ACC Project – David’s Entertainment is a merchandising business

David’s Entertainment is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as follows:110 Cash $ 73,920112 Accounts Receivable 34,250113 Allowance for Doubtful Accounts 11,000115 Merchandise Inventory 123,900116 Prepaid Insurance 3,750117 Store Supplies 2,850123 Store Equipment 100,800124 Accumulated Depreciation-Store Equipment 20,160210 Accounts Payable 21,450211 Salaries Payable 0218 Interest Payable 0220 Note Payable (Due 2017) 15,000310 D. Williams, Capital (January 1, 2012) 73,260311 D. Williams, Drawing 50,000312 Income Summary 0410 Sales 853,445411 Sales Returns and Allowances 20,020412 Sales Discounts 13,200510 Cost of Merchandise Sold 414,575520 Sales Salaries Expense 74,400521 Advertising Expense 18,000522 Depreciation Expense 0523 Store Supplies Expense 0529 Miscellaneous Selling Expense 2,800530 Office Salaries Expense 40,500531 Rent Expense 18,600532 Insurance Expense 0533 Bad Debt Expense 0539 Miscellaneous Administrative Expense 1,650550 Interest Expense 1,100David’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: $3,500TV B: $5,250TV C: $6,125PS D: $9,000During 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 number892, 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, $15,600.24. Received notification that Marie Co. has been granted bankruptcy with noamount of recovery. We are to write-off her amount due. (Note: See page402 for entry required.)25. Issued a debit memo for return of $5,200 because of a damaged projectionsystem purchased on December 21, receiving credit from the seller.26. Issued check number 2639 for refund of cash on sales made for cash, $600. (Customer was going to return goods until an allowance was arranged.)27. Issued check number 2640 for sales salaries of $1,750 and officesalaries of $950.28. Purchased store equipment on account from Matt Co., terms n/30, FOBdestination, $1,200.29. Issued check number 2641 for store supplies, $470.30. Sold four TV C units on account to Randall Co., invoice number 893,terms 2/10, n/30, FOB shipping point.30. Received cash from sale of December 20, less discount, plus transportationpaid on December 20. (Round calculations to the nearest dollar.)30. Issued check number 2642 for purchase of December 21, less returnof December 25 and discount.30. Issued a debit memo for $300 of the purchase returned fromDecember 28.Instructions:1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account (General Ledger). Write Balance in the item section, and place a check mark (x) in the Post Reference column.2. Journalize the transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal as illustrated in chapter 7. Also post to the Accounts Receivable and Accounts Payable Subsidiary ledgers and Inventory Control Sheet as needed.3. Total each column on the special journals and prove the journal.4. Post the totals of the account named columns and individually post the “other” columns as well to the General Ledger.5. Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).6. Prepare the unadjusted trial balance on the worksheet.7. Complete the worksheet for the year ended December 31, 2012, using the following adjustment data:a. Merchandise inventory on December 31 $90,800b. Insurance expired during the year 1,250c. Store supplies on hand on December 31 975d. Depreciation for the current year needs to be calculated. The business usesthe Straight-line method, the store equipment has a useful life of 10 yearswith no salvage value. (NOTE: the purchase and return will not be includedas the dates of the transactions were after the 15th of the month).e. Accrued salaries on December 31:Sales salaries $1,400Office salaries 760 2,160f. The note payable terms are at 8%, payment is not being made until Jan. 3, 2013. Interest must be recognized for one month.g. Net realizable value of Accounts Receivable is determined to be $27,950.8. Prepare a multiple-step income statement, a statement of owner’s equity, and aclassified balance sheet in good form. (Recommend review of “Current Liabilities” on pages 166 & 167 and “Current Maturities of Long-term Debt” on page 480.)9. Journalize and post the adjusting entries.10. Journalize and post the closing entries. Indicate closed accounts by inserting a linein both balance columns opposite the closing entry.11. Prepare a post-closing trial balance.Check Figures
for Accounting Project:
Cash Receipts
Journal; Cash Column: 97,939
Trial Balance Total: 1,080,620
Income: 264,350
Post Closing
Trial Balance: 347,490

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