1. During October, the company had several transactions. Prepare journal entries for the transactions below and post them to the t-accounts. a. Sold merchandise with an original cost of $73,000 on account for a total selling price of $170,000 DR Accounts Receivable CR Revenue 170,000 170,000 DR COGS CR Inventory 73,000 73,000 I b. Purchased merchandise inventory on account from various suppliers for $92,600. DR Inventory CR Accounts Payable 92,600 92,600 c. Paid rent of $23,500 for the month of October. DR PP&E CR Cash 23,500 23,500 d. Paid salaries of $41,200 to employees during October, including $2,500 owed to employees for work completed in September. DR Salaries Expense DR Salaries Payable CR Cash 41,200 2,500 41,200 e. Collected accounts receivable of $68,300. DR Cash CR Accounts Receivable 68,300 68,300 f. Paid accounts payable of $77.900. DR Accounts Payable 77,900 CR Cash 77.900 I Paid miscellaneous operating expenses of $6,400. DR Miscellaneous expense 6,400 CR Cash 6,400 2. a. At October 31, the company made several adjusting entries. Prepare entries for the adjustments below and post them to the t-accounts, creating new accounts as necessary. The company paid the entire premium on a l-year insurance policy on June 1, 2015, with the insurance used up evenly throughout the life of the policy. This is the only insurance policy in force on September 30, 2015. DR Insurance Expense 100 CR Prepaid Insurance 100 b. Employees earned salaries of $3,200 during the last two days of October but were not paid. These are the only unpaid salaries at the end of October DR Salaries expense 3,200 CR Salaries Payable 3.200 c. The note payable is a 90-day, 6 percent note issued on September 30, 2015. The principal plus all associated interest will be repaid at the due date. 50 DR Interest Expense CR Interest Payable 50 Prepaid Insurance Land 23,500(10) Accounts Payable 77,900(11) 92,600 (16) (ER) 700 80.900 (EB) Note Payable Common Stock Salaries Payable 2,500 (10) 3.200 (EB) Inventory 92,600 (16) 73,000(1a) Accounts receivable 170,000(1a) 68,300(1e) Cash 68,300 (le) 23,500 (16) 41,200 (10) I 77,900(18) Sales Expense 144.950 (C1) (C2) 0 Interest Payable Retained Earings 153,300 (C1) (C2) 3. Prepare the company's income statement for the year ending October 31, 2015 Cunningham Hardware Income Statement 2 Revenues 2 Gross Margin $? 2 Operating Expenses: ? Rent Expense ? Miscellaneous Expenses Total Operating Expenses 41,900 ? 100 ? 71.900 Operating Income 25,100 Interest Expense ? Net Income 52 4. Prepare the company's statement of retained earnings for the year ending October 31, 2015. Cunningham Hardware ? For the Month Ended October 31, 2015 Balance as of September 30, 2015 $ 153,300 Net Income ? Balance as of October 31, 2015 2 5. Prepare the company's balance sheet at October 31, 2015. Cunningham Hardware Balance Sheet Assets Current Assets ? 2 ? Inventory Total Current Assets $ 7,700 156,200 700 2 7 Long-Term Assets 2 Total Assets S2 Liabilities and Shareholders' Equity Current Liabilities ? ? ? Note Payable Total Current Liabilities $ 80,900 2 50 2 Total Liabilities 94,150 Shareholders' Equity Common Stock Retained Earnings Total Shareholders' Equity ? ? ? Total Liabilities and Shareholders' Equity S? 6. Based on Cunningham Hardware's Net Income this month, do you think the company is successful? 7. Review the Cash T-account you created. What was the overall change in cash for 2015? What were the sources of the cash Cunningham Hardware used to pay its bills during October? Does reviewing the company's cash flows cause you to change your answer to (e), and if so, why