Comprehensive cycle problem: Periodic system (Appendix)
The following trial balance pertains to Reeves Hardware as of January 1, 2011:
Account Title | Debit | Credit |
Cash | $14,000 |
|
Accounts receivable | 9,000 |
|
Merchandise inventory | 60,000 |
|
Accounts payable |
| $ 5,000 |
Common stock |
| 70,000 |
Retained earnings |
| 8,000 |
Total | $83,000 | $83,000 |
The following events occurred in 2011. Assume that Reeves Hardware uses the periodic inventory system.
1. Purchased land for $8,000 cash.
2. Purchased merchandise on account for $23,000, terms 2/10 n/30.
3. The merchandise purchased by Reeves was shipped FOB shipping point for $230 cash.
4. Returned $2,000 of defective merchandise purchased in Event 2.
5. Sold merchandise for $27,000 cash.
6. Sold merchandise on account for $50,000, terms 1/20 n/30.
7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
8. Paid $1,200 cash for selling expenses.
9. Collected $35,000 of accounts receivable within the discount period.
10. Collected $12,000 of accounts receivable but not within the discount period.
11. Paid $3,200 of other operating expenses.
12. Performed a physical count indicating that $30,000 of inventory was on hand at the end of the accounting period.
Required
a. Record these transactions in a general journal.
b. Post the transactions to ledger T-accounts.
c. Prepare a schedule of cost of goods sold, an income statement, a statement of changes in stockholders’ equity, a balance sheet, and a statement of cash flows for 2011.
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