Question

Comprehensive Accounting Cycle Review 6

On December 1, 2017, Shamrock, Inc. had the account balances shown below.

		Debits				Credits
Cash		$5,230		Accumulated Depreciation—Equipment		$1,490
Accounts Receivable		3,590		Accounts Payable		3,260
Inventory (2,900 x $0.60)		1,740		Common Stock		9,500
Equipment		20,300		Retained Earnings		16,610
		$30,860				$30,860

The following transactions occurred during December.

Dec. 3		Purchased 3,900 units of inventory on account at a cost of $0.68 per unit.
5		Sold 4,300 units of inventory on account for $0.80 per unit. (It sold 2,900 of the $0.60 units and 1,400 of the $0.68.)
7		Granted the December 5 customer $240 credit for 300 units of inventory returned costing $210. These units were returned to inventory.
17		Purchased 2,200 units of inventory for cash at $0.90 each.
22		Sold 2,100 units of inventory on account for $0.93 per unit. (It sold 2,100 of the $0.68 units.)

Adjustment data:

1.		Accrued salaries and wages payable $420.
2.		Depreciation on equipment $210 per month.
3.		Income tax expense was $220, to be paid next year

Journalize the December transactions and adjusting entries, assuming Shamrock, Inc. uses the perpetual inventory method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Journal entries:

Date	Account title	Debit	Credit
Dec. 3	Inventory	2,652
	Accounts payabale (3,900x$0.68)		2,652
Dec. 5	Accounts receivable	3,440
	Sales revenue (4,300x$0.80)		3,440
	Cost of goods sold	2,692
	Inventory (2,900x$0.60)+(1,400x$0.68)		2,692
Dec. 7	Sales return	240
	Accounts receivable		240
	Inventory	210
	Cost of goods sold		210
Dec. 17	Inventory	1,980
	Cash (2,200x$0.90)		1,980
Dec. 22	Accounts receivable	1,953
	Sales revenue (2,100x$0.93)		1,953
	Cost of goods sold	1,428
	Inventory (2,100x$0.68)		1,428

Adjusting entries:

Date	Account title	Debit	Credit
Dec. 31	Salaries and wages expense	420
	Salaries and wages payable		420
Dec. 31	Depreciation expense	210
	Accumulated dep. - Equipment		210
Dec. 31	Income tax expense	220
	Income taxes payable		220