Concept explainers
(a)
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Note receivable:
Note receivable refers to a written promise for the amounts to be received within a stipulated period of time. This written promise is issued by a debtor or, borrower to the lender or creditor. Notes receivable is an asset of a business.
To prepare: Journal and
(a)
Answer to Problem 8.1CACR
Prepare
Date | Account Title and Explanation | Debit ($) |
Credit ($) |
January 1 | Notes Receivable | 1,200 | |
Accounts Receivable – Company B | 1,200 | ||
(To record the acceptance of notes receivable in exchange of accounts receivable) | |||
January 3 | Allowance for Doubtful Accounts (1) | 730 | |
Accounts Receivables | 730 | ||
(To write-off of Corporation W accounts and Company D) | |||
January 8 | Inventory | 17,200 | |
Accounts Payable | 17,200 | ||
(To record the purchase of inventory on account) | |||
January 11 | Accounts Receivables | 25,000 | |
Sales revenue | 25,000 | ||
(To record the sale of inventory on account) | |||
January 11 | Cost of Goods Sold | 17,500 | |
Inventory | 17,500 | ||
(To record the cost of goods sold on January 11) | |||
January 15 | Cash | 970 | |
Service Charge Expenses (2) | 30 | ||
Sales Revenue | 1,000 | ||
(To record the sale of inventory by accepting credit card payment) | |||
January 15 | Cost of Goods Sold | 700 | |
Inventory | 700 | ||
(To record the cost of goods sold on January 15) | |||
January 17 | Cash | 22,900 | |
Accounts Receivable | 22,900 | ||
(To record the collection of cash on account) | |||
January 21 | Accounts Payable | 16,300 | |
Cash | 16,300 | ||
(To record the cash payment on account) | |||
January 24 | Accounts Receivable | 280 | |
Allowance for Doubtful Accounts | 280 | ||
(To reverse the write off of Company D’s accounts) | |||
January 24 | Cash | 280 | |
Accounts Receivable | 280 | ||
(To record the collection of cash on account from Company D) | |||
January 27 | Advertising Supplies | 1,400 | |
Cash | 1,400 | ||
(To record the purchase of advertising supplies for cash) | |||
January 31 | Other operating Expenses | 3,218 | |
Cash | 3,218 | ||
(To record the operating expenses) |
Working note:
For transaction made on January 3:
Calculate the amount of allowance for doubtful accounts.
For transaction made on January 15:
Calculate the amount of service charge expense.
Prepare adjusting entries in the books of Corporation H, to record the transactions of January month.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
January 31 | Interest receivable | 8 | |
Interest revenue (3) | 8 | ||
(To accrue one months’ interest on Company B’s note) | |||
January 31 |
| 847 | |
Allowance for doubtful Accounts | 847 | ||
(To record bad debt expenses) | |||
January 31 | Supplies Expense (5) | 840 | |
Supplies | 840 | ||
(To record the purchase of inventory on account) | |||
January 31 | Income tax Expense (6) | 862 | |
Income taxes payable (6) | 862 | ||
(To record the income tax expense) |
Working note for adjusting entry:
Calculate the amount of interest earned on Company B’s note.
Calculate the amount of bad debt expenses.
Calculate the amount of supplies expenses.
Explanation of Solution
Explanation for journal entries:
January 1: Exchange of accounts receivable for notes receivable.
- Notes receivable is an asset account, which is increased on exchange of accounts receivable for note. Hence, an increase in notes receivable is debited.
- Accounts receivable is an asset account, which is decreased to cancel the receivable on account. Hence, a decrease in accounts receivable is credited.
January 3: Write-off of uncollectible receivables.
- To record this write-off of uncollectible receivables, both allowance for bad debts and accounts receivable must be decreased by $730.
- Hence, a decrease in Allowance for doubtful accounts (contra asset account) is debited with $730, and a decrease in accounts receivable (asset account) is credited with $730.
January 8: Purchase of inventory on account.
- Purchase of inventory on account increases accounts payable balance an inventory balance. Inventory is an asset account, which is increased on purchase. Hence, an increase in inventory account is debited.
- Accounts payable is a liability, which is increased by $17,200. Hence, an increase in accounts payable account is credited.
January 11: Sale on account.
- Sale on account increases accounts receivable and sales revenue account. Hence, an increase in accounts receivable (asset account) is debited with $25,000, and
- An increase in sales revenue (
stockholders’ equity account) is credited with $25,000.
January 11: Cost of goods sold.
