1 Start with the Journal Entries worksheet. Complete the journal entries for the economic events stated. You need to compute the Cost of Goods Sold. Note that it should not be the same as the Sales. The store marks up the inventory so it makes a profit. 2 Post the journal entries to the T accounts in the T Accounts worksheet. 3 Compute the balance in each account. Be sure that you net the debits and credits when you are computing the balance. For example, an increase in an asset cash is a debit. When a cash payment is made the cash account is reduced with a credit. 4 Complete the financial statement in the Financial Stmts worksheet. Fill in the name of the account in the left column and the amount in the right hand column in the appropriate area of the worksheet. Note the five columns in the T Accounts worksheet correspond to the five areas on the statements. Economic Events and Journal Entries for Toy Shoppe Entry 1 Date Description (Account/Explanation) Debit Credit 12/1/2020 NAO buys common stock in his newly formed corporation for $10,000 and the corporation opens up a bank account. 12/1/2020 2 12/1/2020 The corporation pays the mall owner $1,000 for the December rent. 12/1/2020 3 12/2/2020 FedEx delivers inventory ordered "on account." The box includes an invoice for $7,500 (300 toys at $25 each). The invoice (bill) is due in 30 days. The corporation uses a 100% markup which means the sales price will be $50. 12/2/2020 4 12/31/2020 The total cash sales for the month was $8,750 (175 toys * $50). 12/31/2020 5 12/31/2020 Record the cost of goods sold for the toys sold and remove the amount from the asset account inventory (175 toys * $25). 12/31/2020 Totals DJ's Glasses, Inc. T Accounts Worksheet (General Ledger Equivalent) Asset Accounts Liability Accounts Equity Accounts Revenue Accounts Expense Accounts Cash Accounts Payable Common Stock Sales Cost of Goods Sold CA Retained Earnings - Beginning of Year Rent Expense Inventory Dividends DJ's Glasses, Inc. T Accounts Worksheet (General Ledger Equivalent) Asset Accounts Liability Accounts Equity Accounts Revenue Accounts Expense Accounts Cash Accounts Payable Common Stock Sales Cost of Goods Sold Retained Earnings Beginning of Year Rent Expense Inventory Dividends Toy Shoppe, Inc. Balance Sheet as of December 31, 2020 Assets (debits) Liabilities (credits) Total Liabilities Equity (credits) Common Stock Retained Earnings Total Equity Total Liabilities & Equity Total Assets Income Statement for the Month Ended December 31, 2020 Revenue/Income (credits) Retained Earnings Detail Beginning of Year Net Income Dividends Paid Total Retained Earnings Total Revenue Expenses (debits) Total Expenses Net Income