COMPREHENSIVE PROBLEM World Boards Co. is a merchandising business. The account

Question

COMPREHENSIVE PROBLEM

World Boards Co. is a merchandising business. The account balances for the company as of December 1 2010 are as follows:

110 cash $ 21,200

112 accounts receivable 51,300

115 inventory 200,800

116 prepaid insurance 5,600

117 store supplies 3,800

123 store equipment 156,500

124 accumulated depreciation – equipment 18,900

210 accounts payable 32,200

211 salaries payable ----

310 common stock 85,100

311 retained earnings 100,000

312 dividends 45,000

313 income summary -------

410 sales 1,073,700

411 sales returns and allowances 30,900

412 sales discounts 19,800

510 cost of goods sold 541,000

520 sales salaries expense 111,600

521 advertising expense 27,000

522 depreciation expense -----

523 store supplies expense -----

529 miscellaneous selling expense 4,200

530 office salaries expense 60,700

531 rent expense 27,900

532 insurance expense ---- -

539 miscellaneous administrative expense 2,600

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

1. Paid rent for the month of December, $2,400.

3. Purchased inventory on account from Huisman Co., terms 2/10,n/30, FOB shipping point, $21,600.

4. Paid transportation charges on the Dec. 3rd purchase, 500.

6. Sold inventory on account to Hillcrest Co. terms 2/10,n/30, FOB shipping point, $8,500. The cost was $5,000

7. Received $8,900 cash from Foley Co. on account, no discount.

10. Sold inventory for cash, $27,200. The cost was $16,000.

13. Paid for the inventory purchased on Dec. 3rd less discount.

14. Received inventory returned from the sale of Dec. 6th, $1,500. The cost was $900.

15. Paid advertising expense for the last half of December, $2,600.

16. Received cash from the sale of December 6th less return and discount.

19. Purchased inventory for cash, $11,800.

19 Paid $9,000 to Bakke Co. on account, no discount..

20. Sold inventory on account to Wilts Co. terms 1/10,n/30, FOB shipping point, $22,300, the cost was $13,200.

21. For the convenience of the customer, paid shipping charges on sale of Dec. 20th, $1,100.

21. Received $17,600 cash from Owen Co. on account, no discount.

21. Purchased inventory on account from Nye Co., terms 1/10,n/30, FOB destination, $19,900.

24. Returned $2,000 of inventory purchased on Dec. 21st. receiving credit from the seller.

26. Refunded cash on a cash sale, $1,200. The cost of the inventory was $700.

28. Paid sales salaries of $7,600 and office salaries of $4,800.

29. Purchased store supplies for cash, $800.

30. Sold inventory on account to Whitetail Co. terms 2/10,n/30, FOB shipping point, $18,750. The cost was $11,250

30. Received cash from sale of December 20, less discount, plus shipping charges paid on Dec. 21st

31. Paid for purchase of December 21, less return of December 24 and discount.

ADJUSTMENT DATA:

Inventory on hand on December 31 $196,139

Insurance expired during the year 1,875

Store supplies on hand on Dec. 31st. 1,500

Depreciation for the year 9,500

Accrued salaries on Dec. 31.

Sales salaries $1,200

Office salaries 800 2,000

INSTRUCTIONS

Open a ledger with the accounts given to you in the trial balance. Insert your beginning balances.

Journalize the December transactions and post to the ledger.

Using a 10 column worksheet, prepare a trial balance.

Using the above adjustment data, complete the adjustment columns on the worksheet.

Complete the remainder of the worksheet

Using the worksheet, prepare an income statement, a retained earnings statement, and a balance sheet.

Journalize and post your adjustment entries to the ledger.

Journalize and post your closing entries to the ledger.

Prepare a post-closing trial balance.

What to turn in for a grade

Please turn in your worksheet, your 3 financial statements, and your post-closing trial balance only.

