SASA MERCHANDISE COMPANY SASA Merchandise Company is a trade company. Company's balance sheet as of December 31, 2018 as follows. CURRENT ASSETS SHORT TERM LIABILITIES CASH 22,000 ACCOUNTS PAYABLE 46,000 ACCOUNTS RECEIVABLE 68,000 WAGES PAYABLE 7,000 MERCHANDISE INVENTORY 47,000 LONG TERM LIABILITIES NON CURRENT ASSETS BANK LOANS 83,000 BUILDING 250,000 ACCUMULATED DEPRECIATION (30,000) OWNERS EQUITY CAPITAL 150,000 RETAINED EARNINGS 71,000 TOTAL 357,000 TOTAL 357,000 Business transactions for 2019 are given below: January 4 : Paid the debt to workers. January20 : Collected all of the previous accounts receivables. February 1 : Sold merchandise to ZB company for $50,000 for terms 4/20, 1/60, FOB destination. Paid $800 in cash for transportation. The cost of merchandise sold was $28,000 February : Paid all of the previous accounts payable. February 18 : Collected the receivables from ZB company due from the merchandise sold on February 1. March 5 : Paid $8,500 for bank loan repayment. March 12 : Purchased merchandise for $35,000 from BK company on account, FOB shipping point. Paid $1,100 in cash for transportation. March 17 : Returned $6,000 of merchandise to BK company because they didn't meet specifications. Amount of return reduced from accounts payable. April 1 : Paid $4,500 for one-year fire insurance policy. The effective date of coverage was April 1. April 25 Paid the balance to BK company due from the merchandise purchased on March 12. May 19 : Sold merchandise to NE company for $75,000 in cash. The cost of merchandise sold was $45,000 May 21 : NE company wanted an allowance amounting to $8,000 related to the sales on May 19. Amount of allowance paid in cash to NE company. : SASA company bought a car for manager for $25,000 in cash. The estimated useful life of the car was 6 years. The salvage (residual) value of the car at the end of the useful life was expected $7,000. Company decided to use straight line depreciation method for its car. July 8 : Purchased merchandise for $80,000 on account for terms 5/15, n/45 from EV company, FOB shipping point. $1,600 paid for transportation. July 21 : Paid the debt to EV company due from the merchandise purchased on July 8. August 17 : Paid $3,000 for the newspaper advertisement September 4 : Sold merchandise to JO company for $110,000 on account. The cost of merchandise sold was $68,000. September 12 : JO company turned $8,000 of merchandise back to SASA company that was sold June 1 on September 4. Amount of return reduced from accounts receivable. The cost of merchandise taken back was $4,000. October 3 : Purchased merchandise for $35,000 on account from MT company. October 9 : MT company was granted an allowance of $2,500 for merchandise purchased on October 3. Amount of allowance reduced from accounts payable. October 28 : Collected $71,000 from the JO company because of the sale on September 4. November24 : Received a bill for maintenance of car, $1,500. This amount will be paid on January 10, 2020 December 15: Paid $13,000 to MT company for the merchandise purchased on October 3. December 31 Salaries of the personnel for 2019 were $21,000, and all of them were paid in cash. December 31 : Utilities for 2019 were $18,000. $16,000 of the total amount was paid in cash. December 31 : Interest occurred for bank loan for 2019 was $1,300. Interest hasn't paid yet. December 31 : The estimated useful life of the building was 50 years. The salvage (residual) value of the building at the end of the useful life was expected zero. Company uses straight line depreciation method for buildings. REQUIRMENTS:Under the perpetual inventory system: a) Do the opening journal entry as of January 1, 2019.. b) Journalize all the transactions occurred in 2019. c) Post each transaction to ledger. d) Prepare the unadjusted trial balance as of December 31, 2019. e) Do the adjusting entries. f) Prepare the adjusted trial balance as of December 31, 2019. 