jimmy Printing and Stationery Limited.

7(a)

Paid cash to acquired 30,000 shares of its own at $2.3 each. ITI intends to keep the shares for several months for management bonus.

7(b)

Received credit memorandum of $1,700 from Esorbma Limited for goods purchased in March.

8

Granted Vinga Limited an allowance of $1,000 (original price) due to discrepancy in the color of the ride on cars.

9(a)

Sold flying disc and toy swings to Action Limited, list price of $120,000 with a 20% trade discount, n/20, FOB shipping point. The responsible party paid freight-charges of $800. The shipping document showed that the goods arrived at the warehouse of Action Limited on 12 March.

9(b)

Paid Esorbma Limited for the children laptop toys bought on 1 March and the amount of  $220,000 on account for the purchase  on 27 February. Purchases terms with Esorbma Limited in February was 2/10, n/30, FOB shipping point.

10

Paid $162,000 for salary up to 9^th March (Tuesday). All employees work a five-day week and are paid every four weeks on the following Wednesday, based on the number of days they have worked in the last four weeks. Employees are entitled to full pay on public holidays but not on Saturday and Sunday. The employees receive a total salary of $40,500 for a five-day work week.

12

Received payments from Vinga Limited, for the March sales.

13

Acquired $150,000 toy musical instruments by signing a 90-day, 5% notes payable.

16

Queenie Company Limited, a customer, has financial difficulties and unable to pay the outstanding balance of $200,000. The company has a long-term relationship with Queenie, and agreed to accept a 12%, 45-day notes from the customer to settle the outstanding balance.

17

Share dividends were distributed. Shareholders on the register of the company on 6 March 2021 are entitled to receive the dividend shares.

21

Paid all dividends declared previously.

25

Received from Tom Limited, $180,000, as the prepayment for the leasing of part of the warehouse for one year from 1 April 2021 to 31 March 2022.

27

Received inflatable castle of $40,000 consignment goods returned from Consignee Trading Limited. The goods are delivered to Consignee Trading Limited for consignment purpose in February 2021.

28

Purchased $23,000 play mats from Millan Company, FOB Destination, terms 1/10, n/45. The shipping document showed that the goods were received on 3rd April 2021.

29

A cash dividend was declared for preference shares and a cash dividend of

$0.03 per share was declared for ordinary shares. The dividends will be paid in April.

30

Received a check of $16,000 from the liquidator of YOT Limited. YOT Limited was closed down in December 2020 and the managing director of ITI authorized to write off $45,000, being the full amount outstanding in the accounts of YOT Limited, as of then.