Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 2

1. During the month of January 20-2, TJs Specialty Shop engaged in the following transactions:

   Jan.	1	Sold merchandise on account to Anne Clark, $3,000, plus tax of $150. Sale No. 643.
   	2	Issued Check No. 818 to Nathen Co. in payment of January 1 balance of $800, less 2% discount.
   	3	Purchased merchandise on account from West Wholesalers, $1,500. Invoice No. 678, dated January 3, terms 2/15, n/30.
   	4	Purchased merchandise on account from Owen Enterprises, $2,000. Invoice No. 767, dated January 4, terms 2/10, n/30.
   	4	Issued Check No. 819 in payment of phone expense for the month of January, $180.
   	8	Sold merchandise for cash, $3,600, plus tax of $180.
   	9	Received payment from Lucy Greene in full settlement of account, $1,491.
   	10	Issued Check No. 820 to West Wholesalers in payment of January 1 balance of $1,200.
   	12	Sold merchandise on account to Martha Boyle, $1,000, plus tax of $50. Sale No. 644.
   	12	Received payment from Anne Clark on account, $2,100.
   	12	Issued Check No. 821 in payment of wages (Wages Expense) for the two-week period ending January 11, $1,100.
   	13	Issued Check No. 822 to Owen Enterprises in payment of January 4 purchase. Invoice No. 767, less 2% discount.
   	13	Martha Boyle returned merchandise for a credit, $800, plus sales tax of $40.
   	17	Returned merchandise to Evans Essentials for credit, $300.
   	22	Received payment from John Dempsey on account, $2,121.
   	26	Issued Check No. 823 in payment of wages (Wages Expense) for the two-week period ending January 25, $1,100.
   	27	Issued Check No. 824 to KC Power & Light (Utilities Expense) for the month of January, $630.
   	27	Sold merchandise on account to John Dempsey, $2,000, plus tax of $100. Sale No. 645.
   		Late in January, TJs agreed to sell the business to a competitor. To agree on a selling price, financial statements are needed as of January 31 and for the month of January 20-2. To prepare these financial statements, TJs must perform the same procedures it normally does at year-end.

   At the end of January, the following adjustments (a)(j) need to be made:

   a., b.	Merchandise inventory as of January 31, $19,000.
   c., d., e.	Jones estimates that customers will be granted $500 in refunds of this months sales in subsequent months, and the merchandise expected to be returned will have a cost of $360.
   f.	Unused supplies on hand, $115.
   g.	Unexpired insurance on January 31, $968.
   h.	Depreciation expense on the building for the month, $67.
   i.	Depreciation expense on the store equipment for the month, $38.
   j.	Wages earned but not paid as of January 31, $330.

   Required

   For those not using working papers:

   • 1.

     If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of January 1. Enter the January 1 balance of each of the accounts, with a check mark in the Posting Reference column. The beginning balances for Part 2 are the same as the balances from your solution to Part 1 of Comprehensive Problem 2.

   For working paper users and nonusers:

   • 2.

     Enter transactions for the month of January 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 month-end spreadsheet income statement, statement of owners equity, and 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. Then close Income Summary and Tom Jones, Drawing to Tom Jones, Capital.)

   • 8.

     Prepare a post-closing trial balance.