Explanation / Answer

S No Date Account Debit Credit 1 Dec 1 Rent Expense 2400 1 Dec 1 Cash 2400 (Being Rent Paid) 2 Dec 3 Merchandise Inventory 21600 2 Dec 3 Accounts Payable 21600 (being inventory purchased) 3 Dec 4 Merchandise Inventory 500 3 Dec 4 Cash 500 (Freight Paid) 4 Dec 6 Accounts Receivable 8500 4 Dec 6 Sales 8500 (being Sales done) 5 Dec 6 Cost of Merchandise Sold 5000 5 Dec 6 Merchandise Inventory 5000 (COGS of sales) 6 Dec 7 Cash 8900 6 Dec 7 Accounts Receivable 8900 (being advance received) 7 Dec 10 Cash 27200 7 Dec 10 Sales 27200 (Cash Sale) 8 Dec 10 Cost of Merchandise Sold 16000 8 Dec 10 Merchandise Inventory 16000 (COGS) 9 Dec 13 Accounts Payable 21600 9 Dec 13 Cash 21168 21600*98% 9 Dec 13 Merchandise Inventory 432 2% Discount (payment done after taking discount) 10 Dec 14 Sales Return and Allowance 1500 10 Dec 14 Accounts Receivable 1500 11 Dec 14 Merchandise Inventory 900 11 Dec 14 Cost of Merchandise Sold 900 10 Dec 15 Advertising Expense 2600 10 Dec 15 Cash 2600 11 Dec 16 Cash 6860 11 Dec 16 Sales Discount 140 2% discount 11 Dec 16 Accounts Receivable 7000 8500-1500 (Cash received after discount) 12 Dec 19 Merchandise Inventory 11800 12 Dec 19 Cash 11800 (Inventory purchased) 13 Dec 19 Accounts Payable 9000 13 Dec 19 Cash 9000 (Paid on account to Button and co) 16 Dec 20 Accounts Receivable 22300 16 Dec 20 Sales 22300 17 Dec 20 Cost of Merchandise Sold 13200 17 Dec 20 Merchandise Inventory 13200 18 Dec 21 Accounts Receivable 1100 18 Dec 21 Cash 1100 19 Dec 21 Cash 17600 19 Dec 21 Accounts Receivable 17600 20 Dec 21 Merchandise Inventory 19900 20 Dec 21 Accounts Payable 19900 21 Dec 24 Accounts Payable 2000 21 Dec 24 Merchandise Inventory 2000 22 Dec 26 Sales Return and Allowance 1200 22 Dec 26 Cash 1200 23 Dec 26 Merchandise Inventory 700 23 Dec 26 Cost of Merchandise Sold 700 24 Dec 28 Sales Salaries Expense 7600 24 Dec 28 Office Salaries Expense 4800 24 Dec 28 Cash 12400 25 Dec 28 Store Supplies 800 25 Dec 28 Cash 800 26 Dec 30 Accounts Receivable 18750 26 Dec 30 Sales 18750 27 Dec 30 Cost of Merchandise Sold 11250 27 Dec 30 Merchandise Inventory 11250 28 Dec 30 Sales Discount 223 22300*1% 28 Dec 30 Cash 23177 (22300*99%)+1100 28 Dec 30 Accounts Receivable 23400 29 Dec 31 Accounts Payable 17900 29 Dec 31 Cash 17721 17900*99% 29 Dec 31 Merchandise Inventory 179 17900*1% Adjusting Entries 1 Dec 31 Cost of Merchandise Sold 12000 1 Dec 31 Merchandise Inventory 12000 2 Dec 31 Insurance Expense 1875 2 Dec 31 Prepaid Insurance 1875 3 Dec 31 Store Supplies Expense 3100 3 Dec 31 Store Supplies 3100 4 Dec 31 Depreciation Expense 9500 4 Dec 31 Accumulated Depcreciation 9500 5 Dec 31 Sales Salaries Expense 1200 5 Dec 31 Office Salaries Expense 800 5 Dec 31 Salaries Payable 2000 Closing Entries Dec 31 Sales 1150450 Dec 31 Income Summary 1150450 (Closing revenue account) Dec 31 Income Summary 918488 Dec 31 Sales Return and Allowance 33600 Dec 31 Sales Discount 20163 Dec 31 Cost of Merchandise Sold 596850 Dec 31 Sales Salaries Expense 120400 Dec 31 Advertising Expense 29600 Dec 31 Depreciation Expense 9500 Dec 31 Store Supplies Expense 3100 Dec 31 Miscellaneous Selling Expense 4200 Dec 31 Office Salaries Expense 66300 Dec 31 Rent Expense 30300 Dec 31 Insurance Expense 1875 Dec 31 Miscellaneous Administrative Expense 2600 (Closing Expense Account) Dec 31 Income Summary 231962 Dec 31 Retained Earning 231962 (closing Income Summary Account) Dec 31 Retained