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Foundations of Accounting I Accounting Project-David?s Entertainment is a merchandising business




Question;Foundations of Accounting I;Accounting Project;Written by: Karen Pitsch;David?s;Entertainment is a merchandising business.;Their account balances as of November 30, 2012 (unless otherwise;indicated), are as follows;110 Cash $ 73,920;112 Accounts;Receivable 34,250;113 Allowance;for Doubtful Accounts 11,000;115 Merchandise;Inventory 123,900;116 Prepaid;Insurance 3,750;117 Store;Supplies 2,850;123 Store;Equipment 100,800;124 Accumulated;Depreciation-Store Equipment 20,160;210 Accounts;Payable 21,450;211 Salaries;Payable 0;218 Interest;Payable 0;220 Note;Payable (Due 2017) 15,000;310 D.;Williams, Capital (January 1, 2012) 73,260;311 D.;Williams, Drawing 50,000;312 Income Summary 0;410 Sales 853,445;411 Sales;Returns and Allowances 20,020;412 Sales;Discounts 13,200;510 Cost;of Merchandise Sold 414,575;520 Sales;Salaries Expense 74,400;521 Advertising;Expense 18,000;522 Depreciation;Expense 0;523 Store;Supplies Expense 0;529 Miscellaneous;Selling Expense 2,800;530 Office;Salaries Expense 40,500;531 Rent;Expense 18,600;532 Insurance;Expense 0;533 Bad;Debt Expense 0;539 Miscellaneous;Administrative Expense 1,650;550 Interest Expense 1,100;David?s;Entertainment uses the perpetual inventory system and the First-in, First-out;costing method. Transportation-in and;purchase discounts should be added to the Inventory Control Sheet, but since;this will complicate the computation of the First-in, First-out costing method;please ignore this step in the process.;They also use the Allowance Method for bad debt.;The;Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the;Inventory Control Sheet should be updated as each transaction affects them;(daily).;David?s Entertainment sells four types of;television entertainment units.;The;sale prices of each are;TV;A: $3,500;TV;B: $5,250;TV;C: $6,125;PS;D: $9,000;During;December, the last month of the accounting year, the following transactions;were completed;Dec. 1.;Issued check number 2632 for the December rent, $2,600.;3. Purchased three TV C units;on account from Prince Co., terms 2/10, n/30, FOB shipping point, $11,100.;4. Issued check number 2633 to;pay the transportation changes on purchase of December 3, $400. (NOTE;Do not include shipping and purchase discounts to the Inventory Control;sheet for this project.);6. Sold four TV A and four TV;B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.;10. Sold two projector systems;for cash.;11. Purchased store supplies on;account from Matt Co., terms n/30, $580.;13. Issued check to Prince Co.;number 2634 for the full amount due, less discount allowed.;14. Issued credit memo for one;TV A unit returned on sale of December 6.;15. Issued check number 2635;for advertising expense for last half of December, $1,500.;16. Received cash from Albert;Co. for the full amount due (less return of December 14 and discount).;19.;Issued check number 2636 to buy two TV C units, $7,600.;19.;Issued check number 2637 for $6,100 to Joseph Co. on account.;20. Sold five TV C units on;account to Cameron Co., invoice number;892, terms 1/10, n/30, FOB shipping point.;20. For the convenience of the;customer, issued check number 2638 for shipping charges on sale of December 20;$700.;21. Received $12,250 cash from;McKenzie Co. on account, no discount.;21. Purchased three projector;systems on account from Elisha Co., terms 1/10, n/30, FOB destination, $15,600.;24.;Received notification that Marie Co. has been granted bankruptcy with no;amount of recovery. We are to write-off her amount due. (Note: See page;402 for entry required.);25.;Issued;a debit memo for return of $5,200 because of a damaged projection;system purchased on December 21, receiving credit from the seller.;26. Issued check number 2639 for refund of cash on;sales made for cash, $600. (Customer;was going to return goods until an allowance was arranged.);27. Issued check number 2640 for sales;salaries of $1,750 and office;salaries of $950.;28. Purchased store equipment on account from Matt;Co., terms n/30, FOB;destination, $1,200.;29. Issued check number 2641 for store supplies;$470.;30. Sold four TV C units on account to Randall;Co., invoice number 893;terms 2/10, n/30, FOB shipping point.;30. Received cash from sale of December 20, less;discount, plus transportation;paid on December 20. (Round;calculations to the nearest dollar.);30. Issued check number 2642 for purchase of;December 21, less return;of December 25 and discount.;30. Issued a debit memo for $300 of the purchase;returned from;December 28.;Instructions;1. Enter the balances of each;of the accounts in the appropriate balance column of a four-column account;(General Ledger). Write Balance in the;item section, and place a check mark (x) in the Post Reference column.;2. Journalize the transactions;in a sales journal, purchases journal, cash receipts journal, cash payments;journal, or general journal as illustrated in chapter 7. Also post to the Accounts Receivable and;Accounts Payable Subsidiary ledgers and Inventory Control Sheet as needed.;3. Total each column on the;special journals and prove the journal.;4. Post the totals of the;account named columns and individually post the ?other? columns as well to the;General Ledger.;5. Prepare the Schedule of;Accounts Receivable and the Schedule of Accounts Payable (their total amount must;equal the amount in their controlling general ledger account).;6. Prepare the unadjusted trial balance on the;worksheet.;7. Complete the worksheet for;the year ended December 31, 2012, using the following adjustment data;a.;Merchandise inventory on December 31 $90,800;b.;Insurance expired during the year 1,250;c.;Store supplies on hand on December 31 975;d.;Depreciation for the current year needs to be calculated. The business uses;the Straight-line method, the;store equipment has a useful life of 10 years;with no salvage value. (NOTE: the purchase and return will not be;included;as the dates of the;transactions were after the 15th of the month).;e.;Accrued salaries on December 31;Sales salaries $1,400;Office salaries 760 2,160;f.;The note payable terms are at 8%, payment is not being made until Jan.;3, 2013. Interest must be recognized for;one month.;g.;Net realizable value of Accounts Receivable is determined to be $27,950.;8. Prepare a multiple-step income statement, a;statement of owner?s equity, and a;classified balance sheet in good form.;(Recommend review of ?Current Liabilities? on pages 166 & 167 and ?Current;Maturities of Long-term Debt? on page 480.);9. Journalize and post the adjusting entries.;10.;Journalize;and post the closing entries. Indicate;closed accounts by inserting a line;in both balance columns opposite the;closing entry.;11.;Prepare;a post-closing trial balance.


Paper#38179 | Written in 18-Jul-2015

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