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Foundations of Accounting I
Accounting Project
Written 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 1,100
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:
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, $2,600.
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 no
amount of recovery. We are to write-off her amount due. (Note: See page
402 for entry required.)
25.
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, $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 $90,800
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. 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 2,160
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.
Check Figures for Accounting Project:
Cash Receipts Journal; Cash Column: 97,939
Unadjusted Trial Balance Total: 1,080,620
Net Income: 264,350
Post Closing Trial Balance: 347,490
Foundations of Accounting I
Accounting Project
Written 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
1,100
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:
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, $2,600.
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 no
amount of recovery. We are to write-off her amount due. (Note: See page
402 for entry required.)
25. 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, $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
$90,800
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. 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
2,160
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.
Check Figures for Accounting Project:
Cash Receipts Journal; Cash Column: 97,939
Unadjusted Trial Balance Total: 1,080,620
Net Income: 264,350
Post Closing Trial Balance: 347,490
>SJ
ED
CR.
1 3 4 5 RECEIPTS JOURNAL
SALES CASH ED
REF INVENTORY CR. DR. 7 8 9 CR. DR. DR. Page No. 8 POST OTHER ACCOUNTS MERCH. 10 12 13 14 15 16 REF DEBIT CREDIT 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 POST een Televi ion
)
INVENTORY Units cost per unit Amount Units cost per unit Amount 20 Purchases Cost of Goods Sold (Sales) INVENTORY Purchases Cost of Goods Sold (Sales) INVENTORY Purchases Cost of Goods Sold (Sales) INVENTORY REF DEBIT CREDIT 5,800 POST RUNNING 7,500 POST RUNNING SJ 5 8,700 POST RUNNING SJ 5 12,250 POST RUNNING 24,500 Prince Co.
POST RUNNING 9,700 POST RUNNING PJ 10 6,100 POST RUNNING PJ 10 5,650 POST RUNNING 580 POST RUNNING Accounts
REF DEBIT CREDIT DEBIT CREDIT POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE Summary
ACCOUNT NO. POST BALANCE Accounts
POST BALANCE s cr ACCOUNT NO. POST BALANCE 3,500 ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE 2,000 ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE ACCOUNT NO. POST BALANCE Income Trial Balance Statement Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. 3 8 12 16 19 20 21 22 23 24 25 27 26 28 DEBIT CREDIT
2
SALES
JOURNAL
Page No.
6
INVOICE
POST
ACCTS. REC.
DR.
COST OF SALE DR.
DATE
NO.
ACCOUNT
DEBIT
REF
SALES
CR.
INVENTORY
1
2 2
3
4
5
6 6
CRJ
CASH
Page No. 4
POST
OTHER
ACCOUNTS
COST/SOLD DR.
DATE
ACCOUNT
CREDIT
ACCTS – CR.
SALES – CR
REC. – CR.
DISC. – DR.
1 1
2 2
3 3
4 4
5 5
6 6
7
8
9
PJ
PURCHASES JOURNAL
Page No.
11
POST OTHER ACCOUNTS
STORE
MERCH.
DATE ACCOUNT CREDITED REF
(SUNDRY)
PAYABLE
SUPPLIES
INVENORY
ACCTS – DR.
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
CPJ
CASH PAYMENTS JOURNAL
CK.
DATE NO. ACCOUNT DEBITED REF (SUNDRY) PAYABLE INVENTORY CASH
ACCTS – DR. DR. CR. CR.
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10
11 11
12
13
14
15
16
Journal
JOURNAL
Page No. 53
POST
DATE
DESCRIPTION
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
JOURNAL
Page No. 54
DATE DESCRIPTION REF DEBIT CREDIT
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 31
32 32
33 33
34 34
35 35
36 36
37 37
38 38
39 39
40 40
41 41
Inventory
Inventory Control Sheet
TV A:
52 inch Flat S
cr
s
Purchases
Cost of Goods Sold (
Sales
Date
Units
cost per unit
Amount
11/30/12
$
2,000
$40,000
TV B:
68 inch Flat Screen Television
Date Units cost per unit Amount Units cost per unit Amount Units cost per unit Amount 11/30/12 10
$3,000
$30,000
TV C:
72 inch Flat Screen Television
Date Units cost per unit Amount Units cost per unit Amount Units cost per unit Amount 11/30/12 8
$
3,500
$28,000
PS D:
6 foot x 10 foot Projector System
Date Units cost per unit Amount Units cost per unit Amount Units cost per unit Amount 11/30/12 5
$5,180
$25,900
Ending Inventory Value:
AR-SUB
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
(CUSTOMERS)
Customer Name: Albert Co.
