Assume it is Monday May 1, the first business day of the month, and you have just been hired as the accountant for Colo Company, which operates with monthly accounting periods. All of the company's accounting work is completed through the end of April, and its ledgers show April 30 balances. During your first month on the job, the company experience the following transactions and events (terms for all its credits sales are 2/10, n/30 unless stated differently).

May Issued Check No. 3410 to S&P Management Co. in payment of the May rent for $3,710. Charge $2,968 to Rent 1 Expense-Selling Space, and charge $742 to Rent Expense-Office Space. (Use two lines to record the transaction.) 2 Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,100 (cost is $4,100). Issued an allowance (price reduction) of $175 to Knox Co. for merchandise sold on April 28. The total selling price 2 (gross) was $4,725. Issued a refund of $798 to Peyton Products for the return of merchandise purchased on April 29. Colo's Accounts 3 Payable was reduced by that amount. Purchased the following on credit from Gear Supply Co.: merchandise, $37,072; store supplies, $574; and office 4 supplies, $83. Invoice dated May 4, terms n/10 EOM. Received payment from Knox Co. for the balance from the April 28 ($4,550) sale less the May 2 return and the $91 5 discount. Issued Check No.3411 to Peyton Products to pay for the $7,098 of merchandise purchased on April 29 less the May 3 8 return and the $126 discount. Sold store supplies (noninventory) to the business next door at their cost of $350 cash. Hint: Enter "Store Supplies" 9 only in the Account Credited column. 10 Purchased $4,074 of office equipment on credit from Gear Supply Co., terms n/10 EOM. 11 Received payment from Hensel Company for the May 2 sale less the discount of $122. 11 Purchased $8,800 of merchandise from Garcia, Inc., terms 2/10, n/30. Received an $854 price reduction from Gear Supply Co. for the return of office equipment received on May 10. Colo debited Accounts Payable by that amount. Page 287 15 Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cash sales for the first half of the month are $59,220 (cost is $38,200). These cash sales are recorded in the cash 15 receipts journal on May 15. Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the 15 end of the month to the general ledger accounts. 16 Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $3,990 (cost is $1,890). 17 Purchased $13,650 of merchandise from Fink Corp., terms 2/10, n/60. 19 Issued Check No. 3413 to Garcia, Inc., in payment of its May 11 purchase less the discount of $176. 22 Sold merchandise to Lee Services, Invoice No. 8787, for $6,850 (cost is $4,990), terms 2/10, n/60. 23 Issued Check No. 3414 to Fink Corp. in payment of its May 17 purchase less the discount of $273. Purchased the following on credit from Gear Supply Co.: merchandise, $8,120; store supplies, $630; and office 24 supplies, $280. Terms n/10 EOM. 25 Purchased $3,080 of merchandise from Peyton Products, terms 2/10, n/30. 26 Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,210 (cost is $8,230). 26 Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,283. The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $7,000 cash from the business for 29 personal use. 30 Received payment from Lee Services for the May 22 sale less the discount of $137. 30 Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cash sales for the last half of the month are $66,052 (cost is $42,500). These cash sales are recorded in the cash 31 receipts journal on May 31. Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the 31 end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings. Required 1. Enter these transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal (number all journal pages as page 2). Post when instructed to do so. Assume a perpetual inventory system. 2. Prepare a trial balance in the Trial Balance columns of the work sheet provided. Complete the work sheet using the following information for accounting adjustments. a. Expired insurance, $553. b. Ending store supplies inventory, $2,632. c. Ending office supplies inventory, $504. d. Depreciation of store equipment, $567. e. Depreciation of office equipment, $329. Check (2) Unadjusted trial balance totals, $545,020; Adjustments column totals, $2,407 Prepare and post adjusting and closing entries. 3. Prepare a May multiple-step income statement, a May statement of owner's equity, and a May 31 classified balance sheet. (3) Net income, $31,647; Total assets, $385,791 4. (a) Prepare a post-closing trial balance. (6) Prove the accuracy of subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable. May Issued Check No. 3410 to S&P Management Co. in payment of the May rent for $3,710. Charge $2,968 to Rent 1 Expense-Selling Space, and charge $742 to Rent Expense-Office Space. (Use two lines to record the transaction.) 2 Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,100 (cost is $4,100). Issued an allowance (price reduction) of $175 to Knox Co. for merchandise sold on April 28. The total selling price 2 (gross) was $4,725. Issued a refund of $798 to Peyton Products for the return of merchandise purchased on April 29. Colo's Accounts 3 Payable was reduced by that amount. Purchased the following on credit from Gear Supply Co.: merchandise, $37,072; store supplies, $574; and office 4 supplies, $83. Invoice dated May 4, terms n/10 EOM. Received payment from Knox Co. for the balance from the April 28 ($4,550) sale less the May 2 return and the $91 5 discount. Issued Check No.3411 to Peyton Products to pay for the $7,098 of merchandise purchased on April 29 less the May 3 8 return and the $126 discount. Sold store supplies (noninventory) to the business next door at their cost of $350 cash. Hint: Enter "Store Supplies" 9 only in the Account Credited column. 10 Purchased $4,074 of office equipment on credit from Gear Supply Co., terms n/10 EOM. 11 Received payment from Hensel Company for the May 2 sale less the discount of $122. 11 Purchased $8,800 of merchandise from Garcia, Inc., terms 2/10, n/30. Received an $854 price reduction from Gear Supply Co. for the return of office equipment received on May 10. Colo debited Accounts Payable by that amount. Page 287 15 Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cash sales for the first half of the month are $59,220 (cost is $38,200). These cash sales are recorded in the cash 15 receipts journal on May 15. Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the 15 end of the month to the general ledger accounts. 16 Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $3,990 (cost is $1,890). 17 Purchased $13,650 of merchandise from Fink Corp., terms 2/10, n/60. 19 Issued Check No. 3413 to Garcia, Inc., in payment of its May 11 purchase less the discount of $176. 22 Sold merchandise to Lee Services, Invoice No. 8787, for $6,850 (cost is $4,990), terms 2/10, n/60. 23 Issued Check No. 3414 to Fink Corp. in payment of its May 17 purchase less the discount of $273. Purchased the following on credit from Gear Supply Co.: merchandise, $8,120; store supplies, $630; and office 24 supplies, $280. Terms n/10 EOM. 25 Purchased $3,080 of merchandise from Peyton Products, terms 2/10, n/30. 26 Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,210 (cost is $8,230). 26 Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,283. The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $7,000 cash from the business for 29 personal use. 30 Received payment from Lee Services for the May 22 sale less the discount of $137. 30 Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cash sales for the last half of the month are $66,052 (cost is $42,500). These cash sales are recorded in the cash 31 receipts journal on May 31. Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the 31 end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings. Required 1. Enter these transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal (number all journal pages as page 2). Post when instructed to do so. Assume a perpetual inventory system. 2. Prepare a trial balance in the Trial Balance columns of the work sheet provided. Complete the work sheet using the following information for accounting adjustments. a. Expired insurance, $553. b. Ending store supplies inventory, $2,632. c. Ending office supplies inventory, $504. d. Depreciation of store equipment, $567. e. Depreciation of office equipment, $329. Check (2) Unadjusted trial balance totals, $545,020; Adjustments column totals, $2,407 Prepare and post adjusting and closing entries. 3. Prepare a May multiple-step income statement, a May statement of owner's equity, and a May 31 classified balance sheet. (3) Net income, $31,647; Total assets, $385,791 4. (a) Prepare a post-closing trial balance. (6) Prove the accuracy of subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable