$101,114 $40,915 = 2.47

(1)

SOLUTION (concluded)

4. $101,114 – $40,915 = $60,199 $101,114 $40,915

DISCUSSION QUESTIONS

Suggested Responses

1. Current assets are listed in the order of their liquidity (or convertibility into cash). 2. The cost of goods available for sale is the cost of goods that could be sold. The cost of

goods sold, on the other hand, is the cost of goods that were actually sold. The difference between the cost of goods available for sale and the cost of goods sold is the amount of the ending inventory.

3. The basic classifications found on an income statement for a merchandising business are Revenue from Sales, Cost of Goods Sold, Operating Expenses, Other Income, and Other Expenses.

4. Current liabilities are debts that will become due within a company’s normal operating cycle, usually within one year. An example of a current liability is Accounts Payable. Long-term liabilities are debts that are payable over a

comparatively long period, usually more than one year. An example of a long-term liability is Mortgage Payable.

5. The difference between income from operations and net income is Other Income and Other Expenses.

Income from Operations + Other Income – Other Expenses = Net Income In comparing the results of operations over a number of years, income from operations is more useful, because it represents a company’s regular recurring revenue and expenses.

6. Net Sales = Sales – Sales Returns and Allowances – Sales Discounts

Net Purchases = Purchases – Purchases Returns and Allowances – Purchases Discounts These calculations show the true amounts actually earned and the amount actually added to inventory.

7. (a) Purchases Discounts is debited in the first closing entry, in which revenue accounts are closed.

(b) Sales Returns and Allowances is credited in the second closing entry, in which expense accounts are closed.

(c) Freight In is credited in the second closing entry, in which expense accounts are closed.

(d) Gain on Disposal of Property and Equipment is debited in the first closing entry, in which revenue accounts are closed.

8. If an adjusting entry (a) increases an asset account or a liability account (except Merchandise Inventory or a contra account, such as Accumulated Depreciation) and (b) the asset or liability did not have a balance prior to the adjustment, then reverse the adjusting entry.

= 2.47

Working Capital = Current Ratio =

(2)

SOLUTIONS TO EXERCISES

Exercise 12-1

a. Net Sales, $242,000 – $6,000 = $236,000

Cost of Goods Available for Sale, $152,000 + $170,000 = $322,000 Gross Profit, $236,000 – $186,000 = $50,000

b. Sales Returns and Allowances, $304,000 – $297,000 = $7,000 Net Purchases, $404,000 – $134,000 = $270,000

Gross Profit, $297,000 – $228,000 = $69,000 c. Sales, $628,000 + $10,000 = $638,000

Beginning Merchandise Inventory, $486,000 – $416,000 = $70,000 Cost of Goods Sold, $486,000 – $89,000 = $397,000

Gross Profit, $628,000 – $397,000 = $231,000

Exercise 12-2

Merchandise Inventory, Jan. 1, 20-- $185,000

Purchases $476,000

Less: Purchases Returns and Allowances

Purchases Discounts 17,500

Net Purchases $458,500

Add Freight In 12,000

Delivered Cost of Purchases 470,500

Cost of Goods Available for Sale $655,500

Less Merchandise Inventory,

Dec. 31, 20-- 189,000

Cost of Goods Sold $466,500

Exercise 12-3

a. Advertising Expense, SE f. Freight In, CGS

b. Rent Expense, GE g. Depreciation Expense, Building, GE

c. Purchases Discounts, CGS h. Interest Expense, OE d. Sales Returns and Allowances, S i. Insurance Expense, GE

e. Interest Income, OI j. Delivery Expense, SE

8,500 $9,000

(3)

Exercise 12-4

Revenue from Sales:

Sales $292,900

Less: Sales Returns and Allowances $ 12,100

Sales Discounts 6,100 18,200

Net Sales $274,700

Cost of Goods Sold:

Merchandise Inventory, July 1, 20-- $ 26,000

Purchases $115,000

Less: Purchases Returns and

Allowances $1,100

Purchases Discounts 1,200 2,300

June 30, 20-- 22,000

Cost of Goods Sold 123,200

Gross Profit $151,500

Operating Expenses:

Selling Expenses $ 57,000

General Expenses 46,000

Total Operating Expenses 103,000

Net Income $ 48,500

Exercise 12-5

a. Accounts Receivable, CA f. Supplies, CA

b. Building, PE g. Mortgage Payable (due in 3 years), LTL

c. Wages Payable, CL h. Unearned Fees, CL

d. Prepaid Taxes, CA i. D. Marlor, Capital, OE

e. Mortgage Payable (current), CL j. Notes Payable (due in 3 months), CL Bajia Company

Income Statement For Year Ended June 30,

(4)

20--Current Assets: Current Liabilities:

Prepaid Insurance $ 1,600 Unearned Fees $ 800

Merchandise Inventory 72,000 Notes Payable 5,000

Cash 19,000 Accounts Payable 23,000

Store Supplies 1,200 Mortgage Payable

Notes Receivable 3,000 (current portion) 3,500

Total Salaries Payable 2,700

Total – $35,000 =

PAGE

1 20-- 1

2 Dec. 31 Sales 502,000.00 2

3 Purchases Returns and Allowances 8,600.00 3

4 Purchases Discounts 4,300.00 4

5 Income Summary 514,900.00 5

6 6

7 31 Income Summary 353,400.00 7

8 Sales Returns and Allowances 7,400.00 8

9 Purchases 235,600.00 9 10 Freight In 11,200.00 10 11 Salary Expense 65,000.00 11 12 Rent Expense 22,000.00 12 13 Miscellaneous Expense 12,200.00 13 14 14 15 31 Income Summary 177,500.00 15 16 H. Baylor, Capital 177,500.00 16 17 ( + ) 17 18 – ( + ) 18 19 19 20 31 H. Baylor, Capital 55,000.00 20 21 H. Baylor, Drawing 55,000.00 21 22 22 $35,000 $96,800 $61,800 DEBIT POST. REF.

