PC Depot was a retail store for personal computers and handheld calculators, selling several national brands in each product line. The store was opened in early September by Barbara Thompson, a young woman previously employed in direct computer sales for a national firm specializing in business computers.

Thompson knew the importance of adequate records. One of her first decisions, therefore, was to hire Chris Jarrard, a local accountant, to set up her bookkeeping system.

Jarrard wrote up the stores preopening financial transactions in journal form to serve as an example (Exhibit 1). Thompson agreed to write up the remainder of the stores September financial transactions for Jarrards later review.

At the end of September, Thompson had the following items to record:

Questions

1. Explain the events that probably gave rise to journal entries 1 through 8 of Exhibit 1.

2. Set up a ledger account (in T account form) for each account named in the general journal. Post entries 1 through 8 to these accounts, using the entry number as a cross-reference.

3. Analyze the facts listed as 9 through 20, resolving them into their debit and credit elements. Prepare journal entries and post to the ledger accounts. (Do not prepare closing entries.)

4. Consider any other transactions that should be recorded. Why are these adjusting entries required? Prepare journal entries for them and post to ledger accounts.

5. Prepare closing entries and post to ledger accounts. What new ledger accounts are required? Why?

6. Prepare an income statement for September and a balance sheet as of September 30.