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MERCHANDISING ACOUNTING Joe Blink and his brother Paul opened Blink's Partnership Company Merchandising business on July 1. The company applies the perpetual inventory system. Joe and Paul each invest $90,000 cash in a new partnership Purchased merchandise form Boden Company for $7,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1 Purchased cleaning supplies for $2,100 on account. Purchased used truck from Carter for $9,000, paying $3,000 cash and the balance July 1 2 On account. Sold merchandise that cost $4,500 to Rivera's Co. for $9,900 under credit terms of 2/10, n/60 FOB shipping point, Invoice dated July 2, subject to a 9% sales tax. 2 Received $9,954 in advance for merchandise to take place on July 12. 2 Blink's asked Carter, Co. to accept a 60-day, 15 % note to replace its existing account payable to Carter. Paid $225 cash for freight charges on the purchase of July 1 4. Paid $3,800 cash on one-year insurance policy effective July 1 4. 4- Blink's issued a $350,000, 4-year, 12 % note at face value to Forest Hills Bank and received $350,000 cash. The note requires annual interest payments each December 31. 5- Bink's pays the note plus interest to Carter. (July 3) Blink's borrows $95,000 from American Bank. The note bears interest at 9% per year. 6 Principal and interest are due in 30 days. Sold merchandise that cost $700 to customers for $1,900 cash, FOB shipping point 8 Invoice dated July 8, subject to a 9% sales tax. Sold merchandise that cost $7,900 to Rivera's Co. for $9,900 cash received on July 2. Invoice dated July12, subject to a 9 % sales tax. 12 15 Blink's weekly payroll of $40,000 entirely subject to F.I.C.A. and Medicare (7.65 % ) , federal (0.8 %) and state (4% ) unemployment taxes, with income tax withholding of $1,420 and union dues of $99 deducted. Journal entry to record salaries and wages paid. 17 Blink's purchased a patent for $40,000. 18 Purchased merchandise form Boden Company for $9,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 18. 19. Received $7,000 in advance merchandise to take place on August 10. 21 Paid $100 gas and oil for the month. Sold merchandise that cost $46800 to Creek Co. for $9,000 under credit terms of 2/10, n/60 FOB shipping point, Invoice dated July 31, subject to a 9 % sales tax. 22. Purchased cleaning supplies for $1,300 on account. 25. Received a $390 credit memorandum form Boden Co. for the return of part of the merchandise purchased on October 18. 27. Received the balance due from Creek Co. for the invoice dated October 7, net of the Discount 30. Paid part-time receptionist for two weeks 'salary. $13000. Blink's weekly payroll of $40,000 entirely subject to F.I.C.A. and Medicare (7.65 % ), 31- federal (0.8 % ) and state (4 % ) unemployment taxes. Journal entry to record employer payroll taxes. Each partner withdrew $1,600 cash for personal use, 31 The chart of accounts from, Blink,s Partnership Company contains the following ounts: No. 101 Cash, No. 112 Accounts Receivable, No. 125 Merchandise Inventory, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment,, No. 158 Patent, No. 159 Accumulated Depreciation- Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 213 Unearned Revenue. No. 214 Notes Payable, No. 215 Sales Tax Payable, No. 216 Fica & Medicare Tax Payable, No. 217 Income Tax Withholding, No. 218 Union Dues Payable, No. 219 FUTA Tax Payable, No. 220 SUTA Tax Payable, No. Interest Payable 221, No. 301 Joe Blink Capital, No. 302, Joe Blink Drawing, No. 303 Paul Capital, No. 304, Paul Drawing, No. 350 Income Summary, No. 400 Sales, No. 410 Sales Discount, No. 415 Sales return & Allowances, No. 622 Cost of Good Sold, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, No. 726 Salaries Expense, No. 727 Interest Expense, , No. 728 Payroll Tax Expense Instructions: a) Journalize and post the July transactions. Use page J1 for the journal and three-column form for account. b) Prepare a trial balance at July 31 on a work sheet. c Enter the following adjustments on the work sheet and complete the work sheet 0a 030 1) Depreciation on equipment for the month was $250. 