Journal Entry Workshop: COMPREHENSIVE PROBLEM - CHAPTER 4 Problem 4-260 Comprehensive eyele problem perpetual system At the beginning of Year 2. Euro Enterprises had the following balances in its account Cash Inventory Land Common stock Retained earnings $16,800 4,000 2.000 12,000 10,800 During Year 2. Euro Enterprises experienced the following events 1. Purchased inventory that cost $11,200 on account from Ivey Company under terma 2/10, 1/30. The merchandise was delivered FOB shipping point. Freight costs of $800 were paid in cash 2. 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 3. Paid the amount due on its account payable to Ivey Company within the cash discount period 4. Sold inventory that had cout $8,000 for $13,500. The sale was on account under terms 2/10, 1/45 5. 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 6. Delivered goods in Event 4 FOB destination. Freight costs of $800 were paid in cash 7. Collected the amount due on accounts receivable within the discount period S. Sold the land for $3,500 9. Recognized $500 of accrued interest revenue. 10. Took a physical count indicating that $6,500 of inventory was on hand at the end of the accounting period. Hunt: Determine the current balance in the inventory account before calculating the amount of the inventory write down. Required: a) Record the events in general journal format b) Open ledger T-accounts and post the beginning balances and the events to the accounts. c) Prepare a trial balance. EXTRA CREDIT: d) Prepare a multi-step income statement, statement of changes in stockholders' equity, balance sheet and statement of cash flows. e) Use a single general journal entry to close all temporary accounts to the retained earnings account. f) Prepare a post-closing trial balance. b. T-ACCOUNTS EuRo Enterprises T-Accounts for Year 2 Assets Liabilities Stockholders' Equity Cash Accounts Payable Bal. Common Stock Bal. Bal. Bal. Retained Earnings Bal. Merchandise Inventory Bal. Sales Revenue Bal. Bal. 10. Bal. Cost of Goods Sold Accounts Receivable Bal. Bal. Interest Receivable Transportation-out Bal. Bal. Land Bal. Bal. Interest Revenue Bal. Gain on Sale of Land Bal. c. TRIAL BALANCE Euro Enterprises Trial Balance December 31, Year 2 Cash Merchandise Inventory Totals d. FINANCIAL STATEMENTS Euro Enterprises Financial Statements For the Year Ended December 31, Year 2 Income Statement Sales Revenue 11130 (8688) Less cost of goods sold Gross Margin Operating Expenses 24442 Operating Income Nonoperating Items Net Income Statement of Changes in Stockholders' Equity d. Euro Enterprises Financial Statements Balance Sheet As of December 31, Year 2 d. Statement of Cash Flows For the Year Ended December 31, Year 2 Cash Flows From Operating Activities: Net Cash Flow from Operating Activities Cash Flows From Investing Activities Inflow from Sale of Land Cash Flows From Financing Activities Net Change in Cash Plus: Beginning Cash Balance Ending Cash Balance e. CLOSING ENTRIES Date Account Titles Debit Credit Closing Entries, December 31, Year 2 Dec. 31 f. POST-CLOSING TRIAL BALANCE Euro Enterprises Post Closing Trial Balance December 31, Year 2 Account Titles Debit Credit 20600 70000 Cash Accounts Receivable Accounts Payable Common Stock Retained Earnings 22800 24000 43800 Totals 90600 90600