Case 41 PC Depot* PC Depot was a retail store for personal computers and hand-held calculators, selling several national brands in each product line. The store was opened in early September by Barbara Thompson, a young woman previously employed in direct computer sales for a national firm specializing in business computers. * Professor Robert N. Anthony. Thompson knew the importance of adequate records. One of her first decisions, therefore, was to hire Chris Jarrard, a local accountant, to set up her bookkeeping system. Jarrard wrote up the store's preopening financial transactions in journal form to serve as an example (Exhibit 1). Thompson agreed to write up the remain- der of the store's September financial transactions for Jarrard's later review. At the end of September, Thompson had the fol- lowing items to record: Amount Cr. Entry Number (9) (10) (11) Account Cash sales for September Credit sales for September Cash received from credit customers Bills paid to merchandise suppliers New merchandise received on credit from supplier Ms. Thompson ascertained the cost of merchandise sold was Wages paid to assistant Wages earned but unpaid at the end of September Rent paid for October Insurance bill paid for one year (September 1-August 31) Bills received, but unpaid, from electric company Purchased sign, paying $660 cash and agreeing to pay the $1,100 balance by December 31 $38,000 14,850 3,614 96,195 49,940 38,140 688 (12) (13) (14) (15) (16) (17) (18) (19) (20) 440 1,485 2,310 226 1,760 Questions 1. Explain the events that probably gave rise to journal entries 1 through 8 of Exhibit 1. 2. Set up a ledger account (in T account form) for each account named in the general journal. Post en- tries 1 through 8 to these accounts, using the entry number as a cross-reference. 3. Analyze the facts listed as 9 through 20, resolving them into their debit and credit elements. Prepare journal entries and post to the ledger accounts. (Do not prepare closing entries.) 4. Consider any other transactions that should be recorded. Why are these adjusting entries required? Prepare journal entries for them and post to ledger accounts. 5. Prepare closing entries and post to ledger accounts. What new ledger accounts are required? Why? 6. Prepare an income statement for September and a balance sheet as of September 30. EXHIBIT 1 General Journal Amount Entry Number Dr. Cr. (1) 165,000 100,000 65,000 (2) 1,485 1,485 (3) 137,500 137,500 (4) Account Cash Bank Loan Payable (15%) Proprietor's Capital Rent Expense (September) Cash Merchandise Inventory Accounts Payable Furniture and Fixtures (10-year life) Cash Advertising Expense Cash Wages Expense Cash Office Supplies Expense Cash Utilities Expense Cash 15,500 15,500 (5) 1,320 1,320 (6) 935 935 (7) 1,100 1,100 (8) 275 275
