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Foundations of Accounting I
Accounting Project
Karen Pitsch
Alli Co. is a merchandising business. The account balances for Alli Co. as of November 30, 2012 (unless otherwise indicated), are as follows:
110 Cash $ 73,920
112 Accounts Receivable 37,875
113 Allowance for Doubtful Accounts 3,500
115 Merchandise Inventory 133,900
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) 10,000
310 P. Williams, Capital (January 1, 2012) 89,510
311 P. Williams, Drawing 40,000
312 Income Summary 0
410 Sales 853,040
411 Sales Returns and Allowances 20,600
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 240
Alli Co. uses the perpetual inventory system and the last-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 Last-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).
Alli Co. 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, $2,200.
3.
Purchased four TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $14,800.
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 project systems for cash.
11.
Purchased store supplies on account from Matt Co., terms n/30, $620.
13.
Issued check to Prince Co. number 2634 for full amount due (November’s balance plus December 3rd transaction), 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 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 three 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, $600.
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.
25. 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.)
24.
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, $1,000. (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, $800.
29.
Issued check number 2641 for store supplies, $550.
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 24 and discount.
30. Issued a debit memo for $200 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 (√) 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 when needed the Inventory Control Sheet.
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 $110,200
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. Alli Co. 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 $480
Office salaries 260 530
f. The note payable terms are at 8%, payment is not being made until Jan. 3, 2013. Interest must be recognized for one month (round answer to the nearest dollar amount).
g. Net realizable value of Accounts Receivable is determined to be $30,000.
8. Prepare a multiple-step income statement, a statement of owner’s equity, and a
classified balance sheet in good form.
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.
>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 3 3 )
INVENTORY Units cost per unit Amount Units cost per unit Amount 25 Purchases Cost of Goods Sold (Sales) INVENTORY Purchases Cost of Goods Sold (Sales) INVENTORY Purchases Cost of Goods Sold (Sales) INVENTORY REF DEBIT CREDIT 10,500 POST RUNNING 6,125 POST RUNNING SJ 5 9,000 POST RUNNING SJ 5 12,250 POST RUNNING Prince Co.
POST RUNNING 9,700 POST RUNNING PJ 10 6,100 POST RUNNING PJ 10 5,650 POST RUNNING 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 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 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 Foundations of Accounting I
Accounting Project
Karen Pitsch
Alli Co. is a merchandising business. The account balances for Alli Co. as of November 30, 2012 (unless otherwise indicated), are as follows:
110 $ 73,920
112 37,875
113 3,500
115 133,900
116 3,750
117 2,850
123 100,800
124
210 21,450
211 0
218 0
220 10,000
310
311 40,000
312 0
410 853,040
411 20,600
412 13,200
510 414,575
520 74,400
521 18,000
522 0
523 0
529 2,800
530 40,500
531 18,600
532 0
533 0
539
550 240
Alli Co. uses the perpetual inventory system and the last-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 Last-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).
Alli Co. 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. 3. Purchased four TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $14,800.
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 project systems for cash.
11. Purchased store supplies on account from Matt Co., terms n/30, $620.
13. Issued check to Prince Co. number 2634 for full amount due (November’s balance plus December 3rd transaction), 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 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 three 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, $600.
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.
25. 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.)
24. 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, $1,000. (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, $800.
29. Issued check number 2641 for store supplies, $550.
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 24 and discount.
30. Issued a debit memo for $200 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 (√) 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 when needed the Inventory Control Sheet.
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 $110,200
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. Alli Co. 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 $480
Office salaries 260 f. The note payable terms are at 8%, payment is not being made until Jan. 3, 2013. Interest must be recognized for one month (round answer to the nearest dollar amount).
g. Net realizable value of Accounts Receivable is determined to be $30,000.
8. Prepare a multiple-step income statement, a statement of owner’s equity, and a
classified balance sheet in good form.
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.
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
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6 6
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10
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13
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Journal
JOURNAL
Page No. 53
POST
DATE
DESCRIPTION
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Page No. 54
DATE DESCRIPTION REF DEBIT CREDIT
1 1 2 2
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Inventory
Inventory Control Sheet
TV A:
52 inch Flat Screen Television
Purchases
Cost of Goods Sold (
Sales
Date
Units
cost per unit
Amount
11/30/12
$2,000
$50,000
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
10,500
Customer Name: Marie Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE 11/20/12 SJ 5
6,125
Customer Name: Cameron Co.
DATE TRANSACTION REF DEBIT CREDIT BALANCE
11/15/12
9,000
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
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 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
P. Williams, Capital
310
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
P. 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
Sales Returns and Allowances
411
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Sales Discounts
412
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
Cost of Merchandise Sold
510
DATE ITEM REF DEBIT CREDIT DEBIT CREDIT
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 P. Williams, Capital 13
14 P. 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
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Merchandise Inventory
Prepaid Insurance
Store Supplies
Store Equipment
Accumulated Depreciation-Store Equipment
20,160
Accounts Payable
Salaries Payable
Interest Payable
Note Payable (Due 2017)
P. Williams, Capital (January 1, 2012)
89,510
P. Williams, Drawing
Income Summary
Sales
Sales Returns and Allowances
Sales Discounts
Cost of Merchandise Sold
Sales Salaries Expense
Advertising Expense
Depreciation Expense
Store Supplies Expense
Miscellaneous Selling Expense
Office Salaries Expense
Rent Expense
Insurance Expense
Bad Debt Expense
Miscellaneous Administrative Expense
1,650
Interest Expense
1. Issued check number 2632 for the December rent, $2,200.
530