Exercise 12-7

GENERAL JOURNAL DATE

Exercise 12-6

Working Capital = $103,000 Current Ratio = $96,800 $96,800 CREDIT DESCRIPTION $35,000 = 2.77 $353,400 $87,000 $514,900 Closing Entries

(5)

PAGE

1 20-- 1

2 Dec. 31 Income Summary 93,000.00 2

3 H. Nishimoto, Capital 93,000.00 3 4 4 5 31 H. Nishimoto, Capital 75,000.00 5 6 H. Nishimoto, Drawing 75,000.00 6 7 7 $450,000 $ 18,000 93,000 $111,000 75,000 36,000 $486,000 H. Nishimoto, Capital, December 31,

20--Net Income for the Year Subtotal

Less Withdrawals for the Year Increase in Capital

H. Nishimoto, Capital, January 1, 20--Investment during the Year

CREDIT

DESCRIPTION DEBIT

POST. REF. Closing Entries

For Year Ended December 31, 20--Statement of Owner's Equity

Nishimoto Company

Exercise 12-8

(6)

Problem 12-1A

Sales $324,000

Less: Sales Returns and Allowances $ 3,400

Sales Discounts 2,707 6,107

Net Sales $317,893

Merchandise Inventory, Jan. 1, 20-- $ 52,300

Purchases $201,490

Allowances 2,880

Dec. 31, 20-- 54,580

Gross Profit $111,773 Operating Expenses: Wages Expense $ 46,240 Rent Expense 12,610 Commissions Expense 8,310 Supplies Expense 1,842 Insurance Expense 1,240

Depreciation Expense, Building 4,600

Depreciation Expense, Equipment 2,600

Income from Operations $ 34,331

Other Income:

Interest Income $ 1,830

Other Expenses:

Interest Expense 854 976

Net Income $ 35,307

The Fan Shop Income Statement

(7)

20--PAGE

1 20-- 1

2 Dec. 31 Sales 324,000.00 2

4 Interest Income 1,830.00 4

5 Income Summary 328,710.00 5

6 6

7 31 Income Summary 295,683.00 7

9 Sales Discounts 2,707.00 9 10 Purchases 201,490.00 10 11 Freight In 9,790.00 11 12 Wages Expense 46,240.00 12 13 Rent Expense 12,610.00 13 14 Commissions Expense 8,310.00 14 15 Supplies Expense 1,842.00 15 16 Insurance Expense 1,240.00 16

17 Depreciation Expense, Building 4,600.00 17

18 Depreciation Expense, Equipment 2,600.00 18

19 Interest Expense 854.00 19 20 20 21 31 Income Summary 35,307.00 21 22 P. G. Ochoa, Capital 35,307.00 22 23 23 24 31 P. G. Ochoa, Capital 30,500.00 24 25 P. G. Ochoa, Drawing 30,500.00 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 DESCRIPTION DEBIT POST. REF. Closing Entries

Problem 12-1A (concluded)

GENERAL JOURNAL

(8)

Problem 12-2A

M. J. Eckland, Capital, January 1, 20-- $57,314

Net Income for the Year $25,485

Less Withdrawals for the Year 23,000

Increase in Capital 2,485

M. J. Eckland, Capital, December 31, 20-- $59,799

Current Assets:

Cash $14,815

Notes Receivable 7,500

Accounts Receivable 30,170

Merchandise Inventory 50,244

Prepaid Property Taxes 2,115

Prepaid Insurance 1,640

Total Current Assets $106,484

Property and Equipment:

Land $16,700

Building $50,000

Less Accumulated Depreciation 15,900 34,100

Computer Equipment $ 6,892

Store Equipment $ 7,230

Delivery Equipment $ 4,300

Less Accumulated Depreciation 3,470 830

Total Property and Equipment 55,654

Total Assets $162,138

Assets

Eckland Stereo Statement of Owner's Equity For Year Ended December 31,

20--Balance Sheet Eckland Stereo December 31,

(9)

20--Problem 12-2A (concluded)

Current Liabilities: Notes Payable

Mortgage Payable (current portion) Accounts Payable

Wages Payable

Total Current Liabilities $ 37,139

Long-Term Liabilities:

Mortgage Payable 65,200

$102,339

M. J. Eckland, Capital 59,799

Total Liabilities and Owner's Equity $162,138

= Current Assets – Current Liabilities

$106,484 – = Current Assets $106,484 Current Liabilities $37,139 Total Liabilities Owner's Equity Working Capital $37,139 $69,345 = Current Ratio = 2,800 1,984 = 2.87 $ 5,215 27,140 Eckland Stereo

Balance Sheet (concluded) December 31, 20--Liabilities

(10)

PAGE

1 20-- 1

2 June 30 Income Summary 112,200.00 2

3 Merchandise Inventory 112,200.00 3 4 4 5 30 Merchandise Inventory 116,400.00 5 6 Income Summary 116,400.00 6 7 7 8 30 Salary Expense 1,240.00 8 9 Salaries Payable 1,240.00 9 10 10 11 30 Insurance Expense 2,840.00 11 12 Prepaid Insurance 2,840.00 12 13 13

14 30 Depreciation Expense, Delivery 14

15 Equipment 1,400.00 15

16 Accumulated Depreciation, 16

17 Delivery Equipment 1,400.00 17

18 18

19 30 Depreciation Expense, Store 19

20 Equipment 2,600.00 20 21 Accumulated Depreciation, 21 22 Store Equipment 2,600.00 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 POST. REF. Adjusting Entries

Problem 12-3A

GENERAL JOURNAL

(11)

PAGE

1 20-- 1

2 June 30 Sales 516,000.00 2

4 Purchases Discounts 6,800.00 4 5 Income Summary 532,400.00 5 6 6 7 30 Income Summary 480,700.00 7 8 Purchases 399,101.00 8 9 Freight In 14,000.00 9 10 Salary Expense 46,000.00 10 11 Truck Expense 10,600.00 11 12 Supplies Expense 2,700.00 12 13 Miscellaneous Expense 1,459.00 13 14 Insurance Expense 2,840.00 14

15 Depreciation Expense, Delivery 15

16 Equipment 1,400.00 16

17 Depreciation Expense, Store 17

18 Equipment 2,600.00 18 19 19 20 30 Income Summary 55,900.00 20 21 P. R. Masanto, Capital 55,900.00 21 22 22 23 30 P. R. Masanto, Capital 26,000.00 23 24 P. R. Masanto, Drawing 26,000.00 24 25 25 26 26

27 July 1 Salaries Payable 1,240.00 27

28 Salary Expense 1,240.00 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 Reversing Entry

Problem 12-3A (concluded)

GENERAL JOURNAL DATE Closing Entries CREDIT DESCRIPTION DEBIT POST. REF.

