Listed below are selected transactions of Schultz Department Store for the curre
ID: 2715189 • Letter: L
Question
Listed below are selected transactions of Schultz Department Store for the current year ending December 31.
Prepare all the journal entries necessary to record the transactions noted above as they occurred and any adjusting journal entries relative to the transactions that would be required to present fair financial statements at December 31. Date each entry. For simplicity, assume that adjusting entries are recorded only once a year on December 31. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 5
Dec. 1-31
Dec. 10
Dec. 31
Open Show Work
1. On December 5, the store received $640 from the Selig Players as a deposit to be returned after certain furniture to be used in stage production was returned on January 15. 2. During December, cash sales totaled $815,325, which includes the 5% sales tax that must be remitted to the state by the fifteenth day of the following month. 3. On December 10, the store purchased for cash three delivery trucks for $129,600. The trucks were purchased in a state that applies a 5% sales tax. 4. The store determined it will cost $119,100 to restore the area (considered a land improvement) surrounding one of its store parking lots, when the store is closed in 2 years. Schultz estimates the fair value of the obligation at December 31 is $93,840.Explanation / Answer
Date
Account Title and Explanations
Debit
Credit
December 5
Cash A/c Dr
To Security Deposit A/c -Selig Players
(being the receipt of deposit for furniture lent for stage production)
640
640
December 1 - 31
Cash A/c Dr
To Sales Tax Payable A/c
To Sales A/c
(being the accounting of cash-sales and sales tax payable, for the month)
815,325
38,825
776,500
December 10
Fixed Assets – Delivery Trucks A/c Dr
To Cash A/c
(being the purchase of three delivery trucks)
129,600
129,600
December 31
Land Improvement Expenses A/c
To Provision for Land Improvement Exp A/c
(being the provision for land improvement expenses at its fair value as on 31st December)
93,840
93,840
December 31
Profit and Loss A/c Dr
To Land Improvement Expenses A/c
(transfer of expenditure a/c to Profit & Loss A/c)
93,840
93,840
Note: It is presumed that the value of the three trucks of $ 129,600 is inclusive of the State tax.
If the amount of 129,600 is exclusive of Sales Tax, then the value of the entry would be 105% of 129,600 = 136,080
Date
Account Title and Explanations
Debit
Credit
December 5
Cash A/c Dr
To Security Deposit A/c -Selig Players
(being the receipt of deposit for furniture lent for stage production)
640
640
December 1 - 31
Cash A/c Dr
To Sales Tax Payable A/c
To Sales A/c
(being the accounting of cash-sales and sales tax payable, for the month)
815,325
38,825
776,500
December 10
Fixed Assets – Delivery Trucks A/c Dr
To Cash A/c
(being the purchase of three delivery trucks)
129,600
129,600
December 31
Land Improvement Expenses A/c
To Provision for Land Improvement Exp A/c
(being the provision for land improvement expenses at its fair value as on 31st December)
93,840
93,840
December 31
Profit and Loss A/c Dr
To Land Improvement Expenses A/c
(transfer of expenditure a/c to Profit & Loss A/c)
93,840
93,840
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