Journalizing purchase and sale transactions—perpetual inventory; making closing entries, and preparing financial statements [30-40 min]
Shine King Cleaning has decided that, in addition to providing cleaning services, it will sell cleaning products. During December, Shine King completed the following transactions:
Dec 2 | Purchased 600 units of inventory for $3,600 from Sparkle, Co., on terms, 3/10, n/20. |
5 | Purchased 400 units of inventory from Borax on terms 4/5, n/30. The total invoice was for $3,200, which included a $200 freight charge. |
7 | Returned 100 units of inventory to Sparkle from the December 2 purchase (cost $600). |
9 | Paid Borax. |
11 | Sold 350 units of goods to Happy Maids for $4,900 on terms 5/10, n/30. Shine King’s cost of the goods was $2,100. |
12 | Paid Sparkle. |
15 | Received 30 units with a retail price of $420 of goods back from customer Happy Maids. The goods cost Shine King $180. |
21 | Received payment from Happy Maids, settling the amount due in full. |
28 | Sold 200 units of goods to Bridget, Inc., for cash of $3,000 (cost $1,144). |
29 | Paid cash for Utilities of $350. |
30 | Paid cash for Sales commission expense of $225. |
31 | Recorded the following adjusting entries: Physical count of Inventory on December 31 showed 330 units of goods on hand, $2,541 Depreciation, $170 Accrued salary expense of $700 Prepared all other adjustments necessary for December |
Requirements
1. Add any needed accounts to Shine King’s existing chart of accounts.
2. Journalize and post the December transactions. Key all items by date. Compute each account balance, and denote the balance as Bal.
3. Journalize and post the adjusting entries. Denote each adjusting amount as Adj. After posting all adjusting entries, prove the equality of debits and credits in the ledger.
4. Prepare the December multi-step income statement, statement of retained earnings, and balance sheet for the company.
5. Journalize the December closing entries for the company.
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