Alli Co. is a merchandising business. The account balances for Alli Co. as of November 30, 2012 (unless otherwise indicated), are as follows:
110 Cash 73,920
112 Accounts Receivable 37,875
113 Allowance for Doubtful Accounts 3,500
115 Merchandise Inventory 133,900
116 Prepaid Insurance 3,750
117 Store Supplies 2,850
123 Store Equipment 100,800
124 Accumulated Depreciation-Store Equipment 20,160
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) 89,510
311 P. Williams, Drawing 40,000
312 Income Summary 0
410 Sales 853,040
411 Sales Returns and Allowances 20,600
412 Sales Discounts 13,200
510 Cost of Merchandise Sold 414,575
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
533 Bad Debt Expense 0
539 Miscellaneous Administrative Expense 1,650
550 Interest Expense 240
Alli 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. They also use the Allowance Method for bad debt.
The Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the Inventory Control Sheet should be updated as each transaction affects them (daily).
Alli Co. sells four types of television entertainment units. The sale prices 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, $2,200.
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 four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.
10. Sold two project systems for cash.
11. Purchased store supplies on account from Matt Co., terms n/30, $620.
13. Issued check to Prince Co. number 2634 for full amount due (November’s balance plus December 3rd transaction), less discount allowed.
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 Albert Co. for full amount due (less return of December 14 and discount).
19. Issued check number 2636 to buy 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 $12,250 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.
25. Received notification that Marie Co. has been granted bankruptcy with no amount of recovery. We are to write-off her amount due. (Note: See page 402 for entry required.)
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 an allowance 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 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. (Round calculations to the nearest dollar.) 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.
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 and when needed the Inventory Control Sheet.
3. Total each column on the special journals and prove the journal.
4. Post the totals of the account named columns and individually post the “other” columns as well to the General Ledger.
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: $110,200
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. Alli 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 $480,
Office salaries $260 $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).
g. Net realizable value of Accounts Receivable is determined to be $30,000.
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.