Question

Page 1 PRACTICE SET ACCOUNTING 3341 (5133) SPRING 2020 This practice set is intended to refresh your basic accounting skills by requiring you to record, summarize, and report the results of a basic set of accounting transactions for a sample company. HOW TO PROCEED Enter the current period transactions in the General Journal. Use the journal entry number for each transaction as a reference. It is not necessary to include an explanation for the entries in this problem. Enter the beginning balances for each account in the General Ledger and post the current period journal entries to the accounts in the General Ledger. Balance each account in the General Ledger. List each account balance on the Unadjusted Trial Balance, Record the adjusting entries in the General Journal. Post the adjusting entries to the General Ledger and re- balance each account. List each account balance on the Adjusted Trial Balance. Prepare a multiple-step Income Statement, a Statement of Retained Earnings, and a classified Balance Sheet Record the year-end closing entries in the General Journal, post them to the General Ledger, and re-balance each account. Prepare a Post-Closing Trial Balance. REQUIREMENTS COMPLETE THE FOLLOWING FOR THE PERIOD CURRENTLY ENDED: 1. General Journal - should include current period entries, adjusting entries and closing entries. General Ledger - with all journal entries appropriately posted. Unadjusted Trial Balance - which you will complete prior to making adjusting entries, Adjusted Trial Balance - which you will use to prepare the financial statements. Income Statement (Multiple Step) - including Earnings-Per-Share. Statement of Retained Earnings. Balance Sheet (Classified). Post-Closing Trial Balance. NOTE: All of the above must be submitted inside this bound workbook and in page number sequence in order to insure uniformity in the grading process. If your practice set is submitted in any other form, credit will be deducted for failure to follow instructions.

Answer 1

In the Books of Tony's Tools

(1) Journal

Journal Entry	Particulars	LFno.	Debit	Credit
1.	Merchandise Inventory a/c Dr To Accounts Payable a/c		$201960	$201960
2.	Accounts Receivable a/c Dr To sales a/c		$1130220	$1130220
3.	Cash a/c Dr To Accounts Receivable a/c		$980352	$980352
4.	Accounts Payable a/c Dr To cash a/c		$414000	$414000
5.	Telephone and Utility expense a/c Dr To cash a/c		$27490	$27490
6.	Salaries and wages a/c Dr To cash a/c		$438840	$438840
7.	Rent expense a/c Dr To cash a/c		$22767	$22767

(2) Ledger

Dr 1110.Cash a/c Cr

Journal Entry	Particulars	Amount($)	Journal Entry	Particulars	Amount($)
	To balance b/d	691200	4	By Accounts payable a/c	414000
3	To Accounts Receivablea/c	980352	5	By telephone and utility expense a/c	27490
			6	By salaries and wages a/c	438840
			7	By Rent expense a/c	22767
				By balance c/d	768455
		1671552			1671552

Likewise we need to prepare all other ledger accounts, post the journal entries to them, total it and then balance to get the figures.

(3) Adjustment entries

Closing balance as per books would be $(201960+1151280-508599)=$844641

Closing balance as per physical count is =$838141

Shortage of inventory$(844641-838141) =$6500

Adjustment entry	Particulars	Debit	Credit
1	Trading a/c Dr To Merchandise Inventorya/c	$6500	$6500

Depreciation:

Let value of equipment be x

Depreciation=Original value-Salvage Value/Number of years

let salvage value be 0.1x, number of years=20

Depreciation=(x-0.1x)/20=0.9x/20

Machinery purchased on January 1,2010.

today is december 31,2019;

So 8 years depreciation is made till now

so x-(0.9x/20)8=$594864

20x-7.2x=11897280

x=929475

So depreciation = 0.9*929475/20=41826(rounded off)

Adjustment entry	Particulars	Debit	Credit
2	Depreciationa/c Dr To Equipment a/c	$41826	$41826

Adjustment entry	Particulars	Debit	Credit
3	Income tax expense a/cDr To Income Tax Payable a/c	$184920	$184920
	Trading a/c Dr To Income tax Expense a/c	$184920	$184920

Now all we have to do is make necessary changes to the rial balance and then prepare Income statement from there on.