Foundations of Accounting I
Written by: Karen Pitsch
Particular thanks to Donna Larner
Randiddle Co. is a selling concern. Their history balances as of November 30. 2012 ( unless otherwise indicated ) . are as follows:
110Cash $ 74. 370
112Accounts Receivable 6. 178
113Allowance for Doubtful Histories 650
115Merchandise Inventory 2. 346
116Prepaid Insurance 5. 750
117Store Supplies 2. 850
123Store Equipment 100. 800
124Accumulated Depreciation-Store Equipment 31. 060
210Accounts Collectible 3. 286
211Salaries Collectible 0
218Interest Collectible 0
220Note Collectible ( Due 2017 ) 30. 000
( $ 6. 000 to be paid in 2013 )
310Randiddle. Capital ( January 1. 2012 ) 46. 288
311Randiddle. Withdrawals 60. 000
312Income Drumhead 0
410Sales 296. 130
411Sales Tax returns and Allowances 10. 020
412Sales Discounts 7. 200
510Cost of Goods Sold 30. 250
520Sales Salaries Expense 34. 400
521Advertising Expense 18. 000
522Depreciation Expense 0
523Store Supplies Expense 0
529Miscellaneous Selling Expense 2. 800
530Office Salaries Expense 25. 500
531Rent Expense 24. 200
532Insurance Expense 0
533Bad Debt Expense 0
539Miscellaneous Administrative Expense 1. 650
550 Interest Expense 1. 100
Randiddle Co. uses the ageless stock list system and the First-in. First-out bing method. Transportation-in and purchase price reductions should be added to the Inventory Control Sheet. but since this will perplex the calculation of the First-in. First-out bing method. delight ignore this measure in the procedure. They besides 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 dealing affects them ( daily ) .
Randiddle Co. sells three types of microwave ovens.
The sale monetary values of each are:
900 Ws microwave: $ 199
1000 W microwave: $ 299
1200 W microwave: $ 499
During December. the last month of the accounting twelvemonth. the undermentioned minutess were completed:
Dec. 1. Issued cheque figure 2632 for the December rent. $ 2. 200. 2. Sold two 1200 W microwaves for hard currency.
4. Purchased four 1000 W microwaves on history from Matt Co. . footings 2/10. n/30. FOB transporting point. $ 596.
5. Issued cheque figure 2633 to pay the transit charges on purchase of December 4. $ 89. ( Note: Debit Merchandise Inventory. Do non include transportation and purchase price reductions to the Inventory Control sheet for this
project. ) 6. Sold six 1000 W microwaves and four 1200 W microwaves on history to Briana Co. . bill 891. footings 2/10. n/30. FOB transporting point. 8. Issued cheque figure 2634 for refund of hard currency on gross revenues made for hard currency. $ 150. ( Customer was traveling to return goods until an allowance was arranged. ) 10. Purchased shop supplies on history from Prince Co. . footings n/30. $ 310. 10. Issued cheque to Matt Co. figure 2635 for the full sum due. less price reduction allowed. ( Round price reduction to nearest dollar. )
11. Paid Prince Co. full sum due. look into figure 2636.
12. Issued recognition memo for one 1000 W microwave returned on sale of December 6. ( Note: Assume the returned microwave was from the 11/30 stock list ) 13. Issued cheque figure 2637 for advertisement disbursal for last half of December. $ 3. 000. 14. Received hard currency from Briana Co. for the full sum due ( less return of December 12 and price reduction ; unit of ammunition to nearest dollar ) . 19. Issued cheque figure 2638 to purchase five 900 W microwaves. $ 495. 19. Issued cheque figure 2639 for $ 596 to Joseph Co. on history. 20. Sold seven 900 watt microwaves on history to Cameron Co. . bill figure 892. footings 1/10. n/30. FOB transporting point. 20. To hasten sale on Dec. 20. issued cheque figure 2640 for transporting charges on sale to Cameron on December 20. $ 120 ( Note: Cameron Co. will be reimbursing us for this transportation cost ) . 21. Received $ 1. 396 hard currency from McKenzie Co. on history. no price reduction.
21. Purchased three 1200 watt microwaves on history from Elisha Co. . footings 1/10. n/30. FOB transporting point. $ 747. transporting $ 78 ( Note: Debit Merchandise Inventory $ 825. but merely put $ 747 in the Inventory Control Sheet ) . 24. Received presentment that Marie Co. has been granted bankruptcy with no sum of recovery. We are to write-off her sum due. ( Note: See page 365 for entry required. )
26. Issued a debit memo for return of $ 249 because of harm to one 1200 W microwave purchased on December 21. having recognition from the marketer.
27. Issued cheque figure 2641 for gross revenues wages of $ 2. 050 and office wages of $ 1. 400.
28. Purchased shop equipment on history from Joseph Co. . footings n/30. FOB finish. $ 1. 200.
29. Issued cheque figure 2642 for shop supplies. $ 70.
29. Purchased seven 1000 watt microwave from Prince Co. footings 1/10. n/30. FOB transporting point. for $ 1. 113 on history. transporting $ 107. 30. Sold eight 1000 W microwaves on history to Briana Co. . bill figure 893. footings 2/10. n/30. FOB transporting point.
30. Received hard currency from sale of December 20. less price reduction. plus transit paid on December 20. ( Round computations to the nearest dollar. ) 31. Issued cheque figure 2643 for purchase of December 21. less return of December 25 and price reduction. ( Round price reduction to the nearest dollar. ) 31. Issued a debit memo for $ 200 of the purchase returned from December 28.
1. Enter the balances of each of the histories in the appropriate balance column of the General Ledger ( B-S and I-S Ledger ) . Write Balance in the point subdivision. and topographic point a ( ten ) in the Post Reference column. 2. Journalize the minutess in a gross revenues diary. purchases journal. hard currency grosss journal. hard currency payments journal. or general diary as illustrated in chapter 7. Besides station to the Accounts Receivable and Accounts Payable Subsidiary legers and Inventory Control Sheet as needed. 3. Entire each column on the particular diaries and turn out the diaries. 4. Post the sums of the history named columns and separately post the “Other Accounts” columns every bit good to the General Ledger. 5. Fix the Schedule of Accounts Receivable and the Schedule of Accounts Payable ( their sum sum must be the sum in their controlling general leger history ) . 6. Fix the unadjusted test balance on the worksheet.
7. Complete the worksheet for the twelvemonth ended December 31. 2012. utilizing the undermentioned accommodation informations: a. Merchandise stock list on December 31 $ 1. 090
B. Insurance expired during the twelvemonth 2. 250
c. Store supplies on manus on December 31 850
d. Depreciation for the current twelvemonth demands to be calculated. The concern uses the Straight-line method. the shop equipment has a utile life of 10 old ages with no salvage value. ( Note: the purchase and return will non be included as the day of the months of the minutess were after the 15th of the month ) . e. Accrued wages on December 31:
Gross saless salaries $ 1. 075
Office salaries 540 $ 1. 615
f. The note collectible footings are at 8 % . payment is non being made until Jan. 3. 2013. Interest must be recognized for one month. g. Calculate the Bad Debt accommodation sum ; net realizable value of Accounts Receivable is determined to be $ 6. 313.
8. Fix a multiple-step income statement. a statement of owner’s equity. and a classified balance sheet in good signifier. ( Recommend reappraisal of “Current Liabilities” on page 149. ) 9. Journalize and post the adjusting entries.
10. Journalize and post the shutting entries. Indicate closed histories by infixing a nothing in both balance columns opposite the shutting entry.
11. Fix a post-closing test balance.