Completion of the Accounting Cycle For a Merchandise Company

ANSWERS TO DISCUSSION QUESTIONS 1. 2.

12

3. 4. 5. 6. 7.

8. 9.

Income Statement and Balance Sheet columns. Beginning Inventory + Net Purchases + Freight-In Ending Inventory = Cost of Goods Sold Selling and Administrative Expenses Current AssetsCash and assets converted into cash or used during normal operating cycle of the company or one year, whichever is longer. Plant and EquipmentLong-lived assets used in the production or sale of other assets or services. Time period it takes a company to buy and sell merchandise and then collect accounts receivable. To bring ledger up to date. A) Close all the balances on the income statement credit column of the worksheet, except Income Summary, and credit the Income Summary account. B) Close balance of accounts in the income statement debit column of the worksheet, except Income Summary, and debit the total to the Income Summary account. C) Transfer the balance of Income Summary to Owners Capital. D) Transfer the balance of Owners Withdrawals to Owners Capital account. Disagree. Only permanent accounts. Not mandatory. Reversing entries helps avoid potential errors involving specified adjusting entries. Done on Jan. 1 after adjusting and closing entries have been completed.

399

SOLUTIONS TO CHAPTER 12 MINI EXERCISES 1. Gross Sales $140 2. Beginning Inventory + Net Purchases + Freight-In Ending Inventory = Cost of Goods Sold 3. Net Sales Cost of Goods Sold = Gross Profit Operating Expenses = Net Income 4. A. B. C. D. E. F. G. H. I. J. 1 3 1 3 2 4 3 2 3 1 Salaries Payable Salaries Expense Salaries Expense Cash 300 300 900 900 Sales Ret. and Allow. $10 $20 50 5 15 $ 60 $125 60 $65 (A) 25 $40 (B) Sales Discounts $5 = Net Sales = $125

5. A. January 1 January 8 B. $600

400

SOLUTIONS TO EXERCISES 12-1. Merchandise Inv. 12/01/X1 Purchases Less: Purchases Disc. Purch. R. & A. Net Purchases Add: Freight-in Net Cost of Purchases Cost of Goods Available for Sale Less: Merchandise Inv. 12/31/X1 Cost of Goods Sold COST OF GOODS SOLD $ 4,000 $58,000 $ 900 1,000 $ 1,900 56,100 300 56,400 60,400 6,000 $54,400

12-2. A. Salaries Payable: Liability, Current Liability, Balance Sheet B. Accounts Payable: Liability, Current Liability, Balance Sheet C. Mortgage Payable: Liability, Long-term Liability, Balance Sheet D. Unearned Legal Fees: Liability, Current Liability, Balance Sheet E. SIT Payable: Liability, Current Liability, Balance Sheet F. Office Equipment: Asset, Plant and Equipment, Balance Sheet G. Land: Asset, Plant and Equipment, Balance Sheet 12-3.
Dec. 31 Sales Purchase Returns & Allowances Purchases Discount Income Summary Income Summary Sales Returns & Allowances Sales Discount Purchases Salaries Expense Insurance Expense Utilities Expense Plumbing Expense Advertising Expense Depreciation Expense, Office Equipment 31 Income Summary A. Slow, Capital 8 0 5 00 8 0 5 00 2 1 4 8 8 8 00 2 2 3 00 1 0 8 00 6 2 8 00 0 8 3 00 6 9 6 00 4 8 00 5 7 00 1 5 00 3 0 00 5 5 2 0 3 4 5 1 00 00 00 5 6 0 5 00

401

SOLUTIONS TO EXERCISES (CONTINUED) 12-4.

A. SLOW COMPANY PARTIAL BALANCE SHEET DECEMBER 31, 200X

Current Assets: Cash Merchandise Inventory Prepaid Advertising Prepaid Insurance Total Current Assets Plant and Equipment: Office Equipment Less: Acc. Dep., Office Equipment Total Assets

1 9 3 00 4 5 0 00 5 6 1 00 3 0 00 $1 2 3 4 00

$1

0 8 0 00 (2 1 0 00) $2

8 7 0 00 1 0 4 00

12-5. (A)
Dec. 31 Salaries Expense Salaries Payable 3 0 0 00 3 0 0 00

Salaries Expense 26,000 300

Salaries Payable 300 3 0 0 00 3 0 0 00

(B)
Jan. 1 Salaries Payable Salaries Expense

Salaries Expense 300

Salaries Payable 300 300

(C)
Feb. 3 Salaries Expense Cash 6 0 0 0 00 6 0 0 0 00

Salaries Expense 6,000 300

Cash 15,000 6,000

402

SOLUTIONS TO A PROBLEMS PROBLEM 12A-1

RING.COM INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 200X Revenue: Gross Sales Less: Sales Ret. & Allow. Sales Discount Net Sales Cost of Goods Sold: Merchandise Inventory, 1/1/0X Purchases Less: Purch. Ret & Allow. Purch. Discount Net Purchases Add: Freight-In Net Cost of Purchases Cost of Goods Avail. for Sale Less: Merch. Inv., 12/31/0X Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Insurance Expense Advertising Expense Rent Expense Depreciation Exp., Store Equip. Total Operating Expenses Net Income from Operations Other Income: Rental Income: Net Income $2 8 0 0 00 $ 1 1 9 6 4 00 00 1 8 3 00 $2 6 1 7 00

$ $ $ 1 6 7 1 2 9 00 00 8 7 0 00 2 9 6 00 5 7 4 00 1 0 2 00 $1

3 7 0

00

6 7 6 0 4 6 2 6 0

00 00 00 7 8 6 00 $1 8 3 1 00

3 2 1 2 2

0 0 5 1 0

0 0 5 5 0

00 00 00 00 00 1 $ 0 7 0 00 7 6 1 00

2 0 0 00 9 6 1 00

403

PROBLEM 12A-2
JAMES CO. STATEMENT OF OWNERS EQUITY FOR YEAR ENDED DECEMBER 31, 200X

H. James, Capital, 1/1/0X Less: Net Loss Less: Withdrawals for December H. James, Capital, 12/31/0X

$12 4 0 0 00 ($3 7 1 0 00) (1 0 0 00) 3 8 1 0 00 $ 8 5 9 0 00

404

PROBLEM 12A-2 (CONCLUDED)

JAMES CO. BALANCE SHEET DECEMBER 31, 20XX Assets Current Assets: Cash Petty Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Total Current Assets Plant and Equipment: Store Equipment Less: Acc. Depr., Store Equip. Automobile Less: Acc. Depr., Auto Total Assets Liabilities Current Liabilities: Mortgage Payable Accounts Payable Salaries Payable Taxes Payable Unearned Rent Total Liabilities Long-Term Liabilities: Mortgage Payable Total Liabilities Owners Equity H. James, Capital Total Liabilities & Owners Equity

$23 5 0 9 1 3 5 4 0 0 3 2 5 0

0 0 0 0 5 0

00 00 00 00 00 00 $29 7 6 5 00

$2 8 7 1 7 2

0 0 0 2

0 0 0 5

00 00 00 00

$2 1 0 0 1 4 7 5

00 00 3 5 7 5 00 $33 3 4 0 00

2 2 8 6 2 4 18 5

0 0 0 0 0

0 0 0 0 0

00 00 00 00 00 $24 5 0 0 00

2 5 0

00 $24 7 5 0 00

8 5 9 0 00 $33 3 4 0 00

405

JAYS SUPPLIES WORKSHEET FOR YEAR ENDED DECEMBER 31, 200X Trial Balance Debit Credit Adjustments Debit Credit Adjusted Trial Balance Debit Credit Income Statement Debit Credit Balance Sheet Debit Credi

PROBLEM 12A-3

Account Titles

2,000 3,000 11,000 1,880 3,400 (B) 10,400 (A) 11,000 (E) 500 (D) 400 1,480 5,080 1,800 1,200 10,560 4,280 11,000 3,200 2,600 63,600 13,600 3,200 2,680 11,400 10,000 13,600 132,640 (C) (D) 400 (E) 500 22,620 320 320 320 2,680 11,400 10,000 13,600 13,600 3,200 10,400 95,800 10,400 95,800 (B) 10,400 3,200 2,600 63,600 13,600 3,200 2,680 11,400 10,000 13,600 132,640 4,280 11,000 1,080 5,080 2,120 1,200 10,560 4,280 (A) 11,000 95,800 3,200 2,600 63,600 (C) 320

2,000 3,000 10,400 1,380 3,400

2,000 3,000 10,400 1,380 3,400 1,480 5,080 1,800 1,200 10,560

406 22,620 400 500 143,440 143,440

Cash Accounts Receivable Merch. Inv. 1/1/XX Prepaid Insurance Equipment Acc. Dep. Equip. Accounts Payable Unearned Training Fees Mortgage Payable P. Jay, Capital P. Jay, Withdrawals Income Summary Sales Sales Returns & Allow. Sales Discount Purchases Purch. Returns & Allow. Purchases Discounts Freight-In Advertising Expense Rent Expense Salaries Expense

Training Fees Earned Dep. Exp, Equipment Insurance Expense

123,320 123,320

24,460 24,460

Net Income

400 500 118,980 4,340 123,320

20,120 4,340 24,460

PROBLEM 12A-3 (CONTINUED)

JAYS SUPPLIES INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 200X Revenue: Gross Sales Less: Sales Ret. & Allow. Sales Discounts Net Sales Cost of Goods Sold Merch. Inventory, 1/1/0X Purchases Less: Purch. Ret. & Allow. Purchases Disc. Net Purchases Add: Freight-In Net Cost of Purchases Cost of Goods Avail for Sale Less: Merch. Inv. 12/31/0X Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Rent Expense Salaries Expense Dep. Exp., Equipment Insurance Expense Total Operating Expenses Net Income from Operations Other Income: Training Fees Earned Net Income $95 8 0 0 00 $3 2 2 0 0 6 0 0 00 00 5 8 0 0 00 90 0 0 0 00

$11 $63 6 0 0 00 $13 6 0 0 3 2 0 0 00 00 16 8 0 0 00 $46 8 0 0 00 2 6 8 0 00 49 $60 10

0 0 0

00

4 8 0 4 8 0 4 0 0

00 00 00 50 0 8 0 00 $39 9 2 0 00

$11 10 13

4 0 6 4 5

0 0 0 0 0

0 0 0 0 0

00 00 00 00 00 35 9 0 0 00 $4 0 2 0 00 3 2 0 00 $4 3 4 0 00

407

PROBLEM 12A-3 (CONTINUED)

JAYS SUPPLIES STATEMENT OF OWNERS EQUITY FOR MONTH ENDED DECEMBER 31, 200X

P. Jay, Capital, 1/1/0X Net Income Less Withdrawals for December Increase in Capital P. Jay, Capital, 12/31/0X

$10 5 6 0 00 $4 (4 3 4 0 00 2 8 0 00) 6 0 00 $10 6 2 0 00

408

PROBLEM 12A-3 (CONTINUED)

JAYS SUPPLIES BALANCE SHEET DECEMBER 31, 200X

Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Plant and Equipment: Equipment Less: Acc. Depreciation Total Assets Liabilities Current Liabilities Mortgage Payable Accounts Payable Unearned Training Fees Total Current Liabilities Long-Term Liabilities Mortgage Payable Total Liabilities Owners Equity P. Jay, Capital Total Liabilities and Owners Equity $2 3 10 1 0 0 4 3 0 0 0 8 0 0 0 0 00 00 00 00 $16 7 8 0 00 $3 4 0 0 00 1 4 8 0 00

1 9 2 0 00 $18 7 0 0 00

5 1

8 0 0 00 0 8 0 00 8 0 0 00 $7 6 8 0 00 4 0 0 00 $ 8 0 8 0 00

10 6 2 0 00 $18 7 0 0 00

409

PROBLEM 12A-3 (CONTINUED)

GENERAL JOURNAL PAGE 2

Date Dec. 31 31 31 31 31

31

31

31 31

Account Titles and Description Adjusting Entries Income Summary Merchandise Inventory Merchandise Inventory Income Summary Unearned Training Fees Training Fees Earned Depreciation Expense, Equipment Accumulated Depreciated, Equipment Insurance Expense Prepaid Insurance Closing Entries Sales Training Fees Earned Purchases Returns and Allowance Purchases Discount Income Summary Income Summary Sales Returns and Allowances Sales Discount Purchases Freight-In Advertising Expense Rent Expense Salaries Expense Depreciation Expense, Equipment Insurance Expense Income Summary P. Jay, Capital P. Jay Capital P. Jay, Withdrawals

PR

Dr. 11 0 0 0 00

Cr.