(12)

Problem 12-4A

Celso and Company Work Sheet

For Year Ended June 30,

20--DEBIT CREDIT 1 Cash 15,349.00 2 Accounts Receivable 13,810.00 3 Merchandise Inventory 50,280.00 4 Prepaid Insurance 1,385.00 5 Store Equipment 18,640.00

6 Accumulated Depreciation, Store Equipment 6,882.00

7 Accounts Payable 10,065.00

8 B. E. Celso, Capital 96,424.00

9 B. E. Celso, Drawing 30,000.00

10 Sales 208,030.00

11 Sales Returns and Allowances 1,740.00

12 Purchases 133,050.00

13 Purchases Returns and Allowances 4,295.00

14 Purchases Discounts 3,853.00

15 Freight In 8,350.00

16 Wages Expense 35,400.00

17 Advertising Expense 7,710.00

18 Rent Expense 12,000.00

19 Store Supplies Expense 1,835.00

20 329,549.00 329,549.00

21 Income Summary 22 Insurance Expense

23 Depreciation Expense, Store Equipment 24 Wages Payable 25 26 Net Income 27 28 29 30 31 32 33 34 35 36 37 38 TRIAL BALANCE ACCOUNT NAME

(13)

DEBIT CREDIT DEBIT CREDIT 15,349.00 1 13,810.00 2 (b) 54,600.00 (a) 50,280.00 54,600.00 3 (c) 475.00 910.00 4 18,640.00 5 (d) 4,380.00 11,262.00 6 10,065.00 7 96,424.00 8 30,000.00 9 208,030.00 10 1,740.00 11 133,050.00 12 4,295.00 13 3,853.00 14 8,350.00 15 (e) 1,492.00 36,892.00 16 7,710.00 17 12,000.00 18 1,835.00 19 20 (a) 50,280.00 (b) 54,600.00 50,280.00 54,600.00 21 (c) 475.00 475.00 22 (d) 4,380.00 4,380.00 23 (e) 1,492.00 1,492.00 24 111,227.00 111,227.00 256,712.00 270,778.00 133,309.00 119,243.00 25 14,066.00 14,066.00 26 270,778.00 270,778.00 133,309.00 133,309.00 27 28 29 30 31 32 33 34 35 36 37 38 CREDIT

ADJUSTMENTS INCOME STATEMENT BALANCE SHEET

Problem 12-4A (continued)

(14)

Problem 12-4A (continued)

Sales $208,030

Less Sales Returns and

Net Sales $206,290

Cost of Goods Sold: Merchandise Inventory,

July 1, 20-- $ 50,280

Purchases $133,050

Less: Purchases Returns

and Allowances $4,295

Cost of Goods Available

for Sale $183,532

Less Merchandise

Inventory, June 30, 20-- 54,600

Gross Profit $ 77,358

Wages Expense $ 36,892

Advertising Expense 7,710

Rent Expense 12,000

Store Supplies Expense 1,835

Insurance Expense 475

Depreciation Expense,

Store Equipment 4,380

Net Income $ 14,066

Celso and Company Income Statement For Year Ended June 30,

(15)

20--Problem 12-4A (continued)

B. E. Celso, Capital, July 1, 20-- $96,424

Decrease in Capital 15,934

B. E. Celso, Capital, June 30, 20-- $80,490

Current Assets:

Cash $15,349

Prepaid Insurance 910

Store Equipment $18,640

Total Assets $92,047 Current Liabilities: Accounts Payable $10,065 Wages Payable 1,492 Total Liabilities $11,557 B. E. Celso, Capital 80,490

Liabilities

Owner's Equity

Celso and Company Statement of Owner's Equity For Year Ended June 30,

20--Assets

Celso and Company Balance Sheet

(16)

20--PAGE

1 20-- 1

3 Merchandise Inventory 50,280.00 3 4 4 5 30 Merchandise Inventory 54,600.00 5 6 Income Summary 54,600.00 6 7 7 8 30 Insurance Expense 475.00 8 9 Prepaid Insurance 475.00 9 10 10

11 30 Depreciation Expense, Store Equipment 4,380.00 11

12 Accumulated Depreciation, Store 12

13 Equipment 4,380.00 13 14 14 15 30 Wages Expense 1,492.00 15 16 Wages Payable 1,492.00 16 17 17 18 18 19 30 Sales 208,030.00 19

22 Income Summary 216,178.00 22

23 23

24 30 Income Summary 206,432.00 24

26 Purchases 133,050.00 26

27 Freight In 8,350.00 27

28 Wages Expense 36,892.00 28

29 Advertising Expense 7,710.00 29

30 Rent Expense 12,000.00 30

31 Store Supplies Expense 1,835.00 31

32 Insurance Expense 475.00 32

34 Equipment 4,380.00 34 35 35 36 36 37 37 38 38 39 39 40 40 DEBIT POST. REF. Closing Entries

Problem 12-4A (continued)

Adjusting Entries

CREDIT DESCRIPTION

(17)

PAGE

1 20-- 1

3 B. E. Celso, Capital 14,066.00 3 4 4 5 30 B. E. Celso, Capital 30,000.00 5 6 B. E. Celso, Drawing 30,000.00 6 7 7 8 8

9 July 1 Wages Payable 1,492.00 9

10 Wages Expense 1,492.00 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

Problem 12-4A (concluded)

GENERAL JOURNAL DESCRIPTION DEBIT POST. REF. DATE Closing Entries Reversing Entry CREDIT

(18)

Sales $315,483

Less: Sales Returns and Allowances $ 4,348

Sales Discounts 1,817 6,165

Net Sales $309,318

Merchandise Inventory, Jan. 1, 20-- $ 48,473

Purchases $185,272

Dec. 31, 20-- 48,850

Gross Profit $116,797 Operating Expenses: Wages Expense $ 40,615 Rent Expense 10,840 Commissions Expense 8,220 Supplies Expense 1,826 Insurance Expense 2,624

Depreciation Expense, Building 4,220

Depreciation Expense, Equipment 4,500

Income from Operations $ 43,952

Other Income: Interest Income $ 925 Other Expenses: Interest Expense 1,258 (333) Net Income $ 43,619

Problem 12-1B

McKnight Music Store Income Statement

(19)

20--PAGE

1 20-- 1

2 Dec. 31 Sales 315,483.00 2

4 Interest Income 925.00 4

5 Income Summary 317,955.00 5

6 6

7 31 Income Summary 274,713.00 7

9 Sales Discounts 1,817.00 9 10 Purchases 185,272.00 10 11 Freight In 9,173.00 11 12 Wages Expense 40,615.00 12 13 Rent Expense 10,840.00 13 14 Commissions Expense 8,220.00 14 15 Supplies Expense 1,826.00 15 16 Insurance Expense 2,624.00 16

17 Depreciation Expense, Building 4,220.00 17

18 Depreciation Expense, Equipment 4,500.00 18

19 Interest Expense 1,258.00 19 20 20 21 31 Income Summary 43,619.00 21 22 W. J. McKnight, Capital 43,619.00 22 23 23 24 31 W. J. McKnight, Capital 40,000.00 24 25 W. J. McKnight, Drawing 40,000.00 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 DATE Closing Entries

Problem 12-1B (concluded)

CREDIT DESCRIPTION DEBIT POST. REF. GENERAL JOURNAL

(20)

M. E. Meyer, Capital, January 1, 20-- $75,085

M. E. Meyer, Capital, December 31, 20-- $85,984

Current Assets: Cash $18,525 Notes Receivable 4,500 Accounts Receivable 22,680 Merchandise Inventory 53,542 Prepaid Taxes 1,820 Prepaid Insurance 2,450