Earning 45000 Dec 31 Dividends 45000 (Closign Dividend Account) Account Date Sum of Debit Sum of Credit Balance Cash Beginning 21200 21200 Cash Dec 1 2400 18800 Cash Dec 4 500 18300 Cash Dec 7 8900 27200 Cash Dec 10 27200 54400 Cash Dec 13 21168 33232 Cash Dec 15 2600 30632 Cash Dec 16 6860 37492 Cash Dec 19 11800 25692 Cash Dec 19 9000 16692 Cash Dec 21 1100 15592 Cash Dec 21 17600 33192 Cash Dec 26 1200 31992 Cash Dec 28 12400 19592 Cash Dec 28 800 18792 Cash Dec 30 23177 41969 Cash Dec 31 17721 24248 Accounts Payable Beginning 32200 32200 Accounts Payable Dec 3 21600 53800 Accounts Payable Dec 13 21600 32200 Accounts Payable Dec 19 9000 23200 Accounts Payable Dec 21 19900 43100 Accounts Payable Dec 24 2000 41100 Accounts Payable Dec 31 17900 23200 Accounts Receivable Beginning 51300 51300 Accounts Receivable Dec 6 8500 59800 Accounts Receivable Dec 7 8900 50900 Accounts Receivable Dec 14 1500 49400 Accounts Receivable Dec 16 7000 42400 Accounts Receivable Dec 20 22300 64700 Accounts Receivable Dec 21 1100 65800 Accounts Receivable Dec 21 17600 48200 Accounts Receivable Dec 30 18750 66950 Accounts Receivable Dec 30 23400 43550 Rent Expense Beginning 27900 27900 Rent Expense Dec 1 2400 30300 Rent Expense Dec 31 30300 0 Merchandise Inventory Beginning 200800 200800 Merchandise Inventory Dec 31 12000 188800 Merchandise Inventory Dec 3 21600 210400 Merchandise Inventory Dec 4 500 210900 Merchandise Inventory Dec 6 5000 205900 Merchandise Inventory Dec 10 16000 189900 Merchandise Inventory Dec 13 432 189468 Merchandise Inventory Dec 14 900 190368 Merchandise Inventory Dec 19 11800 202168 Merchandise Inventory Dec 20 13200 188968 Merchandise Inventory Dec 21 19900 208868 Merchandise Inventory Dec 24 2000 206868 Merchandise Inventory Dec 26 700 207568 Merchandise Inventory Dec 30 11250 196318 Merchandise Inventory Dec 31 179 196139 Sales Salaries Expense Beginning 111600 111600 Sales Salaries Expense Dec 31 1200 112800 Sales Salaries Expense Dec 28 7600 120400 Sales Salaries Expense Dec 31 120400 0 Office Salaries Expense Beginning 60700 60700 Office Salaries Expense Dec 31 800 61500 Office Salaries Expense Dec 28 4800 66300 Office Salaries Expense Dec 31 66300 0 Store Supplies Beginning 3800 3800 Store Supplies Dec 31 3100 700 Store Supplies Dec 28 800 1500 Sales Beginning 1073700 1073700 Sales Dec 6 8500 1082200 Sales Dec 10 27200 1109400 Sales Dec 20 22300 1131700 Sales Dec 30 18750 1150450 Sales Dec 31 1150450 0 Cost of Merchandise Sold Beginning 541000 541000 Cost of Merchandise Sold Dec 31 12000 553000 Cost of Merchandise Sold Dec 6 5000 558000 Cost of Merchandise Sold Dec 10 16000 574000 Cost of Merchandise Sold Dec 14 900 573100 Cost of Merchandise Sold Dec 20 13200 586300 Cost of Merchandise Sold Dec 26 700 585600 Cost of Merchandise Sold Dec 30 11250 596850 Cost of Merchandise Sold Dec 31 596850 0 Advertising Expense Beginning 27000 27000 Advertising Expense Dec 15 2600 29600 Advertising Expense Dec 31 29600 0 Sales Discount Beginning 19800 19800 Sales Discount Dec 16 140 19940 Sales Discount Dec 30 223 20163 Sales Discount Dec 31 20163 0 Sales Return and Allowance Beginning 30900 30900 Sales Return and Allowance Dec 14 1500 32400 Sales Return and Allowance Dec 26 1200 33600 Sales Return and Allowance Dec 31 33600 0 Insurance Expense Beginning Insurance Expense Dec 31 1875 1875 Insurance Expense Dec 31 1875 0 Prepaid Insurance Beginning 5600 5600 Prepaid Insurance Dec 