- Cost of goods sold is expense account, which is increased by $17,500. Hence, cost of goods sold is debited.
- Inventory is an asset account, which is decreased by $17,500. Hence, inventory is credited to decrease its balance by $17,500.
January 15: Sale of inventory by accepting credit card payment.
Corporation H sold its inventory for $1,000 and accepted a credit card payment. For accepting the credit card payment Corporation H incurred 3% bank charge on its $1,000 sales. This transaction increases cash, service charge expense, and sales revenue. Hence,
- Increase in cash (asset account) is debited with $970,
- Increase in service charge expense (decrease in stockholders’ equity) is debited with $30, and
- Increase in sales revenue (Stockholders’ equity) is credited with $1,000.
January 15: Cost of goods sold.
- Cost of goods sold is expense account, which is increased by $700. Hence, cost of goods sold is debited.
- Inventory is an asset account, which is decreased by $700. Hence, inventory is credited to decrease its balance by $700.
January 17: Collection of cash on account.
Collection of cash on account, increases cash and decreases accounts receivable by $22,900. Hence,
- An increase in cash (asset account) is debited with $22,900, and
- A decrease in accounts receivable (asset account) is credited with $22,900.
January 21: Payment of cash on account.
Payment of cash on account, decreases cash and decreases accounts receivable by $16,300. Hence,
- A decrease in cash (asset account) is debited with $16,300, and
- A decrease in accounts payable (liability account) is credited with $16,300.
January 24: Reverse the write off of Company D’s accounts.
Corporation H has recovered $280 from a customer (Company D), whose account is previously written off as uncollectible. Now, Corporation H required reversing the entry, which is previously written off as uncollectible receivables. Hence,
- Accounts receivable (asset account) is debited to increase its balance by $280, and
- Allowance for doubtful accounts (contra asset account) is credited to increase its balance by $280.
January 24: Collection of cash on account.
Collection of cash on account, increases cash and decreases accounts receivable by $280. Hence,
- An increase in cash (asset account) is debited with $280, and
- A decrease in accounts receivable (asset account) is credited with $280.
January 27: Purchase of supplies.
Purchase of supplies, decreases cash and increases supplies by $1,400. Hence,
- An increase in supplies (asset account) is debited with $1,400, and
- A decrease in cash (asset account) is credited with $1,400.
January 31: Payment of other operating expense.
Payment of other operating expense, decreases cash and increases expenses account by $3,218. Hence,
- An increase in other operating expense (asset account) is debited with $3,218, and
- A decrease in cash (asset account) is credited with $3,218.
Explanation for adjusting entries:
January 31: Accrued interest revenue.
On January 31, Corporation H has to record accrued interest revenue of $8 (3) on Company B’s note due. To record this accrued interest revenue, both interest receivable, and interest revenue must be increased by $8.
- Interest receivable is an asset, thus interest receivable is debited to increase its balance by $8.
- Interest revenue is a stockholders’ equity account, thus interest revenue is credited to increase its balance by $8.
January 31: Bad debt expense.
- An increase in bad debt expense (decrease in stockholders’ equity account) is debited with $847 (4) and
- An increase in allowance for doubtful accounts (contra-asset account) is credited with $847.
January 31: Supplies expense.
- An increase in supplies expense (decrease in stockholders’ equity account) is debited with $840 (5) and,
- A decrease in supplies accounts (asset account) is credited with $840.
January 31: Income tax expense.
- An increase in income tax expense (decrease in stockholders’ equity account) is debited with $862 (6) and
- An increase in income tax payable accounts (liability account) is credited with $862.
(b)
To prepare: An adjusted
(b)
Explanation of Solution
Prepare an adjusted trial balance at January 31, 2017 for Corporation H.
Incorporation H | ||
Adjusted Trial Balance | ||
January 31, 2017 | ||
Particulars | Debit ($) | Credit ($) |
Cash | 16,332 | |
Notes Receivable | 1,200 | |
Accounts Receivable | 19,950 | |
Allowance for Doubtful Accounts | 1,197 | |
Interest Receivable | 8 | |
Inventory | 8,400 | |
Supplies | 560 | |
Accounts Payable | 9,650 | |
Income tax payable | 862 | |
Common Stock | 20,000 | |
| 12,730 | |
Sales Revenue | 26,000 | |
Cost of Goods Sold | 18,200 | |
Advertising Supplies Expense | 840 | |
Bad Debt Expense | 847 | |
Service Charge Expense | 30 | |
Other Operating Expenses | 3,218 | |
Interest Revenue | 8 | |
Income tax expense (6) | 862 | |
Total balance | $70,447 | $70,447 |
Working note:
Prepare T-accounts for accounts with multiple transactions, to determine the ending balance of each account.
