During the month of December 20-1, TJ's Specialty Shop engaged in the following transactions:
Dec. 1 Sold merchandise on account to Anne Clark, $2,000, plus tax of $100.
Sale no. 637.
2 Issued check no. 806 to Owen Enterprises in payment of December 1
balance of $1,600, less 2% discount.
3 Issued check no. 807 to Nathen Co. in payment of December 1 balance of
$3,000, less 2% discount.
4 Purchased merchandise on account from Owen Enterprises, $1,550.
Invoice no. 763, dated December 4, terms 2/10, n/30.
4 Issued check no. 808 in payment of telephone expense for the month of
November, $180.
6 Purchased merchandise on account from Evans Essentials, $2,350.
Invoice no. 621, dated December 5, terms net 30.
8 Sold merchandise for cash, $4,840, plus tax of $242.
9 Received payment from Heather Waters in full settlement of account, $490.
9 Sold merchandise on account to Lucy Greene, $800, plus tax of $40.
Sale no. 638.
10 Issued check no. 809 to West Wholesalers in payment of December 1
balance of $1,000.
11 Issued check no. 810 in payment of advertising expense for the month of
December, $400.
12 Sold merchandise on account to Martha Boyle, $1,260, plus tax of $63.
Sale no. 639.
12 Received payment from Anne Clark on account, $1,340.
13 Issued check no. 811 to Owen Enterprises in payment of December 4
purchase. Invoice no. 763, less 2% discount.
13 Martha Boyle returned merchandise for a credit, $740, plus sales tax of $37.
15 Issued check no. 812 in payment of wages (Wages Expense) for the
two-week period ending December 14, $1,100.
15 Received payment from Lucy Greene on account, $1,960.
16 Sold merchandise on account to Kim Fields, $160, plus sales tax of $8.
Sale no. 640.
17 Returned merchandise to Evans Essentials for credit, $150.
18 Issued check no. 813 to Evans Essentials in payment of December 1 balance
of $1,250, less the credit received on December 17.
19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31.
Sale no. 641.
22 Received payment from John Dempsey on account, $1,560.
23 Issued check no. 814 for the purchase of supplies, $120. (Debit Supplies)
(continued)
Dec. 24 Purchased merchandise on account from West Wholesalers, $1,200.
Invoice no. 465, dated December 24, terms net 30.
26 Purchased merchandise on account from Nathen Co., $800.
Invoice no. 817, dated December 26, terms 2/10, n/30.
27 Issued check no. 815 in payment of utilities expense for the month of
November, $630.
27 Sold merchandise on account to John Dempsey, $2,020, plus tax of $101.
Sale no. 642.
29 Received payment from Martha Boyle on account, $2,473.
29 Issued check no. 816 in payment of wages (Wages Expense) for the two-week
period ending December 28, $1,100.
30 Issued check no. 817 to Meyers Trophy Shop for a cash purchase of
merchandise, $200.
As of December 1, TJ's account balances were as follows:
Account Account No. Debit Credit
Cash 101 $ 11,500
Accounts Receivable 122 8,600
Merchandise Inventory 131 21,800
Supplies 141 1,035
Prepaid Insurance 145 1,380
Land 161 8,700
Building 171 52,000
Accum. Depr.-Building 171.1 $ 9,200
Store Equipment 181 28,750
Accum. Depr.-Store Equipment 181.1 9,300
Accounts Payable 202 6,850
Wages Payable 219
Sales Tax Payable 231 970
Mortgage Payable 251 12,525
Tom Jones, Capital 311 90,000
Tom Jones, Drawing 312 8,500
Income Summary 313
Sales 401 116,000
Sales Returns and Allowances 401.1 690
Purchases 501 60,500
Purchases Returns and Allowances 501.1 460
Purchases Discounts 501.2 575
Freight-In 502 175
Wages Expense 511 25,000
Advertising Expense 512 4,300
Supplies Expense 524
Telephone Expense 525 2,000
Utilities Expense 533 6,900
Insurance Expense 535
Depr. Expense-Building 540
Depr. Expense-Store Equipment 541
Miscellaneous Expense 549 2,700
Interest Expense 551 1,350
$245,880 $245,880
TJ's also had the following subsidiary ledger balances as of December 1:
