More Co. is a merchandising business. The account balances for More Co. as of November 30, 2008 (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
220 Note Payable (Due 2013) 10,000
310 P. Williams, Capital (January 1, 2008) 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
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.
- Purchased merchandise on account from Prince Co., terms 2/10, n/30, FOB shipping point, $15,000.
- Issued check number 2633 to pay the transportation changes on purchase of December 3, $400.
- Sold merchandise on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point, $8,500. The cost of the merchandise sold was $5,000.
- Received $7,500 cash from Marie Co. on account, no discount.
- Sold merchandise for cash, $18,300. The cost of the merchandise sold was
11. Purchased store supplies on account from Matt Co., terms 1/10, n/30, $620.
- Issued check number 2634 for merchandise purchased on December 3, less discount.
- Issued credit memo for merchandise returned on sale of December 6, $1,500. The cost of the merchandise returned was $900.
- Issued check number 2635 for advertising expense for last half of December, $1,500.
- Received cash from sale of December 6, less return of December 14 and discount.
19. Issued check number 2636 for merchandise, $8,100.
19. Issued check number 2637 for $6,100 to Joseph Co. on account.
20. Sold merchandise on account to Cameron Co., invoice number 892, terms 1/10, n/30, FOB shipping point, $16,000. The cost of the merchandise sold was $9,600.
- For the convenience of the customer, issued check number 2638 for shipping charges on sale of December 20, $600.
- Received $11,750 cash from McKenzie Co. on account, no discount.
- Purchased merchandise on account from Elisha Co., terms 1/10, n/30, FOB
- Issued a debit memo for return of $3,500 of damaged merchandise purchased on December 21, receiving credit from the seller.
26. Issued check number 2639 for refund of cash on sales made for cash, $720. (Customer was going to return goods until partial refund was arranged.)
28. Issued check number 2640 for sales salaries of $1,750 and office salaries of $950.
27. 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 merchandise on account to Randall Co., invoice number 893, terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250.
30. Received cash from sale of December 20, less discount, plus transportation paid on December 21.
30. Issued check number 2642 for purchase of December 21, less return of December 24 and discount.
31. Issued a debit memo for $200 of the purchase returned from December 27.
Instructions:
- 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.
- 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. Assume a perpetual inventory system.
- Total each column on the special journals and prove the journal.
- Post the totals of the account columns and individually post the other columns as well as the general journal.
- 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).
- Prepare the unadjusted trial balance on the worksheet.
- Complete the worksheet for the year ended December 31, 2008, using the following adjustment data:
a. Merchandise inventory on December 31 $124,115
b. Insurance expired during the year 1,250
c. Store supplies on hand on December 31 975
d. Depreciation for the current year 7,400
e. Accrued salaries on December 31:
Sales salaries $350
Office salaries 180 530
8. Prepare a multiple-step income statement, a statement of owner's equity, and a report form classified balance sheet.
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.