POST
RUNNING
DATE
TRANSACTION
BALANCE
11/20/12
SJ 5
5,800
Customer Name: Marie Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE 11/20/12 SJ 5
7,500
Customer Name: Cameron Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
11/15/12
8,700
Customer Name: McKenzie Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
11/27/12
12,250
Customer Name: Randall Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
12/30/12
sj6
24,500
AP-SUB
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
(VENDERS)
Vendor Name:
DATE TRANSACTION REF DEBIT CREDIT BALANCE
11/26/12
PJ 10
9,700
Vendor Name: Joseph Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
11/16/12
6,100
Vendor Name: Elisha Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
11/29/12
5,650
Vendor Name: Matt Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
12/11/12
580
Vendor Name:
DATE TRANSACTION REF DEBIT CREDIT BALANCE
SCH-SUB
Schedule of
Accounts Receivable
Total Accounts Receivable
Schedule of
Accounts Payable
Total Accounts Payable
B-S Ledger
GENERAL LEDGER
Balance Sheet
Cash
ACCOUNT NO.
110
POST BALANCE
DATE
ITEM
Accounts Receivable ACCOUNT NO.
112
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Allowance for Doubtful Accounts
113
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Merchandise Inventory
115
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Prepaid Insurance
116
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Store Supplies
117
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Store Equipment
123
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Accumulated Depreciation-Store Equipment
124
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT Accounts Payable ACCOUNT NO.
210
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Salaries Payable
211
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Interest Payable
218
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Note Payable
220
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
D. Williams, Capital
310
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
D. Williams, Drawing
311
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Income
312
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
I-S Ledger
GENERAL LEDGER
Income
Statement
Sales ACCOUNT NO.
410
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT 11/30/12
853,445
12/31/12
90,125
943,570
12.31/12
18,000
961,570
Sales Returns and Allowances
411
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT 11/30/12
20,020
12/26/12
600
20,620
12/14/12
24,120
Sales Discounts
412
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT 11/30/12
13,200
12/31/12
936
14,136
Cost of Merchandise Sold
510
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT 11/30/12
414,575
12/31/12
51,700
466,275
12/31/12
10,360
476,635
12.14/12
474,635
Sales Salaries Expense
520
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Advertising Expense
521
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Depreciation Expense
522
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Store Supplies Expense
523
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Miscellaneous Selling Expense
529
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Office Salaries Expense
530
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Rent Expense
531
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Insurance Expense
532
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Bad Debt Expense
533
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Miscellaneous Administrative Expense
539
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Interest Expense
550
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
WkSheet
Worksheet
Unadjusted
Adjusted
Equity Statement
Account Title
Trial Balance
Adjustments
and Balance Sheet
Dr.
Cr.
1 Cash 1
2 Accounts Receivable 2
3
Allow for Doubtful Accts
4 Merchandise Inventory 4
5 Prepaid Insurance 5
6 Store Supplies 6
7 Store Equipment 7
8
Accm. Deprec-Store Eq.
9 Accounts Payable 9
10 Salaries Payable 10
11 Interest Payable 11
12
Note Payable (Due 2017)
13 D. Williams, Capital 13
14 D. Williams, Drawing 14
15 Sales 15
16
Sales Returns & Allow.
17 Sales Discounts 17
18 Cost of Merchandise Sold 18
19
Sales Salaries Exp.
20
Advertising Exp.
21
Depreciation Exp.
22
Store Supplies Exp.
23
Misc. Selling Exp.
24
Office Salaries Exp.
25
Rent Exp.
27
Insurance Exp.
26
Bad Debt Exp.
28
Misc. Administrative Exp.
29 Interest Expense 29
30 30
27 27
28 28
29 29
Income Stmt
Income Statement
Stmt Equity
Statement of Owner’s Equity
Bal Sheet
Balance Sheet
Post Trial
Post-Closing Trial Balance
ACCOUNT TITLE
Sheet1
