Problem 1 (81 points)

On December 1, 2020, Sigma Distributing had the following account balances.

	Debit		Credit
Cash	7,200	Accumulated depreciation Equipment	2,200
Accounts Receivable	4,600	Accounts Payable	4,500
Inventory	12,000	Salaries and Wages Payable	1,000
Supplies	1,200	Share Capital - Ordinary	30,000
Equipment	22,000	Retaine Earnings	9,300
	47,000		47,000

During December, the company completed the following summary transactions.

Dec. 6	Paid 1,600 for salaries and wages due employees, of which 600 is for December and 1,000 is for November salaries and wages payable.
Dec. 8	Received 2,100 cash from customers in payment of account (no discount allowed).
Dec. 10	Sold merchandise for cash 6,600. The cost of the merchandise sold was 4,100.
Dec. 13	Purchased merchandise on account from Gong Co. 9,000, terms 2/10, n/30.
Dec. 15	Purchased supplies for cash 2,000.
Dec. 18	Sold merchandise on account 12,000, terms 3/10, n/30. The cost of the merchandise sold was 8,400.
Dec. 20	Paid salaries and wages 1,800.
Dec. 23	Paid Gong Co. in full, less discount.
Dec. 27	Received collections in full, less discounts, from customers billed on December 18.

Adjustment data:

1. Accrued salaries and wages payable 800.

2. Depreciation 200 per month.

3. Supplies on hand 1,700.

Answer the following -

a. Journalize the December transactions using a perpetual inventory system (18 points).

b. Enter the December 1 balances in the ledger Taccounts and post the December transactions. Use Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Sales Revenue, Sales Discounts, and Supplies Expense (16 points).

c. Journalize and post adjusting entries (6 points).

d. Prepare an adjusted trial balance (17 points).

e. Prepare an income statement and a retained earnings statement for December and a classified statement of financial position at December 31 (24 points).