Accounts Receivable Ledger
CUSTOMER BALANCE
Martha Boyle
12 Jude Lane
$3,250
Hartford, CT 06117
Anne Clark
52 Juniper Road
Hartford, CT 06118
1,340
John Dempsey
700 Hobbes Dr.
1,560
Avon, CT 06108
Kim Fields
5200 Hamilton Ave.
___
Hartford, CT 06117
Lucy Greene
236 Bally Lane
Simsbury, CT 06123
Heather Waters
447 Drury Lane
West Hartford, CT 06107
1,960
490
Accounts Payable Ledger
VENDOR
Evans Essentials
BALANCE
34 Harry Ave.
East Hartford, CT 05234 $1,250
Nathen Co.
1009 Drake Rd.
Farmington, CT 06082 3,000
Owen Enterprises
43 Lucky Lane
Bristol, CT 06007 1,600
West Wholesalers
888 Anders Street 1,000
Newington, CT 06789
At the end of the year, the following adjustments (a)-(g) need to be made:
(a, b) Merchandise inventory as of December 31, $19,700.
$19,700.
(c) Unused supplies on hand, $525.
(d ) Unexpired insurance on December 31, $1,000.
(e) Depreciation expense on the building for the year, $800.
(f) Depreciation expense on the store equipment for the year, $450.
(g) Wages earned but not paid as of December 31, $330.
Requirements and working papers for this problem are special journals based.
(REQUIRED: SPECIAL JOURNALS)
1. If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 1. Enter the December 1 balance of each of the accounts, with a check mark in the Posting Reference column.
2. Enter transactions for the month of December in the proper journals. Post immediately to the accounts receivable and accounts payable ledgers.
3. 3. Post from the journals to the general ledger. Post the journals in the following order: general, sales, purchases, cash receipts, and cash payments.
4. Prepare schedules of accounts receivable and accounts payable.
5. Prepare a year-end work sheet, an income statement, a statement of owner's equity, and a balance sheet. The mortgage payable includes $600 that is due within one year.
6. Journalize and post adjusting entries.
7. Journalize and post closing entries. (HINT: Close all expense and revenue account balances listed in the Income Statement columns of the work sheet. Then, close Income Summary and Tom Jones, Drawing to Tom Jones, Capital.)
8. Prepare a post-closing trial balance.
9. Journalize and post reversing entries for the adjustments where appropriate, as of January 1, 20-2.
Thanks for your valable resources
1. Open the general ledger, accounts receivable ledger, and accounts payable ledger as of December 1, and enter the December 1 balance of each account:
General Ledger:
- Cash (101): Debit $11,500
- Accounts Receivable (122): Credit $8,600
- Merchandise Inventory (131): Credit $21,800
- Supplies (141): Credit $1,035
- Prepaid Insurance (145): Credit $1,380
- Land (161): Credit $8,700
- Building (171): Credit $52,000
- Accum. Depr.-Building (171.1): Debit $9,200
- Store Equipment (181): Credit $28,750
- Accum. Depr.-Store Equipment (181.1): Debit $9,300
- Accounts Payable (202): Credit $6,850
- Wages Payable (219): No balance entered
- Sales Tax Payable (231): Credit $970
- Mortgage Payable (251): Credit $12,525
- Tom Jones, Capital (311): Credit $90,000
- Tom Jones, Drawing (312): Debit $8,500
- Income Summary (313): No balance entered
- Sales (401): Credit $116,000
- Sales Returns and Allowances (401.1): Debit $690
- Purchases (501): Debit $60,500
- Purchases Returns and Allowances (501.1): Credit $460
- Purchases Discounts (501.2): Credit $575
- Freight-In (502): Debit $175
- Wages Expense (511): Debit $25,000
- Advertising Expense (512): Debit $4,300
- Supplies Expense (524): No balance entered
- Telephone Expense (525): Debit $2,000
- Utilities Expense (533): Debit $6,900
- Insurance Expense (535): No balance entered
- Depr. Expense-Building (540): No balance entered
- Depr. Expense-Store Equipment (541): No balance entered
- Miscellaneous Expense (549): Debit $2,700
- Interest Expense (551): Debit $1,350
