Because Natalie has had such a successful fi rst few months, she is considering other opportunities to develop her business. One opportunity is to become the exclusive distributor of a line of fi ne European mixers. Natalie comes to you for advice on how to account for these mixers.
Go to the book’s companion website, at www.wiley.com/college/kimmel, to see the completion of this problem.

ACR5-1 On December 1, 2017, Devine Distributing Company had the following account balances.
Debit Credit Cash $ 7,200 Accumulated Depreciation—
Accounts Receivable 4,600 Equipment $ 2,200 Inventory 12,000 Accounts Payable 4,500 Supplies 1,200 Salaries and Wages Payable 1,000 Equipment 22,000 Common Stock 15,000 $47,000 Retained Earnings 24,300 $47,000 During December, the company completed the following summary transactions.
Dec. 6 Paid $1,600 for salaries due employees, of which $600 is for December and $1,000 is for November salaries payable.
8 Received $1,900 cash from customers in payment of account (no discount allowed).
10 Sold merchandise for cash $6,300. The cost of the merchandise sold was $4,100.
13 Purchased merchandise on account from Hecht Co. $9,000, terms 2/10, n/30.
15 Purchased supplies for cash $2,000.
18 Sold merchandise on account $12,000, terms 3/10, n/30. The cost of the merchandise sold was $8,000.
20 Paid salaries $1,800.
23 Paid Hecht Co. in full, less discount.
27 Received collections in full, less discounts, from customers billed on December 18.
Adjustment data:
1. Accrued salaries payable $800.
2. Depreciation $200 per month.
3. Supplies on hand $1,500.
4. Income tax due and unpaid at December 31 is $200.
Instructions

(a) Journalize the December transactions using 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, Salaries and Wages Expense, Sales Revenue, Sales Discounts, Supplies Expense, Income Tax Expense, and Income Taxes Payable.

(c) Journalize and post adjusting entries.

(d) Prepare an adjusted trial balance.

(e) Prepare an income statement and a retained earnings statement for December and a classifi ed balance sheet at December 31.
ACR5-2 On November 1, 2017, IKonk, Inc. had the following account balances. The company uses the perpetual inventory method.

Debit Credit Cash $ 9,000 Accumulated Depreciation—
Accounts Receivable 2,240 Equipment $ 1,000 Supplies 860 Accounts Payable 3,400 Equipment 25,000 Unearned Service Revenue 4,000 $37,100 Salaries and Wages Payable 1,700 Common Stock 20,000 Retained Earnings 7,000 $37,100 During November, the following summary transactions were completed.
Nov. 8 Paid $3,550 for salaries due employees, of which $1,850 is for November and $1,700 is for October.
10 Received $1,900 cash from customers in payment of account.
11 Purchased merchandise on account from Dimas Discount Supply for $8,000, terms 2/10, n/30.
12 Sold merchandise on account for $5,500, terms 2/10, n/30. The cost of the merchandise sold was $4,000.
15 Received credit from Dimas Discount Supply for merchandise returned $300.
19 Received collections in full, less discounts, from customers billed on sales of $5,500 on November 12.
20 Paid Dimas Discount Supply in full, less discount.
22 Received $2,300 cash for services performed in November.
25 Purchased equipment on account $5,000.
27 Purchased supplies on account $1,700.
28 Paid creditors $3,000 of accounts payable due.
29 Paid November rent $375.
29 Paid salaries $1,300.
29 Performed services on account and billed customers $700 for those services.
29 Received $675 from customers for services to be performed in the future.
Adjustment data:
1. Supplies on hand are valued at $1,600.
2. Accrued salaries payable are $500.
3. Depreciation for the month is $250.
4. $650 of services related to the unearned service revenue has not been performed by month-end.
Instructions

(a) Enter the November 1 balances in ledger T-accounts.

(b) Journalize the November transactions.

(c) Post to the ledger accounts. You will need to add some accounts.

(d) Journalize and post adjusting entries.

(e) Prepare an adjusted trial balance at November 30.

(f) Prepare a multiple-step income statement and a retained earnings statement for November and a classifi ed balance sheet at November 30.
(g) Journalize and post closing entries.