11 0 0 0 00 10 4 0 0 00 10 4 0 0 00 3 2 0 00 3 2 0 00 4 0 0 00 4 0 0 00 5 0 0 00 5 0 0 00 95 8 3 13 6 3 2 0 2 0 0 0 0 0 0 00 00 00 00 112 9 2 0 00 107 9 8 0 00 3 2 63 2 11 10 13 2 6 6 6 4 0 6 4 5 0 0 0 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 00 00 00 00 00 00 00 00

4 3 4 0 00 4 3 4 0 00 4 2 8 0 00 4 2 8 0 00

410

CALLAHAN LUMBER WORKSHEET FOR YEAR ENDED DECEMBER 31, 200X

PROBLEM 12A-4

Account Titles

Trial Balance Debit Credit

Adjustments Debit Credit

Adjusted Trial Balance Debit Credit

Income Statement Debit Credit

Balance Sheet Debit Credit

1,340 1,300 4,550 269 218 3,000 (B) 4,900 (A) 4,550 (C) 194 (D) 150 (E) 250 740 1,160 7,352 490 1,160 7,352 3,000 (A) 4,550 22,800 200 14,800 285 300 2,480 400 830 32,387 32,387 (C) (D) (E) 194 150 250 (F) 10,139 95 10,139 194 150 250 37,632 95 37,632 194 150 250 (F) 95 2,575 400 830 200 14,800 285 300 2,575 400 830 (B) 4,900 3,000 4,550 4,900 22,800

1,340 1,300 4,900 75 68 3,000

1,340 1,300 4,900 75 68 3,000 740 1,160 7,352 3,000 4,550 200 14,800 285 300 4,900 22,800

411

Cash Accounts Receivable Merch. Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Acc. Dep., Lumber Equip. Accounts Payable J. Callahan, Capital J. Callahan, Withdrawals Income Summary Sales Sales Returns & Allow. Purchases Purchases Discount Purch. Ret & Allow. Wages Expense Advertising Expense Rent Expense

Lumber Supplies Exp. Insurance Expense Dep. Exp., Lumber Equip. Wage Payable

28,285 28,285

13,683 13,683

Net Income

23,949 4,336 28,285

95 9,347 4,336 13,683

PROBLEM 12A-4 (CONTINUED)

CALLAHAN LUMBER INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 200X

Revenue: Gross Sales Less: Sales Ret. and Allow. Net Sales Cost of Goods Sold Merchandise Inv. 1/1/XX Purchases Less: Purch. Discount Purch. Ret. and Allow. Net Cost of Purchases Cost of Goods Avail. for Sale Less: Merch. Inv. 12/31/XX Cost of Goods Sold Gross Profit Operating Expenses: Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Depreciation Expense, Equip. Total Operating Expenses Net Income from Operations

$22

8 0 0 2 0 0

00 00 $22 6 0 0 00

$4 5 5 0 $14 8 0 0 00 $ 2 8 5 3 0 0 00 00 5 8 5 00 14 2 1 5 $18 7 6 5 4 9 0 0

00

00 00 00 13 $8 8 6 5 00 7 3 5 00

$2 5 4 8 1 1 2

7 0 3 9 5 5

5 0 0 4 0 0

00 00 00 00 00 00 4 $4 3 9 9 00 3 3 6 00

412

PROBLEM 12A-4 (CONTINUED)

CALLAHAN LUMBER STATEMENT OF OWNERS EQUITY FOR YEAR ENDED DECEMBER 31, 200X

J. Callahan, Capital, 1/1/0X Net Income Less: Withdrawals for December Increase in Capital J. Callahan, Capital, 12/31/0X

$7 $4 (3 3 3 6 00 0 0 0 00) 1 $8

3 5 2 00

3 3 6 00 6 8 8 00

413

PROBLEM 12A-4 (CONTINUED)

CALLAHAN LUMBER BALANCE SHEET DECEMBER 31, 200X

Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Total Current Assets Plant and Equipment: Lumber Equipment Less: Acc. Depr., Lumber Equip. Total Assets Liabilities Current Liabilities Accounts Payable Wages Payable Total Current Liabilities Owners Equity J. Callahan, Capital Total Liabilities and Owners Equity

$1 3 4 0 1 3 0 0 4 9 0 0 7 5 6 8

00 00 00 00 00 $7 6 8 3 00

$3 0 0 0 00 7 4 0 00

2 2 6 0 00 $9 9 4 3 00

$1 1 6 0 00 9 5 00 $1 2 5 5 00

8 6 8 8 00 $9 9 4 3 00

414

PROBLEM 12A-4 (CONTINUED)

GENERAL JOURNAL PAGE 2

Date Dec. 31 31 31 31 31

31

31

31 31 Jan. 1

Account Titles and Description Adjusting Entries Income Summary Merchandise Inventory Merchandise Inventory Income Summary Lumber Supplies Expense Lumber Supplies Insurance Expense Prepaid Insurance Depreciation Expense, Lumber Equipment Acc. Depreciation, Lumber Equipment Wages Expense Wages Payable Closing Entries Sales Purchases Discount Purchases Returns and Allowances Income Summary Income Summary Sales Returns and Allowances Purchases Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Insurance Expense Dep. Exp., Lumber Equipment Income Summary J. Callahan, Capital J. Callahan, Capital J. Callahan, Withdrawals Wages Payable Wages Expense (Reversing Entry)

PR 332 112 112 332 664 113 665 114 663 122 660 221 440 551 552 332 332 441 550 660 661 662 664 665 663 332 330 330 331 221 660

Dr. 4 5 5 0 00

Cr.

4 5 5 0 00 4 9 0 0 00 4 9 0 0 00 1 9 4 00 1 9 4 00 1 5 0 00 1 5 0 00 2 5 0 00 2 5 0 00 9 5 00 9 5 00 22 8 0 0 00 2 8 5 00 3 0 0 00 23 3 8 5 00 19 3 9 9 00 2 14 8 2 5 4 8 1 1 2 4 3 3 6 00 4 3 3 6 00 3 0 0 0 00 3 0 0 0 00 9 5 00 9 5 00 0 0 7 0 3 9 5 5 0 0 5 0 0 4 0 0 00 00 00 00 00 00 00 00

415

PROBLEM 12A-4 (CONTINUED)

CALLAHAN LUMBER GENERAL LEDGER CASH ACCOUNT NO. 110

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit 1 3 4 0 00 Credit

ACCOUNTS RECEIVABLE

ACCOUNT NO. 111

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit 1 3 0 0 00 Credit

MERCHANDISE INVENTORY

ACCOUNT NO. 112

Balance Date 200X Explanation Dec. 31 Balance Adjusting Adjusting Post Ref. GJ2 GJ2 Debit 4 5 5 0 00 4 5 5 0 00 0 0 0 0 00 4 9 0 0 00 4 9 0 0 00 Debit Credit Credit

LUMBER SUPPLIES

ACCOUNT NO. 113

Balance Date 200X Explanation Dec. 31 Balance Adjusting Post Ref. GJ2 Debit Credit 1 9 4 00 Debit 2 6 9 00 7 5 00 Credit

416

PROBLEM 12A-4 (CONTINUED) PREPAID INSURANCE ACCOUNT NO. 114

Balance Date 200X Explanation Dec. 31 Balance Adjusting Post Ref. GJ2 Debit Credit 1 5 0 00 Debit 2 1 8 00 6 8 00 Credit

LUMBER EQUIPMENT

ACCOUNT NO. 121

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit 3 0 0 0 00 Credit

ACCUMULATED DEPRECIATION, LUMBER EQUIPMENT

ACCOUNT NO. 122

Balance Date 200X Explanation Dec. 31 Balance Adjusting Post Ref. GJ2 Debit Credit 2 5 0 00 Debit Credit 4 9 0 00 7 4 0 00

ACCOUNTS PAYABLE

ACCOUNT NO. 220

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit Credit 1 1 6 0 00

WAGES PAYABLE

ACCOUNT NO. 221

Balance Date 200X Explanation Dec. 31 Adjusting Jan. 1 Post Ref. GJ2 GJ2 Debit 9 5 00 Credit 9 5 00 Debit Credit 9 5 00

417

PROBLEM 12A-4 (CONTINUED)

J. CALLAHAN, CAPITAL ACCOUNT NO. 330

Balance Date 200X Explanation Dec. 31 Balance Closing Closing Post Ref. GJ2 GJ2 Debit Credit 4 3 3 6 00 3 0 0 0 00 Debit Credit 7 3 5 2 00 11 6 8 8 00 8 6 8 8 00

J. CALLAHAN, WITHDRAWALS

ACCOUNT NO. 331

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit Credit 3 0 0 0 00 Debit 3 0 0 0 00 Credit

INCOME SUMMARY

ACCOUNT NO. 332

Date 200X Dec. 31 31 31 31 31

Explanation Adjusting Adjusting Closing Closing Closing

Balance Post Ref. Debit Credit Debit Credit GJ2 4 5 5 0 00 4 5 5 0 00 GJ2 4 9 0 0 00 3 5 0 00 GJ2 23 3 8 5 00 23 7 3 5 00 GJ2 19 3 9 9 00 4 3 3 6 00 GJ2 4 3 3 6 00

SALES

ACCOUNT NO. 440

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. Debit GJ2 22 8 0 0 00 Credit Debit Credit 22 8 0 0 00

SALES RETURNS AND ALLOWANCES

ACCOUNT NO. 441

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit Credit 2 0 0 00 Debit 2 0 0 00 Credit

418

PROBLEM 12A-4 (CONTINUED)

PURCHASES ACCOUNT NO. 550

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit Credit 14 8 0 0 00
ACCOUNT NO. 551

Debit 14 8 0 0 00

Credit

PURCHASES DISCOUNT

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit 2 8 5 00
ACCOUNT NO. 552

Credit

Debit

Credit 2 8 5 00

PURCHASES RETURNS AND ALLOWANCES

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit 3 0 0 00 Credit Debit Credit 3 0 0 00

WAGES EXPENSE

ACCOUNT NO. 660

Balance Date 200X Explanation Dec. 31 Balance Adjusting Closing Jan. 1 Post Ref. GJ2 GJ2 Debit 9 5 00 2 5 7 5 00 9 5 00 Credit Debit 2 4 8 0 00 2 5 7 5 00 Credit

9 5 00
ACCOUNT NO. 661

ADVERTISING EXPENSE

Balance Date 200X Explanation Dec. 31 Balance Closing Post Ref. GJ2 Debit Credit 4 0 0 00 Debit 4 0 0 00 Credit

419

PROBLEM 12A-4 (CONTINUED)

RENT EXPENSE ACCOUNT NO. 662

Balance Date 200X Explanation Dec. 31 Balance Closing Post Ref. GJ2 Debit Credit 8 3 0 00 Debit 8 3 0 00 Credit

DEPRECIATION EXPENSE, LUMBER EQUIPMENT

ACCOUNT NO. 663

Balance Date 200X Explanation Dec. 31 Adjusting 31 Closing Post Ref. GJ2 GJ2 Debit 2 5 0 00 Credit 2 5 0 00 Debit 2 5 0 00 Credit

LUMBER SUPPLIES EXPENSE

ACCOUNT NO. 664

Balance Date 200X Explanation Dec. 31 Adjusting 31 Closing Post Ref. GJ2 GJ2 Debit 1 9 4 00 Credit 1 9 4 00 Debit 1 9 4 00 Credit

INSURANCE EXPENSE

ACCOUNT NO. 665

Balance Date 200X Explanation Dec. 31 Adjusting 31 Closing Post Ref. GJ2 GJ2 Debit 1 5 0 00 Credit 1 5 0 00 Debit 1 5 0 00 Credit

420

PROBLEM 12A-4 (CONTINUED)

CALLAHAN LUMBER POST-CLOSING TRIAL BALANCE DECEMBER 31, 200X Dr. Cr.

Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Acc. Depr., Lumber Equipment Accounts Payable Wages Payable J. Callahan, Capital

1 1 4

3 4 0 00 3 0 0 00 9 0 0 00 7 5 00 6 8 00 0 0 0 00 1 8 10 7 4 0 1 6 0 9 5 6 8 8 6 8 3 00 00 00 00 00

10

6 8 3 00

421

SOLUTIONS TO B PROBLEMS PROBLEM 12B-1

RING.COM INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 200X Revenue: Gross Sales Less: Sales Ret. & Allow. Sales Discount Net Sales Cost of Goods Sold: Merchandise Inventory, 1/1/0X Purchases Less: Purch. Ret. & Allow. Purch. Discount Net Purchases Add: Freight-In Net Cost of Purchases Cost of Goods Avail. for Sale Less: Merch. Inv., 12/31/0X Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Insurance Expense Advertising Expense Rent Expense Depreciation Exp., Store Equip. Total Operating Expenses Net Income from Operations Other Income: Rental Income Net Income

$4 $ 1 4 5 1 7 5 00 00 $3

1 0 0 00 3 2 0 00 7 8 0 00

$ $2 $ 1 7 5 8 5 00 00 1 0 0 0 00 2 6 0 00 7 4 0 00 5 0 00 1 $2

3 0 0

00

7 9 0 0 9 0 2 9 5

00 00 00 1 $1 7 9 5 00 9 8 5 00

3 2 1 2 1

6 7 6 2 1

0 5 5 5 5

00 00 00 00 00 1 $ 1 4 0 00 8 4 5 00

$1

2 3 0 00 0 7 5 00

422

PROBLEM 12B-2
JAMES CO. STATEMENT OF OWNERS EQUITY FOR YEAR ENDED DECEMBER 31, 200X

H. James, Capital, 1/1/0X Less: Net Loss Less: Withdrawals for December H. James, Capital, 12/31/0X

$10 5 0 0 00 ($2 ( 4 8 5 6 00) 0 0 0 00) ( 6 8 5 6 00) $ 3 6 4 4 00

423

PROBLEM 12B-2 (CONCLUDED)

JAMES CO. BALANCE SHEET DECEMBER 31, 200X Assets Current Assets: Cash Petty Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Total Current Assets Plant and Equipment: Store Equipment Less: Acc. Depr., Store Equip. Automobile Less: Acc. Depr., Auto Total Assets Liabilities Current Liabilities: Mortgage Payable Accounts Payable Salaries Payable Taxes Payable Unearned Rent Total Liabilities Long-Term Liabilites Mortgage Payable Total Liabilities Owners Equity H. James, Capital Total Liabilities & Owners Equity 3 6 4 4 00 $28 2 9 4 00 $ 3 0 0 3 4 5 1 0 2 1 0 11 0 0 0 0 0 0 0 00 00 00 00 00 $19 6 5 0 00

$ 2 5 0 5 1 3 0 4 2 5 3 4 6 0

0 0 0 0 4 0

00 00 00 00 00 00 $ 9 0 4 4 00

$ 18 0 7 $ 2 5 5

0 5 0 0

0 0 0 0

00 00 00 00

$17 2 5 0 2 0 0 0

00 00 19 2 5 0 00 $28 2 9 4 00

5 0 0 0

00 $24 6 5 0 00

424

JAYS SUPPLIES WORKSHEET FOR YEAR ENDED DECEMBER 31, 200X Trial Balance Debit Credit Adjustments Debit Credit Adjusted Trial Balance Debit Credit Income Statement Debit Credit Balance Sheet Debit Credit

PROBLEM 12B-3

Account Titles

3,000 3,000 11,700 1,000 5,000 (B) 8,000 (A) 11,700 (E) 350 (D) 500 2,400 2,100 1,050 2,400 27,750 1,900 2,100 1,450 2,400 27,750 4,000 (A) 11,700 100,800 4,100 2,800 70,000 2,000 1,400 2,700 8,000 8,500 16,000 139,800 139,800 (C) (D) (E) 500 350 20,950 400 400 400 2,700 8,000 8,500 16,000 4,100 2,800 70,000 2,000 1,400 2,700 8,000 8,500 16,000 (B) 8,000 4,000 11,700 8,000 100,800 (C) 400

3,000 3,000 8,000 650 5,000

3,000 3,000 8,000 650 5,000 2,400 2,100 1,050 2,400 27,750 4,000 11,700 4,100 2,800 70,000 2,000 1,400 8,000 100,800

425 20,950 500 350 148,300

Cash Accounts Receivable Merch. Inv. 1/1/XX Prepaid Insurance Equipment Acc. Dep., Equip. Accounts Payable Unearned Training Fees Mortgage Payable P. Jay, Capital P. Jay, Withdrawals Income Summary Sales Sales Returns & Allow. Sales Discount Purchases Purch. Returns & Allow. Purchases Discounts Freight-in Advertising Expense Rent Expense Salaries Expense

Training Fees Earned Dep. Exp., Equipment Insurance Expense

148,300

500 350 124,650 124,650

35,700 35,700

Net Loss

112,600 12,050 124,650

23,650 12,050 35,700

PROBLEM 12B-3 (CONTINUED)

JAYS SUPPLIES INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 200X Revenue: Gross Sales Less: Sales Ret. & Allow. Sales Discounts Net Sales Cost of Goods Sold Merch. Inventory, 1/1/0X Purchases Less: Purch. Ret. & Allow. Purchases Disc. Net Purchases Add: Freight-In Net Cost of Purchases Cost of Goods Avail for Sale Less: Merch. Inv. 12/31/0X Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Rent Expense Salaries Expense Depreciation Expense, Equip. Insurance Expense Total Operating Expenses Net Loss from Operations Other Income: Training Fees Earned Net Loss

$100 8 0 0 00 $ 4 2 1 0 0 8 0 0 00 00 6 9 0 0 00 $ 93 9 0 0 00

$ 11 7 0 0 $ 70 0 0 0 00 $2 1 0 0 0 4 0 0 00 00 3 4 0 0 00 66 6 0 0 00 2 7 0 0 00 69 3 0 0 $ 81 0 0 0 8 0 0 0

00

00 00 00 73 0 0 0 00 $ 20 9 0 0 00

$ 8 8 16

0 5 0 5 3

0 0 0 0 5

0 0 0 0 0

00 00 00 00 00 33 3 5 0 00 $ 12 4 5 0 00 4 0 0 00 $ 12 0 5 0 00

426

PROBLEM 12B-3 (CONTINUED)

JAYS SUPPLIES STATEMENT OF OWNERS EQUITY FOR YEAR ENDED DECEMBER 31, 200X

P. Jay, Capital, 12/1/0X Net Loss Less Withdrawals for December Decrease in Capital P. Jay, Capital, 12/31/0X

$27 7 5 0 00 ($12 0 5 0 00) (4 0 0 0 00) (16 0 5 0 00) $11 7 0 0 00

427

PROBLEM 12B-3 (CONTINUED)

JAYS SUPPLIES BALANCE SHEET DECEMBER 31, 200X Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Plant and Equipment: Equipment Less: Acc. Depreciation Total Assets Liabilities Current Liabilities Mortgage Payable Accounts Payable Unearned Training Fees Total Current Liabilities Long-Term Liabilities Mortgage Payable Total Liabilities Owners Equity P. Jay, Capital Total Liabilities and Owners Equity $ 2 1 8 0 0 1 0 0 0 5 0 00 00 00 $3 9 5 0 1 6 0 0 00 00 $ 5 5 5 0 00 $3 0 0 0 3 0 0 0 8 0 0 0 6 5 0 00 00 00 00 $ 14 6 5 0 00 $5 0 0 0 2 4 0 0 00 00

2 6 0 0 00 $ 17 2 5 0 00

11 7 0 0 00 $ 17 2 5 0 00

428

PROBLEM 12B-3 (CONTINUED)

GENERAL JOURNAL PAGE 2

Date Dec. 31 31 31 31 31

31

31

31 31

Account Titles and Description Adjusting Entries Income Summary Merchandise Inventory Merchandise Inventory Income Summary Unearned Training Fees Training Fees Earned Depreciation Expense, Equipment Accumulated Depreciation, Equipment Insurance Expense Prepaid Insurance Closing Entries Sales Training Fees Earned Purchases Returns and Allowances Purchases Discount Income Summary Income Summary Sales Returns and Allowances Sales Discount Purchases Freight-In Advertising Expense Rent Expense Salaries Expense Depreciation Expense, Equipment Insurance Expense P. Jay, Capital Income Summary P. Jay, Capital P. Jay, Withdrawals

PR

Dr. 11 7 0 0 00

Cr.

