Assume there is a small shoe store in your neighborhood with a single owner. The owner started the business on December 1, 2018 and sells two types of shoes: a comfortable sneaker that is something athletes would purchase, and a comfortable dress shoe that looks dressy but has the comfort of a sneaker. The name of the business is The Shoe Horn. Complete tasks A and B that follow, using the detailed instructions for each. Following is a list of all transactions that occurred during December 2018.

a. Dec.1 Jack Simmons, the owner contributed a $500,000 check from his personal account, which he deposited into an account opened in the name of the business, to start the business.

b. Dec.1 He rented space that had previously been used by a shoe store and wrote check no. 100 for $9,000 for the first six months rent.

c. Dec.2 He paid for installation and phone usage $300 (check no. 101)

d. Dec.2 He paid for advertising in the local paper $150 (check no. 102). The ads will all run in December.

e. Dec.2 He purchased $500 of office supplies (check no. 103)

f. Dec.3 He paid $300 for insurance for three months (December 2018, January and February 2019 using check no, 104).

g. Dec.4 He purchased 800 pairs of sneakers at $40 a pair on account from Nike (using purchase order no. 301). Payment terms were 2/10, net 30. Assume the shoe store uses the perpetual inventory system.

h. Dec.5 He purchased 500 pairs of dress shoes from Footwear Corp. on account for $20 a pair (using purchase order no. 302). Payment terms were 2/10, net 30

i. Dec.10 He made a sale on account of 20 pairs of sneakers at $100 a pair, to a local University Highland University (sales invoice number 2000) for their basketball team. Payment terms were 2/10 net 30.

j. Dec.11 He made a sale on account of 2 pairs of dress shoes at $50 a pair (sales invoice no. 2001) to a local charity, U.S. Veterans, that intended to raffle them off at one of their events.

k. Dec.12 He made a sale on account to The Jenson Group of 300 pairs of dress shoes at $50 a pair, to use as part of an employee uniform. Payment terms were 2/10 net 30.

l. Dec.14 He made a cash sale for 2 sneakers at $120 each and 1 pair of shoes for $60.

m. Dec.14 He paid the amount owed to Footwear Corp (check no 105)

n. Dec.17 Highland University returned 2 pairs of sneakers they had previously purchased on account.

o. Dec.18 He received a check from Highland University in full payment of their balance.

p. Dec.20 He made a cash sale to Charles Wilson of three pairs of sneakers at $120 each and 1 pair of dress shoes at $60.

q. Dec.20 He made a partial payment to Nike for $20,000 (check number 106)

r. Dec.23 Received a $400 utility bill which will be paid in January.

s. Dec.27 Received a check from The Jenson Group in the amount of $9,000.

t. Dec.28 He paid $2,000 of his balance to Nike (check number 107)

Chart of Accounts

1100 Cash

1120 Accounts Receivable

1130 Merchandise Inventory

1140 Prepaid Insurance

1150 Prepaid Rent

1160 Office Supplies

2100 Accounts Payable

3100 Jack Simmons, Capital

3200 Jack Simmons, Drawing

4000 Sales

4100 Sales Returns and Allowances

4200 Sales Discounts

5000 Cost of Goods Sold

5100 Rent Expense

5110 Advertising Expense

5115 Telephone Expense

5130 Utilities Expense

5140 Office Supplies Expense

5150 Insurance Expense

1. For each of the transactions listed for the month of December 2018, identify the journal to which the entry should be recorded. Your possible choices are as follows: general journal (GJ), cash receipts journal (CR), cash disbursements journal (CD), sales journal (SJ), or purchases journal (PJ). Templates for the journals and ledgers have been provided.

2. Enter each transaction in the appropriate journal using the format provided.

3. Total the four special journals, and post from all of them to the general ledger provided on the last day of December.

4. Post each entry to the appropriate subsidiary ledger on the date the transaction occurred.

5. Prepare a trial balance.

6. Prepare an accounts receivable schedule and an accounts payable schedule.