Land $18,600

Building $42,000

Computer Equipment $ 4,424

Store Equipment $ 7,480

Delivery Equipment $ 5,740

Total Property and Equipment 45,184

Total Assets $148,701

Assets

Meyer Mountain Shop Balance Sheet December 31, 20--Meyer Mountain Shop Statement of Owner's Equity For Year Ended December 31,

20--Problem 12-2B

(21)

Problem 12-2B (concluded)

Current Liabilities: Notes Payable

Mortgage Payable (current portion) Accounts Payable

Wages Payable

Total Current Liabilities $ 29,915

Long-Term Liabilities:

Mortgage Payable 54,600

Total Liabilities $ 84,515

M. E. Meyer, Capital 64,186

= Current Assets – Current Liabilities

$103,517 – $29,915 =

Current Assets $103,517

Current Liabilities $29,915 3.46 Meyer Mountain Shop

Balance Sheet (concluded) December 31, 20--Liabilities 1,460 19,455 $ 6,500 2,500 = = Owner's Equity Working Capital Current Ratio = $73,602

(22)

PAGE

1 20-- 1

3 Merchandise Inventory 113,202.00 3 4 4 5 30 Merchandise Inventory 117,274.00 5 6 Income Summary 117,274.00 6 7 7 8 30 Salary Expense 1,645.00 8 9 Salaries Payable 1,645.00 9 10 10 11 30 Insurance Expense 2,940.00 11 12 Prepaid Insurance 2,940.00 12 13 13

14 30 Depreciation Expense, Delivery 14

15 Equipment 2,800.00 15

16 Accumulated Depreciation, 16

17 Delivery Equipment 2,800.00 17

18 18

19 30 Depreciation Expense, Store 19

20 Equipment 2,718.00 20 21 Accumulated Depreciation, 21 22 Store Equipment 2,718.00 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 Adjusting Entries DEBIT POST. REF.

Problem 12-3B

GENERAL JOURNAL

(23)

PAGE

1 20-- 1

2 June 30 Sales 532,262.00 2

4 Purchases Discounts 6,935.00 4 5 Income Summary 548,014.00 5 6 6 7 30 Income Summary 498,096.00 7 8 Purchases 397,830.00 8 9 Freight In 23,400.00 9 10 Salary Expense 54,700.00 10 11 Truck Expense 9,492.00 11 12 Supplies Expense 2,416.00 12 13 Miscellaneous Expense 1,800.00 13 14 Insurance Expense 2,940.00 14

15 Depreciation Expense, Delivery 15

16 Equipment 2,800.00 16

18 Equipment 2,718.00 18 19 19 20 30 Income Summary 53,990.00 20 21 J. Ketcher, Capital 53,990.00 21 22 22 23 30 J. Ketcher, Capital 40,350.00 23 24 J. Ketcher, Drawing 40,350.00 24 25 25 26 26

27 July 1 Salaries Payable 1,645.00 27

28 Salary Expense 1,645.00 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 DEBIT POST. REF. Reversing Entry

Problem 12-3B (concluded)

GENERAL JOURNAL DATE Closing Entries CREDIT DESCRIPTION

(24)

Problem 12-4B

Sheldon Company Work Sheet

For Year Ended January 31,

20--DEBIT CREDIT 1 Cash 16,400.00 2 Accounts Receivable 15,100.00 3 Merchandise Inventory 55,500.00 4 Prepaid Insurance 3,080.00 5 Store Equipment 24,900.00

6 Accumulated Depreciation, Store Equipment 3,860.00

7 Accounts Payable 14,400.00

8 M. E. Sheldon, Capital 126,384.00

9 M. E. Sheldon, Drawing 36,000.00

10 Sales 227,000.00

11 Sales Returns and Allowances 2,000.00

12 Purchases 172,000.00

13 Purchases Returns and Allowances 2,375.00

14 Purchases Discounts 3,567.00

15 Freight In 7,491.00

16 Wages Expense 24,800.00

17 Advertising Expense 5,912.00

18 Rent Expense 12,900.00

19 Store Supplies Expense 1,503.00

20 377,586.00 377,586.00

21 Income Summary 22 Insurance Expense

23 Depreciation Expense, Store Equipment 24 Wages Payable 25 26 Net Loss 27 28 29 30 31 32 33 34 35 36 37 38 TRIAL BALANCE ACCOUNT NAME

(25)

INCOME STATEMENT BALANCE SHEET

DEBIT CREDIT DEBIT CREDIT

16,400.00 1 15,100.00 2 (b) 55,750.00 (a) 55,500.00 55,750.00 3 (c) 1,285.00 1,795.00 4 24,900.00 5 (d) 5,482.00 9,342.00 6 14,400.00 7 126,384.00 8 36,000.00 9 227,000.00 10 2,000.00 11 172,000.00 12 2,375.00 13 3,567.00 14 7,491.00 15 (e) 1,503.00 26,303.00 16 5,912.00 17 12,900.00 18 1,503.00 19 20 (a) 55,500.00 (b) 55,750.00 55,500.00 55,750.00 21 (c) 1,285.00 1,285.00 22 (d) 5,482.00 5,482.00 23 (e) 1,503.00 1,503.00 24 119,520.00 119,520.00 290,376.00 288,692.00 149,945.00 151,629.00 25 1,684.00 1,684.00 26 290,376.00 290,376.00 151,629.00 151,629.00 27 28 29 30 31 32 33 34 35 36 37 38 DEBIT CREDIT

Problem 12-4B (continued)

ADJUSTMENTS

(26)

Sales $227,000

Less Sales Returns and

Net Sales $225,000

Cost of Goods Sold: Merchandise Inventory,

February 1, 20-- $ 55,500

Purchases $172,000

Less: Purchases Returns

and Allowances $2,375

Cost of Goods Available

for Sale $229,049

Less Merchandise

Inventory, January 31, 20-- 55,750

Gross Profit $ 51,701

Wages Expense $ 26,303

Advertising Expense 5,912

Rent Expense 12,900

Store Supplies Expense 1,503

Insurance Expense 1,285

Depreciation Expense,

Store Equipment 5,482

Net Loss $ (1,684)

Problem 12-4B (continued)

Sheldon Company Income Statement

(27)

20--M. E. Sheldon, Capital, February 1, 20-- $126,384

Net Loss for the Year $ 1,684

M. E. Sheldon, Capital, January 31, 20-- $ 88,700

Current Assets:

Cash $16,400

Prepaid Insurance 1,795

Total Current Assets $ 89,045

Store Equipment $24,900

Total Assets $104,603 Current Liabilities: Accounts Payable $14,400 Wages Payable 1,503 Total Liabilities $ 15,903 M. E. Sheldon, Capital 88,700

Sheldon Company Balance Sheet Sheldon Company Statement of Owner's Equity For Year Ended January 31,

20--Problem 12-4B (continued)

