Question

During May, the last month of the fiscal year, the following transactions were completed:

1. Paid rent for May, $5,000.

3. Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping

point, $36,000.

4. Paid freight on purchase of May 3, $600.

6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point,

$68,500. The cost of the goods sold was $41,000.

7. Received $22,300 cash from Halstad Co. on account.

10. Sold merchandise for cash, $54,000. The cost of the goods sold was $32,000.

13. Paid for merchandise purchased on May 3.

15. Paid advertising expense for last half of May, $11,000.

16. Received cash from sale of May 6.

19. Purchased merchandise for cash, $18,700.

19. Paid $33,450 to Buttons Co. on account.

20. Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of

May 6. The invoice amount of the returned merchandise was $13,500 and the

cost of the returned merchandise was $8,000.

20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping

point, $110,000. The cost of the goods sold was $70,000.

21. For the convenience of Crescent Co., paid freight on sale of May 20, $2,300.

21. Received $42,900 cash from Gee Co. on account.

21. Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB

destination, $88,000.

24. Returned damaged merchandise purchased on May 21, receiving a credit memo

from the seller for $5,000.

26. Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned

was $4,800.

28. Paid sales salaries of $56,000 and office salaries of $29,000.

29. Purchased store supplies for cash, $2,400.

30. Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point,

$78,750. The cost of the goods sold was $47,000.

30. Received cash from sale of May 20 plus freight paid on May 21.

31. Paid for purchase of May 21, less return of May 24.

Complete the following:

1. Prepare journal entries for all May transactions

2. Post journal entries to appropriate ledgers (t-charts) – remember there are starting balances above!

3. Prepare an unadjusted trial balance.

4. Prepare (and post) the adjusting journal entries given the following information:

a. Inventory on May 31 = $570,000

b. Insurance expired during the year = $12,000

c. Store supplies on hand on May 31 = $4,000

d. Depreciation for the current year = $14,000

e. Accrued salaries on May 31:

Sales salaries   $7,000

Office salaries     6,600

   13,600

f. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of goods sold.

5. Prepare an adjusted trial balance.

6. Prepare an Income Statement, Statement of Stockholder’s Equity, and Balance

Sheet.

7. Prepare and post the closing journal entries.

8. Prepare a post-closing trial balance.

Answer 1

During May, the last month of the fiscal year, the following transactions were completed:

Journal entries of May Monthe Rent $5,000 $ 5000 to cash Merchandise inventoon $36.000 TO Accounts Payable $ 30000 freight $ 600 To cash 600 6 Accounts peceivable $ 68,500 cost of goods sold $ 41,000 69500 To sale to Merchandise inventooy 69500 cash $ 92,300 To accounts Deceivable $ 99300 cash $ 54,000 cost of goods sold $ 39,000 Merchandise inventory $ 32,000

To sale 54000 13 Accounts payable OY$360,000 TO Dinant received (36000*900 $ 720 To cash 35280 | Advertising expense DY. $ 11,000 To cash 11000 16 | cash $ 67130 Discount allowed (68500 * 9.) $ 1370 TO Accounts deceivable 68500 19. Merchandise inventory $ 18700 To cash 16700 $110,000 20 Accounts cast of To sale receivable goods sold $ 70,000 11,000 TO Merchandose soventos 70000

Accounts receivable $93000 To cash 2300 cash $ 142,900 To accounts de ce voble 42900 21 Merchandise inventory $ 88,000 To account payable 88,000 28 sales $ 560,000 salaries salaries office $ 99,000 To cash 85000 99 Supplies 2400 To cash $ 9,400 30 Accounts receivable $ 78,750 sold $ 47,000 cost of goods To sale. 78750 To Merchandise 47000 inventory

30 cash $ 112300 To accounts Receivable 112300 31 Accounts Payable. 88000 To cash 2 Ad Justing Entries b Insurance expense $ 12000 To prepaid 19000 expense c supphes 1600 To accounts payable \GOO d Depreciation expense $ 14000 TO Accmulated depreciation 14000 $ 7,000 salen office salaries salaries $ 6,600 TO Accoued Salaries $ 13600

Income Statement : Sale revenue ( 68500 + 54000 + 110000 + 78750) 311250 1999 : cost of goods sold [ 41000 + 32000 + 70000 + 47000] 190000 G695 Posit 121250 Add : Discount received 720 less . Rent 5000 Freight 6000 Advertising experose 11000 Discount allowed 1370 office salaries 35600 sales salaries 63006 Insance 14000 De põection 14000 147970 poofit before tax (26000) loss

Answer 2

Undjusted trail balance