Solved by verified expert :Foundations of Accounting I
Accounting Project

Written by: Karen Pitsch

Entertainment is a merchandising business.
Their account balances as of November 30, 2012 (unless otherwise
indicated), are as follows:Foundations of Accounting IAccounting ProjectWritten by: Karen Pitsch David’s
Entertainment is a merchandising business.
Their account balances as of November 30, 2012 (unless otherwise
indicated), are as follows: 110 Cash $ 73,920 112 Accounts
Receivable 34,250 113 Allowance
for Doubtful Accounts 11,000 115 Merchandise
Inventory 123,900 116 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) 15,000 310 D.
Williams, Capital (January 1, 2012) 73,260 311 D.
Williams, Drawing 50,000 312 Income
Summary 0 410 Sales 853,445 411 Sales
Returns and Allowances 20,020 412 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 1,100David’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:TV A: $3,500TV B: $5,250TV C: $6,125PS D: $9,000During
December, the last month of the accounting year, the following transactions
were completed:Dec. 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, $11,100.4. 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 projector systems for cash. 11. Purchased store supplies on account
from Matt Co., terms n/30, $580.13. Issued check to Prince Co. number 2634
for the full amount due, 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 the
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 five 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, $700.21. 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, $15,600.24. Received notification that Marie Co. has been
granted bankruptcy with noamount of recovery. We are to write-off her amount due. (Note: See page402 for entry required.)25.
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, $600. (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, $1,200.29. 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.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 25 and discount.30. Issued a debit memo for $300 of the purchase
returned from December 28.Instructions: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 (x) 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 Inventory Control Sheet as needed. 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 $90,800b. Insurance expired during the year 1,250c. Store supplies on hand on December 31 975d. Depreciation for the current year needs to
be calculated. The business 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 $1,400 Office
salaries 760 2,160f. 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 aclassified
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.
and post the closing entries. Indicate
closed accounts by inserting a linein
both balance columns opposite the closing entry.11.
a post-closing trial balance.

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