Liabilities

Owner's Equity Assets

(28)

20--PAGE

1 20-- 1

2 Jan. 31 Income Summary 55,500.00 2

3 Merchandise Inventory 55,500.00 3 4 4 5 31 Merchandise Inventory 55,750.00 5 6 Income Summary 55,750.00 6 7 7 8 31 Insurance Expense 1,285.00 8 9 Prepaid Insurance 1,285.00 9 10 10

11 31 Depreciation Expense, Store Equipment 5,482.00 11

12 Accumulated Depreciation, Store 12

13 Equipment 5,482.00 13 14 14 15 31 Wages Expense 1,503.00 15 16 Wages Payable 1,503.00 16 17 17 18 18 19 31 Sales 227,000.00 19

22 Income Summary 232,942.00 22

23 23

24 31 Income Summary 234,876.00 24

26 Purchases 172,000.00 26

27 Freight In 7,491.00 27

28 Wages Expense 26,303.00 28

29 Advertising Expense 5,912.00 29

30 Rent Expense 12,900.00 30

31 Store Supplies Expense 1,503.00 31

32 Insurance Expense 1,285.00 32

34 Equipment 5,482.00 34 35 35 36 36 37 37 38 38 39 39 40 40 Closing Entries

Problem 12-4B (continued)

GENERAL JOURNAL DATE Adjusting Entries CREDIT DESCRIPTION DEBIT POST. REF.

(29)

PAGE

1 20-- 1

2 Jan. 31 M. E. Sheldon, Capital 1,684.00 2

3 Income Summary 1,684.00 3 4 4 5 31 M. E. Sheldon, Capital 36,000.00 5 6 M. E. Sheldon, Drawing 36,000.00 6 7 7 8 8

9 Feb. 1 Wages Payable 1,503.00 9

10 Wages Expense 1,503.00 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

Problem 12-4B (concluded)

GENERAL JOURNAL DATE Closing Entries Reversing Entry CREDIT DESCRIPTION DEBIT POST. REF.

(30)

(31)

COMPREHENSIVE REVIEW PROBLEM (General Journal)

PAGE 89

1 20-- 1

2 Feb. 1 Salaries Payable 230 620.00 2

3 Salary Expense 611 620.00 3

4 Reversed the adjusting entry for 4

5 accrued salaries. 5

6 6

7 1 Accounts Receivable, Hotel Beritz 113/

9

12,520.86 7

8 Sales 411 12,520.86 8

9 Sold merchandise to Hotel Beritz, 9

10 invoice No. 5221. 10

11 11

12 2 Accounts Payable, Kingston Fabrics 221/

9

16,932.10 12

13 Purchases Discounts 513 338.64 13

14 Cash 111 16,593.46 14

15 Paid Kingston Fabrics for invoice no. 15

16 D1739 less discount, Ck. No. 7216. 16

17 17

18 5 Purchases 511 4,874.80 18

19 Freight In 514 158.00 19

20 Accounts Payable, Magnuson Textiles 221/

9

5,032.80 20

21 Purchased merchandise from 21

22 Magnuson Textiles, invoice no. RE275, 22

23 invoice dated February 2, terms 1/10, 23

24 n/30. 24

25 25

26 5 Utilities Expense 614 358.00 26

27 Cash 111 358.00 27

28 Paid Countrywide Power for electric bill, 28

29 Ck. No. 7217. 29

30 30

31 6 Cash 111 10,780.51 31

32 Accounts Receivable, Jason and Waldon 113/

9

10,780.51 32

33 Received payment of account from 33

34 Jason and Waldon. 34

35 35

36 7 Accounts Payable, Magnuson Textiles 221/

9

9,782.00 36

38 Cash 111 9,684.18 38

39 Paid Magnuson Textiles for invoice no. 39

40 RE64 less discount, Ck. No. 7218. 40

41 41 42 42 43 43 DATE GENERAL JOURNAL CREDIT Reversing Entry DESCRIPTION POST. REF. DEBIT

(32)

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

PAGE 90

1 20-- 1

2 Feb. 9 Cash 111 9,745.40 2

3 Sales 411 9,745.40 3

4 Cash sales, February 1–9. 4

5 5

6 12 Salary Expense 611 5,214.00 6

7 Employees' Income Tax Payable 226 503.00 7

8 FICA Taxes Payable 227 398.87 8

9 Salaries Payable 230 4,312.13 9

10 Payroll register for semimonthly 10

11 period ended February 12. 11

12 12

13 12 Salaries Payable 230 4,312.13 13

14 Cash, R. W. Harris 111 2,335.74 14

15 Cash, T. L. Newkirk 111 1,976.39 15

16 Issued Ck. No. 7219 to R. W. Harris 16

17 for $2,335.74, and Ck. No. 7220 to 17

18 T. L. Newkirk for $1,976.39 for the 18

19 February 12 payroll. 19

20 20

21 12 Payroll Tax Expense 612 641.23 21

23 State Unemployment Tax Payable 228 211.09 23 24 Federal Unemployment Tax Payable 229 31.27 24

25 To record employer's share of FICA 25

26 taxes and employer's federal and 26

27 state unemployment taxes. 27

28 28

9

692.00 29 30 Purchases Returns and Allowances 512 692.00 30

31 Credit memo no. 916 for defective 31

32 merchandise. 32

33 33

34 14 Employees' Income Taxes Payable 226 1,285.00 34

35 FICA Taxes Payable 227 1,615.80 35

36 Cash 111 2,900.80 36

37 Issued Ck. No. 7221 to Mid-State 37

38 Bank for monthly deposit of January 38

39 employees’ federal income tax 39

40 withheld. 40 41 41 42 42 43 43 CREDIT DEBIT GENERAL JOURNAL DATE DESCRIPTION POST. REF.

(33)

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

PAGE 91

1 20-- 1

2 Feb. 14 Accounts Receivable, Jason and Waldon 113/

9

15,781.30 2

3 Sales 411 15,781.30 3

4 Sold merchandise to Jason and 4

5 Waldon, invoice no. 5222. 5

6 6

9

4,340.80 7

9 Cash 111 4,298.97 9

10 Paid Magnuson Textiles for invoice 10

11 no. RE275, Ck. No. 7222. 11

12 12

13 18 Purchases 511 21,375.20 13

14 Freight In 514 1,242.00 14

15 Accounts Payable, Brandon, Inc. 221/

9

22,617.20 15

16 Purchased merchandise from Brandon, 16

17 Inc., invoice no. 164M, invoice dated 17

18 February 14, terms 2/10, n/30. 18

19 19

20 18 Cash 111 7,889.24 20

21 Sales 411 7,889.24 21

23 23

24 19 Supplies Expense 616 336.00 24

25 Cash 111 336.00 25

26 Bought invoice forms from Quicker 26

27 Printing, Ck. No. 7223. 27

28 28

29 19 Cash 111 4,830.65 29

30 Accounts Receivable, Fashion Decor 113/

9

4,830.65 30

31 Received payment on account. 31

32 32

33 22 Accounts Payable, Tyson Manufacturing 33

34 Company 221/

9

12,540.00 34

35 Cash 111 12,540.00 35

36 Paid Tyson Manufacturing Company for 36

37 invoice no. 9264D, Ck. No. 7224. 37

38 38

39 22 Accounts Receivable, Fashion Decor 113/

9

17,435.32 39

40 Sales 411 17,435.32 40

41 Sold merchandise to Fashion Decor, 41

42 invoice no. 5223. 42

43 43

GENERAL JOURNAL

DATE DESCRIPTION

POST.

