Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sun&Fun Company uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger

Sun&Fun Company uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledger for the company are indicated in the working papers. Below are a series of transactions for Sun&Fun Co. for the month of January. Credit sales terms are 2/10, n/30. The cost of all merchandise sold was 56% of the sales price.

Jan. 3 Sell merchandise on account to M. Knast $2,900, invoice no. 825, and to C. Ryder $1,800, invoice no. 826.

5 Purchase merchandise from R. Drifter $5,000 and N. Sova $2,200, terms n/30.

7 Receive checks from V. Arnold $4,000 and I. Tan $2,000 after discount period has lapsed. 8 Pay freight on merchandise purchased $235.

9 Send checks to K. Xerxes for balance currently due less 2% cash discount, and to T. Caper for balance currently due less 1% cash discount.

9 Issue credit of $300 to C. Ryder for merchandise returned.

10 Summary daily cash sales total $15,500.

11 Sell merchandise on account to D. Gallagher $1,600, invoice no. 827, and to V. Arnold $900, invoice no. 828.

12 Pay rent of $1,000 for January.

13 Receive payment in full from M. Knast and C. Ryder less cash discounts.

15 Withdrawal of $800 cash by J. Sandy for personal use.

15 Post all entries to the subsidiary ledgers.

16 Purchase merchandise from T. Caper $18,000, terms 1/10, n/30; K. Xerxes $14,200, terms 2/10, n/30; and R. Drifter $1,500, terms n/30.

17 Pay $400 cash for office supplies.

18 Return $450 of merchandise to K. Xerxes and receive credit.

20 Summary daily cash sales total $20,100.

21 Issue $15,000 note, maturing in 90 days, to M. Griffen in payment of balance due.

21 Receive payment in full from V. Arnold less cash discount.

22 Sell merchandise on account to M. Knast $2,700, invoice no. 829, and to D. Gallagher $1,300, invoice no. 830.

22 Post all entries to the subsidiary ledgers.

23 Send checks to T. Caper and K. Xerxes in full payment less cash discounts.

25 Sell merchandise on account to I. Tan $3,500, invoice no. 831, and to C. Ryder $6,100, invoice no. 832.

27 Purchase merchandise from T. Caper $14,500, terms 1/10, n/30; N. Sova $1,200, terms n/30; and R. Drifter $3,800, terms n/30.

27 Post all entries to the subsidiary ledgers.

28 Pay $200 cash for office supplies.

31 Summary daily cash sales total $21,300.

31 Pay salaries and wages of $8,100.

INSTRUCTIONS: (a) Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal, a cash payments journal, and a two-column general journal.

(b) Post the journals to the general ledger.

(c) Prepare a trial balance at January 31, 2020, in the trial balance columns of the worksheet.

Complete the worksheet using the following additional information:

1) Office supplies at January 31 total $850.

2) Insurance coverage expires on October 31, 2020.

3) Annual depreciation on the equipment is $1,500.

4) Interest of $50 has accrued on the note payable.

(d) Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January. (e) Prepare and post adjusting and closing entries.

(f) Prepare a post-closing trial balance and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.

(g) Calculate the following ratios. Include the written formula in words in addition to your calculations and your final answers:

1) Inventory Turnover

2) Days in Inventory

3) Gross Profit Rate

4) Working Capital

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

Payroll Accounting

Authors: Bernard J. Bieg, Judith Toland

21st Edition

1111531056, 978-1111531058

More Books

Students also viewed these Accounting questions

Question

13. Give four examples of psychological Maginot lines.

Answered: 1 week ago