2) An inventory count shows $600 of cleaning supplies on hand at July 31. :03)Accrued but unpaid enmployee salaries were $500 4) One-twelfth of the insurance expired. oo 5) Merchandise ending inventory is $ 500 by FIFO method. naka6) Record the July 31 accrued notes payable. SA d) Prepare the income statement and owner's equity statement for July and a classified balance sheet at July 31. e) Journalize and post adjustment entries. f) Journalize and post closing entries and complete the closing process. Joe and Paul for Joe and % for Paul. agree to divide profits or losses g) Prepare a post-closing trial balance at July 31. MERCHANDISING ACOUNTING Joe Blink and his brother Paul opened Blink's Partnership Company Merchandising business on July 1. The company applies the perpetual inventory system. Joe and Paul each invest $90,000 cash in a new partnership Purchased merchandise form Boden Company for $7,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1 Purchased cleaning supplies for $2,100 on account. Purchased used truck from Carter for $9,000, paying $3,000 cash and the balance July 1 2 On account. Sold merchandise that cost $4,500 to Rivera's Co. for $9,900 under credit terms of 2/10, n/60 FOB shipping point, Invoice dated July 2, subject to a 9% sales tax. 2 Received $9,954 in advance for merchandise to take place on July 12. 2 Blink's asked Carter, Co. to accept a 60-day, 15 % note to replace its existing account payable to Carter. Paid $225 cash for freight charges on the purchase of July 1 4. Paid $3,800 cash on one-year insurance policy effective July 1 4. 4- Blink's issued a $350,000, 4-year, 12 % note at face value to Forest Hills Bank and received $350,000 cash. The note requires annual interest payments each December 31. 5- Bink's pays the note plus interest to Carter. (July 3) Blink's borrows $95,000 from American Bank. The note bears interest at 9% per year. 6 Principal and interest are due in 30 days. Sold merchandise that cost $700 to customers for $1,900 cash, FOB shipping point 8 Invoice dated July 8, subject to a 9% sales tax. Sold merchandise that cost $7,900 to Rivera's Co. for $9,900 cash received on July 2. Invoice dated July12, subject to a 9 % sales tax. 12 15 Blink's weekly payroll of $40,000 entirely subject to F.I.C.A. and Medicare (7.65 % ) , federal (0.8 %) and state (4% ) unemployment taxes, with income tax withholding of $1,420 and union dues of $99 deducted. Journal entry to record salaries and wages paid. 17 Blink's purchased a patent for $40,000. 18 Purchased merchandise form Boden Company for $9,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 18. 19. Received $7,000 in advance merchandise to take place on August 10. 21 Paid $100 gas and oil for the month. Sold merchandise that cost $46800 to Creek Co. for $9,000 under credit terms of 2/10, n/60 FOB shipping point, Invoice dated July 31, subject to a 9 % sales tax. 22. Purchased cleaning supplies for $1,300 on account. 25. Received a $390 credit memorandum form Boden Co. for the return of part of the merchandise purchased on October 18. 27. Received the balance due from Creek Co. for the invoice dated October 7, net of the Discount 30. Paid part-time receptionist for two weeks 'salary. $13000. Blink's weekly payroll of $40,000 entirely subject to F.I.C.A. and Medicare (7.65 % ), 31- federal (0.8 % ) and state (4 % ) unemployment taxes. Journal entry to record employer payroll taxes. Each partner withdrew $1,600 cash for personal use, 31 The chart of accounts from, Blink,s Partnership Company contains the following ounts: No. 101 Cash, No. 112 Accounts Receivable, No. 125 Merchandise Inventory, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment,, No. 158 Patent, No. 159 Accumulated Depreciation- Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 213 Unearned Revenue. No. 214 Notes Payable, No. 215 Sales Tax Payable, No. 216 Fica & Medicare Tax Payable, No. 217 Income Tax Withholding, No. 218 Union Dues Payable, No. 219 FUTA Tax Payable, No. 220 SUTA Tax Payable, No. Interest Payable 221, No. 301 Joe Blink Capital, No. 302, Joe Blink Drawing, No. 303 Paul Capital, No. 304, Paul Drawing, No. 350 Income Summary, No. 400 Sales, No. 410 Sales Discount, No. 415 Sales return & Allowances, No. 622 Cost of Good Sold, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, No. 726 Salaries Expense, No. 727 Interest Expense, , No. 728 Payroll Tax Expense Instructions: a) Journalize and post the July transactions. Use page J1 for the journal and three-column form for account. b) Prepare a trial balance at July 31 on a work sheet. c Enter the following adjustments on the work sheet and complete the work sheet 0a 030 1) Depreciation on equipment for the month was $250. 2) An inventory count shows $600 of cleaning supplies on hand at July 31. :03)Accrued but unpaid enmployee salaries were $500 4) One-twelfth of the insurance expired. oo 5) Merchandise ending inventory is $ 500 by FIFO method. naka6) Record the July 31 accrued notes payable. SA d) Prepare the income statement and owner's equity statement for July and a classified balance sheet at July 31. e) Journalize and post adjustment entries. f) Journalize and post closing entries and complete the closing process. Joe and Paul for Joe and % for Paul. agree to divide profits or losses g) Prepare a post-closing trial balance at July 31