Question

Financial Accounting Instructor: Turck Review of the Accounting Cycles The December 31, 2017, balance sheet for Karl's Caddy-Shack is as follows: Karl's Caddy Shack Balance Sheet As of December 31, 2017 LIABILITIES & STOCKHOLDER EQUITY Accounts Payable $3,300 Salaries Payable. Interest Payable on Note. Notes Payable Total Liabilities ASSETS: Cash. Accounts Receivable, Gross... ... $12,000 Less: Allowance for Doubtful Accts. (2.400) Accounts Receivable, Net Realizable Value.. Interest Receivable on Loan Supplies . Merchandise Inventory, carried at LIFO cost Loan Receivable. Buildings & Equipment, at Cost..... $50,000 Less: Accumulated Depreciation . (15,000) Buildings & Equipment, Net Book Value... Total Assets.. $ 5,000 600 250 20,000 24.150 9,600 100 1,550 29,500 5,000 Capital Stock Retained Earnings. Total Stkholder Equity . 61,600 40,000 21,600 35,000 S85,750 Total Liabilities & Stockholder Equity.. 85,750 The following transactions and other economic events took place during the year ending December 31, 2018. THE REPORTING PERIOD FOR THIS EXERCISE IS 2018: DATE (in the accounting records, use the following numbers in place of specific dates) 1) Made a $350 interest only payment related to the note payable. Payment includes interest accrued as of 12/31/17 (i.e., payment includes the balance in #230 as shown in General Ledger). Purchased merchandise on account at a cost ofS17,500 (assume a periodic inventory system)'. 2) (Periodic, so do not journalize to Merchandise Inventory until the end of 2018) (review periodic system, see examples on pages [58] and (60] of our study-guide) Sales Revenue: on open accounts $13,500; for cash, $8,000. Paid salaries totaling $2,400, including accrued salaries at previous year end. Cash collections on open accounts, $11,600. Purchased merchandise for cash at a cost of $13,000. Wrote off a customer's account of $300 as uncollectible. (hint: debit Allowance for Doubtful Acceants) Sales Revenue: on open accounts, $6,500; for cash, $15,000. Made payment on accounts payable of $17,640. Purchased supplies on open account in the amount of $2,300. 3) 4) 5) 6) 7) 8) 10) One customer returned $150 of merchandise. Customer had not yet paid for these goods. Paid salaries totaling $3,600. Purchased merchandise on account at a cost of $5,400. Sales Revenue: on open accounts, $12,000; for cash, $5,400. и) 12) 13) 14) Received an interest-only cash payment of $300 related to the Loan Receivable. The $300 includes the $100 accrued as of 12/31/2017. 15) 16) Cash collections on open accounts, $8,000. Declared a cash dividend of $5,000 to be paid in January 2019, Since Karl's Chart of Accounts has not a Dividends account, then debit Retained'Earnings directly for this event. 17) ' The internet contains many illustrations comparing the accounting for Periodic versus Perpetual systems.

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Answer 1

Debit Credit 41 42 Date Account title & explanation 2018 1-Dec Interest Expense Interest Payable Cash (To record payment of accrued interest expense) 100 250 350 17500 2-Dec Purchases Accounts Payable (To record purchases made) 17500 13500 8000 3-Dec Accounts receivable Cash Sales Revenue (To record goods sold on open account and for cash) 21500 4-Dec Salaries Payable 600 Salaries expense 1800 Cash (To record salaries Payable and salaries expense in cash) 2400 59 61 11600 5-Dec Cash Accounts receivable (To record cash received on open account) 11600

13000 6-Dec Purchases Cash (To record purchases made for cash) 13000 300 7-Dec Allowance for Doubtful Accounts Accounts Receivable (To record wrote off a customer account) 300 6500 15000 8-Dec Accounts receivable Cash Sales Revenue (To record goods sold on open account and for cash) 21500 17640 9-Dec Accounts Payable Cash (To record cash paid to accounts payable) 17640 80 2300 83 10-Dec Supplies Accounts Payable (To record suplies purchased on account) 2300 84 85 86 150 11-Dec Sales Returns and Allowances Accounts receivable (TO record sales return) 150 88

3600 91 12-Dec Salaries expense Cash (To record salaries expense in cash) 3600 92 93 5400 95 13-Dec Purchases Accounts Payable (To record purchases made) 5400 97 98 99 12000 5400 14-Dec Accounts receivable Cash Sales Revenue (To record goods sold on open account and for cash) 100 17400 101 102 103 300 104 15-Dec Cash Interest Receivable Interest Revenue (To record interest receivable and interest revenue) 100 200 105 106 107 8000 16-Dec Cash Accounts receivable (To record cash received on open account) 8000 108 109 110 111 112 113 114 5000 17-Dec Retained Earnings Dividend Payable (To record dividend declared) 5000