11 7 0 0 00 8 0 0 0 00 8 0 0 0 00 4 0 0 00 4 0 0 00 5 0 0 00 5 0 0 00 3 5 0 00 3 5 0 00 100 8 4 2 0 1 4 0 0 0 0 0 0 0 0 00 00 00 00 104 6 0 0 00 112 9 5 0 00 4 2 70 2 8 8 16 1 8 0 7 0 5 0 5 3 0 0 0 0 0 0 0 0 5 0 0 0 0 0 0 0 0 0 00 00 00 00 00 00 00 00 00

12 0 5 0 00 12 0 5 0 00 4 0 0 0 00 4 0 0 0 00

429

CALLAHAN LUMBER WORKSHEET FOR YEAR ENDED DECEMBER 31, 200X Trial Balance Debit Credit Adjustments Debit Credit Adjusted Trial Balance Debit Credit Income Statement Debit Credit Balance Sheet Debit Credit

PROBLEM 12B-4

Account Titles

940 1,470 5,600 260 117 2,600 (B) 3,900 (A) 5,600 (C) 200 (D) 50 (E) 400 740 1,330 7,562 340 1,330 7,562 3,500 (A) 5,600 23,000 400 14,700 440 545 2,390 400 840 33,217 33,217 (C) (D) (E) (F) 10,325 200 50 400 175 10,325 200 50 400 37,692 175 37,692 200 50 400 27,885 27,885 (F) 175 2,565 400 840 400 14,700 440 545 2,565 400 840 (B) 3,900 3,900 23,000 3,500 5,600 5,600 400 14,700 440 545

940 1,470 3,900 60 67 2,600

940 1,470 3,900 60 67 2,600 740 1,330 7,562 3,500 3,900 23,000

430

Cash Accounts Receivable Merch. Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Acc. Dep., Lumber Equip. Accounts Payable J. Callahan, Capital J. Callahan, Withdrawals Income Summary Sales Sales Returns & Allow. Purchases Purchases Discount Purch. Ret & Allow. Wages Expense Advertising Expense Rent Expense

Lumber Supplies Exp. Insurance Expense Dep. Exp., Lumber Equip. Wage Payable

12,537 12,537

Net Income

25,155 2,730 27,885

175 9,807 2,730 12,537

PROBLEM 12B-4 (CONTINUED)

CALLAHAN LUMBER INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 200X Revenue: Gross Sales Less: Sales Ret. and Allow. Net Sales Cost of Goods Sold Merchandise Inv. 1/1/0X Purchases Less: Purch. Discount Purch. Ret. and Allow. Net Cost of Purchases Cost of Goods Avail. for Sale Less: Merch. Inv. 12/31/0X Cost of Goods Sold Gross Profit Operating Expenses: Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Insurance Expense Depreciation Expense, Equip Total Operating Expenses Net Income

$23

0 0 0 4 0 0

00 00 $ 22 6 0 0 00

$ 5 $14 7 0 0 00 $ 4 4 0 5 4 5 00 00 9 8 5 00

6 0 0

00

13 7 1 5 $19 3 1 5 3 9 0 0

00 00 00 15 4 1 5 00 $ 7 1 8 5 00

$ 2

5 4 8 2

6 0 4 0 5 4 0

5 0 0 0 0 0

00 00 00 00 00 00 4 4 5 5 00 $ 2 7 3 0 00

431

PROBLEM 12B-4 (CONTINUED)

CALLAHAN LUMBER STATEMENT OF OWNERS EQUITY FOR YEAR ENDED DECEMBER 31, 200X

J. Callahan, Capital, 12/1/0X Net Income Less: Withdrawals for December Decrease Capital J. Callahan, Capital, 12/31/0X

$7 $2 7 3 0 00 (3 5 0 0 00)

5 6 2 00

(7 7 0 00) $6 7 9 2 00

432

PROBLEM 12B-4 (CONTINUED)

CALLAHAN LUMBER BALANCE SHEET DECEMBER 31, 200X Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Total Current Assets Plant and Equipment: Lumber Equipment Less: Acc. Depr., Lumber Equip. Total Assets Liabilities Current Liabilities Accounts Payable Wages Payable Total Current Liabilities Owners Equity J. Callahan, Capital Total Liabilities and Owners Equity $1 3 3 0 1 7 5 00 00 $1 5 0 5 00

$ 1 3

9 4 0 4 7 0 9 0 0 6 0 6 7

00 00 00 00 00 $6 4 3 7 00

$2

6 0 0 7 4 0

00 00

1 $8

8 6 0 00 2 9 7 00

6 $8

7 9 2 00 2 9 7 00

433

PROBLEM 12B-4 (CONTINUED)

GENERAL JOURNAL PAGE 2

Date Dec. 31 31 31 31 31 31

31

31

31 31 Jan. 1

Account Titles and Description Adjusting Entries Income Summary Merchandise Inventory Merchandise Inventory Income Summary Lumber Supplies Expense Lumber Supplies Insurance Expense Prepaid Insurance Depreciation Expense, Lumber Equipment Acc. Depreciation, Lumber Equipment Wages Expense Wages Payable Closing Entries Sales Purchases Discount Purchases Returns and Allowances Income Summary Income Summary Sales Returns and Allowances Purchases Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Insurance Expense Dep. Exp., Lumber Equipment Income Summary J. Callahan, Capital J. Callahan, Capital J. Callahan, Withdrawals Wages Payable Wages Expense (Reversing Entry)

PR 332 112 112 332 664 113 665 114 663 122 660 221 440 551 552 332 332 441 550 660 661 662 664 665 663 332 330 330 331 221 660

Dr. 5 6 0 0 00

Cr.

5 6 0 0 00 3 9 0 0 00 3 9 0 0 00 2 0 0 00 2 0 0 00 5 0 00 5 0 00 4 0 0 00 4 0 0 00 1 7 5 00 1 7 5 00 23 0 0 0 00 4 4 0 00 5 4 5 00 23 9 8 5 00 19 5 5 5 00 4 0 14 7 0 2 5 6 4 0 8 4 2 0 5 4 0 2 7 3 0 00 2 7 3 0 00 3 5 0 0 00 3 5 0 0 00 1 7 5 00 1 7 5 00 0 0 5 0 0 0 0 0 00 00 00 00 00 00 00 00

434

PROBLEM 12B-4 (CONTINUED)

CALLAHAN LUMBER GENERAL LEDGER CASH ACCOUNT NO. 110

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit 9 4 0 00 Credit

ACCOUNTS RECEIVABLE

ACCOUNT NO. 111

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit 1 4 7 0 00 Credit

MERCHANDISE INVENTORY

ACCOUNT NO. 112

Balance Date 200X Explanation Dec. 31 Balance 31 Adjusting 31 Adjusting Post Ref. GJ2 GJ2 Debit Credit 5 6 0 0 00 3 9 0 0 00 3 9 0 0 00
ACCOUNT NO. 113

Debit 5 6 0 0 00

Credit

LUMBER SUPPLIES

Balance Date 200X Explanation Dec. 31 Balance 31 Adjusting Post Ref. GJ2 Debit Credit 2 0 0 00 Debit 2 6 0 00 6 0 00 Credit

435

PROBLEM 12B-4 (CONTINUED)

PREPAID INSURANCE ACCOUNT NO. 114

Balance Date 200X Explanation Dec. 31 Balance Adjusting Post Ref. GJ2 Debit Credit 5 0 00 Debit 1 1 7 00 6 7 00 Credit

LUMBER EQUIPMENT

ACCOUNT NO. 121

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit 2 6 0 0 00 Credit

ACCUMULATED DEPRECIATION, LUMBER EQUIPMENT

ACCOUNT NO. 122

Balance Date 200X Explanation Dec. 31 Balance Adjusting Post Ref. GJ2 Debit Credit 4 0 0 00 Debit Credit 3 4 0 00 7 4 0 00

ACCOUNTS PAYABLE

ACCOUNT NO. 220

Balance Date 200X Explanation Dec. 31 Balance Post Ref. Debit Credit Debit Credit 1 3 3 0 00

WAGES PAYABLE

ACCOUNT NO. 221

Balance Date 200X Explanation Dec. 31 Adjusting Jan. 1 Post Ref. GJ2 GJ2 Debit 1 7 5 00 Credit 1 7 5 00 Debit Credit 1 7 5 00

436

PROBLEM 12B-4 (CONTINUED)

J. CALLAHAN, CAPITAL ACCOUNT NO. 330

Balance Date 200X Explanation Dec. 31 Balance Closing Closing Post Ref. GJ2 GJ2 Debit Credit 2 7 3 0 00 3 5 0 0 00 Debit Credit 7 5 6 2 00 10 2 9 2 00 6 7 9 2 00

J. CALLAHAN, WITHDRAWALS

ACCOUNT NO. 331

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit Credit 3 5 0 0 00 Debit 3 5 0 0 00 Credit

INCOME SUMMARY

ACCOUNT NO. 332

Balance Date 200X Dec. 31 31 31 31 31 Explanation Adjusting Adjusting Closing Closing Closing Post Ref. Debit Credit Debit Credit GJ2 5 6 0 0 00 5 6 0 0 00 GJ2 3 9 0 0 00 1 7 0 0 00 GJ2 23 9 8 5 00 22 2 8 5 00 GJ2 19 5 5 5 00 2 7 3 0 00 GJ2 2 7 3 0 00
SALES ACCOUNT NO. 440

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. Debit GJ2 23 0 0 0 00 Credit Debit Credit 23 0 0 0 00

SALES RETURNS AND ALLOWANCES

ACCOUNT NO. 441

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit Credit 4 0 0 00 Debit 4 0 0 00 Credit

437

PROBLEM 12B-4 (CONTINUED)

PURCHASES ACCOUNT NO. 550

Balance Date 200X Dec. 31 31 Explanation Post Ref. GJ2 Debit Credit 14 7 0 0 00
ACCOUNT NO. 551

Debit 14 7 0 0 00

Credit

PURCHASES DISCOUNT

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit 4 4 0 00
ACCOUNT NO. 552

Credit

Debit

Credit 4 4 0 00

PURCHASES RETURNS AND ALLOWANCES

Balance Date 200X Explanation Dec. 31 Balance 31 Closing Post Ref. GJ2 Debit 5 4 5 00
ACCOUNT NO. 660

Credit

Debit

Credit 5 4 5 00

WAGES EXPENSE

Balance Date 200X Explanation Dec. 31 Balance Adjusting Closing Jan. 1 Post Ref. GJ2 GJ2 GJ2 Debit 1 7 5 00 2 5 6 5 00 1 7 5 00 Credit Debit 2 3 9 0 00 2 5 6 5 00 Credit

1 7 5 00
ACCOUNT NO. 661

ADVERTISING EXPENSE

Balance Date 200X Explanation Dec. 31 Balance Closing Post Ref. GJ2 Debit Credit 4 0 0 00 Debit 4 0 0 00 Credit

438

PROBLEM 12B-4 (CONTINUED)

RENT EXPENSE ACCOUNT NO. 662

Balance Date 200X Explanation Dec. 31 Balance Closing Post Ref. GJ2 Debit Credit 8 4 0 00 Debit 8 4 0 00 Credit

DEPRECIATION EXPENSE, LUMBER EQUIPMENT

ACCOUNT NO. 663

Balance Date 200X Explanation Dec. 31 Adjusting 31 Closing Post Ref. GJ2 GJ2 Debit 4 0 0 00 Credit 4 0 0 00 Debit 4 0 0 00 Credit

LUMBER SUPPLIES EXPENSE

ACCOUNT NO. 664

Balance Date 200X Explanation Dec. 31 Adjusting 31 Closing Post Ref. GJ2 GJ2 Debit 2 0 0 00 Credit 2 0 0 00 Debit 2 0 0 00 Credit

INSURANCE EXPENSE

ACCOUNT NO. 665

Balance Date 200X Explanation Dec. 31 Adjusting 31 Closing Post Ref. GJ2 GJ2 Debit 5 0 00 Credit 5 0 00 Debit 5 0 00 Credit

439

PROBLEM 12B-4 (CONCLUDED)

CALLAHAN LUMBER POST-CLOSING TRIAL BALANCE DECEMBER 31, 200X Dr. Cr.

Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Acc. Depr., Lumber Equipment Accounts Payable Wages Payable J. Callahan, Capital

1 3

9 4 0 00 4 7 0 00 9 0 0 00 6 0 00 6 7 00 6 0 0 00 1 6 9 7 3 1 7 0 4 3 7 9 3 0 0 5 2 7 00 00 00 00 00

0 3 7 00

440

SOLUTION TO REAL WORLD APPLICATION #1

CHAN COMPANY INCOME STATEMENT FOR YEAR ENDED DECEMBER 31, 20X1 Revenue: Gross Sales Less: Sales Ret. and Allow. Sales Discount Net Sales Cost of Goods Sold: Merchandise Inv., 01/01/X1 Purchases Less: Purch. Ret & Allow. Purch. Discount Net Cost of Purchases Cost of Goods Avail. for Sale Less: Merch. Inv., 12/31/X1 Cost of Goods Sold Gross Profit Operating Expenses: Delivery Expense Salaries Expense Rent Expense Office Supplies Expense Advertising Expense Depreciation Exp., Store Equip. Total Operating Expenses Net Income from Operations

$5 $ 1 4 0 3 0 00 00 $5

5 4 2 00 1 7 0 00 3 7 2 00

$1 $2 4 0 0 00 $ 1 0 0 1 2 0 00 00 2 2 0 00 2 $3 3

4 0 0

00

1 8 0 5 8 0 0 0 0

00 00 00 $4 5 8 0 00 7 9 2 00

9 8 4 3 5 1 4

0 0 0 0 0 0

00 00 00 00 00 00 1 $3 0 6 0 00 7 3 2 00

441

SOLUTION TO REAL WORLD APPLICATION #2

GREGOT COMPANY BALANCE STATEMENT DECEMBER 31, 200X Current Assets: Cash Accounts Receivable Inventory Office Supplies Prepaid Insurance Total Current Assets Plant and Equipment: Building Less: Accum. Dep. Land Total Plant and Equip. Total Assets Liabilities Current Liabilities: Notes Payable Accounts Payable Total Current Liabilities Owners Equity G. Gregot, Capital* Total Liabilities and Owners Equity

$11 0 0 0 38 0 0 0 80 0 0 0 6 0 0 7 5 0

00 00 00 00 00 $130 3 5 0 00

$50 0 0 0 12 0 0 0

00 00

$38 0 0 0 17 5 0 0

00 00 $ 55 5 0 0 00 $185 8 5 0 00

$40 0 0 0 30 0 0 0

00 00 $ 70 0 0 0 00

115 8 5 0 00 $185 8 5 0 00

* Need to calculate net income and add to beg. capital less withdrawals. 442

SOLUTION TO REAL APPLICATION #3 The question in this case is whether Janet should only show the income statement to the Petro National Bank. I feel that when a company applies for a loan, the bank should be able to know financial stability of the company. In this case, Janets action is obstructing the bank from making a reasonable assessment of the company. Thus, it seems unethical for Janet to only report the income statement and not the balance sheet to the bank. SOLUTION TO CONTINUING PROBLEM 12
GENERAL JOURNAL PAGE 12

Account Titles and Description Adjusting Entries Mar. 31 Rent Expense Prepaid Rent Mar. 31 Supplies Expense Supplies Mar. 31 Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equip. Mar. 31 Depreciation Expense, C.S. Equipment Accumulated Depreciation, C.S. Equip. Mar. 31 Merchandise Inventory Income Summary

Date 20XX

PR 5020 1025 5050 1030 5090 1091 5080 1081 1040 3020 2

Dr. 4 0 0 00 2 2 8 7 00

Cr.

4 0 0 00

2 8 7 00 1 0 0 00 1 0 0 00 4 4 3 00 4 4 3 00 3 0 0 00 3 0 0 00

443

ELDORADO COMPUTER CENTER GENERAL LEDGER CASH ACCOUNT NO. 1000

Balance Date 200X Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 12 5 1 6 65 Credit

PETTY CASH

ACCOUNT NO. 1010

Balance Date 200X Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 1 0 0 00 Credit

ACCOUNTS RECEIVABLE

ACCOUNT NO. 1020

Balance Date 200X Mar. 1 Explanation Post Ref. Debit Credit Debit 11 9 0 0 00 Credit

PREPAID RENT

ACCOUNT NO. 1025

Balance Date 200X Explanation Mar. 1 Balance 31 Adjusting Post Ref. J12 Debit Debit 2 8 0 0 00 2 4 0 0 00 4 0 0 00 Credit Credit

444

SUPPLIES

ACCOUNT NO. 1030

Balance Date Explanation Mar. 1 Balance 31 Adjusting Post Ref. J12 Debit Credit 2 8 7 00 Debit 4 3 2 00 1 4 5 00 Credit

MERCHANDISE INVENTORY

ACCOUNT NO. 1040

Balance Date Explanation Mar. 31 Adjusting Post Ref. J12 Debit 3 0 0 00 Credit Debit 3 0 0 00 Credit

COMPUTER SHOP EQUIPMENT

ACCOUNT NO. 1080

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 3 8 0 0 00 Credit

ACCUMULATED DEPRECIATION, C.S. EQUIPMENT

ACCOUNT NO. 1081

Balance Date Explanation Mar. 1 Balance 31 Adjusting Post Ref. J12 Debit Credit 4 2 3 00 Debit Credit 9 9 00 5 2 2 00

OFFICE EQUIPMENT

ACCOUNT NO. 1090

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 1 0 5 0 00 Credit

ACCUMULATED DEPRECIATION, OFFICE EQUIPMENT

ACCOUNT NO. 1091

Balance Date Explanation Mar. 1 Balance 31 Adjusting Post Ref. J12 Debit Credit 1 0 0 00 Debit Credit 2 0 00 1 2 0 00

445

ACCOUNTS PAYABLE

ACCOUNT NO. 2000

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit Credit 2 8 4 0 00

WAGES PAYABLE

ACCOUNT NO. 2010

Balance Date Explanation Post Ref. Debit Credit Debit Credit

FICA S.S. PAYABLE

ACCOUNT NO. 2020

Balance Date Explanation Post Ref. Debit Credit Debit Credit

FICA MEDICARE PAYABLE

ACCOUNT NO. 2030

Balance Date Explanation Post Ref. Debit Credit Debit Credit

FIT PAYABLE

ACCOUNT NO. 2040

Balance Date Explanation Post Ref. Debit Credit Debit Credit

SIT PAYABLE

ACCOUNT NO. 2050

Balance Date Explanation Post Ref. Debit Credit Debit Credit

446

FUTA PAYABLE

ACCOUNT NO. 2060

Balance Date Explanation Post Ref. Debit Credit Debit Credit

SUTA PAYABLE

ACCOUNT NO. 2070

Balance Date Explanation Post Ref. Debit Credit Debit Credit

T. FREEDMAN, CAPITAL

ACCOUNT NO. 3000

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit Credit 7 4 0 6 00

T. FREEDMAN, WITHDRAWALS

ACCOUNT NO. 3010

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 2 0 1 5 00 Credit

INCOME SUMMARY

ACCOUNT NO. 3020

Balance Date Explanation Mar. 31 Adjusting Post Ref. J12 Debit Credit 3 0 0 00 Debit Credit 3 0 0 00

SERVICE REVENUE

ACCOUNT NO. 4000

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit Credit 19 8 0 0 00

447

SALES

ACCOUNT NO. 4010

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit Credit 9 7 0 0 00

SALES RETURN AND ALLOWANCES

ACCOUNT NO. 4020

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 4 0 0 00 Credit

SALES DISCOUNTS

ACCOUNT NO. 4030

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 2 2 0 00 Credit

ADVERTISING EXPENSE

ACCOUNT NO. 5010

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 8 0 0 00 Credit

RENT EXPENSE

ACCOUNT NO. 5020

Balance Date Explanation Mar. 31 Adjusting Post Ref. J12 Debit 2 4 0 0 00 Credit Debit 2 4 0 0 00 Credit

UTILITIES EXPENSE

ACCOUNT NO. 5030

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 2 9 0 00 Credit

448

PHONE EXPENSE

ACCOUNT NO. 5040

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 1 5 0 00 Credit

SUPPLIES EXPENSE

ACCOUNT NO. 5050

Balance Date Explanation Mar. 31 Adjusting Post Ref. J12 Debit 2 8 7 00 Credit Debit 2 8 7 00 Credit

INSURANCE EXPENSE

ACCOUNT NO. 5060

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 1 0 0 00 Credit

POSTAGE EXPENSE

ACCOUNT NO. 5070

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 1 7 5 00 Credit

DEPRECIATION EXPENSE, C.S. EQUIPMENT

ACCOUNT NO. 5080

Balance Date Explanation Mar. 31 Adjusting Post Ref. J12 Debit 4 2 3 00 Credit Debit 4 2 3 00 Credit

DEPRECIATION EXPENSE, OFFICE EQUIPMENT

ACCOUNT NO. 5090

Balance Date Explanation Mar. 31 Adjusting Post Ref. J12 Debit 1 0 0 00 Credit Debit 1 0 0 00 Credit

449

MISCELLANEOUS EXPENSE

ACCOUNT NO. 5100

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 1 0 00 Credit

WAGE EXPENSE

ACCOUNT NO. 5110

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 2 0 3 0 00 Credit

PAYROLL TAX EXPENSE

ACCOUNT NO. 5120

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 2 2 6 35 Credit

INTEREST EXPENSE

ACCOUNT NO. 5130

Balance Date Explanation Post Ref. Debit Credit Debit Credit

BAD DEBT EXPENSE

ACCOUNT NO. 5140

Balance Date Explanation Post Ref. Debit Credit Debit Credit

PURCHASES

ACCOUNT NO. 6000

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 9 5 0 00 Credit

450

PURCHASE RETURNS AND ALLOWANCES

ACCOUNT NO. 6010

Balance Date Explanation Mar. 1 Balance Post Ref. Debit Credit Debit Credit 1 0 0 00

PURCHASE DISCOUNTS

ACCOUNT NO. 6020

Balance Date Explanation Post Ref. Debit Credit Debit Credit

FREIGHT IN

ACCOUNT NO. 6030

Balance Date Explanation Post Ref. Debit Credit Debit Credit

451

ELDORADO COMPUTER CENTER INCOME STATEMENT FOR THE SIX MONTHS ENDED MARCH 31, 200X Revenue Service Revenue Sales Less: SRA Less: SD Net Revenue COGS: Merch. Inv. beg Purchases Less: PRA Net Purchases Cost of Good Avail. Less: End Inventory COGS Gross Profit Operating Expenses: Advertising Expense Rent Expense Phone Expense Supplies Expense Insurance Expense Postage Expense Depr. ExpenseCS Equip. Depr. ExpenseOffice Equip. Misc. Expense Wage Expense Payroll Tax Expense Utilities Expense Total Operating Expenses Net Income

$19 8 0 0 00 9 7 0 0 00 $4 0 0 2 2 0 00 00 6 2 0 00 28 8 8 0 00

- 0 $9 5 0 10 0 00 00 8 5 0 00 8 5 0 3 0 0 00 00 28 5 5 0 00 3 3 0 00

8 4 1 2 1 1 4 1

0 0 5 8 0 7 4 0 1 0 3 2 2 2 9

0 0 0 7 0 5 3 0 0 0 6 0

00 00 00 00 00 00 00 00 00 00 35 00 7 0 1 1 35 $21 3 1 8 65

452

ELDORADO COMPUTER CENTER STATEMENT OF OWNERS EQUITY FOR THE SIX MONTHS ENDED MARCH 31, 200X Beg. CapitalT. Freedman Add: Net Income Less: W/D NET INCREASE IN CAPITAL Ending CapitalT. Freedman $ 7 $21 2 3 0 1 8 1 5 65 00 19 $26 ELDORADO COMPUTER CENTER BALANCE SHEET MARCH 31, 200X Assets Current Assets Cash Petty Cash Accounts Rec. Prepaid Rent Supplies Merch. Inventory Total Curr. Assets Long Term Assets CS Equip. Less: Accum. Depr. Office Equip. Less: Accum. Depr. Total Long Term Assets Total Assets Liabilities Current Liabilities Accounts Payable Total Liabilities 2 8 4 0 00 2 8 4 0 00 3 8 0 0 00 ( 5 4 2 00) 0 5 0 00 ( 1 2 0 00) $12 5 1 11 9 4 1 3 1 0 0 0 4 0 6 0 0 0 5 0 65 00 00 00 00 00 $25 3 6 1 65 3 7 0 0 3 9 65 65 4 0 6 00

