David's Entertainment is a merchandising business. Their account balances as of
November 30, 2012 (unless otherwise indicated), are as follows
Allowance for Doubtful Accounts
Accumulated Depreciation-Store Equipment
Note Payable (Due 2017)
D Williams, Capital (January 1, 2012)
D Williams, Drawing
Sales Returns and Allowances
510 Cost Merchandise Sold
Sales Salaries Expense
Store Supplies Expense
Miscellaneous Selling Expense
Office Salaries Expense
Bad Debt Expense
Miscellaneous Administrative Expense
David's Entertainment uses the perpetual inventory system and the First-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 First-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)
David's Entertainment sells four types of television entertainment units.
The sale prices of each are:
TVC $6 125
PS D: $9,000
During December the last month of the accounting year, the following transactions
1 Issued check number 2632 for the December rent, $2,600
3. Purchased three TV C units on account from Prince Co. terms 2/10, n/30,
FOB shipping point, $1 1,100.
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 and four TV B on account to Albert Co. invoice 891, terms
2/10, , n/30. FOB shipping point
10 Sold two projector systems for cash
11 Purchased store supplies or account from Matt Co. terms n/30, $580
Issued check to Prince Co. number 2634 for the full amount due, less
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,
16 Received cash from Albert Co for the full amount due (less return of
December 14 and discount)
19 Issued check number 2636 to buy two TV units, $7 ,600
19 Issued check number 2637 for $6. 100 to Joseph Co on account
20. Sold five TV C units on account to Cameror Co. invoice number
892. terms 1/10 n/30, FOB shipping point.
For the convenience of the customer issued check number 2638 for shipping
charges on sale of December 20, $700
21 Received $1 250 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.
24. 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.)
25. Issued debit memo for return of $5 200 because of damaged projection
system purchased on Decembe 21, receiving credit from the seller
Issued check number 2639 for refund of cash on sales made for cash, $600.
(Customer was going to return goods until an allowance was arranged.)
Issued check number 2640 for sales salaries of $1 ,750 and office
salaries of $950.
28 Purchased store quipment on account from Matt Co., terms n/30, FOB
29 Issued check number 2641 for store supplies $470
30 Sold four TV C units on account to Randall Co., invoice number 893,
terms 2/10, n/30. FOB shipping point.
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 25 and discount
30 Issued debit memo for $300 of the purchase returned from
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
acheck mark (x) in the Post Reference column
2. Journalize the transactions in sales journal, purchases journal, cash receipts
journal, cash payments journal, general journal illustrated in chapter 7.
or as Also
post to the Accounts Receivable and Accounts Payable Subsidiary ledgers and
Inventory Control Sheet as needed
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
6. Prepare the unadjusted trial balance on the worksheet.
7. Complete the worksheet for the year ended December 31, 2012. using the following
Merchandise inventory on December 31
Insurance expired during the year
Store supplies on hand on December 31
Depreciatio for the current year needs to be calculated. The business uses
the Straight-line method, the store equipment has usefu 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)
Accrued salaries on December 31
f. The note payable terms are at 8%. payment is not being made until Jan 3,
2013 Interest must be recognized for one month
g. Net realizable value of Accounts Receivable is determined to be $27,950
8. Prepare a multiple-step income statement, a statement of owner's equity, and a
classified balance sheet in good form. (Recommend review of "Current Liabilities' on
pages 166 & 167 and "Current Maturities of Long-term Debt" on page 480.)
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
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110 Cash 121,889.00
112 Accounts Receivable 39,000.00
113 Allowance for Doubtful Accounts (11,050.00)
115 Merchandise Inventory 90,800.00
116 Prepaid Insurance 2,500.00
117 Store Supplies 975.00
Total CA 244,114.00
123 Store Equipment 101,700.00
124 Accumulated Depreciation-Store Equipment (30,240.00)
Total NCA 71,460.00...