Comprehensive Problem Accounting for Merchandising Merchandising Business Business The post-closing trial balance of the general ledger of Wilson Retail Company at December 31, 2016, reflected the following: __________Account __________Account Cash Accounts receivable Inventory Prepaid insurance (20 months remaining) Equipment (20-year life, no salvage value) Accumulated depreciation Accounts payable Salaries payable Wilson, Capital
Debit 27,000 20,000 35,000 900 50,000
______ 132,900
Credit
22,500 7,500 4,000 98,900 ________ 132,900
The company is using the perpetual inventory system. The following transactions occurred during January 2017: January 1 – Invested additional cash of P321,000 in the business. January 2 – Collected the accounts from customers from last month in full. January 3 – Purchased office supplies of P5,000 on account. January 4 – Purchased inventory costing P210,000 for cash, including freight of P3,000. January 5 – Sold goods for P200,000 cash. The cost of the goods sold is P120,000. P120,000. January 6 – Paid the accrued salaries from the previous month. January 7 – Returned goods to your supplier costing P3,000 due to defects. January 8 – Sold goods on account for P80,000. Terms are at 2/10, n/30. The cost of the goods sold is P48,000. January 9 – Purchased goods on account for P60,000. Terms are at 1/5, n/25. January 10 – Paid the account with the suppliers on the January 3 purchase. January 11 – Paid the accounts to suppliers from last month in full. January 12 – Paid a mechanic for P4,500 for repairs and maintenance of the equipment. January 13 – Paid the account with suppliers on the January 9 purchase. January 15 – Paid mid-month salaries totaling P14,000. January 15 – Purchased a new equipment costing P20,000 for cash. The equipment has a useful life of 5 years and a 10% salvage value. January 16 – Borrowed P25,000 from a bank . Interest was at 10% per annum. January 17 – Received the payment due from the customer on the January 8 sale. January 19 – Purchased goods on account for P25,000. The terms are 2/8, n/20. January 20 – Sold goods for P100,000 cash. The cost of the goods is in the same proportion with its sales price as usually transacted. Upon delivery to the customer, the Company paid P5,000 freight. January 23 – Received P15,000 from a customer as advanced payment for goods to be paid on February 14. January 25 – Sold goods for P50,000 on account. The terms was 3/15, n/45. The cost of the goods sold was P40,000 January 27 – Customers returned P3,000 worth of inventory back to the Company due to poor quality. The goods were originally sold last January 25. January 29 – Paid the account with the suppliers on the January 19 purchase. January 30 – Paid the following expenses: Rent – P15,000, Light and water – P8,500, Advertising (good for one year) – P4,250. Additional information: information: Supplies at the end of the month, as counted, is valued at P2,000. Salaries of P14,500 needs to be accrued. Ending inventory is P61,400 per physical count
Requirement s: 1. Analyzed the aforementioned transactions and prepare the journal entries for the month of January. 2. Post the journal entries to their respective accounts and compute the month-end balances per account. 3. Prepare the necessary adjusting entries at the end of the month. 4. Prepare a worksheet showing the following: 5. The unadjusted trial balance 6. The adjustments per account, if necessary 7. The adjusted trial balance 8. Prepare the balance sheet and the income statement of the proprietor for the month ended January 31, 2017. 9. Prepare the closing entries. 10. Prepare the post-closing post-closing trial balance.
