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 sales information found in the Excel file entitled Assignment 2 Information,

determine sales discounts and cash receipts. Then, 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, 2016 (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 2016:

1. Sales for the year were $887,500, of which $762,500 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, 2016 were as follows:

Customer A - $15,000, Customer B - $5,000, Customer C - $3,750,

Customer D - $1,250, and Customer E - $750.

The credit sales for 2016 (recorded in TE #1) are broken down by customer in a

separate worksheet of the Excel worksheet file. In 2016, 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 2016.

Record these collections.

4. Record the December 20 return of $11,250 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 2016. Record the sales discounts and cash receipts in one entry.

6. Record the following two returns in one entry: In 2016, two customers returned

merchandise after payment was made. Customer A returned $3,000 of

merchandise purchased on March 12^th. Customer B returned $1,250 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 2016. Widget uses the periodic inventory system.

8. In 2016, the company paid $731,250 for merchandise purchased on account.

Record these payments.

9. Record the purchase returns for 2016. 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 2016 payment of $4,500 made by the company for insurance

covering the period June 1, 2016 to May 31, 2017.

11. Paid cash for the following: $60,000 for salaries expense (this amount includes

the accrual of Salaries Payable at December 31, 2015), $23,500 for selling

expenses, and $60,500 for administrative expenses.

12. Received the refund of 2015 taxes.

13. On January 2, 2016, the company issued 500 shares of common stock and

received $150 per share. The common stock has a par value of $10 per share.

14. Declared and paid dividends of $20,000 in 2016.

15. In 2016, the company recorded a $7,200 receipt of rental revenue for renting

out a portion of its warehouse from October 1, 2016 to June 30, 2017.

16. On January 2, 2016, 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

$37,500 at an annual interest rate of 5%. The principal on this note is to be

paid in three installments of $12,500 over each of the next three years. Record

the issuance of the new note payable.

18. In 2016, a petty cash fund was established for $100.

19. Record the replenishment of the petty cash fund at December 31, 2016. Cash

on hand at this time was $5. Receipts included $52.50 for general and

administrative expenses and $42.50 for selling expenses. Also record the

companys decision to increase the fund by $25 to $125 at this time.

20. Record the $30,000 investment made by the company on November 1, 2016 in

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

Adjustments Needed in 2016:

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

bad debt expense for 2016. 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 2 to 6 months - 1%, and

outstanding more than 6 months - 3%.

2. 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, 2016. Adjust inventory to its correct balance.

3. Twelve months of insurance were incurred in 2016. Record the adjustment.

4. Record depreciation for 2016 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 2017, the first payroll amounted to $9,500. 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, 2016 at a 5% interest rate.

7. Twelve months of rental revenue were earned in 2016.

8. Record the interest earned on the outstanding CD as of December 31, 2016.

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

at December 31, 2016 as well as the necessary adjusting journal entries.

10. The company's income tax rate is 30%.

Check Figures for Part A:

Net income for 2016 = $9,856

unadjusted cash balance = $7,721.25

Assignment 2 information

Information for the Bank Reconciliation
Important: It is assumed that The Widget Depot, Inc. receives one bank statement for the entire year.
Bank Reconciliation at December 31, 2015:
		Books			Bank Statement
Unreconciled Balance at December 31, 2015		18,625.00			$ 28,250.00
	Deposits in Transit				$ 162.50
	Outstanding Checks				$ (9,787.50)
Reconciled Balance at December 31, 2015		18,625.00			$ 18,625.00
Information from 2016 bank statement:
	Balance January 1, 2016				$ 28,250.00
	Deposits				$ 976,725.00
	Checks Paid				$ (988,075.00)
	Interest Earned in 2016				$ 87.50
	Service Charges in 2016				$ (17.50)
	Balance - December 31, 2016				$ 16,970.00
Additional information:
	- Check 11023 was recorded on the books for $2,750 as part of selling expense.
	The correct amount of the check was $2,500 which is what the bank charged when
	the check cleared.
	- Check 11254 was correctly recorded on the books as administrative expense for $500.
	However, when the bank cleared the check, it charged the company $550.