Question

Sunland Company's balance sheet at December 31, 2021, is presented below. Sunland Company Balance Sheet December 31, 2021 Cash $13,010 20,600 Accounts payable Common stock $8,310 18,500 Accounts receivable Allowance for doubtful accounts (850) Retained earnings 15,710 Inventory 9,760 $42,520 $42,520 During January 2022, the following transactions occurred. Sunland uses the perpetual inventory method. Jan. 1 Sunland accepted a 4-month, 8% note from Betheny Company in payment of Betheny's $1,200 account. 3 Sunland wrote off as uncollectible the accounts of Walter Corporation ($500) and Drake Company ($300). 8 Sunland purchased $15,700 of inventory on account. 11 Sunland sold for $23,400 on account inventory that cost $16.110. 15 Sunland sold inventory that cost $750 to Jack Rice for $900. Rice charged this amount on his Visa First Bank card. The service fee charged Sunland by First Bank is 3%. 17 Sunland collected $24,700 from customers on account. 21 Sunland paid $15,620 on accounts payable. 24 Sunland received payment in full ($300) from Drake Company on the account written off on January 3. 27 Sunland purchased advertising supplies for $1,420 cash. 31 Sunland paid other operating expenses, $3,390.

Answer 1

Sunland Company Journal Entry Date Particulars 1.1.2022 Note Receivable a/c Dr. To Accounts receivable (Note Receivable received) Debit in $ Credit in $ 1200 1200 800 3.1.2022 Allowance for doubtful accounts a/c Dr. To Accounts receivable (Uncollectibles written off) 800 8.1.2022 15700 Inventory a/c Dr. To Accounts Payable (Inventory on account) 15700 Dr. 23400 11.1.2022 Accounts Receivable a/c To Sales Revenue (Sales on account) 23400 16110 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 16110 873 Dr. Dr. 15.1.2022 Cash a/c Visa Service fee a/c To Sales Revenue (Sales made) 900 750 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 750 Dr. 24700 17.1.2022 Cash a/c To Accounts receivable (Cash from debtors) 24700 Dr. 15620 21.1.2022 Accounts Payable a/c To Cash (Creditors paid) 15620 300 24.1.2022 Accounts Receivable a/c Dr. To Allowance for doubtful accounts (Recovery of bad debts) 300 Dr. 300 Cash a/c To Accounts receivable (Cash from debtors) 300 1420 27.1.2022 Supplies a/c Dr. To Cash (Advertising supplies purchased) 1420 Dr. 3390 31.1.2022 Operating Expense a/c To Cash (Operating expense paid) 3390

Adjusting Enteries Date Particulars Debit in $ Credit in $ 31.1.2022 Interest Receivable a/c Dr. To Interest Revenue (Interest income accrued) 1200 x 8% x 1/12 31.1.2022 Bad Debts Expense a/c Dr. 832 To Allowance for doubtful accounts 832 (Bad debts estimated) 20600-1200 - 800 +23400-24700 + 300 - 300 = 19700 x 6% = 1182 Allowance for doubtful accounts = 850 - 800 + 300 = 350 1182 - 350 890 31.1.2022 Supplies Expense a/c Dr. To Supplies (Supplies on account) 1420 - 530 = 890 890 Dr. 693 31.1.2022 Income Tax Expense a/c To Income Tax Payable (Income Tax accrued) 693

Worksheet For the Month Ending 31.1.2022 Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 18453 18453 1200 1200 17300 17300 350 832 1182 8600 1420 8600 530 890 8390 693 Particulars Cash Note Receivable Interest Receivable Accounts Receivable Allowance for doubtful accounts Inventory Supplies Accounts Payable Income Tax Payable Common Stock Retained Earnings Interest Revenue Sales Revenue Cost of goods sold Visa Service fee Operating Expense Bad Debts Expense Supplies Expense Income Tax Expense Totals 8390 693 18500 15710 18500 15710 24300 24300 16860 3390 832 890 693 2422.7 16860 27 3390 832 890 693 68783 67250 67250 2422.7 68783

24300 -16860 7440 Statement of Income For the Month Ending 31.1.2022 Sales Revenue Cost of goods sold Gross Profit Visa Service fee Operating Expense Bad Debts Expense Supplies Expense Operating Income Non Operating Items Interest Revenue 27 3390 832 890 5139 2301 Income Tax Expense @30% Net Income 2309 693 1616 Statement of Retained Earnings For the Month Ending 31.1.2022 Beginning Balance Net Income 15710 1616 17326

Amounts in $ Amounts in $ Amounts in $ Amounts in $ Liabilities Current Liabilities 18453 Accounts Payable 1200 Income Tax Payable 8390 693 9083 Balance sheet As at 31.1.2022 Assets Current Assets Cash Note Receivable Interest Receivable Accounts Receivable Allowance for doubtful accounts Inventory Supplies Total Assets 17300 -1182 8600 530 Shareholders Equity Common Stock 44909 Retained Earnings 44909 Total Liabilities & Equity 18500 17326 35826 44909