Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On December 1, 2012, Bluemound Company had the following account balances. Debits Credits Cash $18,200 Accumulated Depreciation Notes Receivable 2,200 Equipment $ 3,000 Accounts Receivable

On December 1, 2012, Bluemound Company had the following account balances.

Debits

Credits

Cash

$18,200

Accumulated Depreciation

Notes Receivable

2,200

Equipment

$ 3,000

Accounts Receivable

7,500

Accounts Payable

6,100

Inventory

16,000

Owners Capital

64,400

Prepaid Insurance

1,600

$73,500

Equipment

28,000

$73,500

During December, the company completed the following transactions.

Dec.

7

Received $3,600 cash from customers in payment of account (no discount allowed).

12

Purchased merchandise on account from Klump Co. $12,000, terms 1/10, n/30.

17

Sold merchandise on account $15,000, terms 2/10, n/30. The cost of the merchandise

sold was $10,000.

19

Paid salaries $2,500.

22

Paid Klump Co. in full, less discount.

26

Received collections in full, less discounts, from customers billed on December 17.

Adjustment data:

1. Depreciation $200 per month.

2. Insurance expired $400.

Instructions

(b) Enter the December 1 balances in the ledger T accounts and post the December transactions.

Use Cost of Goods Sold, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Sales Revenue, and Sales Discounts.

(c) The statement from Jackson County Bank on December 31 showed a balance of $21,994. A comparison of the bank statement with the Cash account revealed the following facts.

1. The bank collected a note receivable of $2,200 for Bluemound Company on December 15.

2. The December 31 receipts of $2,736 were not included in the bank deposits for December.

The company deposited these receipts in a night deposit vault on December 31.

3. Checks outstanding on December 31 totaled $1,210.

4. On December 31, the bank statement showed a NSF charge of $800 for a check received by the company from L. Shur, a customer, on account.

Prepare a bank reconciliation as of December 31 based on the available information

(d) Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.

(e) Post the adjusting entries to the ledger T accounts.

(f) Prepare an adjusted trial balance.

(g) Prepare an income statement for December and a classified balance sheet at December 31.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services An Integrated Approach

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan

18th Edition

0137879199, 9780137879199

More Books

Students also viewed these Accounting questions