Applying the Entire Accounting Cycle

The post-closing trial balance for Wilson Corp., a retailer, at December 31, 2019, follows.

Acc. No.	Description	Debit	Credit
101	Cash	27,000	0
102	Accounts receivable	21,000
103	Allowance for doubtful accounts		1,000
104	Inventory (perpetual inventory system)	35,000
105	Prepaid insurance (20 months remaining)	900
200	Equipment (20-year estimated life, no residual value)	50,000
201	Accumulated depreciationequipment		22,500
300	Accounts payable		7,500
301	Salaries payable
302	Income taxes payable (for 2019)		4,000
400	Common stock, par $1		80,000
401	Retained earnings		18,900
500	Sales
600	Cost of goods sold
601	Operating expenses
602	Income tax expense
700	Income summary
	Total	$133,900	$133,900

The following transactions occurred during 2020 in the order shown (use the number at the left in place of a date). 1. Sales revenue was $30,000, of which $10,000 was on credit; the cost, provided using perpetual inventory, was $19,500. 2. Collected $17,000 cash on accounts receivable. 3. Paid $4,000 cash toward income taxes payable (2019). 4. Purchased $40,000 of merchandise, of which $8,000 was on credit. 5. Paid $6,000 cash toward accounts payable. 6. Sales revenue was $72,000 (in cash); cost was $46,800. 7. Paid $19,000 cash in operating expenses. 8. On July 1, 2020, issued 1,000 shares of common stock, par $1, for $1,000 cash. 9. Purchased $100,000 of merchandise, of which $27,000 was on credit. 10. Sales revenue was $98,000, of which $30,000 was on credit; cost, $63,700. 11. Collected $26,000 cash toward accounts receivable. 12. Paid $28,000 cash toward accounts payable. 13. Paid $18,000 cash for various operating expenses.

• Journal Entries - a. Prepare general journal entries for each of the transactions above for 2020. Note: List multiple debits or credits (when applicable) in alphabetical order according to the first letter of the account name.
• T-Accounts - b. Set up T-accounts as the general ledger for each of the accounts listed in the above trial balance and enter the December 31, 2019, balances. Post the journal entries from part a. Note: Enter amounts in the order that they are presented above (1 through 13), using the first available answer field on the appropriate side of the T-account. Not all answer fields will be used. Do not enter reference numbers.
• Unadjusted Trial Balance
• Adjusting Journal Entries- d. Prepare December 31, 2020, adjusting entries for the following additional information. 1. Increase Allowance for Doubtful Accounts by $200. (Hint: Debit Operating Expenses.) 2. Accrued income tax expense is $11,784. (Hint: Credit Income Taxes Payable.) 3. Accrued salaries were $300. 4. Use straight-line depreciation for equipment. 5. Adjust Prepaid Insurance for current year expense.
• T-Accounts after Adjusting Journal Entries - al entries from part d to the ledger.
• Adjusted Trial Balance
• Financial Statements- . Prepare the income statement and balance sheet. Note: Record expenses in alphabetical order based upon the first letter of the account name. Note: Do not use negative signs with your answers.
• Closing Journal Entries- h. Prepare the closing entries, using the Income Summary account to close out revenues and expenses. Note: List multiple debits or credits (when applicable) in alphabetical order according to the first letter of the account name.
• T-Accounts After Closing Journal Entries- i. Post the closing entries to the ledger.
• Post-Closing Trial Balance- . Prepare a post-closing trial balance.