Exercise 2 Porter Corporation's balance sheet at December 31 is presented below PORTER CORPORATION Balance Sheet December 31 Cash $13,100 Accounts payable $ 8,750 Accounts receivable 19,780 Common stock 20,000 Allowance for doubtful accounts (800) Retained earnings 12,730 Inventory 9,400 $41,40 $41,40 During January, the following transactions occurred Porter uses the perpetual inventory method 3 Porter wrote off as uncollectible the accounts of Elrich Corporation ($450) and Rios Company ($280) 8 Porter purchased $17,200 of inventory on account 11 Porter sold for $25,000 on account inventory that cost $17,500 17 Porter collected $22,900 from customers on account, assuming the collection is not eligible for any discount 21 Porter paid $16,300 on accounts payable 24 Porter received payment in full ($280) from Rios Company on the account written off on January 3 27 Porter purchased advertising supplies for $1,400 cash Adjustment data 1 Bad debts are expected to be 6 of the January 31, accounts receivable 2 A count of advertising supplies on January 31, reveals that $560 remains unused Instructions (a) (You may want to set up T accounts to determine ending balances ) (b) Prepare journal entries for the transactions listed above and adjusting entries (Include entries for cost of goods sold using the perpetual system )

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Exercise 2: Porter Corporation's balance sheet at December 31 is presented below.

PORTER CORPORATION
Balance Sheet
December 31
Cash	$13,100	Accounts payable	$ 8,750
Accounts receivable	19,780	Common stock	20,000
Allowance for doubtful accounts	(800)	Retained earnings	12,730
Inventory	9,400
	$41,40		$41,40

During January, the following transactions occurred. Porter uses the perpetual inventory method.

3	Porter wrote off as uncollectible the accounts of Elrich Corporation ($450) and Rios Company ($280).
8	Porter purchased $17,200 of inventory on account.
11	Porter sold for $25,000 on account inventory that cost $17,500.
17	Porter collected $22,900 from customers on account, assuming the collection is not eligible for any discount.
21	Porter paid $16,300 on accounts payable.
24	Porter received payment in full ($280) from Rios Company on the account written off on January 3.
27	Porter purchased advertising supplies for $1,400 cash.

Adjustment data:


1.	Bad debts are expected to be 6% of the January 31, accounts receivable.
2	A count of advertising supplies on January 31, reveals that $560 remains unused.

Instructions

(a)	(You may want to set up T accounts to determine ending balances.)
(b)	Prepare journal entries for the transactions listed above and adjusting entries. (Include entries for cost of goods sold using the perpetual system.)