Question;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.;Purchased three TV C units on account from Prince Co., terms;2/10, n/30, FOB shipping point, $11,100.;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.);Sold four TV A and four TV B on account to Albert Co.;invoice 891, terms 2/10, n/30, FOB shipping point.;Sold two projector systems for cash.;Purchased store supplies on account from Matt Co., terms;n/30, $580.;Issued check to Prince Co. number 2634 for the full amount;due, less discount allowed.;Issued credit memo for one TV A unit returned on sale of;December 6.;Issued check number 2635 for advertising expense for last;half of December, $1,500.;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.;Sold five TV C units on account to Cameron Co., invoice;number;892, terms;1/10, n/30, FOB shipping point.;For the convenience of the customer, issued check number;2638 for shipping charges on sale of December 20, $700.;Received $12,250 cash from McKenzie Co. on account, no;discount.;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.);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;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.;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.;Total each column on the special journals and prove the;journal.;Post the totals of the account named columns and;individually post the ?other? columns as well to the General Ledger.;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).;Prepare the;unadjusted trial balance on the worksheet.;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.;Journalize and post the closing entries. Indicate closed accounts by inserting a line;in both balance columns opposite the closing entry.;Prepare a post-closing trial balance.
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