The balances as of 30 November 2016 for McDowell Merchandising, Inc. are as follows:

Cash	$ 42,000
Accounts Receivable	11,000
Merchandise Inventory	40,000
Prepaid Rent	6,000
Store Equipment (Purchased 1 January 2016)	60,000
Accumulated Depreciation-Store Equipment		5,000
Accounts payable		$ 32,000
Capital Stock ($10 par)		100,000
Retained Earnings		22,000
Sales		45,000
Sales Discounts	3,000
Sales Returns	2,000
Cost of Goods Sold (COGS)	22,000
Selling & Marketing expenses	6,000
Administrative & Office expenses	2,000
TOTAL	$ 195,000	$ 195,000

During the month of November the following transactions occurred:

Dec. 2 McDowell purchased merchandise from Zakiwa Inc. for $60,000, of these 20% were paid in cash and the remaining amount on credit under the terms (5% discount /10 days, net due in/30 days). Freight FOB destination point (the seller pays for the freight, so the buyer does not record anything), cost $500.

Dec. 4 McDowell purchased merchandise from TOYZ for $20,000, paid 40% cash and 60% on account; credit terms 2/10, n/30. Freight FOB shipping point, (the buyer pays for the freight), cost $350, was paid in cash.

Dec. 4 McDowell returned $6,000 of merchandise ON ACCOUNT to Zakiwa Inc. since the GOODS did not meet order specifications.

Dec. 4 McDowell paid local radio station $4,000 for advertising services during December. Advertising expenses are classified as Selling & Marketing expenses.

Dec. 7 McDowell paid in cash $500 to Property Management for general maintenance services charging the full amount to administrative & office expenses

Dec. 10 McDowell paid Zakiwa and received the discount benefit.

Dec. 10 Sold merchandise to Little People Inc. for $60,000 receiving 20% cash and 80% on account; credit terms were 2/10, n /30. The cost of goods sold is 50% of the sales price. FOB shipping point, cost $250.

Dec 10 McDowell paid $12,000 cash for the annual fire insurances. The insurance policy is dated 1 December 2016 to 30 November 2017.

Dec. 11 McDowell received $50,000 cash from stockholders for issuance of 4000 common shares, $10 par value; plus paid in excess of par.

Dec 11 McDowell paid $10,000 for the rent of the month of November; rent expense is allocated 40% to administrative and office expenses and 60% to selling and marketing expenses.

Dec 11 McDowell bought additional furniture for the store that cost $5,000. Of this amount, 50% was paid in cash and a note due in 30 days was signed for the rest. Office furniture has no residual value and a useful live of 5 years.

Dec. 12 Paid TOYZ receiving the discount benefit.

Dec. 12 Cash sales for the first two weeks were $80,000; the cost of goods sold is 50% of the sales price.

Dec. 13 McDowell purchased merchandise from Zakiwa Inc. for $85,000, on account under the terms (5% discount /10 days, net due in/30 days). Freight FOB destination point cost $550.

Dec. 15 McDowell paid salaries for the first fortnight of December for $25,000; 60% is allocated to administrative and office expenses and 40% is allocated to selling and marketing expenses. Payment was in cash.

Dec 16 McDowell paid $16,000 in cash for utilities and other operating expenses; allocating 50% to administrative and office expenses and 50% to selling and marketing expenses.

Dec 16 The bank approved a loan for $200,000 with an interest rate of 18%; payment is due in two years days. The cash was paid into the bank account.

Dec. 18 Sold merchandise to Rosenburg Inc. for $70,000 on account; credit terms were 4/15; n/30. The cost of goods sold is 50% of the sales price. FOB shipping point cost $360.

Dec 21 Rosenburg returned merchandise sold at $10,000 on account.

Dec. 28 Little People returned $10,000 of merchandise from the sale on account. The merchandise was returned to the merchandise inventory. Little People paid the outstanding invoice but they did not receive the benefit of the discount

Dec. 28 Cash sales for the second half of the month were $95,000. Cost of goods sold is 50% of sales price; FOB destination point cost $200.

Dec. 28 Rosenburg paid the outstanding invoice; the agreed discount was granted.

Dec 30 McDowell invested in a portfolio of marketable securities for a total of $30,000 that will be converted into cash in January.

Dec 30 McDowell paid, in cash, salaries for the second fortnight of December for $18,000; 60% is allocated to administrative and office expenses and 40% is allocated to selling and marketing expenses.

Dec 30 McDowell declared and paid a cash dividend of $25,000.

Dec 31 McDowell adjusts its accounts at year end. The following adjusting journals are required:

Depreciation expense for the month is $500 (Depreciation expense is charged in full to Selling and Marketing expenses.

Calculate the interest on the long-term loan. Interest expense is debited.

Based on past experience and due to the increase in credit sales, McDowell was advised to create a provision for bad debts of $15,000; debiting the bad debts expense to Selling and Marketing expense and crediting the Provision for Bad Debts (Allowance for doubtful accounts).

Adjust the insurance expired for the month of December.

Accrued expenses include $2,000 for telephone, $1,000 electricity and $400 water. These are allocated to Administrative and Office Expenses and Selling and Marketing Expenses at 40% and 60% respectively.

a)Raise journals for the transactions for the month of December