Sun & Surf Company uses a perpetual inventory system and both an accounts receiv
ID: 2567094 • Letter: S
Question
Sun & Surf Company uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledger for Sun & Surf are indicated in the working papers. Below are a series of transactions for Sun & Surf Co. for the month of January. Credit sales terms are 2/10, n/30. The cost of all merchandise sold was 55% of the sales price.
General Ledger 1
Cash 01/01 37,150 #101
Accounts Receivable 13,000 # 112
Notes Receivable 39,0000 #115
Inventory 01/01 17,795 #120
Office Supplies 01/01 1,200 #125
Prepaid Insurance 01/01 2,205 #130
General Ledger 2
Equipment 01/01 6,450 #157
Accumulated Depreciation - Equipment 6,450 #158
Notes Payable 01/01 0.00 #200
Accounts Payable 01/01 35,500 #201
Intrest payable 01/01 0.00
J. Sandy Capital 01/01 80,300 #301
J. Sandy Drawing 01/01 0.00 #306
Jan.3 Sell merchandise on account to M. Knast $5,100, invoice no. 825, and to C. Ryder $1,900, invoice no. 826.
5 Purchase merchandise from R. Drifter $5,000 and N. Sova $2,200, terms n/30. 7 Receive checks from V. Arnold $4,000 and I. Tan $2,000 after discount period has lapsed.
8 Pay freight on merchandise purchased $235.
9 Send checks to K. Xerxes for $9,000 less 2% cash discount, and to T. Caper for $11,000 less 1% cash discount.
9 Issue credit of $300 to C. Ryder for merchandise returned.
10 Summary daily cash sales total $15,500. 11 Sell merchandise on account to D. Gallagher $1,600, invoice no. 827, and to V. Arnold $900, invoice no. 828. 12 Pay rent of $1,000 for January.
13 Receive payment in full from M. Knast and C. Ryder less cash discounts.
15 Withdrawal of $800 cash by J. Sandy for personal use.
15 Post all entries to the subsidiary ledgers.
16 Purchase merchandise from T. Caper $18,000, terms 1/10, n/30; K. Xerxes $14,200, terms 2/10, n/30; and R. Drifter $1,500, terms n/30.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to K. Xerxes and receive credit.
20 Summary daily cash sales total $20,100.
21 Issue $15,000 note, maturing in 90 days, to M. Griffen in payment of balance due.
21 Receive payment in full from V. Arnold less cash discount.
22 Sell merchandise on account to M. Knast $2,700, invoice no. 829, and to D. Gallagher $1,300, invoice no. 830.
22 Post all entries to the subsidiary ledgers.
23 Send checks to T. Caper and K. Xerxes in full payment less cash discounts.
25 Sell merchandise on account to I. Tan $3,500, invoice no. 831, and to C. Ryder $6,100, invoice no. 832.
27 Purchase merchandise from T. Caper $14,500, terms 1/10, n/30; N. Sova $1,200, terms n/30; and R. Drifter $5,400, terms n/30.
27 Post all entries to the subsidiary ledgers.
28 Pay $275 cash for office supplies.
31 Summary daily cash sales total $21,300.
31 Pay salaries and wages of $8,100.
(a) Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal, a cash payments journal, and a two-column general journal.
(b) Post the journals to the general ledger.
(c) Prepare a trial balance at January 31, 2017, in the trial balance columns of the worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $900.
2. Insurance coverage expires on September 30, 2017.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $50 has accrued on the note payable.
(d) Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.
