Question

Prepare T accounts from 8 till16

Question 3 Wascana Ltd. is a small wholesaler of restaurant supplies. The company's post-closing trial balance at December 31, 2017, the end of its fiscal year, is presented below: Credit 23,400 WASCANA LTD. Post-Closing Trial Balance December 31, 2017 Debit Cash $78,000 Accounts receivable 468,000 Allowance for doubtful accounts Inventory 352,000 Equipment 1,800,000 Accumulated depreciation equipment Accounts payable Interest payable Employee income tax payable CPP payable EI payable Provisions Unearned revenue Bank loan payable Common shares Retained earnings $2,698,000 480,000 289,000 3,000 57,000 26,000 10,000 34,000 13,000 900,000 59,000 803,600 $2,698,000 The company had the following transactions during January 2018. When recording these transactions, use the item number listed in lieu of the date and also use that same item number if recording a subsequent adjustment pertaining to that item. 8. Sales for the month of January were $ 719,000 and the cost of the inventory sold was $294,000. The company uses a perpetual inventory system. All sales were on credit. 9. Accounts receivable collected during the month were $718,000. 10. A customer owing the company $18,000 went bankrupt during January 11. Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubtful accounts were $33,000 at month end. 12a. Inventory costing $250,000 was purchased in January on credit. 12b. Administrative expenses of $46,000 were incurred on credit. 13. During the month of January, accounts payable amounting to $321,000 were paid. 14. The provisions at December 31, 2017, consisted of estimated damages from a lawsuit. In January, legal counsel felt that an additional $18,000 of damages had become probable that month. Any expenses relating to these damages are recorded in administrative expenses. Unearned revenue consists of deposits from customers received in advance. No new deposits were received in January, but by the end of the month, management has estimated that unearned revenue at that time should be $7,000. Products sold to these customers that paid deposits cost 25% of the price they were sold at. 16. The company declared and paid out dividends amounting to $3,000 in January

Answer 1

(8) SALES A/C

By Accounts Receivable    719000

(9 & 10)Accounts Receivable A/C

Op. Bal. 468000 To Sales A/C 719000

By Cash 718000 By Bad debts    18000 By Bal. 451000

(11) Allowance for Doubtful Debts A/C

To Bal. 33000

By Op. Bal. 23400 By P&L A/C 9600

(12a)Purchase A/C

To Accounts Payable 250000

   (12b) Administrative Exp. A/C

To outstanding Adm.Exp. A/c 250000

(13) Accounts Payable A/C

To Cash A/c 321000 To Bal. 218000

By Op. Bal. 289000 By Purchase A/C 250000

(14) Provision for Adm .Exp. A/C (Estimated Damages lawsuit)

To Bal. 52000

By Op. Bal. 34000 By P & L A/C 18000

  (15) Unearned Revenue A/C

To Sales A/c 4500 To P & L A/C 1500 To Bal. 7000

By Op. Bal. 13000

  (16) Dividend A/C

To Cash A/c 3000