acc problem

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Comprehensive Problem

 

More Co. is a merchandising business.  The account balances for More Co. as of November 30, 2012 (unless otherwise indicated), are as follows:

 

            110     Cash                                                                          $  13,920

            112     Accounts Receivable                                                  34,220

            115     Merchandise Inventory                                             133,900

            116     Prepaid Insurance                                                         3,750

            117     Store Supplies                                                                2,550

            123     Store Equipment                                                        114,300

            124     Accumulated Depreciation-Store Equipment         12,600

            210     Accounts Payable                                                       21,450

            211     Salaries Payable                                                                   0

            218     Interest Payable                                                                     0

            220     Note Payable (Due 2017)                                           10,000

            310     P. Williams, Capital (January 1, 2012)                   103,280

            311     P. Williams, Drawing                                                   10,000

            312     Income Summary                                                                 0

            410     Sales                                                                            715,800

            411     Sales Returns and Allowances                                20,600

            412     Sales Discounts                                                           13,200

            510     Cost of Merchandise Sold                                        360,500

            520     Sales Salaries Expense                                             74,400

            521     Advertising Expense                                                   18,000

            522     Depreciation Expense                                                          0

            523     Store Supplies Expense                                                      0

            529     Miscellaneous Selling Expense                                 2,800

            530     Office Salaries Expense                                             40,500

            531     Rent Expense                                                              18,600

            532     Insurance Expense                                                              0

            539     Miscellaneous Administrative Expense                    1,650

            550     Interest Expense                                                               240

 

 

More Co. uses the perpetual inventory system and the last-in, first-out costing method.  Transportation-in and purchase discounts should be added to the Inventory Control Sheet, but since this will complicate the computation of the Last-in, first-out costing method, please ignore this step in the process.

 

 More Co. sells four types of television entertainment units.

 

The sales price of each are:

 

TV A:  $3,500

TV B:  $5,250

TV C:  $6,125

PS D: $9,000

 

 

 

 

During December, the last month of the accounting year, the following transactions were completed:

 

Dec.    1.   Issued check number 2632 for the December rent, $1,600.

3.    Purchased four TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $14,800.

4.    Issued check number 2633 to pay the transportation changes on purchase of December 3, $400.  (NOTE:  Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)

6.    Sold four TV A and 4 TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.

7.    Received $7,500 cash from Marie Co. on account, no discount.

10.  Sold two project systems for cash.

11.  Purchased store supplies on account from Matt Co., terms 1/10, n/30,

      $620.

13.  Issued check number 2634 for merchandise purchased on December 3, less discount.

14.  Issued credit memo for one TV A unit returned on sale of December 6. 

15.  Issued check number 2635 for advertising expense for last half of December, $1,500.

16.  Received cash from sale of December 6, less return of December 14 and discount.

19.  Issued check number 2636 for two TV C units, $7,600.

19.  Issued check number 2637 for $6,100 to Joseph Co. on account.

20.   Sold three TV C units on account to Cameron Co., invoice number

       892, terms 1/10, n/30, FOB shipping point. 

20.  For the convenience of the customer, issued check number 2638 for shipping charges on sale of December 20, $600.

21.  Received $11,750 cash from McKenzie Co. on account, no discount.

21.  Purchased three projector systems on account from Elisha Co., terms 1/10, n/30, FOB destination, $15,600.

24.  Issued a debit memo for return of $5,200 because of a damaged projection system purchased on December 21, receiving credit from the seller.

26.  Issued check number 2639 for refund of cash on sales made for cash, $1,000.   (Customer was going to return goods until partial refund was arranged.)

27. Issued check number 2640 for sales salaries of $1,750 and office

       salaries of $950.

28.  Purchased store equipment on account from Matt Co., terms 2/10, n/30, FOB

      destination, $800.

29.  Issued check number 2641 for store supplies, $550.

30.  Sold four TV C units on account to Randall Co., invoice number 893,

 terms 2/10, n/30, FOB shipping point.

30.  Received cash from sale of December 20, less discount, plus transportation

       paid on December 20.

30.  Issued check number 2642 for purchase of December 21, less return

 of December 24 and discount.

30.  Issued a debit memo for $200 of the purchase returned from

       December 28.

 

 

 

 

Instructions:

 

1.    Enter the balances of each of the accounts in the appropriate balance column of a four-column account (General Ledger).  Write Balance in the item section, and place a check mark (√) in the Post Reference column.

2.    Journalize the transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal as illustrated in chapter 7.  Also post to the Accounts Receivable and Accounts Payable Subsidiary ledgers.

3.    Total each column on the special journals and prove the journal.

4.    Post the totals of the account columns and individually post the other columns as well as the general journal.

5.    Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).

6.     Prepare the unadjusted trial balance on the worksheet.

7.    Complete the worksheet for the year ended December 31, 2012, using the following adjustment data:

a.    Merchandise inventory on December 31                             $111,040

b.    Insurance expired during the year                                              1,250

c.    Store supplies on hand on December 31                                     975

d.    Depreciation for the current year needs to be calculated.  More Co. uses the

Straight-line method, the store equipment has a useful life of 10 years with no salvage value.  (NOTE: the purchase and return will not be included as the dates of the transactions were after the 15th of the month).

e.    Accrued salaries on December 31:

                              Sales salaries                                         $350

                              Office salaries                                        180                        530

f.   The note payable terms are at 8%, payment is not being made until Jan. 3, 2013.  Interest must be recognized for one month (round answer to the nearest dollar amount).

 

 

8.  Prepare a multiple-step income statement, a statement of owner’s equity, and a

     classified balance sheet in good form.

9.  Journalize and post the adjusting entries.

10.   Journalize and post the closing entries.  Indicate closed accounts by inserting a line

in both balance columns opposite the closing entry.

11.   Prepare a post-closing trial balance.

 

 

  • 9 years ago
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