Cash
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 1 | Opening balance | 13,100 | January 21 | Accounts payable | 16,300 |
January 15 | Sales revenue | 970 | January 27 | Advertising supplies | 1,400 |
January 17 | Accounts receivable | 22,900 | January 31 | Operating expenses | 3,218 |
January 24 | Accounts receivable | 280 | |||
January 31 | Ending balance | 16,332 |
Accounts receivable
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 1 | Opening balance | 19,780 | January 1 | Notes receivable | 1,200 |
January 11 | Sales revenue | 25,000 | January 3 | Allowance for doubtful accounts | 730 |
January 24 | Allowance for doubtful accounts | 280 | January 17 | Cash | 22,900 |
January 24 | Cash | 280 | |||
Ending balance | 19,950 |
Allowance for Doubtful Accounts
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 3 | Accounts receivable | 730 | January 1 | Opening balance | 800 |
January 24 | Accounts receivable | 280 | |||
January 31 | Bad debt expenses (Adjusting entry) | 847 | |||
January 31 | Ending balance | 1,197 |
Inventory
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 1 | Opening balance | 9,400 | January 11 | Cost of goods sold | 17,500 |
January 8 | Accounts payable | 17,200 | January 15 | Cost of goods sold | 700 |
January 31 | Ending balance | 8,400 |
Supplies
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 27 | Cash | 1,400 | January 31 |
Advertising Supplies Expenses (Adjustment) | 840 |
January 31 | Ending balance | 560 |
Accounts payable
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 21 | Cash | 16,300 | January 1 | Opening balance | 8,750 |
January 8 | Inventory | 17,200 | |||
January 31 | Ending balance |
9,650 |
Cost of Goods Sold
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 11 | Inventory | 17,500 | |||
January 15 | Inventory | 700 | |||
January 31 | Ending balance | 18,200 |
Sales return
Date | Particulars |
Debit ($) | Date | Particulars |
Credit ($) |
January 11 | Accounts Receivable | 25,000 | |||
January 15 | Cash | 970 | |||
January 15 | Cash | 30 | |||
January 31 | Ending balance |
26,000 |
(c)
To prepare: An income statement, a retained earnings statement for the month ending of January 31, 2017, and a classified balance sheet as of January 31, 2017.
(c)
Answer to Problem 8.1CACR
Prepare an income statement for Incorporation H for the month ending of January 31, 2017.
Incorporation H | ||
Income Statement | ||
For the Month Ending of January 31, 2017 | ||
Particulars | Amount in ($) | Amount in ($) |
Sales revenue | 26,000 | |
Less: Cost of goods sold | 18,200 | |
Gross profit | 7,800 | |
Operating expenses: | ||
Other operating expenses | 3,218 | |
Bad debt expense | 847 | |
Advertising Supplies expense | 840 | |
Service charge expense | 30 | |
Total operating expenses | 4,935 | |
Income from operations | 2,865 | |
Add: Other revenues and gains: | ||
Interest revenue | 8 | |
Income before taxes | 2,873 | |
Less: Income tax expense 30% | (6) 862 | |
Net income after tax | $2,011 |
Working note:
Calculate the amount of income tax.
Prepare retained earnings statement for Incorporation H for the month ending of January 31, 2017.
Incorporation H | |
Retained Earnings Statement | |
For the Month Ending of January 31, 2017 | |
Particulars | Amount (in $) |
Retained earnings, January 1 | 12,730 |
Add: Net income | 2,011 |
Retained earnings, January 31 | $14,741 |
Prepare a classified balance statement for Incorporation H, as on January 31, 2017.
Incorporation H | ||
Balance Sheet | ||
As on January 31, 2017 | ||
Assets | Amount (in $) | Amount (in $) |
Current assets: | ||
Cash | 16,332 | |
Notes receivable | 1,200 | |
Accounts receivable | 19,950 | |
Less: Allowance for doubtful accounts | 1,197 | 18,753 |
Interest receivable | 8 | |
Inventory | 8,400 | |
Supplies | 560 | |
Total assets | $45,253 | |
Liabilities and Stockholders’ Equity | Amount (in $) | Amount (in $) |
Current liabilities: | ||
Accounts payable | 9,650 | |
Income taxes payable | 862 | |
Total liabilities | 10,512 | |
Stockholders’ equity: | ||
Common stock | 20,000 | |
Retained earnings | 14,741 | |
Total stockholders’ equity | 34,741 | |
Total liabilities and stockholders’ equity | $45,253 |
Explanation of Solution
- All revenue and expenses items are reported in the income statement.