31 1875 3725 Store Supplies Expense Beginning Store Supplies Expense Dec 31 3100 3100 Store Supplies Expense 3100 0 Depreciation Expense Beginning Depreciation Expense Dec 31 9500 9500 Depreciation Expense Dec 31 9500 0 Accumulated Depcreciation Beginning 18900 18900 Accumulated Depcreciation Dec 31 9500 28400 Salaries Payable Beginning 0 0 Salaries Payable Dec 31 2000 2000 Common Stock Beginning 85100 85100 Common Stock Retained Earning Beginning 100000 100000 Retained Earning Dec 31 231962 331962 Retained Earning Dec 31 45000 286962 Dividends Beginning 45000 45000 Dividends Dec 31 45000 0 Miscellaneous Administrative Expense Beginning 2600 2600 Miscellaneous Administrative Expense Dec 31 2600 0 Miscellaneous Selling Expense Beginning 4200 4200 Miscellaneous Selling Expense Dec 31 4200 0 Store Equipment Beginning 156500 156500 Beginning Transaction Unadjusted Adjusted Entries Adjusted Unadjusted Trial Balance Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash 21,200 0 3048 0 24,248 0 24248 Accounts Receivable 51,300 0 0 7750 43,550 0 43550 Merchandise Inventory 200,800 0 7339 0 208,139 0 12000 196139 0 0 Prepaid Insurance 5,600 0 0 0 5,600 0 1875 3725 Store Supplies 3,800 0 800 0 4,600 0 3100 1500 Store Equipment 156,500 0 0 0 156,500 0 156500 Accumulated Depcreciation 0 18,900 0 0 0 18,900 9500 28400 Accounts Payable 0 32,200 9000 0 0 23,200 23200 Salaries Payable 0 0 0 0 0 0 2000 2000 Customers Refunds Payable 0 0 0 0 0 0 0 Common Stock 0 85,100 0 0 0 85,100 85100 Retained Earning 0 100,000 0 0 0 100,000 0 100000 Dividends 45,000 0 0 0 45,000 45000 Income Summary 0 0 0 0 0 0 Sales 0 1,073,700 0 76750 0 1,150,450 1150450 Sales Return and Allowance 30,900 0 2700 33,600 33600 Sales Discount 19,800 0 363 20,163 20163 Cost of Merchandise Sold 541,000 0 43850 0 584,850 12000 596850 Sales Salaries Expense 111,600 0 7600 0 119,200 1200 120400 Advertising Expense 27,000 0 2600 0 29,600 29600 Depreciation Expense 0 0 0 0 0 9500 9500 Store Supplies Expense 0 0 0 0 0 3100 3100 Miscellaneous Selling Expense 4,200 0 0 0 4,200 4200 Office Salaries Expense 60,700 0 4800 0 65,500 800 66300 Rent Expense 27,900 0 2400 0 30,300 30300 Insurance Expense 0 0 0 0 0 1875 1875 Miscellaneous Administrative Expense 2,600 0 0 0 2,600 2600 1,309,900 1,309,900 84,500 84,500 1,377,650 1,377,650 28,475 28,475 1,389,150 1,389,150 Net Income Statement Sales 1150450 Less: Sales Return and Allowance 33600 Net Sales 1116850 Less: Sales Discount 20163 1096687 Less: Cost of Merchandise Sold 596850 Gross Margin 499837 Less: expenses Sales Salaries Expense 120400 Advertising Expense 29600 Depreciation Expense 9500 Store Supplies Expense 3100 Miscellaneous Selling Expense 4200 Office Salaries Expense 66300 Rent Expense 30300 Insurance Expense 1875 Miscellaneous Administrative Expense 2600 Net Income 231962 Retained Earning Statement: Beginning Balance 100000 add: Net Income 231962 Less: Dividends -45000 Ending Balance 286962 Balance Sheet Assets: Current Assets: Cash 24248 Accounts Receivable 43550 Merchandise Inventory 196139 Prepaid Insurance 3725 Store Supplies 1500 Total Current Assets 269162 Store Equipment 156500 Less:Accumulated Depcreciation -28400 128100 Total Assets 397262 Current Liabilities: Accounts Payable 23200 Salaries Payable 2000 Total Liabilities 25200 Common Stock 85100 Retained Earning 286962 Total Liabilities and Equity 397262

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