(e) Prepare and post adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
Income Summary No. 350 Date Explanation Ref. Debit Credit Balance Sales No. 401 Date Explanation Ref. Debit Credit Balance Sales Returns and Allowances No. 412 Date Explanation Ref. Debit Credit Balance Sales Discounts No. 414 Date Explanation Ref. Debit Credit Balance Cost of Goods Sold No. 505 Date Explanation Ref. Debit Credit Balance Salaries and Wages Expense No. 627 Date Explanation Ref. Debit Credit Balance Depreciation Expense No. 711 Date Explanation Ref. Debit Credit Balance Interest Expense No. 718 Date Explanation Ref. Debit Credit Balance Insurance Expense No. 722 Date Explanation Ref. Debit Credit Balance Office Supplies Expense No. 728 Date Explanation Ref. Debit Credit Balance Rent Expense No. 729 Date Explanation Ref. Debit Credit BalanceExplanation / Answer
Journal Entries Sun & Surf Company for January month transactions perpetual inventory system
Jan.3
Account receivables - Debit $6,860
Sales Discount - Debit $140
To Sales - Credit $7,000
(recording sales of merchandise on account to M Knast and C Ryder)
Cost of goods sold - Debit $3,850
To Inventory - Credit $3,850
(recording cost of goods sold )
Jan.5
Inventory - Debit $7,200
To Accounts Payable- Credit $7,200
(recording of purchase of merchandise from R Differ and N Sova)
Cash - Debit $6,000
To Accounts receivables - Credit $6,000
(recording of checks received from Arnold and Tan)
Note: Purchase terms is not provided, hence no sales discount entry recorded
Jan.8
Inventory - Debit $235
To Cash - Credit $235
(recording of payment of freight under)
Jan.9
Accounts payable - Debit $20,000
(Xerxes $9,000+ T Caper $11,000)
To Discount allowed- Credit $290
($9,000 @2% and $11,000@ 11%)
To Cash - Credit $19,710
(recording payment made to vendor net of cash discount)
Jan.9
Sales - Debit $300
To Account receivables - Credit $300
(recording sales returns form C Ryder on earlier purchase made)
Jan.10
Cash - Debit $15,500
To Sales - Credit $15,500
(recording cash sales)
Jan.11
Account receivables - Debit $2,450
Sales Discount - Debit $50
To Sales - Credit $2,500
(recording sales of merchandise on account to D Gallagher and V Arnold)
Jan.12
Rent expense - Debit $1,000
To Cash - Credit $1,000
(recording of rent expenses for January)
Jan.13
Cash - Debit $6,860
To Account receivables - Credit $6,860
(recording of cash receipt from sales of merchandise on account to M Knast and C Ryder)
Jan .15
J Sandy Drawings - Debit $800
To Cash - Credit $800
(recording of drawings by J sandy for personal use)
Jan .16
Inventory - Debit $18,000
To Purchase discount - Credit $180
Inventory - Debit $14,200
To Purchase discount - Credit $284
Inventory - Debit $1,500
To Accounts Payable - Credit $33,236
(recording of purchase of merchandise from T. Caper, K. Xerxes and R Differ and discount received)
Jan.17
Offices supplies Debit $400
To Cash - Credit $400
(recording of payment to office supplies)
Jan.18
Accounts payable - Debit $200
To Inventory - Credit $200
(recording sales returns form K. Xerxes on earlier purchase made)
Jan .19
Cash - Debit $20,100
To Sales - Credit $20,100
(recording cash sales)
Jan.21
Notes Receivable- Debit $15,000
To Cash - Credit $15,000
(recording of issue of note to M Griffen for period of 90 days)
Jan.21
Cash - Debit $2,450
Account receivables - Credit $2,450
(recording of receipt of Payment from V Arnold on account purchase made on Jan 11)
Jan.
Account receivables - Debit $3,920
Sales Discount - Debit $80
To Sales - Credit $3,920
(recording sales of merchandise on account to M Knast and D. Gallagher)
Jan.23
Accounts Payable - Debit $31,736
To Cash - Credit $31,736
(recording of payment towards purchase net of discount)
Jan.25
Account receivables - Debit $9,408
Sales Discount - Debit $192
To Sales - Credit $9,600
(recording sales of merchandise on account to I. Tan and C Ryder)
Jan.27
Inventory - Debit $14,500
To Purchase discount - Credit $145
Inventory - Debit $1,200
Inventory - Debit $5,400
To Accounts Payable - Credit $30,955
(recording of purchase of merchandise from T. Caper, K. N Sova and R Differ and discount)
Jan.28
Offices supplies Debit $275
To Cash - Credit $275
(recording of payment to office supplies)
Jan.31 Cash - Debit $20,300
To Sales - Credit $20,300
(recording cash sales)
Jan.31
Salaries and Wages paid - Debit $8,100
To Cash - Credit $8,100
(recording of salary and wages paid for January month)
Please Note: 1) In case one question with multiple subparts, only first 4 subparts needs be answered as a mandatory requirement and
2) In case of multiple questions only first full question with minimum 4 sub parts needs to be answered as a mandatory requirement.
I have journalized all the transactions listed in first question ( which is more than 4 sub parts)
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