- The retained earnings of Incorporation H for the year month ended January 31, 2017 are determined by adding the dividends from the net income and retained earnings as on January 1, 2017.
- Cash, accounts receivable, notes receivable, interest receivable, supplies and inventory are the resources of the business. Since, these are short-term assets; all are reported under current asset section.
- Accounts payable, income taxes payable is a short-term liability; hence it is also classified under current liabilities.
- Common stock is the value of investment made in the business by the stockholders. Hence, common stock is classified under Stockholders’ equity section. Retained earnings of $14,741 are reported under Stockholders’ equity section, because retained earnings are the amount of owners claim on the assets of the business.
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Chapter 8 Solutions
FINANCIAL ACCT.:TOOLS...(LL)-W/ACCESS
- Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed: May 1. Paid rent for May, 5,000. 3. Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, 36,000. 4. Paid freight on purchase of May 3, 600. 6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, 68,500. The cost of the merchandise sold was 41,000. 7. Received 22,300 cash from Halstad Co. on account. 10. Sold merchandise for cash, 54,000. The cost of the merchandise sold was 32,000. 13. Paid for merchandise purchased on May 3. 15. Paid advertising expense for last half of May, 11,000. 16. Received cash from sale of May 6. 19. Purchased merchandise for cash, 18,700. 19. Paid 33,450 to Buttons Co. on account. 20. Paid Korman Co. a cash refund of 13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was 13,500 and the cost of the returned merchandise was 8,000. Record the following transactions on Page 21 of the journal: 20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, 110,000. The cost of the merchandise sold was 70,000. 21. For the convenience of Crescent Co., paid freight on sale of May 20, 2,300. 21. Received 42,900 cash from Gee Co. on account. May 21. Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, 88,000. 24. Returned of damaged merchandise purchased on May 21, receiving a credit memo from the seller for 5,000. 26. Refunded cash on sales made for cash, 7,500. The cost of the merchandise returned was 4,800. 28. Paid sales salaries of 56,000 and office salaries of 29, 000. 29. Purchased store supplies for cash, 2,400. 30. Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, 78,750. The cost of the merchandise sold was 47,000. 30. Received cash from sale of May 20 plus freight paid on May 21. 31. Paid for purchase of May 21, less return of May 24. Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). f. The adjustment for customer returns and allowances is 60,000 for sales and 35,000 for cost of merchandise sold. 5. (Optional) Enter the unadjusted trial balance on a IO-column end-of-period spreadsheet (work sheet), and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the owners capital account. 10. Prepare a post-closing trial balance.arrow_forwardEffects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in 2019 appear below. During 2019, Graul discovered that the 2017 ending inventory had been misstated due to the following two transactions being recorded incorrectly. a. A purchase return of inventory costing $42,000 was recorded twice. b. A credit purchase of inventory' made on December 20 for $28,500 was not recorded. The goods were shipped F.O.B. shipping point and were shipped on December 22, 2017. Required: 1. Was ending inventory for 2017 overstated or understated? By how much? 2. Prepare correct income statements for all 3 years. 3. CONCEPTUAL CONNECTION Did the error in 2017 affect cumulative net income for the 3-year period? Explain your response. 4. CONCEPTUAL CONNECTION Why was the 2019 net income unaffected?arrow_forwardAppendix Periodic inventory accounts, multiple-step income statement, closing entries On December 31, 2018, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Cash 13,500 Dividends 25,000 Accounts Receivable 72,000 Sales 3,280,000 Inventory, January 1, 2018 257,000 Purchases 2,650,000 Estimated Returns Inventory, January 1,2018 35,000 Purchases Returns and Allowances 93,000 Purchases Discounts 37,000 Office Supplies 3,000 Freight In 48,000 Prepaid Insurance 4,500 Sales Salaries Expense 300,000 Land 150,000 Advertising Expense 45,000 Store Equipment 270,000 Delivery Expense 9,000 Accumulated Depreciation Store Equipment 55,900 Depreciation Expense Store Equipment 6,000 Office Equipment 78,500 Miscellaneous Selling Expense 12,000 Accumulated Depreciation Office Equipment 16,000 Office Salaries Expense 175,000 Rent Expense 28,000 Accounts Payable 77,800 Insurance Expense 3,000 Salaries Payable 3,000 Office Supplies Expense 2,000 Customer Refunds Payable 50,000 Depreciation Expense Office Equipment 1,500 Unearned Rent 8,300 Notes Payable 50,000 Miscellaneous Administrative Expense 3,500 Common Stock 150,000 Rent Revenue 7,000 Retained Earnings 365,600 Interest Expense 2,000 Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 2018. The inventory as of December 31, 2018, was 305,000. The estimated cost of customer returns inventory for December 31, 2018, is estimated to increase to 40,000. 3. Prepare the closing entries for Wyman Company as of December 31, 2018. 4. What would be the net income if the perpetual inventory system had been used?arrow_forward
