Comprehensive Problem

INSTRUCTIONS: Solve the problem below clearly, orderly, accurately, and completely using Excel. (You may use a pencil/paper T account General Ledger, if you prefer.)

Pacheco Inc. is a merchandising business headquartered in the U.S. and selling primarily to wholesalers. The accounting information system is based upon the principles and rules of U.S. Generally Accepted Accounting Principles (GAAP). Business activity is recorded on an accrual basis. The company employs the perpetual inventory system in accounting for its merchandise inventory. Sales revenue is recorded net of sales discounts. Purchases of inventory are also recorded net of purchases discounts. The company operates using a January through December fiscal year. The balances of the accounts in the general ledger as of November 30 of the current fiscal year are as follows: SEE ATTACHED IMAGES FOR ACCOUNTS

There are 100,000 shares of common stock outstanding. During December, the last month of the fiscal year, the following transactions were completed:

-Dec 3 Purchased $24,500 of merchandise on account, FOB shipping point, terms 2/10,n/30. -Dec 4 Paid transportation costs of $475 on the December 3 purchase. -Dec 7 Returned $4,000 of the merchandise purchased on December 3. -Dec 11 Sold merchandise on account, $12,700, FOB destination, 1/15,n/30. The cost of the merchandise sold was $7,600. -Dec 12 Paid transportation charges of $300 for the merchandise sold on December 11. -Dec 13 Paid for the purchase of December 3 less the return and the discount. -Dec 15 Received payment from customers on account, $8,430. Amount received is net of discount. -Dec 22 Received payment on account for the sale of December 11, less the discount. -Dec 23 Purchased supplies on account, n/30 $500. -Dec 26 Paid amounts owed to creditors on account, $9,040. Amount paid was net of discount. -Dec 27 Paid sales salaries, $2,300, and office salaries, $1,400. -Dec 28 Sold merchandise for cash, $16,500. The cost of the merchandise sold was $11,200. -Dec 29 Paid customer a cash refund of $2,210 for returned merchandise from the sale of Dec. 11. The cost of the returned merchandise was $1,212. -Dec 30 Paid rent for store equipment for December, $1,000. -Dec 31 Paid cash for a web page advertisement, $400

1. Enter the balances of each of the accounts as of November 30 in the appropriate balance column of a T account (use account names and numbers) or a four-column account. [You are creating the General Ledger.] 2. Journalize (using the General Journal) the transactions for December. 3. Post the December journal entries to the General Ledger, computing the year-end balances after all posting is completed. 4. Prepare an Unadjusted Trial Balance as of December 31. 5. Analyze the following adjustment data assembled at the end of December. Use the adjustment data to journalize, then post, the necessary adjusting entries. -a. Merchandise inventory on hand at December 31, per physical count, $248,315. -b. Insurance coverage expired during the year, $12,350. -c. Supplies on hand at December 31, $2,100. -d. Additional depreciation to be recorded on the equipment for the year, $14,130. -e. Accrued sales salaries $1,800 and accrued office salaries $890 on December 31

-f. Accrued interest on the note payable as of December 31, $240. -g. Unearned Rent at December 31 is $8,300. -h. Company estimates that customers will request an additional $12,830 of refunds related to current year sales and the related merchandise to be costing $5,900 will be returned.

6. Prepare an Adjusted Trial Balance as of December 31. 7. Prepare, in good form, a multiple-step Income Statement, a Retained Earnings Statement, and a classified Balance Sheet at the end of the December 31 fiscal year. Retained earnings as of 11/30 equaled retained earnings as of beginning of the fiscal year (1/1). 8. Journalize and post the necessary closing entries. 9. Prepare a Post-Closing Trial Balance as of December 31.

65,900 192,100 256,400 8,100 12,100 30,000 140,000 897,100 110 Cash 111 Accounts Receivable 112 Inventory 113 Estimated Returns Inventory 114 Supplies 115 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation-- Equip. 210 Accounts Payable 211 Customer Refunds Payable 212 Salaries Payable 213 Interest Payable 214 Unearned Rent 220 Notes payable (final payment due in 4 years) 310 Common Stock, $1 par 311 Retained Earnings 312 Dividends 313 Income Summary 410 Sales 229,600 42,810 25,200 0 0 33,200 50,000 100,000 500,800 75,000 0 4,281,190 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Advertising expense 522 Delivery Expense 523 Rent expense 524 Miscellaneous selling expense 530 Office Salaries Expense 531 Depreciation Expense-Equip. 532 Insurance Expense 533 Supplies Expense 610 Rent revenue 710 Interest Expense 2,122,100 650,600 220,000 36,000 125,000 42,800 357,000 29,600 0 0 0 3,000 65,900 192,100 256,400 8,100 12,100 30,000 140,000 897,100 110 Cash 111 Accounts Receivable 112 Inventory 113 Estimated Returns Inventory 114 Supplies 115 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation-- Equip. 210 Accounts Payable 211 Customer Refunds Payable 212 Salaries Payable 213 Interest Payable 214 Unearned Rent 220 Notes payable (final payment due in 4 years) 310 Common Stock, $1 par 311 Retained Earnings 312 Dividends 313 Income Summary 410 Sales 229,600 42,810 25,200 0 0 33,200 50,000 100,000 500,800 75,000 0 4,281,190 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Advertising expense 522 Delivery Expense 523 Rent expense 524 Miscellaneous selling expense 530 Office Salaries Expense 531 Depreciation Expense-Equip. 532 Insurance Expense 533 Supplies Expense 610 Rent revenue 710 Interest Expense 2,122,100 650,600 220,000 36,000 125,000 42,800 357,000 29,600 0 0 0 3,000