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The following trial balance is for Jackson Sales Company, a home improvement retailer, at January 1, 2012:
|
Debit |
Credit |
|
Cash |
$49,950 |
|
Accounts Receivable |
14,000 |
|
Allowance for Doubtful Accounts |
$2,600 |
|
Merchandise Inventory |
20,200 |
|
Land |
50,000 |
|
Buildings |
81,000 |
|
Accumulated Depreciation – Buildings |
37,500 |
|
Equipment |
45,000 |
|
Accumulated Depreciation – Equipment |
18,000 |
|
Accounts Payable |
3,750 |
|
Notes Payable |
38,500 |
|
Common Stock, $10 par |
40,000 |
|
Retained Earnings |
119,800 |
|
$260,150 |
PART 1—TRANSACTIONS – 150 points
INSTRUCTIONS: Journalize the appropriate entries for the following transactions for the period January 1, 2012 to
December 31
, 2012. The company uses a perpetual inventory system and FIFO cost method. Beginning inventory on January 1 consisted of 1,000 units at $20.20 per unit.
|
February 1 |
Paid $3,750 accounts payable balance due to a supplier. |
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|
March 15 |
Received $2,500 partial payment on a $5,000 accounts receivable balance. Wrote off the rest of the account as uncollectible. |
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April 1 April 15 |
Purchased on account 2,500 units merchandise for resale at $21.50 per unit, with 2/10, n/30 terms. Paid the invoice for April 1 purchase |
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October 10 |
Sold 700 units of merchandise for a cash price of $40/unit. |
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November 1 |
Borrowed $20,000 at 6% interest for 5 years with annual payments of principal and interest on October 31. Used the loan proceeds plus cash to purchase a $25,000 delivery truck. |
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December 1 |
Bought back 500 shares of outstanding stock, paying $15/share. |
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December 5 |
Sold 2,400 units of merchandise on account for $41/unit. Payment terms on the invoice were 1/10, n/30. |
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December 7 |
Of the merchandise sold on December 5, 50 units were returned. |
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December 15 |
Paid $3,000 for rent of a warehouse facility. The payment covers rent for December and January. |
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|
Declared a $1/share cash dividend, payable January 14 to shareholders of record on January 3. |
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December 18 |
Purchased office supplies of $1,600 on account. |
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| December 31 |
Recorded depreciation for the year Buildings have a 30-year life, a $6,000 residual value and use straight-line depreciation Equipment has a 5-year life, no residual value and use double-declining balance depreciation NOTE: Equipment was all purchased January 1, 2011 Vehicles have a 5-year life, no residual value and use straight-line depreciation |
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|
The allowance for doubtful accounts balance is estimated as follows: 2% of current balances are estimated as uncollectible 20% of past-due balances are estimated as uncollectible. |
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A count of office supplies shows $550 still on hand on December 31. |
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January 2, 2013 |
Paid salaries of $24,500 for the pay period December 31 through January 4. Salaries are earned evenly during the pay period.
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PART 2 – TRIAL BALANCE – 30 points
INSTRUCTIONS: Prepare a trial balance as of December 31, 2012.
PART 3—FINANCIAL STATEMENTS – 120 points
INSTRUCTIONS: Prepare a December 31, 2012 Classified Balance Sheet, Classified Income Statement and Statement of Cash Flows
