201610-SE1-ACCT510.10031: Fall2015-SE1-ACCT510.10031 – Davenport – Comprehensive problem David’s Entertainment
201610-SE1-ACCT510.10031: Fall2015-SE1-ACCT510.10031 – Davenport – Comprehensive problem David’s Entertainment
201610-SE1-ACCT510.10031: Fall2015-SE1-ACCT510.10031 – Davenport – Comprehensive problem David’s Entertainment
Question
.blackboard.com/webapps/blackboard/execute/launcher?type=Course&id=_191720_1&url=”>201610-SE1-ACCT510.10031: Fall2015-SE1-ACCT510.10031
.blackboard.com/webapps/assignment/uploadAssignment?content_id=_7290093_1&course_id=_191720_1&assign_group_id=&mode=view”>Comprehensive Problem Information
This is a large homework problem requiring you to record transactions for a merchandising company in special journals (see chapter seven), post to the general ledger and subsidiary ledgers and prepare adjusting entries, financial statements, closing entries and a post-closing trial balance. This problem is assigned at course beginning but not due until Week 6.
Foundations of Accounting I
Accounting Project
Written by: Karen Pitsch
David’s Entertainment is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as follows:
110 Cash $ 73,920
112 Accounts Receivable 34,250
113 Allowance for Doubtful Accounts 11,000
115 Merchandise Inventory 123,900
116 Prepaid Insurance 3,750
117 Store Supplies 2,850
123 Store Equipment 100,800
124 Accumulated Depreciation-Store Equipment 20,160
210 Accounts Payable 21,450
211 Salaries Payable 0
218 Interest Payable 0
220 Note Payable (Due 2017) 15,000
310 D. Williams, Capital (January 1, 2012) 73,260
311 D. Williams, Drawing 50,000
312 Income Summary 0
410 Sales 853,445
411 Sales Returns and Allowances 20,020
412 Sales Discounts 13,200
510 Cost of Merchandise Sold 414,575
520 Sales Salaries Expense 74,400
521 Advertising Expense 18,000
522 Depreciation Expense 0
523 Store Supplies Expense 0
529 Miscellaneous Selling Expense 2,800
530 Office Salaries Expense 40,500
531 Rent Expense 18,600
532 Insurance Expense 0
533 Bad Debt Expense 0
539 Miscellaneous Administrative Expense 1,650
550 Interest Expense 1,100
David’s Entertainment uses the perpetual inventory system and the First-in, First-out costing method. Transportation-in and purchase discounts should be added to the Inventory Control Sheet, but since this will complicate the computation of the First-in, First-out costing method, please ignore this step in the process. They also use the Allowance Method for bad debt.
The Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the Inventory Control Sheet should be updated as each transaction affects them (daily).
David’s Entertainment sells four types of television entertainment units.
The sale prices of each are:
TV A: $3,500
TV B: $5,250
TV C: $6,125
PS D: $9,000
During December, the last month of the accounting year, the following transactions were completed:
Dec. 1. Issued check number 2632 for the December rent, $2,600.
3. Purchased three TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $11,100.
4. Issued check number 2633 to pay the transportation changes on purchase of December 3, $400. (NOTE: Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)
6. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.
10. Sold two projector systems for cash.
11. Purchased store supplies on account from Matt Co., terms n/30, $580.
13. Issued check to Prince Co. number 2634 for the full amount due, less discount allowed.
14. Issued credit memo for one TV A unit returned on sale of December 6.
15. Issued check number 2635 for advertising expense for last half of December, $1,500.
16. Received cash from Albert Co. for the full amount due (less return of December 14 and discount).
19. Issued check number 2636 to buy two TV C units, $7,600.
19. Issued check number 2637 for $6,100 to Joseph Co. on account.
20. Sold five TV C units on account to Cameron Co., invoice number
892, terms 1/10, n/30, FOB shipping point.
20. For the convenience of the customer, issued check number 2638 for shipping charges on sale of December 20, $700.
21. Received $12,250 cash from McKenzie Co. on account, no discount.
21. Purchased three projector systems on account from Elisha Co., terms 1/10, n/30, FOB destination, $15,600.