Concept explainers
Comprehensive Problem 2:
Accounting Cycle with Subsidiary Ledgers, Part 2
During the month of January 20-2, TJ’s Specialty Shop engaged in the following transactions:
Jan. 1 Sold merchandise on account to Anne Clark, $3,000, plus tax of $150. Sale No. 643.
2 Issued Check No. 818 to Nathen Co. in payment of January 1 balance of $800, less 2% discount.
Jan. 3 Purchased merchandise on account from West Wholesalers, $1,500. Invoice No. 678, dated January 3, terms 2/15, n/30.
4 Purchased merchandise on account from Owen Enterprises, $2,000. Invoice No. 767, dated January 4, terms 2/10, n/30.
4 Issued Check No. 819 in payment of phone expense for the month of January, $180.
8 Sold merchandise for cash, $3,600, plus tax of $180.
9 Received payment from Lucy Greene in full settlement of account, $1,491.
10 Issued Check No. 820 to West Wholesalers in payment of January 1 balance of $1,200.
12 Sold merchandise on account to Martha Boyle, $1,000, plus tax of $50. Sale No. 644.
12 Received payment from Anne Clark on account, $2,100.
12 Issued Check No. 821 in payment of wages (Wages Expense) for the two-week period ending January 11, $1,100.
13 Issued Check No. 822 to Owen Enterprises in payment of January 4 purchase. Invoice No. 767, less 2% discount.
13 Martha Boyle returned merchandise for a credit, $800, plus sales tax of $40.
17 Returned merchandise to Evans Essentials for credit, $300.
22 Received payment from John Dempsey on account, $2,121.
26 Issued Check No. 823 in payment of wages (Wages Expense) for the two-week period ending January 25, $1,100.
27 Issued Check No. 824 to KC Power & Light (Utilities Expense) for the month of January, $630.
27 Sold merchandise on account to John Dempsey, $2,000, plus tax of $100. Sale No. 645.
Late in January, TJ’s agreed to sell the business to a competitor. To agree on a selling price, financial statements are needed as of January 31 and for the month of January 20-2. To prepare these financial statements, TJ’s must perform the same procedures it normally does at year-end.
At the end of January, the following adjustments (a)–(j) need to be made:
(a, b) Merchandise inventory as of January 31, $19,000.
(c, d, e) Jones estimates that customers will be granted $500 in refunds of this month’s sales in subsequent months, and the merchandise expected to be returned will have a cost of $360.
(f) Unused supplies on hand, $115.
(g) Unexpired insurance on January 31, $968.
(h)
(i) Depreciation expense on the store equipment for the month, $38.
(j) Wages earned but not paid as of January 31, $330.
6. Journalize and
Want to see the full answer?
Check out a sample textbook solutionChapter 15 Solutions
College Accounting, Chapters 1-27
- Purchases transactions Hoffman Company purchased merchandise on account from a supplier for 65,000, terms 1/10, n/30. Hoffman returned 7,500 of the merchandise and received full credit. A. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment? B. What account is debited by Hoffman Company to record the rerurn?arrow_forwardExercise 4-54 Operating Cycle and Current Receivables a. Dither and Sly are attorneys-at-law who specialize in federal income tax law. The): complete their typical case in 6 months or less and collect from the typical client within 1 additional month. b. Johnstons Market specializes in fresh meat and fish. All merchandise must be sold within one week of purchase. Almost all sales are for cash and any receivables are generally paid by the end of the following month. c. Mortondos is a womens clothing store specializing in high-style merchandise. Merchandise spends an average of 7 months on the rack following purchase. Most sales are on credit and the typical customer pays within 1 month of sale. d. Trees Inc. grows Christmas trees and sells them to various Christmas tree lots. Most sales are for cash. It takes 6 years to grow a tree. Required: For each of the businesses described above, indicate the length of the operating cycle.arrow_forwardTransaction Analysis Pollys Cards $ Gifts Shop had the following transactions during the year: Pollys purchased inventory on account from a supplier for $8,000. Assume that Pollys uses a periodic inventory system. On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder. Pollys returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received. Pollys paid the balance due on the purchase of inventory. On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800. Pollys sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed. Sales for the year were $120,000, of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31. Required Record all necessary journal entries relating to these transactions. Assume that Pollys accounting year ends on December 31. Prepare any necessary adjusting journal entries. What is the total of the current liabilities at the end of the year?arrow_forward
- SALES AND CASH RECEIPTS TRANSACTIONS Paul Jackson owns a retail business. The following sales, returns, and cash receipts are for April 20--. There is a 7% sales tax. REQUIRED 1. Record the transactions starring on page 7 of a general journal. 2. Post from the journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.arrow_forwardOn January 1, Incredible Infants sold goods to Babies Inc. for $1,540, terms 30 days, and received payment on January 18. Which journal would the company use to record this transaction on the 18th? A. sales journal B. purchases journal C. cash receipts journal D. cash disbursements journal E. general journalarrow_forwardSales-related transactions The- following selected transactions were completed by Affordable Supplies Co., which sells supplies primarily to wholesalers and occasionally to retail customers. Jan. 6. Sold merchandise on account, $14,000. terms FOB shipping point, n/com. The cost of merchandise sold was $8,400. 8. Sold merchandise on account. $20,000. terms FOB destination. 1/10. n/30. The cost of merchandise sold was $14,000. 16. Sold merchandise on account, $19-500. terms FOB shipping point, n/30. The cost of merchandise sold was $11,700. 18. Received check for amount due for sale on January 8. 19. Issued credit memorandum for $4,500 for merchandise returned from sale on January 16. The cost of the merchandise returned was $2,700. 26. Received check for amount due for sale on January 16 less credit memorandum of January 19. 31. Paid Cashell Delivery Service $3,000 for merchandise delivered during January to customers under shipping terms of FOB destination. 31. Received cheek for amount due for sale of January 6. Instructions Illustrate the effects of each of the preceding transactions on the accounts and financial statements of Affordable Supplies Co. Identify each transaction by date.arrow_forward
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning