On December 1, 2020, Papadopoulos Seasonings had the following account balances.

During December, the company completed the following transactions.

Dec. 7 Received €3,600 cash from customers in payment of account (no discount allowed).

12 Purchased merchandise on account from Spiro Co. €12,000, terms 1/10, n/30.

17 Sold merchandise on account €16,000, terms 2/10, n/30. The cost of the merchandise sold was €10,000.

19 Paid salaries €2,200.

22 Paid Spiro Co. in full, less discount.

26 Received collections in full, less discounts, from customers billed on December 17.

31 Received €2,700 cash from customers in payment of account (no discount allowed).

Adjustment data:

1. Depreciation €200 per month.

2. Insurance expired €400.

Instructions

a. Journalize the December transactions. (Assume a perpetual inventory system.)

b. Enter the December 1 balances in the ledger T-accounts and post the December transactions. Use Cost of Goods Sold, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Sales Revenue, and Sales Discounts.

c. The statement from Athens Bank on December 31 showed a balance of €26,130. A comparison of the bank statement with the Cash account revealed the following facts.

1. The bank collected a note receivable of €2,200 for Papadopoulos on December 15.

2. The December 31 receipts were deposited in a night deposit vault on December 31. These deposits were recorded by the bank in January.

3. Checks outstanding on December 31 totaled €1,210.

4. On December 31, the bank statement showed an NSF charge of €680 for a check received by the company from A. Quinn, a customer, on account.

Prepare a bank reconciliation as of December 31 based on the available information. The cash balance per books is €26,100. This can be proven by fi nding the balance in the Cash account from parts (a) and (b).

d. Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.

e. Post the adjusting entries to the ledger T-accounts.

f. Prepare an adjusted trial balance.

g. Prepare an income statement for December and a classifi ed statement of fi nancial position at December 31.

Transcribed Image Text:

Credit Debit Cash Notes Receivable Accounts Receivable Inventory €18,200 2,200 7,500 Accumulated Depreciation- Equipment Accounts Payable Share Capital Ordinary Retained Earnings € 3,000 6,100 50,000 16,000 1,600 Prepaid Insurance Equipment 14,400 28,000 €73,500 €73,500