Smallville Company was organized on January 1, 2020. It is authorized to issue 104000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts. Cash-$57000, Merchandise Inventory- $75600, Prepaid Insurance-$5100, 10% Notes Payable-$25000, Equipment-$135000, Accumulated Depreciation: Equipment-$3900, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$22000, and Retained Earnings-$97800. The following transactions took place in Smallville Company during April of the current year (2020). April 1 - Issued $2600 new shares of common stock for $339000 April 3 - Purchased merchandise of $8000 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $280. April 4 - Sold merchandise for cash, $81500. The cost of the merchandise sold was $50000. April 5 - Purchased merchandise on account from Stafford Co., $23000, terms FOB shipping point, 2/10, n/30. The appropriate paid the freight charge of $680. April 6 - Returned $580 of merchandise purchased on April 3 from Prescott Co. April 13 - Paid Prescott Co. on account for the purchase of April 3. April 15 - Paid Stafford Co. on account for the purchase of April 5. April 17 - Purchased merchandise for cash $1600. April 20 - Received refund for poor quality merchandise from a supplier on cash purchase $150. (1) Journalize the transactions for the month of April. (Assume that the company follows a perpetual inventory system). (2) Post the April journal entries to the ledger. (Remember, the ledger accounts should start with the beginning balances (if any) (3) Prepare a trial balance on April 30, 2020.
Smallville Company was organized on January 1, 2020. It is authorized to issue 104000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts.
Cash-$57000, Merchandise Inventory- $75600, Prepaid Insurance-$5100, 10% Notes Payable-$25000, Equipment-$135000, Accumulated
The following transactions took place in Smallville Company during April of the current year (2020).
April 1 - Issued $2600 new shares of common stock for $339000
April 3 - Purchased merchandise of $8000 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $280.
April 4 - Sold merchandise for cash, $81500. The cost of the merchandise sold was $50000.
April 5 - Purchased merchandise on account from Stafford Co., $23000, terms FOB shipping point, 2/10, n/30. The appropriate paid the freight charge of $680.
April 6 - Returned $580 of merchandise purchased on April 3 from Prescott Co.
April 13 - Paid Prescott Co. on account for the purchase of April 3.
April 15 - Paid Stafford Co. on account for the purchase of April 5.
April 17 - Purchased merchandise for cash $1600.
April 20 - Received refund for poor quality merchandise from a supplier on cash purchase $150.
(1) Journalize the transactions for the month of April. (Assume that the company follows a perpetual inventory system).
(2) Post the April
(3) Prepare a
Additional Information on Smallville Company:
A review of the ledger of Smallville Company on April 30, 2020, produces the following data pertaining to the preparation of monthly
(a) Notes Payable $25000. This balance consists of a note for 6 months at an annual interest rate of 15%, dated January 1, 2020.
(b) There are five workers in Smallville Company who are paid wages weekly. The five workers are paid $860 each for a 5-day work week (Monday to Friday). April 30 is a Tuesday and workers are paid on Fridays.
(c) Annual depreciation is $12600 on equipment.
(d) Physical check reveals inventory actually on hand on April 30, 2020, is $55041.6.
(4) Journalize the adjusting entries at April 30, 2020.
(5) Prepare an adjusted trial balance.
(6) Using the balances from the adjusted trial balance, prepare a multi-step income statement and owner’s equity statement for the one month ended April 30. (Assume that the company falls under the 20% tax bracket).
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