Barfalamew
,
Wednesday, 11th of August 2010 11:54:54 PM
Assume it is Monday, May 1, the first business day of the month, and you
Barfalamew
have just been hired as the accountant for Colo Company, which operates
Registered User
with monthly accounting periods. All of the company’s accounting work is
Joined: Tuesday, 20th of April 2010, 21:27:27
completed through the end of April and its ledgers show April 30
Posts: 546
balances.During your first month on the job, the company experiences the
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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, $3,710. (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 $175 credit memorandum
to Knox, Inc., for defective (worthless) merchandise sold on April 28 and
returned for credit. The total selling price (gross) was $4,725.
3
Received a $798 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, $37,072; store supplies, $574;
and office supplies, $83. Invoice dated May 4, terms n_10 EOM.
5
Received payment from Knox, Inc., 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 $7,098 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 $350 cash.
10 Purchased $4,074 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 $8,800 of merchandise from
Garcia, Inc., invoice dated May 10, terms 2_10, n_30.
12 Received an
$854 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, $5,320, and office
salaries, $3,150. Cashed the check and paid the employees.
15 Cash
sales for the first half of the month are $59,220 (cost is $38,200). (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 $3,990 (cost is $1,890).
17 Purchased $13,650 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 $6,850 (cost is $4,990), 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, $8,120; store supplies, $630; and office
supplies, $280. Invoice dated May 24, terms n_10 EOM.
25 Purchased
$3,080 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 $14,210 (cost is $8,230).
26 Issued Check No. 3415 to
Perennial Power in payment of the May electric bill, $1,283.
29 The
owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $7,000
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, $5,320, and
office salaries, $3,150. Cashed the check and paid the employees.
31
Cash sales for the last half of the month are $66,052 (cost is $42,500).
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.
Required
1. Enter these transactions
in a sales journal, a purchases journal, a cash receipts journal, a cash
disbursements journal, or a general journal as illustrated in this
chapter. Post when instructed to do so. Assume a perpetual inventory
system.
2. Prepare a trial balance in the Trial Balance columns of
the work sheet form provided with the working papers. Complete the work
sheet using the following information for accounting adjustments:
a.
Expired insurance, $553.
b. Ending store supplies inventory, $2,632.
c. Ending office supplies inventory, $504.
d. Depreciation of
store equipment, $567.
e. Depreciation of office equipment, $329.
Prepare and post adjusting and closing entries.
3. Prepare a
May 2005 multiple-step income statement, a May 2005 statement of owner’s
equity, and a