Question

Comprehensive Accounting Cycle Review 5-02 (Part Level Submission) On November 1, 2022, Marin had the following account balances. The company uses the perpetual inventory method. Cash Accounts Receivable Supplies Equipment Debit $17,100 Accumulated Depreciation-Equipment 4,256 Accounts Payable 1,634 Unearned Service Revenue 47,500 Salaries and Wages Payable $70,490 Common Stock Retained Earnings Credit $1,900 6,460 7,600 3,230 38,000 13,300 $70,490 During November, the following summary transactions were completed. Nov. 8 Paid $6,745 for salaries due employees, of which $3,515 is for November and $3,230 is for October. 10 Received $3,610 cash from customers in payment of account. 11 Purchased merchandise on account from Dimas Discount Supply for $15,200, terms 2/10, n/30. 12 Sold merchandise on account for $10,450, terms 2/10, n/30. The cost of the merchandise sold was $7,600. 15 Received credit from Dimas Discount Supply for merchandise returned $570. 19 Received collections in full, less discounts, from customers billed on sales of $10,450 on November 12. 20 Paid Dimas Discount Supply in full, less discount. 22 Received $4,370 cash for services performed in November. 25 Purchased equipment on account $9,500. 27 Purchased supplies on account $3,230. 28 Paid creditors $5,700 of accounts payable due. 29 Paid November rent $712. 29 Paid salaries $2,470. 29 Performed services on account and billed customers $1,330 for those services. 29 Received $1,283 from customers for services to be performed in the future.

Answer 1

Α. 1 Solution: 2 3 Date Account Titles and Explanation Amount in $ Credit Remarks as mentioned in the question Debit Explanations Since salary for Novemeber is paid before month end, we will account it in Advance Salary and at the end of the month we will debit this to Salaries and Wages Payable A/C This is the opening balance as on November 1 4 Nov 8 5 6 Advance Salaries and Wages paid Salaries and Wages Payable Cash 3,515 3,230 6,745 7 8 Nov 10 Cash 3,610 Our customer balance lies in the Accounts Receivable ledger, hence we have reduced the balance in the ledger since we received the amount from the customers 9 Accounts Receivable 3,610 10 11 Nov 11 Credit Purchases 15,200 Since we have made new purchases Since this amount is not yet paid, we have shown it as payable in the Accounts Payable ledger Accounts Payable 15,200 12 13 Since we have not received this money and have given some credit period to our customer, we have accounted for the money receivable in Accounts Receivable ledger Since we have made a new sale 14 Nov 12 10,450 Accounts Receivable Credit Sales 10,450 To record credit sale No entry During sales, we don't need to record the cost of the merchandise sold seperately as cost has been recorded at the time of making the Purchase entry No entry To record cost of merchandise sold

21 Solution (contd.) 22 23 Date Account Titles and Explanation Amount in $ Credit Remarks as mentioned in the question Debit Explanations Since we haven't yet paid the vendor, we reduce the amount from Accounts Payable purchases Accounts Payable Credit Purchases 570 570 24 Nov 15 25 26 27 Nov 19 Cash 10,241 Sale terms were 2/10, n/30- this means that if the customer pays within 10 days, we offer a discount of 2%, else the customer has to pay entire amount within 30 days. Since customer has paid in 7 days, we offer a discount of 2% to the customer. 28 209 Discount Allowed Accounts Receivable 10,450 30 31 Nov 20 Accounts Payable 14,630 Amount outstanding to be paid to Dimas Discunt Purchase terms were 2/10, n/30- this means that if we pay within 10 days, we ger a discount of 2%, else we have to pay entire amount within 30 days. Since we have paid in 9 days, we are eligible to get a discount of 2% on the amount payable. Amount payable will be $15200 less merchandise returned worth $570 = $14630 Discount= 2% * 14630 Net amount paid 32 Discount Received 293 Cash 14,337 34 35 Nov 22 Cash 4,370 Since this is revenue from services performed in November, it will be credited to the Service Revenue 36 371 Service Revenue 4,370 1 Sheet1

A 40 41 Date 42 Nov 25 Account Titles and Explanation Equipment Amount in $ Debit Credit Remarks as mentioned in the question 9,500 Explanations Equipment purchased Since it is purchased on account and paymen is still pending, we credit the Accounts Payable ledger Accounts Payable 9,500 43 44 45 Nov 27 Supplies 3,230 Supplies purcahsed Since it is purchased on account and paymen is still pending, we credit the Accounts Payable ledger 46 Accounts Payable 3,230 5,700 Accounts Payable Cash Creditors accounted for under Accounts Payable Payment entry 5,700 48 Nov 28 49 50 51 Nov 29 52 712 Rent Cash Rent for November, hence debited to Rent ledger. Since amount is paid, we credit the cash ledger 712 To record November rent paid 53 2,470 54 Nov 29 55 Salaries and Wages Paid Cash Since salaries are paid for the month of November, current month Since amount is paid, we credit the cash ledger 2,470 To record salaries paid 56 57 Nov 29 Service Revenue 1,330 Since services are performed in the current month Since amount is not received and is outstanding, we credit it to the Unearned Service Revenue ledger Unearned Service Revenue 1,330 To record services performed 60 Nov 29 Cash 1.283 Amount has been received by customers This is amount will be due after services will be 1,283 To record receipt for services to be performed performed. Right now it is an advance received. 61 Service Revenue Received in Advance