Question Foundations of Accounting I

29 Jun Question Foundations of Accounting I

Question
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:

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 h