The Fantastic Dress Shop

Reviewing the Accounting Cycle for a Merchandise Company

This practice set will help you review all the key concepts of a merchandise company, using the perpetual method of inventory valuation along with the integration of payroll, including the preparation of Form $941.$

Because you are the professional bookkeeper for The Fantastic Dress Shop, we have gathered the following information for you. It will be your task to complete the accounting cycle for March using the knowledge and skills that you have acquired in this course. The company uses the perpetual inventory method.

The Fantastic Dress Shop was in existence prior to March. Below is a post$-$closing trial balance from February to show the permanent accounts that have balances from the previous month. You will use this information to help you get started in March.

THE FANTASTIC DRESS SHOP POST$-$CLOSING TRIAL BALANCE

FEBRUARY $28,202x$

$\backslash$table$[[,$Dr$.,$Cr$.],[$Cash$,\backslash$table$[[3,7,4,4,2]],23,,,,],[$Petty Cash,$550,00,,,,],[$Accounts Receivable,$\backslash$table$[[1,8,0,0,0]],00,,,,],[$Merchandise Inventory,$48700,00,,,,],[$Prepaid Rent,$24800,00,,,,],[$Delivery Truck,,$00,,,,],[$Accumulated Depreciation, Delivery Truck,,,,$40,00,0],[$Accounts Payable,,,,$00,00,],[$FIT Payable,,,,$48,00,0],[$FICA$-$Social Security payable,,,,$\backslash$table$[[0,]],37,],[$FICA$-$Medicare Payable,,,,$25,34,6],[$SIT Payable,,,,$87,40,0],[$SUTA Payable,,,,$82,75,2],[$FUTA Payable,,,,$10,34,4],[$Unearned Rent,,,,$00,00,0],[$B$.$ Duval, Capital,,,$19,66,,5],[$Totals$,\backslash$table$[[28,6,8,9]],23,28,68,92,3],[,,,$L$,1,,]]$

Balances in subsidiary ledgers as of March $1$ are as follows:

$\backslash$table$[[$Accounts Receivable,Accounts Payable$],[$Bach Co$.,$$$1,800,$Danmark Co$.,$$$2,000$

The January and February payroll summary for all three employees is as follows:

$\backslash$table$[[\backslash$table$[[$Pay$],[$Period$]],\backslash$table$[[$Total Gross$],[$Earnings$]],\backslash$table$[[$Taxable$],[$FUTA$/$SUTA$]],\backslash$table$[[$Taxable$],[$Social$],[$Security$],[$Earnings$]],\backslash$table$[[$Social$],[$Security$]],$Medicare,FIT,SIT$],[$January$,$$$9,300,$$$9,300,$$$9,300,$$$576\mathrm{.}60,$$$134\mathrm{.}85,$$$650,$$$930$

$\backslash$table$[[\backslash$table$[[$If the Adjusted Wage$],[$Amount $($line $1$h$)$ is:$]],\backslash$table$[[$The$],[$tentative$],[$amount to$],[$withhold is:$]],\backslash$table$[[$Plus this$],[$percentage$-]],\backslash$table$[[$of the$],[$amount that$],[$the Adjusted$],[$Wage$],[$exceeds$-]]],[$At least$-,\backslash$table$[[$But less$],[$than$-]]],[$A$,$B$,$C$,$D$,$E$],[$Married Filing Jointly$],[$$$0,$$$2,092,$$$0\mathrm{.}00,0\%,$so$],[$$$2,092,$$$3,750,$$$0\mathrm{.}00,10\%,$$$2,092$

Your tasks are to do the following:

Set up the general journal, general ledgers, accounts receivable subsidiary ledgers, accounts payable subsidiary ledgers, and the auxiliary petty cash record. Update the beginning balances for March from the February ending balance information provided.

Journalize the transactions and prepare the auxiliary petty cash record.

Prepare the payroll register and journalize the payroll.

Post to the general ledgers and update the accounts payable and accounts receivable subsidiary ledgers.

Prepare a trial balance on the worksheet and complete the worksheet.

Prepare an income statement, statement of owner's equity, and classified balance sheet.

Journalize the adjusting and closing entries.

Post the adjusting and closing entries to the ledger.

Prepare a schedule of accounts receivable and a schedule of accounts payable.

Prepare a post$-$closing trial balance.

Chart of Accounts for The

Fantastic Dress Shop

$\backslash$table$[[$Assets$,$Revenue$],[110$ Cash,$410$ Sales$],[111$ Petty Cash,$412$ Sales Returns and Allowances$],[112$ Accounts Receivable,$414$ Sales Discount$],[114$ Merchandise Inventory,$416$ Rental Income$],[116$ Prepaid Rent,Cost of Goods Sold$],[120$ Delivery Truck,$510$ Cost of Goods Sold$],[121$ Accumulated Depreciation, Delivery Truck,$],[$Liabilities$,$Expenses$],[210$ Accounts Payable,$610$ Salaries Expense$],[212$ Salaries Payable,$612$ Payroll Tax Expense$],[214$ FIT Payable,$614$ Cleaning Expense$],[216$ FICA$-$Social Security Payable,$616$ Depreciation Expense, Delivery Truck$],[218$ FICA$-$Medicare Payable,$618$ Rent Expense$],[220$ SIT Payable,$620$ Postage Expense$],[222$ SUTA Payable,$624$ Miscellaneous Expense$],[224$ FUTA Payable,$],[226$ Unearned Rent,$],[$Owner$\text{'}$s Equity,$],[310$ B$.$ Duval, Capital,$],[320$ B$.$ Duval, Withdrawals,$],[330$ Income Summary,$]]$

$202x$

Mar. $1$ Bach paid balance owed, no discount.

$2$ Purchased merchandise from Thomas Company on account, $$7,000$; terms $\frac{1}{10},\frac{n}{30}.$

$2$ Paid $$10$ from the petty cash fund for cleaning