PAT Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the follo transactions Dec. 16 Received payment from Lucy Greene on account, $1,960. 16 Sold merchandise on account to Kim Fields, $160, plus sales tax of S8. 17 Returned merchandise to Evans Essentials for credit, $150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 Sale No. 640. balance of $1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31. 22 23 Sale No. 641, Received payment from John Dempsey on account, $1,560 Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies) Purchased merchandise on account from West Wholesalers, $1,200. Invoice No, 465, dated December 24, terms n/30. Purchased merchandise on account from Nathen Co., $800. Invoice No. 817, dated December 26, terms 2/10, n/30. 24 26 27 Issued Check No. 815 to KC Power&Light (Uilities Expense) for the 27 29 29 30 month of December, $630. Sold merchandise on account to John Dempsey, $2,020, plus tax of $101. Sale No. 642. Received payment from Martha Boyle on account, $2,473. Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, $1,100. Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, $200. As of December 16, TJ's account balances were as follows: Account No. Debit Credit Account Cash Accounts Receivable Merchandise Inventory Supplies 101 122 131 141 145 161 S 9,705 10,256 21,800 1,035 1,380 8,700 Prepaid Insurance Land Building Accum. Depr-Building Store Equipment Accum. Depr-Store Equipment $ 9,200 28,750 181.1 9,300 Accounts Payable Wages Payable Sales Tax Payable Mortgage Payable 3,600 1,378 90,000 Capital Drawing Income Summary 8,500 Sales Returns and Allowances Purchases Purchases Returns and Allowances 1,430 124300 64,400 460 Wages Expense Advertising Expense Supplies Expense Telephone Expense Utilities Expense Insurance Expense 26,100 4,700 524 6,900 Depr. Expense-Store Equipment Miscellaneous Expense Interest Expense 2,700 TJ's also had the following subsidiary ledger balances as of December 16 Accounts Receivable Ledger Accounts Payable Ledger Customer Balance Balance Martha Boyle Evans Essentials 34 Harry Ave. East Hartford, CT 05234 Hartford, CT 06117 $3,796 $3,600 52 Juniper Road Farmington, CT 06082 Owen Enterprises 43 Lucky Lane Bristol, CT 06007 Hartford, CT 06118 2,100 John Dempsey 700 Hobbes Dr. Avon, CT 06108 1,560 Kim Fields 5200 Hamilton Ave. Hartford, CT 06117 888 Anders Street Newington, CT 06789 Lucy Greene Simsbury, CT 06123 (continued) 618 PART Accounting for a Merchandising Business At the end of the year, the following adjustments (a(g) need to be made (a, b) Merchandise inventory as of December 31, $19,700 () Depreciation expense on the store equipmenn for (c) Unused supplies on hand, $525 (d) Unexpired insurance on December 31, $1,0o0. (e) Depreciation expense on the building for the the year, $450. ) Wages earned but sot paid as of December 31 year, $800. Requiremments and working papers for this problemt are General Journal based and Special Journals based. provided in two versions Complete the wersion as directe by your instructor. REQUIRED -GENERAL JOURNAL For those not using working papers 1. If you are not using the working papers, open a REQUIRED-SPECIAL JOURNALS For those not ssing working papers 1. If you are not using the working papers: a. Open a general ledger, an accounts receivable general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the December 16 balance of each of the accounts, ledger, and an accounts payable ledger as of December 16. Enter the following December 16 balances in the general lodger accounts and place a check mark in the Posting Reference column Cash Accounts Receivable Accounts Payable Sales Tax Payable Sales with a check mark in the Posting Reference column 6,850 933 116,000 60,500 575 Purchases Discounts Enter the December 16 balances in the rest of the general ledger accounts, as indicated in the b. trial balance, and place a check mark in the Posting Reference column. Enter the December 16 balances in the accounts receivable and accounts payable ledgers, as indicated in the subsidiary ledger account listings, and place a check mark in the Posting Reference column. c. Insert Dec. 1-15, Cumulative Amount, and the following amounts in the special journal columns. d. Sales Journal: Accounts Receivable Dr, 4,263; Sales Cr., 4,060; Sales Tax Payable Cr, 203. Cash Receipts Josrnal: Accounts Receivable Cr, 1,830; Sales Cr, 4,840; Sales Tax Pay Ct, 242; Cash Dr., 6,912. Purchases Journal: Purchases D:/Accts. Pay Cr., 3,900. Cash Payments Journal: General Dr, 1,680; Accounts Payable Dr, 7,150;Purchases Discounts Cr, 123; Cash Cr., 8,707. For working paper users and nonusers 2. Enter transactions for the second half of December in the general journal. Post immediately to the accounts receivable and accounts payable ledgers. For working paper users and nonussers 2. Enter transactions for the second half of December in the proper journals. If you are using, the working papers, the cumulative amount of entries in the spe- cial journals for December 1-15 has been entered in these journals for you. Post immediately to the Post from the journal to the general ledger. accounts receivable and accounts payable ledgers. 3. 3. Post from the journals to the general ledger. Post the journals in the following order: general, sales, purchases, cash receipts, and cash payments. 4. Prepare schedules of accounts receivable and accounts payable. 4. Prepare schedules of accounts receivable and accounts payable. 5. Prepare a yearend work sheet, an income statement, S. Prepare a year-end work sheet, an income state- a statement of owner's equity, and a balance sheet. The mortgage payable includes $600 that is due within one year. ment, a statement of owner's equity, and a balance sheet. The mortgage payable includes $600 that is 6. Journalize and post adjusting entries. 7. Journalize and post closing entries. (Hint: Close all 7. Journalize and post closing entries. (Hint: due within one year Journalize and post adjusting entries. expense and revenue account balances listed in the 6. expense and revenue account balances listed in the Income Statement columns of the work sheet. Then, Income Statement columns of the close Income Summary and Tom Jones, Drawing to close Income Summary and Tom Jones, Drawing to Tom Jones, Capital.) Prepare a post-closing trial balance. work sheet. Then, Tom Jones, Capital.) 8. Prepare a pos dlosing tial balance. 8. 9. Journalize and post reversing entries for the adjust- ments where appropriate, as of January 1,20-2 9. Journalize and post reversing entries for the adjust- ments where appropriate, as of January 1, 20-2 lm 2: Accounting Cycle