6) Prepare the income statement for 2019. h) Prepare the balance sheet as of December 31, 2019. Credit Opening journal entry is below Date Account Titles January 1, 2019 Cash Accounts Receivable Merchandise Inventory Buildings Accumulated Depreciation Accounts Payable Wages Payable Bank Loans Capital Retained Earnings Debit 22,000 68,000 47,000 250,000 30,000 46,000 7,000 83,000 150,000 71,000 Do not forget to start with opening entry to your journal entries. Do not forget to create T-Accounts for the items in opening entry. SASA MERCHANDISE COMPANY SASA Merchandise Company is a trade company. Company's balance sheet as of December 31, 2018 as follows. CURRENT ASSETS SHORT TERM LIABILITIES CASH 22,000 ACCOUNTS PAYABLE 46,000 ACCOUNTS RECEIVABLE 68,000 WAGES PAYABLE 7,000 MERCHANDISE INVENTORY 47,000 LONG TERM LIABILITIES NON CURRENT ASSETS BANK LOANS 83,000 BUILDING 250,000 ACCUMULATED DEPRECIATION (30,000) OWNERS EQUITY CAPITAL 150,000 RETAINED EARNINGS 71,000 TOTAL 357,000 TOTAL 357,000 Business transactions for 2019 are given below: January 4 : Paid the debt to workers. January20 : Collected all of the previous accounts receivables. February 1 : Sold merchandise to ZB company for $50,000 for terms 4/20, 1/60, FOB destination. Paid $800 in cash for transportation. The cost of merchandise sold was $28,000 February : Paid all of the previous accounts payable. February 18 : Collected the receivables from ZB company due from the merchandise sold on February 1. March 5 : Paid $8,500 for bank loan repayment. March 12 : Purchased merchandise for $35,000 from BK company on account, FOB shipping point. Paid $1,100 in cash for transportation. March 17 : Returned $6,000 of merchandise to BK company because they didn't meet specifications. Amount of return reduced from accounts payable. April 1 : Paid $4,500 for one-year fire insurance policy. The effective date of coverage was April 1. April 25 Paid the balance to BK company due from the merchandise purchased on March 12. May 19 : Sold merchandise to NE company for $75,000 in cash. The cost of merchandise sold was $45,000 May 21 : NE company wanted an allowance amounting to $8,000 related to the sales on May 19. Amount of allowance paid in cash to NE company. : SASA company bought a car for manager for $25,000 in cash. The estimated useful life of the car was 6 years. The salvage (residual) value of the car at the end of the useful life was expected $7,000. Company decided to use straight line depreciation method for its car. July 8 : Purchased merchandise for $80,000 on account for terms 5/15, n/45 from EV company, FOB shipping point. $1,600 paid for transportation. July 21 : Paid the debt to EV company due from the merchandise purchased on July 8. August 17 : Paid $3,000 for the newspaper advertisement September 4 : Sold merchandise to JO company for $110,000 on account. The cost of merchandise sold was $68,000. September 12 : JO company turned $8,000 of merchandise back to SASA company that was sold June 1 on September 4. Amount of return reduced from accounts receivable. The cost of merchandise taken back was $4,000. October 3 : Purchased merchandise for $35,000 on account from MT company. October 9 : MT company was granted an allowance of $2,500 for merchandise purchased on October 3. Amount of allowance reduced from accounts payable. October 28 : Collected $71,000 from the JO company because of the sale on September 4. November24 : Received a bill for maintenance of car, $1,500. This amount will be paid on January 10, 2020 December 15: Paid $13,000 to MT company for the merchandise purchased on October 3. December 31 Salaries of the personnel for 2019 were $21,000, and all of them were paid in cash. December 31 : Utilities for 2019 were $18,000. $16,000 of the total amount was paid in cash. December 31 : Interest occurred for bank loan for 2019 was $1,300. Interest hasn't paid yet. December 31 : The estimated useful life of the building was 50 years. The salvage (residual) value of the building at the end of the useful life was expected zero. Company uses straight line depreciation method for buildings. REQUIRMENTS:Under the perpetual inventory system: a) Do the opening journal entry as of January 1, 2019.. b) Journalize all the transactions occurred in 2019. c) Post each transaction to ledger. d) Prepare the unadjusted trial balance as of December 31, 2019. e) Do the adjusting entries. f) Prepare the adjusted trial balance as of December 31, 2019. 6) Prepare the income statement for 2019. h) Prepare the balance sheet as of December 31, 2019. Credit Opening journal entry is below Date Account Titles January 1, 2019 Cash Accounts Receivable Merchandise Inventory Buildings Accumulated Depreciation Accounts Payable Wages Payable Bank Loans Capital Retained Earnings Debit 22,000 68,000 47,000 250,000 30,000 46,000 7,000 83,000 150,000 71,000 Do not forget to start with opening entry to your journal entries. Do not forget to create T-Accounts for the items in opening entry
