Azizi Distributors closes its books and prepares financial statements at the end of each month. Azizi uses the perpetual inventory system. The company completed the following transactions during August 2020:

Aug. 1 Issued cheque no. 682 for August office rent, $1,000 (debit Rent Expense).

Aug. 2 Issued cheque no. 683 to pay salaries of $1,620, which includes salaries payable of $465 from July 31. Azizi does not use reversing entries.

Aug. 2* Issued invoice no. 503 for sale on account to R. T. Loeb, $300. Azizis cost of this merchandise was $95. Aug. 3 Purchased inventory on credit terms of 1/15, n/60 from Grant Ltd., $700. The invoice was dated August 3. Aug. 4 Received net amount of cash on account from Fullam Corp., $2,058, within the discount period.

Aug. 4 Sold inventory for cash, $1,165 (cost, $552).

Aug. 5 Received from Park-Hee Inc. merchandise that had been sold earlier for $275 (cost, $87). The wrong merchandise had been sent.

Aug. 5 Issued cheque no. 684 to purchase supplies for cash, $390.

Aug. 6 Collected interest revenue of $550.

Aug. 7 Issued invoice no. 504 for sale on account to K. D. Skipper Inc., $1,200 (cost, $380).

Aug. 8 Issued cheque no. 685 to pay Fayda Corp. $1,300 of the amount owed at July 31. This payment occurred after the end of the discount period.

Aug. 11 Issued cheque no. 686 to pay Grant Ltd. the net amount owed from August 3.

Aug. 12* Received cash from R. T. Loeb in full settlement of her account from August 2. R. T. Loeb notified Azizi that only one-quarter of the goods ordered had been received but agreed to pay now if Azizi held the remaining goods in the Azizi warehouse until September.

Aug. 16 Issued cheque no. 687 to pay salaries expense of $620.

Aug. 19 Purchased inventory for cash, $425, issuing cheque no. 688.

Aug. 22 Purchased furniture on credit terms of 3/15, n/60 from Beaver Corporation, $255. The invoice was dated August 22.

Aug. 23 Sold inventory on account to Fullam Corp., issuing invoice no. 505 for $4,983 (cost, $1,576).

Aug. 24 Received $2,193 of the July 31 amount receivable from K. D. Skipper Inc.after the end of the discount period.

Aug. 25 Issued cheque no. 689 to pay utilities, $1,216.

Aug. 26 Purchased supplies on credit terms of 2/10, n/30 from Fayda Corp., $90. The invoice was dated August 26.

Aug. 30 Returned damaged inventory to company from whom Azizi made the cash purchase on August 19, receiving cash of $425.

Aug. 30 Granted a sales allowance of $88 to K. D. Skipper Inc.

Aug. 31 Purchased inventory on credit terms of 1/10, n/30 from Suncrest Supply Ltd., $5,165. The invoice was dated August 31.

Aug. 31 Issued cheque no. 690 to Mona Azizi, owner of Azizi, for $850.

*Azizi Distributors sold inventory on account to R. T. Loeb on August 2 and collected in full on August 12. Loeb indicated that the shipment was incomplete and arranged with Azizi to have the goods shipped to Loeb in September. At August 31, $225 of unearned sales revenue needs to be recorded, and the cost of this merchandise ($71) needs to be removed from Cost of Goods Sold and returned to Inventory.

Required

1. Open the following three-column ledger accounts with their account numbers and July 31 balances in the ledgers indicated.

General Ledger

101- Cash- $ 2,245

102- Accounts Receivable -12,280

104 -Interest Receivable- 0

105- Inventory -20,900

109- Supplies- 670

117 -Prepaid Insurance -1,100

140- Note Receivable, Long-Term- 5,500

160 -Furniture -18,635

161 -Accumulated AmortizationFurniture- 5,275

201- Accounts Payable -5,300

204 -Salaries Payable- 465

207- Interest Payable -2,160

208- Unearned Sales Revenue- 0

220- Note Payable, Long-Term -21,000

301 -Mona Azizi, Capital -27,130

303- Mona Azizi, Withdrawals- 0

400- Income Summary- 0

401 -Sales Revenue- 0

402- Sales Discounts- 0

403 -Sales Returns and Allowances- 0

410- Interest Revenue -0

501- Cost of Goods Sold- 0

510 -Salaries Expense- 0

513- Rent Expense -0

514 -Amortization ExpenseFurniture- 0

516 -Insurance Expense -

517 -Utilities Expense - 0

519 -Supplies Expense - 0

523 -Interest Expense - 0

Accounts receivable subsidiary ledger: Fullam Corp., $2,100; R. T. Loeb, $0; Park-Hee Inc., $5,795; K. D. Skipper Inc., $4,385.

Accounts payable subsidiary ledger: Beaver Corporation, $0; Fayda Corp., $5,300; Grant Ltd., $0; Suncrest Supply Ltd., $0.

2. Ask your professor for directions. Journalize the August transactions either in the general journal (Page 9; explanations not required) or, as illustrated in this chapter, in a series of special journals: a sales journal (Page 4), a cash receipts journal (Page 11), a purchases journal (Page 8), a cash payments journal (Page 5), and a general journal (Page 9). Azizi makes all credit sales on terms of 2/10, n/30.

3. Post daily to the accounts receivable subsidiary ledger and the accounts payable subsidiary ledger. On August 31, 2020, post to the general ledger.

4. Prepare a trial balance in the unadjusted trial balance columns of a worksheet and use the following information to complete the worksheet for the month ended August 31, 2020:

1. Accrued interest revenue, $500

2. Supplies on hand, $495

3. Prepaid insurance expired, $275

4. Amortization expense, $115

5. Accrued salaries expense, $515

6. Accrued interest expense, $660

7. Unearned sales revenue, $225 (refers to August 2 transaction)

8. Inventory on hand, $23,850

5. Prepare Azizis multi-step income statement and statement of owners equity for August 2020. Prepare the balance sheet at August 31, 2020 (account format).

6. Journalize and post the adjusting and closing entries.

7. Prepare a post-closing trial balance at August 31, 2020. Also, balance the total of the

customer accounts in the accounts receivable subsidiary ledger against the Accounts Receivable balance in the general ledger. Do the same for the accounts payable subsidiary ledger and Accounts Payable in the general ledger.