Chapter 12 - Term Project Comprehensive Problem Colo Company

Assume it is Monday, May 1, the first business day of the month, and you have just been hired as the accountant for Colo Company, which operates with monthly accounting periods. All of the company’s accounting work is completed through the end of April and its ledgers show April 30 balances. During your first month on the job, the company experiences the following transactions and events (terms for all its credit sales are 2/10, n/30 unless stated differently):

May 1

Issued Check No. 3410 to S&P Management Co. in payment of the May rent, $3,340. (Use two lines to record the transaction. Charge 80% of the rent to Rent Expense-Selling Space and the balance to Rent Expense-Office Space.)

2

Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,100 (cost is $4,100).

2

Issued a $150 credit memorandum to Knox Co., for defective (worthless) merchandise sold on April 28 and returned for credit. The total selling price (gross) was $4,900.

3

Received a $750 credit memorandum from Peyton Products for the return of merchandise purchased on April 29.

4

Purchased the following on credit from Gear Supply Co.: merchandise, $36,072; store supplies, $594; and office supplies, $85. Invoice dated May 4, terms n/10 EOM.

5

Received payment from Knox Co., for the balance from the April 28 sale less the May 2 return and the discount.

8

Issued Check No. 3411 to Peyton Products to pay for the $6,200 of merchandise purchased on April 29 less the May 3 return and a 2% discount.

9

Sold store supplies to the merchant next door at their cost of $369 cash.

10

Purchased $4,500 of office equipment on credit from Gear Supply Co., invoice dated May 10, terms n/10 EOM.

11

Received payment from Hensel Company for the May 2 sale less the discount.

11

Purchased $9,600 of merchandise from Garcia, Inc., invoice dated May 10, terms 2/10, n/30.

12

Received an $900 credit memorandum from Gear Supply Co. for the return of defective office equipment received on May 10.

15

Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $4,820, and office salaries, $3,350. Cashed the check and paid the employees.

15

Cash sales for the first half of the month are $59,720 (cost is $43,200). (Cash sales are recorded daily but are recorded only twice here to reduce repetitive entries.)

15

Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. (Such items are posted daily but are posted only twice each month because they are few in number.)

16

Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $4,600 (cost is $2,500).

17

Purchased $13,250 of merchandise from Fink Corp., invoice dated May 14, terms 2/10, n/60.

19

Issued Check No. 3413 to Garcia, Inc., in payment of its May 10 invoice less the discount.

22

Sold merchandise to Lee Services, Invoice No. 8787, for $7,600 (cost is $5,740), terms 2/10, n/60.

23

Issued Check No. 3414 to Fink Corp. in payment of its May 14 invoice less the discount.

24

Purchased the following on credit from Gear Supply Co.: merchandise, $8,520; store supplies, $650; and office supplies, $263. Invoice dated May 24, terms n/10 EOM.

25

Purchased $3,400 of merchandise from Peyton Products, invoice dated May 23, terms 2/10, n/30.

26

Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,800 (cost is $8,820).

26

Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,266.

29

The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $6,500 cash from the business for personal use.

30

Received payment from Lee Services for the May 22 sale less the discount.

30

Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $4,820, and office salaries, $3,350. Cashed the check and paid the employees.

31

Cash sales for the last half of the month are $66,700 (cost is $41,850).

31

Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings.

Following accounting adjustments are also available:

a.

Expired insurance, $545.

b.

Ending store supplies inventory, $2,636.

c.

Ending office supplies inventory, $517.

d.

Depreciation of store equipment, $563.

e.

Depreciation of office equipment, $320.

Assume that Colo Co. uses the perpetual inventory system. Following opening balances are available for the month of May, 2013.

Balance

  Cash

$

51,347  

  Accounts Receivable

4,900  

  Merchandise Inventory

220,680  

  Office Supplies

510  

  Store Supplies

2,557  

  Prepaid Insurance

3,398  

  Office Equipment

23,570  

  Accumulated Depreciation–Office Equipment

9,858  

  Store Equipment

39,420  

  Accumulated Depreciation–Store Equipment

16,636  

  Accounts Payable

6,200  

  Jenny Colo, Capital

313,688