Comprehensive problem 2: Accounting cycle with subsidiary ledgers, Part 1

heintz and parry college accounting 21e

During the second half of December 20-1, TJ's Specialty Shop engaged in the following transactions:

Dec. 16: Received payment from Lucy Greene on account, 1,960

Dec 16: Sold merchandise on account to Kim Fields, $160, plus sales tax of $8, Sale No. 640

Dec 17: Returned merchandise to Evans Essentials for credit, $150

Dec 18: Issued Check NO. 813 to Evans Essentials in payment of December 1 balance of $1,250, less the credit received on December 17.

Dec 19: Sold merchandise on account to Lucy Greene, $620, plus tax of $31. Sale No. 641

Dec 22: Received payment from John Dempsey on account, $1,560.

Dec 23: Issued Check No. 814 for the purchase of supplies, $120. (Debit supplies)

Dec 24: Purchased merchandise on account from West Wholesalers, $1,200. Invoice No. 465, dated December 24, terms n/30.

Dec 27: Issued Check No. 815 to KC Power & Light (Utilities Expense) for the month of December, $630.

Dec 27: Sold merchandise on account to John Dempsey, $2,020, plus tax of $101. Sale No. 642.

Dec 29: Received payment from Martha Boyle on account, $2,473.

Dec 29: Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, $1,100.

Dec 30: Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, $200.

As of december 16, TJ's account balances were as follows:

Account	Account No.	Debit ($)	Credit($)
Cash	101	9,705
Accounts Rec.	122	10,256
Merchandise Inv.	131	21,800
Supplies	141	1,035
Prepaid Ins.	145	1,380
Land	161	8,700
Building	171	52,000
Accum. Depr. Building	171.1		9,200
Store Equip	181	28,750
Accum. Depr.-Store Equip	181.1		9,300
Accounts Payable	202		3,600
Wages Payable	219
Sales Tax Payable	231		1,378
Mortgage Payable	251		12,525
Tom Jones, Capital	311		90,000
Tom Jones, Drawing	312	8,500
Income Summary	313
Sales	401		124,900
Sales Returns and Allowances	401.1	1,430
Purchases	501	64,400
Purchases Returns and Allowances	501.1		460
Purchases Discounts	501.2		698
Freight-In	502	175
Wages Expense	511	26,100
Advertising Expense	512	4,700
Supplies Expense	524
Telephone Expense	525	2,180
Utilities Expense	533	6,900
Insurane Expense	535
Depr. Expense-Building	540
Depr. Expense-Store Equipment	541
Misc. Expense	549	2,700
Interest Expense	551	1,350
		$252,061	$252,061

TJ's also had the following subsidiary ledger balances as of December 16:

Accounts Receivable Ledger	Accounts Payable Ledger
Customer Balance	Vendor Balance
Martha Boyle - 12 Jude Lane Hartford, $3,796 CT 06117	Evans Essentials $3,600
Anne Clark - 52 Juniper Road Hartford, 2100 CT 06118	Nathen Co. -
John Dempsey - 700 Hobbes Dr. 1560 Avon, CT 06108	Owen Enterprises -
Kim Fields - 5200 Hamilton Ave - Hartford, CT 06117	West Wholesales -
Lucy Greene - 236 Bally Lane $2,800 Hartford, CT 06123

At the end of the year, the following adjustments (a)-(g) need to be made:

(a,b) Merchandise inventory as of December 31, $19,700

(c) Unused supplies on hand, $525.

(d) Unexpired insurance on December 31, $1,000.

(e) Depreciation expenseon the building for the year, $800

(f) Depreciation expense on the store equipment for the year, $450.

(g) Wages earned but not pad as of December 31, $330.

REQUIRED-GENERAL JOURNAL

1. If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the December 16 balance of each of the accounts, with a check mark in the posting reference column.

REQUIRED- SPECIAL JOURNALS

1.If you are not using the working papers:

a. Open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the following December 16 balances in the general ledger accounts and place a check mark in the Postin Regerence column.

a.

Cash $11,500

Accounts Rec. 7,823

Accounts Payable 6,850

Sales Tax Payable 933

Sales 116,000

Purchases 60,500

Purchases Discounts 575

b. Enter the December 16 balances in the rest of the general ledger accounts, as indicated in the trial balance, and placea check mark in the Posting Reference column.

c. Enter the December 16 balances in the accounts receivable and accounts payable ledgers, as indicated in the subsidiary ledger account listings, and palce a check mark in the Posting Reference column.

d. Inset Dec. 1-15, Cumulative Amount, and the following amounts in the special journal columns.

Sales Journal: Accounts Receivable Dr., 4,263; Sales Cr., 4,060; Sales Tax Payable Cr., 203.

Cash Receipts Journal: Accounts Receivable Cr., 1,830; Sales Cr., 4,840; Sales Tax Pay. Cr., 242; Cash Dr., 6,912.

Purchases journal: Purchases Dr./Accts. Pay. Cr., 3,900

Cash Payments Journal: General Dr., 1,680; Accounts Payable Dr., 7,150; Purchases Discounts Cr., 123; Cash Cr., 8,707.

2. Enter transactions for the second half of December in the general journal. Post immediately to the accounts receivable and accounts payable ledgers.

3. Post from the journal to the general ledger.

4. Prepare schedules of accounts receivable and accounts payable.

5. Prepare a year-end work sheet, an income statement, a statement of owners equity,and a balance sheet. The mortgage payable includes $600 that is due within one year.

6. Journalize and post adjusting entries.

7. Journalize and post closing entries. (HINT;close all expense and revenue account balances listed in the Income Statement columns of the work sheet. Then, closeIncome Summary and Tom Jones, Drawing to Tom Jones, Capital).

8. Prepare a post-closing trial balance.

9. Journalize and post reversing entries for the adjustments where appropriate, as of January 1, 20-2.

10. Enter transactions for the second half of December in proper journals.

11. Post from the journals to the general ledger. Post the journals in the following order: general, sales, purchases, cash receipts, and cash payments.

12. Prepare schedules of accounts receivable and accounts payable.

13. Prepare a year-end work sheet, an income statement, a statement of owners equity, and a balance sheet. The mortgage payable includes $600 that is due within one year

14. Journalize and post adjusting entries.

15. Prepare a post-closing trial balance

16. Journalize and psot reversing entries for the adjustments where appropriate, as of January 1, 20-2