3 2 5 8

00

9 3 0

00 4 1 8 8 00

$29 5 4 9 65

Owners Equity T. Freedman, Capital 26 7 0 9 65

Total Liab & Owners Equity 453

$29 5 4 9 65

MINI PRACTICE SET

THE CORNER DRESS SHOP GENERAL JOURNAL PAGE 4

Date 200X
A

Account Titles and Description

PR 412 111/ 1

Dr. 0 0 0 00 1

Cr. 0 0 0 00

Mar. 10 Sales Returns and Allowance Accounts Receivable, Ronald Co. Issued Credit Memo #10 (INV 52) 14 Accounts Payable, Jones Co. Purch. Ret. and Allowance Issued Debit Memo #4 30 Office Salaries Expense Sales Salaries Expense FICASocial Security FICAMedicare Payable FIT Payable SIT Payable Salaries Payable 30 Payroll Tax Expense FICASocial Security Payable FICAMedicare Payable SUTA Tax Payable FUTA Tax Payable Adjusting Entries

210/ 512

0 0 0 00 2 0 0 0 00

611 610 216 218 214 218 212 612 216 218 222 224

3 8

3 2 5 00 8 8 0 00 7 1 3 8 0 5 7 8 5 3 6 6 2 4 4 71 97 00 35 97

1 9 9 6 7 28

7 5 6 1 7 6 2 8 4

71 97 80 80

31 Income Summary Merchandise Inventory 31 Merchandise Inventory Income Summary 31 Rent Expense Prepaid Rent 31 Depreciation Expense, Delivery Truck Acc. Depreciation., Delivery Truck

330 114 114 330 618 116 616 121

6 0 0 00 5 6 0 0 00

13 5 1 5 00 13 5 1 5 00 6 0 0 00 6 0 0 00 1 5 0 00 1 5 0 00

454

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP GENERAL JOURNAL PAGE 5

Date 200X
I

Account Titles and Description 31 Unearned Rent Rental Income Closing Entries

PR 226 416

Dr. 2 0 0 00

Cr. 2 0 0 00

31 Sales Rental Income Purch. Ret. & Allow. Purchase Discount Income Summary Transfers credit account balance on Income Statement column of worksheet to Income Summary 31 Income Summary Sales Ret. & Allow. Sales Discount Purchases Sales Salary Expense Office Salary Expense Payroll Tax Expense Cleaning Expense Postage Expense Delivery Expense Miscellaneous Expense Rent Expense Depreciation Expense, Truck Transfers all Expense and Reduction to Sales to Income Summary Income Summary B. Loeb, Capital Transfers Net Income to Capital B. Loeb, Capital B. Loeb, Withdrawals Withdrawals Transferred to Capital

410 416 512 514 330

70 2 2 2 0 2

0 0 0 8

0 0 0 0

00 00 00 00 72 6 8 0 00

330 412 414 510 610 611 612 614 620 622 624 618 616

56 4 1 3 28 1 0 1 41 0 8 8 3 3 9 3 0 6 0 8 2 6 0 0 0 0 0 5 7 6 5 0 0 0 0 00 00 00 00 00 28 00 00 00 00 00 00

1 1 60 15

330 310

24 1 8 1 72 24 1 8 1 72

310 320

1 0 0 00 1 0 0 00

455

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP GENERAL JOURNAL PAGE 6

Date 200X

Account Titles and Description

PR

Dr.

Cr.

456

THE CORNER DRESS SHOP WORKSHEET FOR THE MONTH ENDED MARCH 31, 200X
Adjustments DR CR Adjusted Trial Balance DR CR Income Statement DR CR Balance Sheet DR CR

Account Titles

Beginning Trial Balance DR CR

26,864.53 15,000.00 35.00 5,600.00 1,800.00 23,200.00 f 5,600.00 600.00 150.00 13,515.00 e g h 1,500.00 39,100.00

26,864.53 15,000.00 35.00 13,515.00 1,200.00 23,200.00

26,864.53 15,000.00 35.00 13,515.00 1,200.00 23,200.00 1,650.00 39,100.00

COMPREHENSIVE REVIEW PROBLEM

1,382.00 1,513.42 353.94 854.35 1,008.00 168.00 800.00 I 9,103.10 200.00 5,600.00 f 13,515.00 1,000.00 160.00 70,200.00 100.00 5,600.00 13,515.00 70,200.00 5,600.00 1,000.00 160.00 200.00 41,000.00 2,000.00 280.00 h 150.00 2,000.00 280.00 41,000.00

1,650.00 39,100.00 1,382.00 1,513.42 353.94 854.35 1,008.00 168.00 600.00 9,103.10 100.00 13,515.00 70,200.00

1,382.00 1,513.42 353.94 854.35 1,008.00 168.00 600.00 9,103.10

457 I
200.00 g 600.00 150.00 8,880.00 3,325.00 967.28 306.00 5.00 10.00 10.00 600.00 128,262.81 20,065.00 20,065.00 141,927.81

100.00

1,000.00 160.00

200.00 2,000.00 280.00

41,000.00

Cash A/R Petty Cash Mdse. Inv. Ppd. Rent Delivery Truck A/D Delivery Truck A/P Salaries Payable FIT Payable FICASoc. Sec. Pay FICAMedicare Pay SIT Pay SUTA Pay FUTA Pay Unearned Rent B. Loeb, Capital B. Loeb, Withdrawals Income Summary Sales Sales Ret. & Allow. Sales Discount Rent Income Purchases Purchases Ret. & Allow. Purchases Discount Depr. Exp., Truck Sales Salary Expense Office Salary Expense Payroll Tax Expense Cleaning Expense Postage Expense Delivery Expense Miscellaneous Expense Rent Expense 86,195.00 141,927.81 86,195.00

8,880.00 3,325.00 967.28 306.00 5.00 10.00 10.00

79,914.53 79,914.53

Net Income Column Totals for Month

128,262.81

150.00 8,880.00 3,325.00 967.28 306.00 5.00 10.00 10.00 600.00 62,013.28 24,181.72 86,195.00

55,732.81 24,181.72 79,914.53

THE CORNER DRESS SHOP PURCHASES JOURNAL

COMPREHENSIVE REVIEW PROBLEM

Date 200X March 2 9 11 21 27 29 Terms 2/10, n/30 2/10, n/30 1/15, n/60 2/10, n/30 2/10, nN/30

Account Credited Morris Co. Morris Co. Jones Co. Moes Garage Blew Co. Morris Co.

Accounts Sundry Dr. Payable Purchases PR Cr. Account PR Amount Dr. 10 0 0 0 00 10 0 0 0 00 5 0 0 0 00 5 0 0 0 00 10 0 0 0 00 10 0 0 0 00 17 2 0 0 00 Del. Truck 120 17 2 0 0 00 6 0 0 0 00 6 0 0 0 00 9 0 0 0 00 9 0 0 0 00 57 2 0 0 00 40 0 0 0 00 17 2 0 0 00 (X) (510) (210)

458 THE CORNER DRESS SHOP SALES JOURNAL PAGE 3

Date 200X Terms 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 1/10, n/30 2/10, n/30 Ronald Co. Ronald Co. Ronald Co. Bing Co. Ronald Co. Bing Co. Blew Co. 51 52 53 54 55 56 57

Invoice No.

Account Debited

PR

Accounts Rec. - Dr. Toy Sales - Cr. 7 5 3 3 4 2 10 34 (111) 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 2 0 0 (410) 00 00 00 00 00 00 00 00

March

3 6 9 16 22 24 30 31

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP CASH RECEIPTS JOURNAL

Date 200X Mar. 1 13 15 16 16 28 28 31

2 7 29 3 7 3 3 56

Cash Dr. 20 0 00 0 00 0 92 0 00 0 92 0 20 0 24 0 (110)

Sales Discounts Dr. 00 00 00 00 00 00 00 00

Sundry Account Pr. Amount Cr. Name Bing Co. 7 0 0 0 00 Cash Sales X 29 0 0 0 00 Cash Sales X 8 0 00 4 0 0 0 00 Ronald Co. 7 0 0 0 00 Ronald Co. 8 0 00 4 0 0 0 00 Ronald Co. 3 2 0 0 00 Bing Co. 1 6 0 00 20 4 0 0 00 36 0 0 0 00 (414) (111) (410) Accounts Receivable Cr. 2 2 0 0 00 Sales Cr.

459

THE CORNER DRESS SHOP CASH PAYMENTS JOURNAL PAGE 7

Sundry Dr. 3 0 0 00 10 0 0 0 00 2 0 0 00 9

Accounts Payable Dr.

Salaries Payable Dr.

Purchases Discount Cr.

Cash Cr. 3 0 0 00 8 0 0 00

COMPREHENSIVE REVIEW PROBLEM

3 3 1 1 7 8 0 0 0 00

3 1 1 0 5

9 3 6 0 6

20 20 00 00 00

8 0 00 7 1

7 1 7 9 0

6 0 5 2 0

8 0 6 0 0

40 00 00 00 00

460

Date Check 200X No. Accounts Debited Mar. 9 110 Cleaning Expense 12 111 Morris Co. 15 112 FICASoc. Sec. Payable FICAMedicare Payable FIT Payable 15 113 B. Loeb, Withdrawals 15 114 SIT Payable 23 115 Jones Co. 25 116 Purchases 30 117 Postage Expense Delivery Expense Cleaning Expense Misc. Expense 31 118 Mel Case 31 119 Jane Holl 31 120 Jackie Moore PR. 614 216 1 218 214 1 320 220 510 1 620 622 614 624 X X X 4 0 0 0 5 1 0 6 1 0 2 3 3 9 00 00 00 00 00 89 42 66 97 9 5 5 40 18 0 0 0 00 (X) (210) 5 4 3 0 6 4 4 2 6 0 3 4 (212)

3 1 2 5 4 3 3 0 6 4 3 4 2 6 2 8 0 00 31 7 1 0 (514) (110)

00 89 42 66 37

COMPREHENSIVE REVIEW PROBLEM

ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME BLEW CO.

Date 200X Explanation Mar. 1 Balance 27

Post Ref. PJ4

Debit

Credit Balance 1 9 0 0 00 6 0 0 0 00 7 9 0 0 00 Credit

NAME

JONES CO.

Date 200X Mar. 11 14 23

Explanation

Post Ref. PJ4 GJ4 CPJ7

Credit Credit Balance 10 0 0 0 00 10 0 0 0 00 2 0 0 0 00 8 0 0 0 00 8 0 0 0 00 Debit

NAME

MOES GARAGE

Date 200X Mar. 21

Explanation

Post Ref. PJ4

Debit

Credit Credit Balance 17 2 0 0 00 17 2 0 0 00

461

COMPREHENSIVE REVIEW PROBLEM

NAME

MORRIS CO.

Date 200X Mar. 2 9 12 29

Explanation

Post Ref. PJ4 PJ4 CPJ7 PJ4

Credit Credit Balance 10 0 0 0 00 10 0 0 0 00 5 0 0 0 00 15 0 0 0 00 10 0 0 0 00 5 0 0 0 00 9 0 0 0 00 14 0 0 0 00 Debit

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME BING CO.

Date 200X Explanation Mar. 1 Balance 1 16 Inv. #54 24 Inv. #56 28

Post Ref. CRJ6 SJ3 SJ3 CRJ6

Debit

Credit 2 2 0 0 00

Debit Balance 2 2 0 0 00

3 2 0 0 00 2 0 0 0 00

3 2 0 0 00 5 2 0 0 00 3 2 0 0 00 2 0 0 0 00

NAME

BLEW CO.

Date 200X Explanation Mar. 31 Inv. #57

Post Ref. SJ3

Debit 10 0 0 0 00

Credit

Debit Balance 10 0 0 0 00

462

COMPREHENSIVE REVIEW PROBLEM

NAME RONALD CO.

Date 200X Mar. 3 6 9 10 16 16 22 28

Explanation Inv. #51 Inv. 352 Inv. #53 CM #19 (Inv. #52)

Inv. #55

Post Ref. SJ3 SJ3 SJ3 GJ4 CRJ6 CRJ6 SJ3 CRJ6

Debit 7 0 0 0 00 5 0 0 0 00 3 0 0 0 00

Credit

1 0 0 0 00 4 0 0 0 00 7 0 0 0 00 4 0 0 0 0 4 0 0 0 00

Debit Balance 7 0 0 0 00 12 0 0 0 00 15 0 0 0 00 14 0 0 0 00 10 0 0 0 00 3 0 0 0 00 7 0 0 0 00 3 0 0 0 00

GENERAL LEDGER CASH ACCOUNT NO. 110

Balance Date 200X Explanation Mar. 1 Balance 31 31 Post Ref. Debit Credit Debit 2 3 3 4 90 CRJ6 56 2 4 0 00 58 5 7 4 90 CPJ7 31 7 1 0 37 26 8 6 4 53 Credit

ACCOUNTS RECEIVABLE

ACCOUNT NO. 111

Balance Date 200X Explanation Mar. 1 Balance 10 31 31 Post Ref. Debit Credit Debit 2 2 0 0 GJ4 1 0 0 0 00 1 2 0 0 SJ3 34 2 0 0 00 35 4 0 0 CRJ6 20 4 0 0 00 15 0 0 0 Credit 00 00 00 00

463

COMPREHENSIVE REVIEW PROBLEM

PETTY CASH ACCOUNT NO. 112

Balance Date 200X Explanation Mar. 1 Balance Post Ref. Debit Credit Debit 3 5 00 Credit

MERCHANDISE INVENTORY

ACCOUNT NO. 114

Date 200X Explanation Mar. 1 Balance 31 Adjusting 31 Adjusting

Balance Post Ref. Debit Credit Debit Credit 5 6 0 0 00 GJ4 5 6 0 0 00 GJ4 13 5 1 5 00 13 5 1 5 00

PREPAID RENT

ACCOUNT NO. 116

Balance Date 200X Explanation Mar. 1 Balance 31 Adjusting Post Ref. GJ4 Debit Credit Debit 1 8 0 0 00 6 0 0 00 1 2 0 0 00 Credit

DELIVERY TRUCK

ACCOUNT NO. 120

Balance Date 200X Explanation Mar. 1 Balance 21 Post Ref. Debit PJ4 17 2 0 0 00 Credit Debit 6 0 0 0 00 23 2 0 0 00 Credit

464

COMPREHENSIVE REVIEW PROBLEM

ACCUMULATED DEPRECIATION, TRUCK ACCOUNT NO. 121

Balance Date 200X Explanation Mar. 1 Balance 31 Post Ref. GJ4 Debit Credit 1 5 0 00 Debit Credit 1 5 0 0 00 1 6 5 0 00

ACCOUNTS PAYABLE

ACCOUNT NO. 210

Balance Date 200X Explanation Mar. 1 Balance 14 31 31 Post Ref. Debit Credit GJ4 2 0 0 0 00 PJ4 57 2 0 0 00 CPJ7 18 0 0 0 00 Debit 1 0 0 00 57 1 0 0 00 39 1 0 0 00 Credit 1 9 0 0 00

SALARIES PAYABLE

ACCOUNT NO. 212

Balance Date 200X Mar. 30 31 Explanation Post Ref. GJ4 CPJ7 Debit 9 0 3 4 97 Credit 9 0 3 4 97 Debit Credit 9 0 3 4 97

FIT PAYABLE

ACCOUNT NO. 214

Balance Date 200X Explanation Mar. 1 Balance 15 30 Post Ref. GJ4 CPJ7 GJ4 Debit 1 1 1 6 00 1 3 8 2 00 1 3 8 2 00
ACCOUNT NO. 216

Credit

Debit

Credit 1 1 1 6 00

FICASOCIAL SECURITY PAYABLE

Balance Date 200X Explanation Mar. 1 Balance 15 30 30 Post Ref. CPJ7 GJ4 GJ4 Debit 1 3 3 9 20 7 5 6 71 7 5 6 71 7 5 6 71 1 5 1 3 42 Credit Debit Credit 1 3 3 9 20

465

COMPREHENSIVE REVIEW PROBLEM

FICAMEDICARE PAYABLE ACCOUNT NO. 218

Balance Date 200X Explanation Mar. 1 Balance 15 30 31

SIT PAYABLE

Post Ref. CPJ7 GJ4 GJ4

Debit 3 1 3 20

Credit

Debit

Credit 3 1 3 20 1 7 6 97 3 5 3 94

1 7 6 97 1 7 6 97

ACCOUNT NO. 220

Balance Date 200X Explanation Mar. 1 Balance 15

SUTA TAX PAYABLE

Post Ref. CPJ7 GJ4

Debit 7 5 6 00

Credit

Debit

Credit 7 5 6 00 8 5 4 35

8 5 4 35

ACCOUNT NO. 222

Balance Date 200X Explanation Mar. 1 Balance 30

FUTA TAX PAYABLE

Post Ref. GJ4

Debit

Credit 2 8 80

Debit

Credit 9 7 9 20 1 0 0 8 00

ACCOUNT NO. 224

Balance Date 200X Explanation Mar. 1 Balance 30

UNEARNED RENT

Post Ref. GJ4

Debit

Credit 4 80

Debit

Credit 1 6 3 20 1 6 8 00

ACCOUNT NO. 226

Balance Date 200X Explanation Mar. 1 Balance 31 Adjusting

B. LOEB, CAPITAL

Post Ref. GJ5

Debit 2 0 0 00

Credit

Debit

Credit 8 0 0 00 6 0 0 00

ACCOUNT NO. 310

Balance Date 200X Explanation Mar. 1 Balance 31 Closing 31 Closing Post Ref. GJ5 GJ5 Debit Credit 24 1 8 1 72 1 0 0 00
466

Debit

Credit 9 1 0 3 10 23 4 6 9 82 33 1 8 4 82

COMPREHENSIVE REVIEW PROBLEM

B. LOEB, WITHDRAWALS ACCOUNT NO. 320

Balance Date 200X Explanation Mar. 15 31 Closing Post Ref. CPJ7 GJ5 Debit 1 0 0 00 Credit 1 0 0 00 Debit 1 0 0 00 Credit

INCOME SUMMARY

ACCOUNT NO. 330

Balance Date 200X Mar. 31 31 31 31 31 Explanation Adjusting Adjusting Closing Closing Closing Post Ref. Debit Credit Debit Credit GJ4 5 6 0 0 00 5 6 0 0 00 GJ4 13 5 1 5 00 7 9 1 5 00 GJ5 72 6 8 0 00 80 5 9 5 00 GJ5 56 4 1 3 28 24 1 8 1 72 GJ5 24 1 8 1 72

SALES

ACCOUNT NO. 410

Balance Date 200X Explanation Mar. 31 31 31 Closing Post Ref. Debit Credit SJ3 34 2 0 0 00 CRJ6 36 0 0 0 00 GJ5 70 2 0 0 00 Debit Credit 34 2 0 0 00 70 2 0 0 00

SALES RETURNS AND ALLOWANCES

ACCOUNT NO. 412

Balance Date 200X Explanation Mar. 10 31 Closing Post Ref. GJ4 GJ5 Debit 1 0 0 0 00 Credit 1 0 0 0 00 Debit 1 0 0 0 00 Credit

SALES DISCOUINT

ACCOUNT NO. 414

Balance Date 200X Explanation Mar. 31 31 Closing Post Ref. CRJ6 GJ5 Debit 1 6 0 00 Credit 1 6 0 00 Debit 1 6 0 00 Credit

467

COMPREHENSIVE REVIEW PROBLEM

RENTAL INCOME ACCOUNT NO. 416

Balance Date 200X Explanation Mar. 31 Adjusting 31 Closing Post Ref. GJ4 GJ5 Debit 2 0 0 00 Credit 2 0 0 00 Debit Credit 2 0 0 00

PURCHASES

ACCOUNT NO. 510

Balance Date 200X Explanation Mar. 25 31 31 Closing Post Ref. Debit Credit Debit CPJ7 1 0 0 0 00 1 0 0 0 00 PJ4 40 0 0 0 00 41 0 0 0 00 GJ5 41 0 0 0 00 Credit

PURCHASES RETURNS AND ALLOWANCES

ACCOUNT NO. 512

Balance Date 200X Explanation Mar. 14 31 Closing Post Ref. GJ4 GJ5 Debit 2 0 0 0 00 Credit 2 0 0 0 00 Debit Credit 2 0 0 0 00

PURCHASES DISCOUNT

ACCOUNT NO. 514

Balance Date 200X Explanation Mar. 31 31 Closing Post Ref. CPJ7 GJ5 Debit 2 8 0 00 Credit 2 8 0 00 Debit Credit 2 8 0 00

SALES SALARY EXPENSE

ACCOUNT NO. 610

Balance Date 200X Explanation Mar. 30 31 Closing Post Ref. GJ4 GJ5 Debit 8 8 8 0 00 Credit 8 8 8 0 00 Debit 8 8 8 0 00 Credit

468

COMPREHENSIVE REVIEW PROBLEM

OFFICE SALARY EXPENSE ACCOUNT NO. 611

Balance Date 200X Explanation Mar. 31 31 Closing Post Ref. GJ4 GJ5 Debit 3 3 2 5 00 Credit 3 3 2 5 00 Debit 3 3 2 5 00 Credit

PAYROLL TAX EXPENSE

ACCOUNT NO. 612

Balance Date 200X Explanation Mar. 30 31 Closing Post Ref. GJ4 GJ5 Debit 9 6 7 28 Credit 9 6 7 28 Debit 9 6 7 28 Credit

CLEANING EXPENSE

ACCOUNT NO. 614

Balance Date 200X Explanation Mar. 9 30 31 Closing Post Ref. CPJ7 CPJ7 GJ5 Debit 3 0 0 00 6 00 Credit Debit 3 0 0 00 3 0 6 00 Credit