(34)

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

PAGE 92

1 20-- 1

2 Feb. 24 Sales Returns and Allowances 412 185.00 2 3 Accounts Receivable, Fashion Decor 113/

9

185.00 3

4 Credit memo no. 214 for return of 4

5 merchandise. 5

6 6

7 24 Purchases 511 16,536.90 7

8 Accounts Payable, Kingston Fabrics 221/

9

16,536.90 8

9 Purchased merchandise from 9

10 Kingston Fabrics, invoice no. D1797, 10

11 invoice dated February 22, terms 11

12 2/10, n/30. 12

13 13

14 26 Salary Expense 611 5,214.00 14

15 Employees' Income Tax Payable 226 503.00 15

17 Salaries Payable 230 4,312.13 17

18 Payroll register for semimonthly 18

19 period ended February 26. 19

20 20

21 26 Salaries Payable 230 4,312.13 21

22 Cash, R. W. Harris 111 2,335.74 22

23 Cash, T. L. Newkirk 111 1,976.39 23

24 Issued Ck. No. 7225 to R. W. Harris 24

25 for $2,335.74, and Ck. No. 7226 to 25

26 T. L. Newkirk for $1,976.39 for the 26

27 February 26 payroll. 27

28 28

29 26 Payroll Tax Expense 612 401.72 29

31 State Unemployment Tax Payable 228 2.48 31

32 Federal Unemployment Tax Payable 229 0.37 32

33 To record employer's share of FICA 33

34 taxes and employer's federal and 34

35 state unemployment taxes. 35

36 36

37 27 Freight In 514 1,035.00 37

38 Cash 111 1,035.00 38

39 Paid JIT Freight Line for 39

40 transportation charges on 40

41 merchandise purchased from 41

42 Kingston Fabrics, Ck. No. 7228. 42

43 43 CREDIT POST. REF. DEBIT GENERAL JOURNAL DATE DESCRIPTION

(35)

PAGE 93

1 20-- 1

2 Feb. 28 Supplies Expense 616 30.24 2

3 Miscellaneous Expense 619 25.36 3

4 Cash 111 55.60 4

5 Issued Ck. No. 7229 to reimburse the 5

6 petty cash fund. 6

7 7

8 28 Cash 111 8,986.60 8

9 Sales 411 8,986.60 9

11 11

12 28 Rent Expense 613 2,290.00 12

13 Cash 111 2,290.00 13

14 Paid Global Rental Agency for monthly 14

15 rent, Ck. No. 7230. 15

16 16

17 28 M. L. Langdon, Drawing 312 5,000.00 17

18 Cash 111 5,000.00 18

19 Owner withdrew cash for personal use, 19

20 Ck. No. 7231. 20

21 21

PAGE 94

1 20-- 1

2 Feb. 28 Income Summary 313 52,640.00 2

3 (a) Merchandise Inventory 114 52,640.00 3

4 4 5 (b) 28 Merchandise Inventory 114 45,484.00 5 6 Income Summary 313 45,484.00 6 7 7 8 (c) 28 Salary Expense 611 2,084.00 8 9 Salaries Payable 230 2,084.00 9 10 10 11 (d) 28 Insurance Expense 617 210.00 11 12 Prepaid Insurance 118 210.00 12 13 13

14 (e) 28 Depreciation Expense, Equipment 618 1,885.00 14 15 Accumulated Depreciation, Equipment 123 1,885.00 15

16 16 17 17 Adjusting Entries POST. REF. DEBIT DESCRIPTION POST. REF. DEBIT DATE CREDIT GENERAL JOURNAL CREDIT

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

(36)

PAGE 95

1 20-- 1

2 Feb. 28 Sales 411 72,358.72 2

3 Purchases Returns and Allowances 512 692.00 3

5 Income Summary 313 73,529.01 5

6 6

7 28 Income Summary 313 63,476.45 7

8 Sales Returns and Allowances 412 185.00 8

9 Purchases 511 42,786.90 9

10 Freight In 514 2,435.00 10

11 Salary Expense 611 11,892.00 11

12 Payroll Tax Expense 612 1,042.95 12

13 Rent Expense 613 2,290.00 13

14 Utilities Expense 614 358.00 14

15 Supplies Expense 616 366.24 15

16 Insurance Expense 617 210.00 16

17 Depreciation Expense, Equipment 618 1,885.00 17

18 Miscellaneous Expense 619 25.36 18 19 19 20 28 Income Summary 313 2,896.56 20 21 M. L. Langdon, Capital 311 2,896.56 21 22 22 23 28 M. L. Langdon, Capital 311 5,000.00 23 24 M. L. Langdon, Drawing 312 5,000.00 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 42 42 Closing Entries

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

GENERAL JOURNAL

DATE DESCRIPTION

POST.

(37)

DEBIT CREDIT 20— Feb. 1 Balance

9

34,641.34 2 J89 16,593.46 18,047.88 5 J89 358.00 17,689.88 6 J89 10,780.51 28,470.39 7 J89 9,684.18 18,786.21 9 J90 9,745.40 28,531.61 12 J90 2,335.74 26,195.87 12 J90 1,976.39 24,219.48 14 J90 2,900.80 21,318.68 14 J91 4,298.97 17,019.71 18 J91 7,889.24 24,908.95 19 J91 336.00 24,572.95 19 J91 4,830.65 29,403.60 22 J91 12,540.00 16,863.60 26 J92 2,335.74 14,527.86 26 J92 1,976.39 12,551.47 27 J92 1,035.00 11,516.47 28 J93 55.60 11,460.87 28 J93 8,986.60 20,447.47 28 J93 2,290.00 18,157.47 28 J93 5,000.00 13,157.47 DEBIT CREDIT 20— Feb. 1 Balance

9

70.00 DEBIT CREDIT 20— Feb. 1 Balance

9

15,611.16 1 J89 12,520.86 28,132.02 6 J89 10,780.51 17,351.51 14 J91 15,781.30 33,132.81 19 J91 4,830.65 28,302.16 22 J91 17,435.32 45,737.48 24 J92 185.00 45,552.48 DEBIT Accounts Receivable POST. REF. ITEM 113 BALANCE DEBIT ACCOUNT NO. ACCOUNT 112 DATE ITEM POST. REF. DEBIT ACCOUNT

ACCOUNT ACCOUNT NO.

