Question Foundations of Accounting I

29 Jun Question Foundations of Accounting I

Question
Foundations of Accounting I

Accounting Project

Written by: Karen Pitsch

Special thanks to Donna Larner

Randiddle Co. is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as follows:

110 Cash $ 74,370

112 Accounts Receivable 6,178

113 Allowance for Doubtful Accounts 650

115 Merchandise Inventory 2,346

116 Prepaid Insurance 5,750

117 Store Supplies 2,850

123 Store Equipment 100,800

124 Accumulated Depreciation-Store Equipment 31,060

210 Accounts Payable 3,286

211 Salaries Payable 0

218 Interest Payable 0

220 Note Payable (Due 2017) 30,000

($6,000 to be paid in 2013)

310 Randiddle, Capital (January 1, 2012) 46,288

311 Randiddle, Withdrawals 60,000

312 Income Summary 0

410 Sales 296,130

411 Sales Returns and Allowances 10,020

412 Sales Discounts 7,200

510 Cost of Goods Sold 30,250

520 Sales Salaries Expense 34,400

521 Advertising Expense 18,000

522 Depreciation Expense 0

523 Store Supplies Expense 0

529 Miscellaneous Selling Expense 2,800

530 Office Salaries Expense 25,500

531 Rent Expense 24,200

532 Insurance Expense 0

533 Bad Debt Expense 0

539 Miscellaneous Administrative Expense 1,650

550 Interest Expense 1,100

Randiddle Co. uses the perpetual inventory system and the Last-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 Last-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).

Randiddle Co. sells three types of microwave ovens.

The sale prices of each are:

900 watt microwave: $199

1000 watt microwave: $299

1200 watt microwave: $499

During December, the last month of the accounting year, the following transactions were completed:

Dec. 1. Issued check number 2632 for the December rent, $2,200.

2. Sold two 1200 watt microwaves for cash.

4. Purchased four 1000 watt microwaves on account from Matt Co., terms 2/10,

n/30, FOB shipping point, $596.

5. Issued check number 2633 to pay the transportation charges on purchase of

December 4, $89. (NOTE: Debit Merchandise Inventory. Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)

6. Sold six 1000 watt microwaves and four 1200 watt microwaves on account to Briana Co., invoice 891, terms 2/10, n/30, FOB shipping point.

8. Issued check number 2634 for refund of cash on sales made for cash, $150.

(Customer was going to return goods until an allowance was arranged.)

10. Purchased store supplies on account from Prince Co., terms n/30, $310.

10. Issued check to Matt Co. number 2635 for the full amount due, less discount

allowed. (Round discount to nearest dollar.)

11. Paid Prince Co. full amount due, check number 2636.

12. Issued credit memo for one 1000 watt microwave returned on sale of

December 6. (NOTE: Assume the returned microwave was from the 11/30 inventory)

13. Issued check number 2637 for advertising expense for last half of December, $3,000.

14. Received cash from Briana Co. for the full amount due (less return of December 12 and discount; round to nearest dollar).

19. Issued check number 2638 to buy five 900 watt microwaves, $495.

19. Issued check number 2639 for $596 to Joseph Co. on account.

20. Sold seven 900 watt microwaves on account to Cameron Co., invoice number 892, terms 1/10, n/30, FOB shipping point.

20. To expedite sale on Dec. 20, issued check number 2640 for shipping charges on sale to Cameron on December 20, $120 (NOTE: Cameron Co. will be reimbursing us for this shipping cost).

21. Received $1,396 cash from McKenzie Co. on account, no discount.

21. Purchased three 1200 watt microwaves on account from Elisha Co., terms 1/10, n/30, FOB shipping point, $747, shipping $78 (NOTE: Debit Merchandise Inventory $825, but only put $747 in the Inventory Control Sheet).

24. Received notification that Marie Co. has been granted bankruptcy with no

amount of recovery. We are to write-off her amount due. (Note: See page

365 for entry required.)

26. Issued a debit memo for return of$249 because of damage to one 1200 watt

microwave purchased on December 21, receiving credit from the seller.

27. Issued check number 2641 for sales salaries of $2,050 and office

salaries of $1,400.

28. Purchased store equipment on account from Joseph Co., terms n/30, FOB

destination, $1,200.

29. Issued check number 2642 for store supplies, $70.

29. Purchased seven 1000 watt microwave from Prince Co, terms 1/10, n/30,

FOB shipping point, for $1,113 on account, shipping $107.

30. Sold eight 1000 watt microwaves on account to Briana Co., invoice number

893, terms 2/10, n/30, FOB shipping point.

30. Received cash from sale of December 20, less discount, plus transportation

paid on December 20. (Round calculations to the nearest dollar.)