Accounts Receivable Ledger:
- Martha Boyle: Debit $3,250
- Anne Clark: Debit $1,340
- John Dempsey: Debit $1,560
- Kim Fields: No balance entered
- Lucy Greene: No balance entered
- Heather Waters: Credit $1,960
- Total: $6,110
Accounts Payable Ledger:
- Evans Essentials: Credit $1,250
- Nathen Co.: Credit $3,000
- Owen Enterprises: Credit $1,600
- West Wholesalers: Credit $1,000
- Total: $6,850
To complete the accounting tasks mentioned in the question, you would need to follow these steps:
1. Open general ledger, accounts receivable ledger, and accounts payable ledger:
- Create a general ledger with accounts such as Cash, Accounts Receivable, Accounts Payable, Merchandise Inventory, etc. Enter the December 1 balances of each account with a check mark in the Posting Reference column.
- Create an accounts receivable ledger with customer accounts like Martha Boyle, Anne Clark, John Dempsey, etc. Enter the respective December 1 balances for each customer.
- Create an accounts payable ledger with vendor accounts like Evans Essentials, Nathen Co., Owen Enterprises, etc. Enter the respective December 1 balances for each vendor.
2. Enter transactions for the month of December in proper journals:
- Use special journals (sales journal, purchases journal, cash receipts journal, cash payments journal) to record the transactions for the month of December.
- Post each transaction immediately to the accounts receivable ledger and accounts payable ledger.
3. Post from the journals to the general ledger:
- Start by posting transactions from the general journal to the general ledger.
- Then, post transactions from the sales journal, purchases journal, cash receipts journal, and cash payments journal to the respective accounts in the general ledger.
4. Prepare schedules of accounts receivable and accounts payable:
- Use the accounts receivable ledger to prepare a schedule of accounts receivable, which lists all customers and their respective balances.
- Use the accounts payable ledger to prepare a schedule of accounts payable, which lists all vendors and their respective balances.
5. Prepare a year-end work sheet, an income statement, a statement of owner's equity, and a balance sheet:
- Use the information given in the question, along with the balances from the general ledger, to prepare a year-end work sheet.
- Use the work sheet to prepare an income statement, a statement of owner's equity, and a balance sheet.
6. Journalize and post adjusting entries:
- Based on the adjustments (a)-(g) mentioned in the question, make the necessary adjusting entries in the general journal.
- Post these adjusting entries to the respective accounts in the general ledger.
7. Journalize and post closing entries:
- Close all revenue and expense account balances listed in the Income Statement columns of the work sheet. Transfer their balances to the Income Summary account.
- Close the Income Summary account to the owner's capital account (Tom Jones, Capital).
- Close the owner's drawing account (Tom Jones, Drawing) to the owner's capital account.
- Journalize and post these closing entries to the respective accounts in the general ledger.
8. Prepare a post-closing trial balance:
- After closing the accounts, prepare a post-closing trial balance using the balances from the general ledger.
- The post-closing trial balance should only include the permanent (balance sheet) accounts.
9. Journalize and post reversing entries for the adjustments (where appropriate) as of January 1, 20-2:
- If any of the adjustments mentioned in (a)-(g) require reversing entries, create them in the general journal.
- Post these reversing entries to the respective accounts in the general ledger.
By following these steps, you should be able to complete the accounting tasks outlined in the question.