Question
Record the Elijah's Home Furnishings transactions in its general journal. The company uses a perpetual inventory system. June 1 Started business by issuing 100,000 shares
Record the Elijah's Home Furnishings transactions in its general journal. The company uses a perpetual inventory system.
June 1 Started business by issuing 100,000 shares of $1 par value per share common stock for $100,000.
June 1 Paid $4,500 to rent store space for the months of June, July and August
June 1 Purchased $32,000 of display equipment by paying $10,000 cash and by signing for the balance a three month note, payable in the amount of $22,000 on September 1. The note requires Elijahs to pay interest at an annual rate of 12%.
June 2 Paid $1,000 for store supplies.
June 3 Purchased $30,000 of merchandise on account, terms 2/10, n/30, FOB destination.
June 4 Paid $500 for the delivery of merchandise purchased on June 3.
June 5 Returned merchandise purchased on June 3 for credit, $3,000
June 7 Paid $1,500 to advertise the business for June.
June 13 Paid the balance due to the seller for purchase of merchandise on June 03, less the discount.
June 17 Sold merchandise on credit for $28,000 (cost $20,000), terms 2/10, n/30, FOB shipping point.
June 18 Paid $600 for the delivery of merchandise sold on June 17.
June 20 Return of merchandise sold on June 17 accepted from the customer for full credit and returned to merchandise inventory, $1,400 (cost, $1,000)
June 21 Paid $100 for the delivery of merchandise returned on June 20.
June 26 Paid June telephone bill of $150.
June 27 Received payment in full from the customer for sale of merchandise on June 17, less the sales discount.
June 28 Purchased merchandise on credit for $5,000, terms 2/10, n/30, FOB destination.
June 29 Sold merchandise on credit for $10,000 (cost $6,000), terms 2/10, n/30, FOB shipping point.
Adjustments:
June 30 Junes prepaid rent has expired
June 30 Store supplies on hand were $300.
June 30 Accrued salaries and wages for June amount to $2,000. Payment to the employees will be made on July 1.
June 30 Display equipment has an estimated used life of 60 months. The residual value of the display equipment is estimated to be $2,000.
June 30 Income taxes for June were estimated to be $600. Taxes will be paid in July.
Required:
- Journalize the transactions (explanations are not required).
- Set up T-accounts and post the journal entries to T-accounts.
- Prepare an unadjusted trial balance
- Make the adjustments
- Prepare an adjusted trial balance
- Close all revenue/expense accounts to the income summary and then close the income summary to the retained earnings.
- Prepare a multi-step income statement. All operating expenses are selling expenses.
- Prepare a classified balance sheet.
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