Comprehensive cycle problem: Perpetual system - Homework LO 4-2, 4-3, 4-4 At the beginning of 2020, Earlybird
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Comprehensive cycle problem: Perpetual system - Homework
LO 4-2, 4-3, 4-4
At the beginning of 2020, Earlybird Enterprises had the following balances in its accounts:
During 2020, Earlybird Enterprises experienced the following events:
- Purchased inventory costing $11,200 on account from Ivey Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $800 were paid in cash.
- Returned $600 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
- Paid the amount due on its account payable to Ivey Company within the cash discount period.
- Sold inventory that had cost $8,000 for $13,500. The sale was on account under terms 2/10, n/45.
- Received merchandise returned from a customer. The merchandise had originally cost $1,200 and had been sold to the customer for $2,100 cash. The customer was paid $2,100 cash for the returned merchandise.
- Delivered goods in Event 4 FOB destination. Freight costs of $800 were paid in cash.
- Paid shareholders a cash dividend of $3,000.
- Collected the amount due on accounts receivable within the discount period.
- Sold the land for $3,500.
Adjusting Entries:
- Recognized $500 of accrued interest revenue.
- Took a physical count indicating that $6,500 of inventory was on hand at the end of the accounting period.
REQUIRED:
- Open a general ledger (under the accounting equation) and establish the beginning balances provided.
- Recognize transactions 1-9 (journalize and post).
- Total the accounts and prepare a Trial Balance on a 10-Column Worksheet.
- Make the adjusting entries (journalize and post)
- Complete the Worksheet.
- Prepare a multi-step Income Statement, Statement of shareholder equity, classified Balance Sheet. You do not need to prepare a Statement of Cashflows.
- Make closing entries (journalize and post).
- Create a Post-Closing Trial Balance.
Check Figures: Cash $16,442, Inventory $6,500, Gross Margin $2,442, RE $11,442
Posted Date: