Question

Starting balances:

cash:83600

dividends:135000

accounts receivable: 233900

sales: 5069000

inventory: 624400

cost of goods sold: 2,823,000

Estimated returns inventory: 28000

sales salaries expense: 664800

prepaid insurance: 16800

advertising expense: 281000

store supplies: 11400

depreciation expense: -

store equipment: 69500

store supplies expense: -

accumulated depreciation- store equipment: 6700

miscellaneous selling expense: 12600

office salaries expense: 382100

accounts payable:96000

rent expense: 83700

salaries payable:-

insurance expense:-

customers refunds payable: 50000

miscellaneous administrative expense: 7800

common stock: 100000

retained earnings: 585300

During May, the last month of the fiscal year, the following transactions were completed:

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 goods 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 goods 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.

20. Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping

point, $110,000. The cost of the goods 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.

21. Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB

destination, $88,000.

24. Returned 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 goods 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.

Complete the following:

1. Prepare journal entries for all May transactions
2. Post journal entries to appropriate ledgers (t-charts) – remember there are starting balances above!
3. Prepare an unadjusted trial balance.
4. Prepare (and post) the adjusting journal entries given the following information:

a. 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

f. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of goods sold.

   5. Prepare an adjusted trial balance.

   6. Prepare an Income Statement, Statement of Stockholder’s Equity, and Balance

Sheet.

   7. Prepare and post the closing journal entries.

   8. Prepare a post-closing trial balance.

Answer 1