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problem: Mulder Corporation's balance sheet at December 31, 2006, is given below.

MULDER CORPORATION Balance Sheet December 31, 2006

Cash

$13,100

Accounts payable

$8,750

Accounts receivable

19,780

Common Stock

20,000

Allowance for doubtful accounts

(1,000)

Retained earnings

12,530

Merchandise inventory

9,400

Total L&SE

$41,280

Total Assets

$41,280

 

 

During January 2007, the following transactions occurred. Mulder uses the perpetual inventory method.

Jan.

 1

 Mulder accepted a 4-month, 12% note from Alien Company in payment of Alien's $1,000 account.

 Jan.

3

Mulder wrote off as uncollectible the accounts of Ex Corporation ($450) and Files Company ($230).

 Jan.

8

 Mulder purchased $17,200 of inventory on account.

 Jan.

11

 Mulder sold for $25,000 on account inventory that cost $15,000.

 Jan.

15

Mulder sold inventory that cost $ 600 to Ben Borke for $1,000. Borke charged this amount on his Visa First Bank card. The services fee charged Mulder by First Bank is 3%.

 Jan.

17

 Mulder collected $21,900 from customers on account.

 Jan.

21

 Mulder paid $16,300 on accounts payable.

 Jan.

24

 Mulder received payment in full ($230) from Files Company on the account written off on January 3.

 Jan.

27

 Mulder purchased advertising supplies for $1,400 cash.

 Jan.

31

 Mulder paid other operating expenses, $4,218.

Adjustment information:

[A] Interest is recorded for the month on the note from January 1.
[B] Bad debts are expected to be 6 percent of the January 31, 2007, accounts receivable.
[C] A count of advertising supplies on January 31, 2007, reveals that $560 remains unused.
[D] The income tax rate is 30 percent (Suggestion: Make income statement up to "Income before taxes" and multiply by 30% to compute the amount.)

Instructions;
[You may want to set up T accounts to estimate ending balances.] 
[A] Make journal entries for the transactions listed above and adjusting entries.
[B] Make an adjusted trial balance at January 31, 2007. 
[C] Make an income statement and a retained earnings statement for the month ending January 31, 2007, and a classified balance sheet as of January 31, 2007.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922631

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