The Wildhorse Shop, owned by Andrew John, sells skateboards in the summer and snowboards in the winter. The shop has an August 31 fiscal year end, and uses a perpetual inventory system and the earnings approach. On August 1, 2021, the company had the following balances in its general ledger: Cash $21,385 A. John, Drawings $52,800 Merchandise inventory 64,125 Sales 485,500 Supplies 3,750 Rent revenue 1,200 Equipment 70,800 Sales returns and allowances 11,420 Accumulated depreciation-equipment 13,275 Cost of goods sold 301,010 Accounts payable 12,650 Salaries expense 68,200 Unearned revenue 4,680 Rent expense 18,150 Notes payable 42,000 Insurance expense 4,140 A. John, capital 58,400 Interest expense 1,925

During August, the last month of the fiscal year, the company had the following transactions: Aug. 1 Paid $1,650 for August's rent.

2 Paid $6,500 of the amount included in Accounts Payable.

4 Sold merchandise costing $7,900 for $12,730 cash.

5 Purchased merchandise on account from Orange Line Co., n/30, FOB shipping point, for $24,000.

5 Paid freight charges of $610 on merchandise purchased from Orange Line Co.

8 Purchased supplies on account for $355.

9 Refunded a customer $425 cash for returned merchandise. The merchandise had cost $264 and was returned to inventory.

10 Sold merchandise on account to Spider Company for $15,800, terms 2/10, n/30, FOB shipping point. The merchandise had a cost of $9,785.

11 Paid Orange Line Co. for half of the merchandise purchased on August 5.

12 Spider Company returned $750 of the merchandise it purchased. Wildhorse Shop issued Spider a credit to its account. The merchandise had a cost of $470 and was returned to inventory.

15 Paid salaries, $3,100.

19 Spider Company paid the amount owing.

21 Purchased $10,000 of merchandise from Rainbow Option Co. on account, terms 2/10, n/30, FOB destination.

23 Returned $800 of the merchandise to Rainbow Option Co. and received a credit on the account.

24 Received $530 cash in advance from customers for merchandise to be delivered in September.

30 Paid salaries, $3,100.

30 Paid Rainbow Option Co. the amount owing.

31 Andrew John withdrew $4,900 cash.

Create a general ledger account for each of the above accounts and enter the August 1 balances.

Record the August transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)

Post the August transactions. Update the balances in the general ledger accounts. (Post entries in the order of Journal entry presented in the previous part.)

Adjustment and additional data:

1.		A count of supplies on August 31 shows $755 on hand.
2.		The equipment has an estimated eight-year useful life. Remember that adjusting entries are done annually, not monthly.
3.		Of the notes payable, $6,000 must be paid on September 1 each year.
4.		(1) An analysis of the Unearned Revenue account shows that $3,750 has been earned by August 31. (2) A corresponding entry of $2,325 for Cost of Goods Sold will also need to be recorded for these sales.
5.		Interest accrued on the note payable to August 31 was $175.
6.		A count of the merchandise inventory on August 31 shows $76,560 of inventory on hand.

Post the adjustments required at August 31, 2021 and update the account balances as required. (Post entries in the order of Journal entry presented in the previous part.)

Sales Debit Credit Date Explanation Ref. Aug. 1 Balance V Aug. 4 Aug. 10 Adjusting Aug. 31 entry Closing entry Balance 485,500 498,23C 514,030 12,730 15,800 3,750 517,78C Sales Returns and Allowances Debit Credit Balance Date Explanation Ref. Aug. 1 Balance V Aug. 9 Aug. 12 425 750 11,420 11,845 12,595 Closing entry Rent Expense Debit Credit Balance Date Explanation Ref. Aug. 1 Balance Aug. 1 18,150 19,800 1,650 Closing entry Interest Expense Debit Credit Balance 1,925 Date Explanation Ref. Aug. 1 Balance Adjusting Aug. 31 entry 175 2,10C Closing entry Insurance Expense Debit Credit Balance Date Explanation Ref. Aug. 1 Balance Closing entry 4,140