111

Cash ACCOUNT NO.

CREDIT

BALANCE

Petty Cash Fund

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

CREDIT BALANCE DATE ITEM POST. REF. CREDIT GENERAL LEDGER DATE

(38)

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

9

52,640.00 28 Adj. J94 52,640.00 — — 28 Adj. J94 45,484.00 45,484.00 DEBIT CREDIT 20— Feb. 1 Balance

9

2,480.00 28 Adj. J94 210.00 2,270.00

Equipment ACCOUNT NO. 122

DEBIT CREDIT

20—

Feb. 1 Balance

9

9,324.00

Accumulated Depreciation, Equipment ACCOUNT NO. 123

9

5,328.00 28 Adj. J94 1,885.00 7,213.00 DEBIT CREDIT 20— Feb. 1 Balance

9

39,254.10 2 J89 16,932.10 22,322.00 5 J89 5,032.80 27,354.80 7 J89 9,782.00 17,572.80 12 J90 692.00 16,880.80 14 J91 4,340.80 12,540.00 18 J91 22,617.20 35,157.20 22 J91 12,540.00 22,617.20 24 J92 16,536.90 39,154.10 221

ACCOUNT Accounts Payable ACCOUNT NO.

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE ITEM DATE CREDIT BALANCE POST. REF. BALANCE CREDIT DEBIT POST. REF. DEBIT ACCOUNT DATE ITEM

Merchandise Inventory _{ACCOUNT NO.} 114

POST. REF. DEBIT CREDIT BALANCE BALANCE ACCOUNT DATE ITEM DEBIT DATE POST. REF. ITEM ACCOUNT CREDIT

(39)

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

9

1,285.00 12 J90 503.00 1,788.00 14 J90 1,285.00 503.00 26 J92 503.00 1,006.00 DEBIT CREDIT 20— Feb. 1 Balance

9

1,615.80 12 J90 398.87 2,014.67 12 J90 398.87 2,413.54 14 J90 1,615.80 797.74 26 J92 398.87 1,196.61 26 J92 398.87 1,595.48 DEBIT CREDIT 20— Feb. 1 Balance

9

536.76 12 J90 211.09 747.85 26 J92 2.48 750.33 DEBIT CREDIT 20— Feb. 1 Balance

9

79.52 12 J90 31.27 110.79 26 J92 0.37 111.16

State Unemployment Tax Payable

DATE ITEM

POST. REF.

227

ACCOUNT FICA Taxes Payable ACCOUNT NO.

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

DATE

ACCOUNT ACCOUNT NO. 228

DEBIT CREDIT

ACCOUNT Employees' Income Tax Payable ACCOUNT NO. 226

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

Federal Unemployment Tax Payable ACCOUNT NO. 229

BALANCE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

(40)

9

620.00 1 Reversing J89 620.00 — — 12 J90 4,312.13 4,312.13 12 J90 4,312.13 — — 26 J92 4,312.13 4,312.13 26 J92 4,312.13 — — 28 Adj. J94 2,084.00 2,084.00 DEBIT CREDIT 20— Feb. 1 Balance

9

66,047.32 28 Closing J95 2,896.56 68,943.88 28 Closing J95 5,000.00 63,943.88 DEBIT CREDIT Feb. 28 J93 5,000.00 5,000.00 28 Closing J95 5,000.00 — — DEBIT CREDIT Feb. 28 Adj. J94 52,640.00 52,640.00 28 Adj. J94 45,484.00 7,156.00 28 Closing J95 73,529.01 66,373.01 28 Closing J95 63,476.45 2,896.56 28 Closing J95 2,896.56 — — ACCOUNT NO. DATE ITEM POST. REF.

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

DEBIT CREDIT

BALANCE

ACCOUNT Salaries Payable 230

CREDIT

BALANCE

DATE ITEM

POST.

REF. DEBIT

ACCOUNT M. L. Langdon, Capital ACCOUNT NO. 311

ACCOUNT M. L. Langdon, Drawing ACCOUNT NO. 312

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

ACCOUNT Income Summary ACCOUNT NO. 313

DATE ITEM

POST.

REF. DEBIT CREDIT

(41)

DEBIT CREDIT Feb. 1 J89 12,520.86 12,520.86 9 J90 9,745.40 22,266.26 14 J91 15,781.30 38,047.56 18 J91 7,889.24 45,936.80 22 J91 17,435.32 63,372.12 28 J93 8,986.60 72,358.72 28 Closing J95 72,358.72 — — DEBIT CREDIT Feb. 24 J92 185.00 185.00 28 Closing J95 185.00 — — DEBIT CREDIT Feb. 5 J89 4,874.80 4,874.80 18 J91 21,375.20 26,250.00 24 J92 16,536.90 42,786.90 28 Closing J92 42,786.90 — — DEBIT CREDIT Feb. 12 J90 692.00 692.00 28 Closing J95 692.00 — — DEBIT CREDIT Feb. 2 J89 338.64 338.64 7 J89 97.82 436.46 14 J91 41.83 478.29 28 Closing J95 478.29 — —

ACCOUNT Purchases Discounts ACCOUNT NO. 513

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

ACCOUNT Sales Returns and Allowances ACCOUNT NO. 412

DATE ITEM

POST.

REF. DEBIT CREDIT

BALANCE

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

511

ACCOUNT Sales ACCOUNT NO. 411

ACCOUNT Purchases ACCOUNT NO.

512 DEBIT CREDIT BALANCE DATE ITEM POST. REF.

ACCOUNT Purchases Returns and Allowances ACCOUNT NO.

DATE ITEM

POST.

REF. DEBIT CREDIT

(42)

DEBIT CREDIT Feb. 5 J89 158.00 158.00 18 J91 1,242.00 1,400.00 27 J92 1,035.00 2,435.00 28 Closing J95 2,435.00 — — DEBIT CREDIT Feb. 1 Reversing J89 620.00 620.00 12 J90 5,214.00 4,594.00 26 J92 5,214.00 9,808.00 28 Adj. J94 2,084.00 11,892.00 28 Closing J95 11,892.00 — — DEBIT CREDIT Feb. 12 J90 641.23 641.23 26 J92 401.72 1,042.95 28 Closing J95 1,042.95 — — DEBIT CREDIT Feb. 28 J93 2,290.00 2,290.00 28 Closing J95 2,290.00 — — DEBIT CREDIT Feb. 5 J89 358.00 358.00 28 Closing J95 358.00 — —

ACCOUNT Freight In ACCOUNT NO. 514

DEBIT CREDIT

BALANCE

611

ACCOUNT NO. ACCOUNT Salary Expense

DATE ITEM

POST. REF.

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

DEBIT CREDIT BALANCE DATE ITEM POST. REF. ITEM POST.

REF. DEBIT CREDIT

BALANCE DATE

ACCOUNT Payroll Tax Expense ACCOUNT NO. 612

613 Rent Expense

ACCOUNT ACCOUNT NO.

DATE DEBIT POST. REF. ITEM CREDIT BALANCE ACCOUNT NO. DATE ITEM POST. REF.

ACCOUNT Utilities Expense 614

BALANCE CREDIT

(43)

DEBIT CREDIT Feb. 19 J91 336.00 336.00 28 J93 30.24 366.24 28 Closing J95 366.24 — — DEBIT CREDIT Feb. 28 Adj. J94 210.00 210.00 28 Closing J95 210.00 — — DEBIT CREDIT Feb. 28 Adj. J94 1,885.00 1,885.00 28 Closing J95 1,885.00 — — DEBIT CREDIT Feb. 28 J93 25.36 25.36 28 Closing J95 25.36 — — 616 CREDIT BALANCE ACCOUNT ITEM POST. REF. DEBIT ACCOUNT NO. Supplies Expense ACCOUNT

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

ACCOUNT NO. Insurance Expense 617 DATE CREDIT BALANCE DATE ITEM POST. REF. 618 DEBIT CREDIT DATE

ACCOUNT Depreciation Expense, Equipment

ITEM POST. REF. DEBIT ACCOUNT NO. BALANCE DATE ITEM POST.

REF. DEBIT CREDIT

BALANCE

(44)

20— Feb. 1

9

4,830.65 19 J91 4,830.65 — 22 J91 17,435.32 17,435.32 24 J92 185.00 17,250.32 Feb. 1 J89 12,520.86 12,520.86 20— Feb. 1

9

10,780.51 6 J89 10,780.51 — 14 J91 15,781.30 15,781.30 NAME Dallas, TX 75294 ADDRESS Hotel Beritz BALANCE ADDRESS DATE

Jason and Waldon 4600 Beaumont Drive BALANCE Balance POST. REF. Balance NAME DATE ITEM DATE Dallas, TX 75294 DEBIT ADDRESS POST. REF. ITEM CREDIT

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

BALANCE CREDIT 1420 Favela Road ITEM DEBIT POST. REF. Dallas, TX 75294 DEBIT 642 Guthrie St. CREDIT ACCOUNTS RECEIVABLE LEDGER

(45)

Feb. 18 J91 22,617.20 22,617.20 20— Feb. 1 9 16,932.10 2 J89 16,932.10 — 24 J92 16,536.90 16,536.90 20— Feb. 1

9

9,782.00 5 J89 5,032.80 14,814.80 7 J89 9,782.00 5,032.80 12 J90 692.00 4,340.80 14 J91 4,340.80 — 20— Feb. 1

9

12,540.00 22 J91 12,540.00 —

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

NAME ADDRESS Brandon, Inc. ADDRESS 400 W. Tatum St. NAME CREDIT POST. REF. ITEM

ACCOUNTS PAYABLE LEDGER

NAME Magnuson Textiles

Amarillo, TX 79178 DATE ITEM DATE DEBIT Kingston Fabrics POST. REF. BALANCE ADDRESS 620 W. Huber St. Corpus Christi, TX 78410 Balance

DEBIT CREDIT BALANCE

Dallas, TX 75294 1464 Harding Drive

ITEM CREDIT BALANCE

NAME Tyson Manufacturing Company

DATE

ADDRESS 842 N. Howard Ave.

Balance POST. REF. DEBIT Balance Fort Worth, TX 76196 DATE ITEM POST.

(46)

$17,250.32 12,520.86 15,781.30 $45,552.48

Fabulous Furnishings

Jason and Waldon

February 28, 20—

Hotel Beritz

Schedule of Accounts Receivable

Fashion Decor

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

(47)

$22,617.20 16,536.90 $39,154.10

Schedule of Accounts Payable February 28, 20—

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

Fabulous Furnishings

Brandon, Inc. Kingston Fabrics Total Accounts Payable

(48)

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

Fabulous Furnishings Work Sheet

For Month Ended February 28, 20—

DEBIT CREDIT

1 Cash 13,157.47

2 Petty Cash Fund 70.00

3 Accounts Receivable 45,552.48

4 Merchandise Inventory 52,640.00

5 Prepaid Insurance 2,480.00

6 Equipment 9,324.00

7 Accumulated Depreciation, Equipment 5,328.00

8 Accounts Payable 39,154.10

9 Employees' Income Tax Payable 1,006.00

10 FICA Taxes Payable 1,595.48

11 State Unemployment Tax Payable 750.33 12 Federal Unemployment Tax Payable 111.16

13 M. L. Langdon, Capital 66,047.32

14 M. L. Langdon, Drawing 5,000.00

15 Sales 72,358.72

16 Sales Returns and Allowances 185.00

17 Purchases 42,786.90

18 Purchases Returns and Allowances 692.00

19 Purchases Discounts 478.29

20 Freight In 2,435.00

21 Salary Expense 9,808.00

22 Payroll Tax Expense 1,042.95

23 Rent Expense 2,290.00 24 Utilities Expense 358.00 25 Supplies Expense 366.24 26 Miscellaneous Expense 25.36 27 187,521.40 187,521.40 28 Income Summary 29 Salaries Payable 30 Insurance Expense

31 Depreciation Expense, Equipment 32 33 Net Income 34 35 36 37 38 ACCOUNT NAME TRIAL BALANCE

(49)

DEBIT CREDIT DEBIT CREDIT 13,157.47 1 70.00 2 45,552.48 3 (b) 45,484.00 (a) 52,640.00 45,484.00 4 (d) 210.00 2,270.00 5 9,324.00 6 (e) 1,885.00 7,213.00 7 39,154.10 8 1,006.00 9 1,595.48 10 750.33 11 111.16 12 66,047.32 13 5,000.00 14 72,358.72 15 185.00 16 42,786.90 17 692.00 18 478.29 19 2,435.00 20 (c) 2,084.00 11,892.00 21 1,042.95 22 2,290.00 23 358.00 24 366.24 25 25.36 26 27 (a) 52,640.00 (b) 45,484.00 52,640.00 45,484.00 28 (c) 2,084.00 2,084.00 29 (d) 210.00 210.00 30 (e) 1,885.00 1,885.00 31 102,303.00 102,303.00 116,116.45 119,013.01 120,857.95 117,961.39 32 2,896.56 2,896.56 33 119,013.01 119,013.01 120,857.95 120,857.95 34 35 36 37 38

COMPREHENSIVE REVIEW PROBLEM (General Journal) (continued)

CREDIT ADJUSTMENTS DEBIT