Sun&Fun Company uses a perpetual inventory system and both an a

ccounts 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 o

f 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 d

iscount period has lapsed.

8 Pay freight on merchandise purchased $235.

9 Send checks to K. Xerxes for balance currently due less 2% cas

h 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 n

o. 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 pay

ment 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. 8

29, 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 ca

sh 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.

(continued)

page 2 of 19

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-co

lumn purchases journa

l, a cash receipts

journal, a cash payments journal, and a two-column general jour

nal.

(b)

Post the journals to the general ledger.

(c)

Prepare a trial balance at January 31, 2020, in the trial balan

ce columns of the worksheet.

Complete the worksheet using the following additional informati

on:

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 bala

nce 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