1. Prepare journal entries (Word or Excel) in good form for the transactions below.

2. Prepare adjusting journal entries (Word or Excel) in good form (see next page).

3. Using the Excel file sales information entitled Assignment 2 Information, determine

sales discounts and cash receipts. It is recommended you prepare subsidiary ledger

accounts (T-accounts) for each of the customers and post the activity for the year to

each account. The ending balances should agree with the control account.

4. Using the inventory information found in the Excel file entitled Assignment 2

Information, provide your calculations for ending inventory (AJE 2).

5. Prepare a bank reconciliation at December 31, 2017 (see AJE # 9)

6. Post both the transaction and adjusting journal entries to the worksheet found in the

Excel file entitled Assignment 2 Information.

Transactions for 2017:

1. Sales for the year were $35,500, of which $30,500 were on credit and

the remainder were cash sales.

Information for accounts receivable entries (2 - 6):

The company has five customers that buy on credit. The opening account

balances for these five customers on January 1, 2017 were as follows:

Customer A - $600, Customer B - $200, Customer C - $150, Customer D - $50,

and Customer E - $30.

The credit sales for 2017 (recorded in TE #1) are broken down by customer in a

separate worksheet of the Excel worksheet file. In 2017, the company changed its

sales terms to incorporate a sales discount. The new terms are 2/10, n/30.

2. Record the January entry to write off the amount due from Customer E as

uncollectible.

3. The other four customers paid off their opening receivable balances in 2017.

Record these collections.

4. Record the December 20 return of $450 of merchandise purchased on

December 10^th by Customer C before making payment.

5. Using the sales worksheet, determine the amount of discounts taken and cash

paid in 2017. Record the sales discounts and cash receipts in one entry.

6. Record the following two returns in one entry: In 2017, two customers returned

merchandise after payment was made. Customer A returned $120 of

merchandise purchased on March 12^th. Customer B returned $50 of

merchandise purchased on February 25^th.

Information for merchandise inventory entries (7, 8, and 9):

The company sells three products - the Handy Widget, Heavy Duty Widget, and International Widget. Information regarding the beginning balances, purchases and purchase returns are included on a separate worksheet in the Excel file.

7. Record the purchases for 2017. Widget uses the periodic inventory system.

8. In 2017, the company paid $29,250 for merchandise purchased on account.

Record these payments.

9. Record the purchase returns for 2017. The Handy Widgets and Heavy Duty

Widgets were returned before payment was made. The International Widgets

were returned after payment was made.

10. Record the 2017 payment of $180 made by the company for insurance

covering the period June 1, 2017 to May 31, 2018.

11. Paid cash for the following: $2,400 for salaries expense (this amount includes

the accrual of Salaries Payable at December 31, 2016), $940 for selling

expenses, and $2,420 for administrative expenses.

12. Received the refund of 2016 taxes.

13. On January 2, 2017, the company issued 500 shares of common stock and

received $6 per share. The common stock has a par value of $0.40 per share.

14. Declared and paid dividends of $800 in 2017.

15. In 2017, the company recorded a $288 receipt of rental revenue for renting

out a portion of its warehouse from October 1, 2017 to June 30, 2018.

16. On January 2, 2017, the company paid off its note payable and related interest.

17. After paying off the above note, the company signed a new note payable for

$1,500 at an annual interest rate of 5%. The principal on this note is to be

paid in three installments of $500 over each of the next three years. Record

the issuance of the new note payable.

18. In 2017, a petty cash fund was established for $4.00.

19. Record the replenishment of the petty cash fund at December 31, 2017. Cash

on hand at this time was $0.20. Receipts included $2.10 for general and

administrative expenses and $1.70 for selling expenses. Also record the

companys decision to increase the fund by $1.00 to $5.00 at this time.

20. Record the $1,200 investment made by the company on November 1, 2017 in

a 4%, 90-day Certificate of Deposit (CD).

Adjustments Needed in 2017:

1. Using the accounts receivable balances from the sales worksheet, calculate the

bad debt expense for 2017. The company uses an aging schedule of accounts

receivable to estimate the expense. The appropriate rates are as follows:

outstanding less than one month - 0.5%, outstanding 1 to 6 months - 1%, and

outstanding more than 6 months - 3%.

2. Record cost of goods sold assuming the company uses LIFO as its inventory

cost flow assumption. Using the information provided on the Excel worksheet,

determine the ending inventory at December 31, 2017.

3. Twelve months of insurance were incurred in 2017. Record the adjustment.

4. Record depreciation for 2017 given the following information: The company

uses straight-line depreciation for all of its assets. The useful lives are:

20 years for the building, 5 years for machinery and 3 years for the copier.

5. In January 2018, the first payroll amounted to $95.00. This covered a ten-day

work period of which 3 days were in December and 7 days were in January.

6. Interest on the note payable needs to be accrued. The loan was made on

January 2, 2017 at a 5% interest rate.

7. Twelve months of rental revenue were earned in 2017.

8. Record the interest earned on the outstanding CD as of December 31, 2017.

9. Use the information provided in the Excel file to prepare a bank reconciliation

at December 31, 2017 as well as the necessary adjusting journal entries.

10. Record the adjusting journal entry for income taxes given a tax rate of 30%.

Check Figures for Part A:

Net income for 2017 = $343.42

unadjusted cash balance = $308.85