- Allowance Method for Accounting for Bad Debts At the beginning of 2016, EZ Tech Companys Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350 (Cr.). EZ Techs sales in 2016 were $1,050,000, 80% of which were on credit. Collections on account during the year were $670,000. The company wrote off $4,000 of uncollectible accounts during the year. Required Prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2016. Prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. What is the net realizable value of accounts receivable on December 31, 2016, under each assumption in part (2)? What effect does the recognition of bad debts expense have on the net realizable value? What effect does the write-off of accounts have on the net realizable value?arrow_forwardInventory Errors McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020. Early in 2020, McLelland discovers that the December 31, 2019 ending inventory was overstated by $20,000. For simplicity, ignore taxes. Required: 1. What is the correct net income for 2019? For 2020? 2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?arrow_forwardContinuing problem Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account Balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows: 110 Cash 83,600 112 Accounts Receivable 233,900 115 Merchandise Inventory 624,400 116 Estimated Returns Inventory 28,000 117 Prepaid Insurance 16,800 118 Store Supplies 11,400 123 Store Equipment 569,500 124 Accumulated DepreciationStore Equipment 56,700 210 Accounts Payable 96,600 211 Salaries Payable 212 Customers Refunds Payable 50,000 310 Common Stock 100,000 311 Retained Earnings 585,300 312 Dividends 135,000 313 Income Summary 410 Sales 5,069,000 510 Cost of Merchandise Sold 2,823,000 520 Sales Salaries Expense 664,800 521 Advertising Expense 281,000 522 Depreciation Expense 523 Store Supplies Expense 529 Miscellaneous Selling Expense 12,600 530 Office Salaries Expense 382,100 531 Rent Expense 83,700 532 Insurance Expense 539 Miscellaneous Administrative Expense 7,800 During May, the last month of the fiscal year, the following transactions were completed: May 1. Paid rent for May, 5,000. 3. Purchased merchandise on account from Martin Co. terms 2/10t n/30, FOB shipping point, 36,000. 4. Paid freight on purchase of May 3, 600. 6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, 68,500. The cost of the merchandise sold was 41,000. 7. Received 22,300 cash from Halstad Co. on account. 10. Sold merchandise for cash, 54,000. The cost of the merchandise sold was 32,000. 13. Paid for merchandise purchased on May 3- 15. Paid advertising expense for last half of May, 11,000. 16. Received cash from sale of May 6. 19. Purchased merchandise for cash, 18,700. 19. Paid 33,450 to Buttons Co. on account 20. Paid Korman Co. a cash refund of 13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was 13,500 and the cost of the returned merchandise was 8,000. Record the following transactions on Page 21 of the journal: 20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, 110,000. The cost of the merchandise sold was 70,000. 21. For the convenience of Crescent Co., paid freight on sale of May 20. 2,300. 21. Received 42,900 cash from Gee Co. on account. May 21. Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination. 88,000. 24. Returned of damaged merchandise purchased on May 21, receiving a credit memo from the seller for 5,000. 26. Refunded cash on sales made for cash. 7,500. The cost of the merchandise returned was 4,800. 28. Paid sales salaries of 56,000 and office salaries of 29,000. 29. Purchased store supplies for cash, 2,400. 30. Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, 78,750. The cost of the merchandise sold was 47,000. 30. Received cash from sale of May 20 plus freight paid on May 21. 31. Paid for purchase of May 21. less return of May 24. Instructions 1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark () in the Posting Reference column. Journalize the transactions for July, starting on Page 20 of the journal. 2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6). a. Merchandise inventory on May 31 570,000 b. Insurance expired during the year 12,000 c. Store supplies on hand on May 31 4,000 d. Depreciation for the current year 14,000 e. Accrued salaries on May 31: Sales salaries 7,000 Office salaries 6,600 13,600 f. 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