Question

Comprehensive Accounting Cycle Review 6

On December 1, 2017, Carla Vista Co. had the account balances shown below.

		Debits				Credits
Cash		$4,640		Accumulated Depreciation—Equipment		$1,380
Accounts Receivable		3,760		Accounts Payable		2,900
Inventory (2,700 x $0.50)		1,350		Common Stock		10,800
Equipment		19,400		Retained Earnings		14,070
		$29,150				$29,150

The following transactions occurred during December.

Dec. 3		Purchased 3,700 units of inventory on account at a cost of $0.78 per unit.
5		Sold 4,100 units of inventory on account for $0.90 per unit. (It sold 2,700 of the $0.50 units and 1,400 of the $0.78.)
7		Granted the December 5 customer $270 credit for 300 units of inventory returned costing $240. These units were returned to inventory.
17		Purchased 2,200 units of inventory for cash at $0.80 each.
22		Sold 2,100 units of inventory on account for $0.88 per unit. (It sold 2,100 of the $0.78 units.)

Adjustment data:

1.		Accrued salaries and wages payable $400.
2.		Depreciation on equipment $200 per month.
3.		Income tax expense was $200, to be paid next year.

Enter the December 1 balances in the ledger T-accounts and post the December transactions. (Post entries in the order of journal entries presented above.)

CASH

ACCOUNT RECEIVABLE

INVENTORY

EQUIPMENT

ACCOUNTS PAYABLE

ACCUMULATED DEPRECIATION-EQUIPMENT

SALARIES AND WAGES PAYABLE

COMMON STOCK

INCOME TAXES PAYABLE

RETAINED EARNINGS

SALES REVENUE

SALARIES AND WAGES EXPENSE

COST OF GOLD SOLD

SALES RETURN AND ALLOWANCES

DEPRECIATION EXPENSE

INCOME TAX EXPENSE

Answer 1

T-Accounts:

Cash
Bal. on Dec. 1	$4,640	Dec. 17 (2,200*$0.80)	$1,760
		Bal. on Dec. 31	$2,880
	$4,640		$4,640
Accounts Receivable
Bal. on Dec. 1	$3,760	Dec. 7	$270
Dec. 5 (4,100*$0.90)	$3,690
Dec. 22 (2,100*$0.88)	$1,848	Bal. on Dec. 31	$9,028
	$9,298		$9,298
Inventory
Bal. on Dec. 1	$1,350	Dec. 5 (2,700*$0.50)+(1,400*$0.78)	$2,442
Dec. 3 (3,700*$0.78)	$2,886	Dec. 7	$240
Dec. 17 (2,200*$0.80)	$1,760	Dec. 22 (2,100*$0.78)	$1,638
		Bal. on Dec. 31	$1,676
	$5,996		$5,996
Equipment
Bal. on Dec. 1	$19,400	Bal. on Dec. 31	$19,400
	$19,400		$19,400
Accounts Payable
		Bal. on Dec. 1	$2,900
Bal. on Dec. 31	$5,786	Dec. 3 (3,700*$0.78)	$2,886
	$5,786		$5,786
Accumulated Depreciation-Equipment
		Bal. on Dec. 1	$1,380
Bal. on Dec. 31	$1,580	Dec. 31	$200
	$1,580		$1,580
Salaries and Wages Payable
Bal. on Dec. 31	$400	Dec. 31	$400
	$400		$400
Common Stock
Bal. on Dec. 31	$10,800	Bal. on Dec. 1	$10,800
	$10,800		$10,800
Income Taxes Payable
Dec. 31	$200	Dec. 31	$200
Retained Earnings
Bal. on Dec. 31	$14,728	Bal. on Dec. 1	$14,070
		Dec. 31 ($3,690+$1,848 - $400 - $2,442 - $1,638 - $200 - $200)	$658
	$14,728		$14,728
Sales Revenue
		Dec. 5 (4,100*$0.90)	$3,690
		Dec. 22 (2,100*$0.88)	$1,848
Salaries and Wages Expense
Dec. 31	$400
Cost of Goods Sold
Dec. 5 (2,700*$0.50)+(1,400*$0.78)	$2,442	Dec. 7	$240
Dec. 22 (2,100*$0.78)	$1,638
Sales Return and Allowances
Dec. 7	$270
Depreciation Expense
Dec. 31	$200
Income Tax Expense
Dec. 31	$200