Question;Foundations of Accounting I - Accounting ProjectDavid?s Entertainment is a merchandising business. Their account balances as ofNovember 30, 2012 (unless otherwise indicated), are as follows:110112113115116117123124210211218220310311312410411412510520521522523529530531532533539550CashAccounts ReceivableAllowance for Doubtful AccountsMerchandise InventoryPrepaid InsuranceStore SuppliesStore EquipmentAccumulated Depreciation-Store EquipmentAccounts PayableSalaries PayableInterest PayableNote Payable (Due 2017)D. Williams, Capital (January 1, 2012)D. Williams, DrawingIncome SummarySalesSales Returns and AllowancesSales DiscountsCost of Merchandise SoldSales Salaries ExpenseAdvertising ExpenseDepreciation ExpenseStore Supplies ExpenseMiscellaneous Selling ExpenseOffice Salaries ExpenseRent ExpenseInsurance ExpenseBad Debt ExpenseMiscellaneous Administrative ExpenseInterest Expense$ 73,92034,25011,000123,9003,7502,850100,80020,16021,4500015,00073,26050,0000853,44520,02013,200414,57574,40018,000002,80040,50018,600001,6501,100David?s Entertainment uses the perpetual inventory system and the First-in, First-outcosting method. Transportation-in and purchase discounts should be added to theInventory 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 theAllowance Method for bad debt.The Accounts Receivable and Accounts Payable Subsidiary Ledgers along with theInventory 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:TV B:TV C:PS D:$3,500$5,250$6,125$9,000During December, the last month of the accounting year, the following transactionswere 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 ofDecember 3, $400. (NOTE: Do not include shipping and purchase discountsto the Inventory Control sheet for this project.)6. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms2/10, 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, lessdiscount 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 ofDecember 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 number892, terms 1/10, n/30, FOB shipping point.20. For the convenience of the customer, issued check number 2638 for shippingcharges 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 noamount of recovery. We are to write-off her amount due. (Note: See page402 for entry required.)25. Issued a debit memo for return of $5,200 because of a damaged projectionsystem 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 officesalaries of $950.28. Purchased store equipment on account from Matt Co., terms n/30, FOBdestination, $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 transportationpaid on December 20. (Round calculations to the nearest dollar.)30. Issued check number 2642 for purchase of December 21, less returnof December 25 and discount.30. Issued a debit memo for $300 of the purchase returned fromDecember 28.Instructions:1. Enter the balances of each of the accounts in the appropriate balance column of afour-column account (General Ledger). Write Balance in the item section, and placea check mark (x) in the Post Reference column.2. Journalize the transactions in a sales journal, purchases journal, cash receiptsjournal, cash payments journal, or general journal as illustrated in chapter 7. Alsopost to the Accounts Receivable and Accounts Payable Subsidiary ledgers andInventory 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 AccountsPayable (their total amount must equal the amount in their controlling general ledgeraccount).6. Prepare the unadjusted trial balance on the worksheet.7. Complete the worksheet for the year ended December 31, 2012, using the followingadjustment data:a. Merchandise inventory on December 31$90,800b. Insurance expired during the year1,250c. Store supplies on hand on December 31975d. Depreciation for the current year needs to be calculated. The business usesthe Straight-line method, the store equipment has a useful life of 10 yearswith no salvage value. (NOTE: the purchase and return will not be includedas the dates of the transactions were after the 15 th of the month).e. Accrued salaries on December 31:Sales salaries$1,400Office salaries7602,160f. 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 aclassified balance sheet in good form. (Recommend review of ?Current Liabilities? onpages 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 linein both balance columns opposite the closing entry.11. Prepare a post-closing trial balance.
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