3 0 6 00
ACCOUNT NO. 616

DEPRECIATION EXPENSE, TRUCK

Balance Date 200X Explanation Mar. 31 31 Closing Post Ref. GJ4 GJ5 Debit 1 5 0 00 Credit 1 5 0 00 Debit 1 5 0 00 Credit

469

RENT EXPENSE

ACCOUNT NO. 618

Balance Date 200X Explanation Mar. 31 31 Closing Post Ref. GJ4 GJ5 Debit 6 0 0 00 Credit 6 0 0 00 Debit 6 0 0 00 Credit

COMPREHENSIVE REVIEW PROBLEM

POSTAGE EXPENSE ACCOUNT NO. 620

Balance Date 200X Explanation Mar. 30 31 Closing Post Ref. CPJ7 GJ5 Debit 5 00 Credit 5 00 Debit 5 00 Credit

DELIVERY EXPENSE

ACCOUNT NO. 622

Balance Date 200X Explanation Mar. 30 31 Closing Post Ref. CPJ7 GJ5 Debit 1 0 00 Credit 1 0 00 Debit 1 0 00 Credit

MISCELLANEOUS EXPENSE

ACCOUNT NO. 624

Balance Date 200X Explanation Mar. 30 31 Closing Post Ref. CPJ7 GJ5 Debit 1 0 00 Credit 1 0 00 Debit 1 0 00 Credit

470

THE CORNER DRESS SHOP AUXILIARY PETTY CASH RECORD

Receipts 3 5 00 Cleaning Expense 3 00 Misc. Expense 5 00 5 00 2 00 5 00 1 0 00

Payment

Postage Expense

Category of Payment Delivery Sundry Expense Account Amount 6 00 1 0 00

Date Voucher 200X No. Mar. 1 2 18 5 19 8 20 9 21 14 22 27 23 3 5 00 6 3 1 0 5 5 2 3 1 4 3 5 00 00 00 00 00 00 00 00 00

COMPREHENSIVE REVIEW PROBLEM

Description Balance Cleaning Expense Postage Expense First Aid Delivery Expense Delivery Expense Postage Expense Total Ending Balance

1 6 00

30 30

Ending Balance Replenishment Balance (New)

3 5 4 3 1 3 5

00 00 00 00

471

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 200X

Bing Co. Blew Co. Ronald Co. Total Accounts Receivable

$2 10 3 $15

0 0 0 0

0 0 0 0

0 0 0 0

00 00 00 00

THE CORNER DRESS SHOP SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 200X

Blew Co. Moes Garage Morris Co. Total Accounts Payable

$7 17 14 $39

9 2 0 1

0 0 0 0

0 0 0 0

00 00 00 00

472

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP INCOME STATEMENT FOR THE MONTH ENDING MARCH 31, 200X Revenue: Sales Less: Sales Returns and Allowances Sales Discounts Net Sales Cost of Goods Sold: Merchandise Inventory, 3/01/0X Purchases Less: Purch. Ret. & Allow. Purchase Discounts Net Cost of Purchases Cost of Goods Available for Sale Less: Merchandise Inventory, 3/31/0X Cost of Goods Sold Gross Profit Operating Expenses: Sales Salaries Expense Office Salaries Expense Payroll Tax Expense Cleaning Expense Postage Expense Delivery Expense Miscellaneous Expense Rent Expense Depreciation Exp., Truck Total Operating Expenses Net Income from Operations Other Income: Rental Income Net Income

$70 $ 1 0 0 0 1 6 0 00 00 1 $69

2 0 0 00 1 6 0 00 0 4 0 00

$ 5 $41 0 0 0 $2 0 0 0 2 8 0 00 00 2 2 8 0 00 00 38 $44 13

6 0 0

00

7 2 0 3 2 0 5 1 5

00 00 00 30 $38 8 0 5 00 2 3 5 00

8 3

8 3 9 3

8 2 6 0

1 1 6 0 1 5

0 5 7 6 5 0 0 0 0

00 00 28 00 00 00 00 00 00 $14 $23 2 5 3 28 9 8 1 72

$24

2 0 0 00 1 8 1 72

473

THE CORNER DRESS SHOP STATEMENT OF OWNERS EQUITY FOR MONTH ENDED MARCH 31, 200X

$9 $24 1 8 1 72 1 0 0 00 24 0 8 1 72 $33 1 8 4 82

COMPREHENSIVE REVIEW PROBLEM

B. Loeb, Capital, March 1, 200X Net Income for Month Less Withdrawals Increase in Capital B. Loeb, Capital, March 31, 200X

1 0 3 10

THE CORNER DRESS SHOP PAYROLL REGISTER MARCH, 200X

EARNINGS Allow. and Marital Status Cum. Earnings Salary Regular Overtime Gross 6 6 0 0 00 3 3 2 5 00 3 3 2 5 00 6 8 0 0 00 4 1 2 0 00 4 1 2 0 00 8 2 0 0 00 4 7 6 0 00 4 7 6 0 00 21 6 0 0 00 12 2 0 5 00 12 2 0 5 00 Cum. Earnings M 2 M 1 M 0 TAXABLE EARNINGS FICA Unemp. Soc. Sec. Medicare 4 0 0 00 3 3 2 5 00 3 3 2 5 00 2 0 0 00 4 1 2 0 00 4 1 2 0 00 4 7 6 0 00 4 7 6 0 00 6 0 0 00 12 2 0 5 00 12 2 0 5 00

474
Deductions Soc. Sec. 2 0 6 15 2 5 5 44 2 9 5 12 7 5 6 71 6 9 02 5 9 74 4 5 2 00 6 3 6 00 4 8 21 2 9 4 00 Medicare FIT SIT Net Pay 2 3 2 75 2 5 4 3 89 2 8 8 40 3 0 6 4 42 3 3 3 20 3 4 2 6 66 8 5 4 35 9 0 3 4 97 Check Number 1 7 6 97 1 3 8 2 00

Employee

Mel Case

3 3 2 5 00 9 9 2 5 00 4 1 2 0 00 10 9 2 0 00 4 7 6 0 00 12 9 6 0 00 12 2 0 5 00 33 8 0 5 00

Jane Holl

Jackie Moore

Totals for Mar.

Employee

Distribution Office Sales Salary Salaries Expense Exp. 3 3 2 5 00 4 1 2 0 00 4 7 6 0 00 3 3 2 5 00 8 8 8 0 00

Mel Case

Jane Holl

Jackie Moore

Totals for Mar.

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP BALANCE SHEET MARCH 31, 200X Assets Current Assets: Cash Accounts Receivable Petty Cash Merchandise Inventory Prepaid Rent Total Current Assets Plant and Equipment: Delivery Truck Less: Acc. Depr., Delivery Truck Total Assets Liabilities Current Liabilities: Accounts Payable FIT Payable FICASoc. Sec. Payable FICAMedicare Payable SIT Payable SUTA Payable FUTA Payable Unearned rent Total Current Liabilities Owners Equity B. Loeb, Capital, 3/31/200X Total Liabilities and Owners Equity

$26 8 6 15 0 0 3 13 5 1 1 2 0

4 0 5 5 0

53 00 00 00 00 $56 6 1 4 53

$23 2 0 0 1 6 5 0

00 00

21 5 5 0 00 $78 1 6 4 53

$39 1 0 0 1 3 8 2 1 5 1 3 3 5 3 8 5 4 1 0 0 8 1 6 8 6 0 0

00 00 42 94 35 00 00 00 $44 9 7 9 71

$33 1 8 4 82 $78 1 6 4 53

475

COMPREHENSIVE REVIEW PROBLEM

THE CORNER DRESS SHOP POST-CLOSING TRIAL BALANCE MARCH 31, 200X

Account Cash Accounts Receivable Petty Cash Merchandise Inventory Prepaid Rent Delivery Truck Acc. Dep., Delivery Truck Account Payable FIT Payable FICASoc. Sec. Payable FICAMedicare Payable SIT Payable SUTA Payable FUTA Payable Unearned Rent B. Loeb, Capital 26 15 13 1 23

Dr. 8 6 4 0 0 0 3 5 5 1 5 2 0 0 2 0 0 53 00 00 00 00 00 1 39 1 1 6 1 3 5 3 8 0 1 6 1 8

Cr.

79

8 1 4 53

33 79

5 0 8 1 5 5 0 6 0 8 1

0 0 2 3 3 4 8 8 0 4 4

00 00 00 42 94 35 00 00 00 82 53

476

477

BLANK FORMS GENERAL JOURNAL PAGE 1

Date

Account Titles and Description

PR

Dr.

Cr.

478

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

479

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

480

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

ACCOUNT NO. _______________

Balance Date Explanation Post Ref. Debit Credit Debit Credit

481

INCOME STATEMENT

482

STATEMENT OF OWNERS EQUITY

483

BALANCE SHEET LIABILITIES AND OWNERS EQUITY

ASSETS

484

WORKSHEET __________________________ __________________________ __________________________

Account Titles

Trial Balance Dr. Cr.

Adjustments Dr. Cr.

485

Adjusted Trial Balance Dr. Cr.

Income Statement Dr. Cr.

Balance Sheet Dr. Cr.

486

Dr.

Cr.

SALES JOURNAL PAGE

Date

Sales Ticket No.

Terms

Accounts Debited

PR.

Accounts Rec. - Dr. Sales - Cr.

487

SALES JOURNAL PAGE

Invoice Date No.

Customers Name

PR.

Accounts Receivable Dr.

Pizza Sales Cr.

Grocery Sales Cr.

488

SALES JOURNAL PAGE

Date

Customer

Sales Ticket PR.

Accounts Receivable Dr.

Sales Tax Payable Cr.

Cr.

Cr.

489

CASH RECEIPTS JOURNAL PAGE

Sundry Account Names PR. Ammount Cr.

Date

Cash Dr. Sales Cr.

Sales Discounts Dr. Accounts Receivable Cr.

490

CASH RECEIPTS JOURNAL PAGE

Date

Cash Dr. Sales Cr.

Sales Discounts Dr.

Accounts Receivable Cr.

Sundry Account Names PR Amount Cr.

491

PURCHASES JOURNAL PAGE

Sundry Dr. Account PR Amount

Date Terms PR

Account Credited Date of Invoice Purchases Dr. Inv. No.

Accounts Payable Cr.

492

CASH PAYMENTS JOURNAL PAGE

Date

Ck. No. Account Debited PR.

Sundry Dr. Purchases Dr.

Accounts Payable Dr.

Purchases Discount Cr.

Cash Cr.

493

AUXILIARY PETTY CASH RECORD Category of Payment Description Receipts Payment Account Sundry Amount

Date

Voucher No.

494

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME ADDRESS

Date

Explanation

Post Ref.

Debit

Credit

Debit Balance

NAME ADDRESS

Date

Explanation

Post Ref.

Debit

Credit

Debit Balance

495

ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME ADDRESS

Date

Explanation

Post Ref.

Debit

Credit

Cr. Balance

NAME ADDRESS

Date

Explanation

Post Ref.

Debit

Credit

Cr. Balance

NAME ADDRESS

Date

Explanation

Post Ref.

Debit

Credit

Cr. Balance

496

BALANCE SHEET

497

INCOME STATEMENT

498

PAYROLL REGISTER Earnings Cumulative Earnings Regular Overtime Gross Soc. Sec Taxable Earnings FICA Medicare Cumulative Earnings

Employee Name

Allowance & Marital Status

499 Deductions Distribution of Expense Accounts Net Pay Ck. No. Office Sales Medicare FIT SIT Union Dues

FICA

Soc. Sec.