Assume it is Monday, May 1, 2011, the first business day of the month, and you have just been hired as the accountant for Colo Company, which operates with monthly accounting periods. All of the companys accounting work is completed through the end of April and its ledgers show April 30 balances. During your first month on the job, the company experiences the following transactions and events (terms for all its credit sales are 2/10, n/30 unless stated differently):
May 1
Issued Check No. 3410 to S&P Management Co. in payment of the May rent, $2,830. (Use two lines to record the transaction. Charge 70% of the rent to Rent Expense-Selling Space and the balance to Rent Expense-Office Space.)
2
Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,500 (cost is $4,500).
2
Issued a $200 credit memorandum to Knox Co., for defective (worthless) merchandise sold on April 28 and returned for credit. The total selling price (gross) was $4,800.
3
Received a $750 credit memorandum from Peyton Products for the return of merchandise purchased on April 29.
4
Purchased the following on credit from Gear Supply Co.: merchandise, $36,272; store supplies, $587; and office supplies, $76. Invoice dated May 4, terms n/10 EOM.
5
Received payment from Knox Co., for the balance from the April 28 sale less the May 2 return and the discount.
8
Issued Check No. 3411 to Peyton Products to pay for the $6,100 of merchandise purchased on April 29 less the May 3 return and a 2% discount.
9
Sold store supplies to the merchant next door at their cost of $372 cash.
10
Purchased $4,400 of office equipment on credit from Gear Supply Co., invoice dated May 10, terms n/10 EOM.
11
Received payment from Hensel Company for the May 2 sale less the discount.
11
Purchased $9,400 of merchandise from Garcia, Inc., invoice dated May 10, terms 2/10, n/30.
12
Received an $900 credit memorandum from Gear Supply Co. for the return of defective office equipment received on May 10.
15
Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $4,550. Cashed the check and paid the employees.
15
Cash sales for the first half of the month are $60,120 (cost is $48,000). (Cash sales are recorded daily but are recorded only twice here to reduce repetitive entries.)
15
Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. (Such items are posted daily but are posted only twice each month because they are few in number.)
16
Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $4,900 (cost is $2,800).
17
Purchased $13,150 of merchandise from Fink Corp., invoice dated May 14, terms 2/10, n/60.
19
Issued Check No. 3413 to Garcia, Inc., in payment of its May 10 invoice less the discount.
22
Sold merchandise to Lee Services, Invoice No. 8787, for $7,500 (cost is $5,640), terms 2/10, n/60.
23
Issued Check No. 3414 to Fink Corp. in payment of its May 14 invoice less the discount.
24
Purchased the following on credit from Gear Supply Co.: merchandise, $9,020; store supplies, $690; and office supplies, $277. Invoice dated May 24, terms n/10 EOM.
25
Purchased $3,300 of merchandise from Peyton Products, invoice dated May 23, terms 2/10, n/30.
26
Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,600 (cost is $8,620).
26
Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,272.
29
The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $6,700 cash from the business for personal use.
30
Received payment from Lee Services for the May 22 sale less the discount.
30
Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $4,550. Cashed the check and paid the employees.
31
Cash sales for the last half of the month are $66,500 (cost is $42,350).
31
Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings.
Following accounting adjustments are also available:
a.
Expired insurance, $546.
b.
Ending store supplies inventory, $2,646.
c.
Ending office supplies inventory, $507.
d.
Depreciation of store equipment, $564.
e.
Depreciation of office equipment, $322.
Assume that Colo Co. uses the perpetual inventory system. Following opening balances are available for
the month of May, 2011.
Balance
Cash
$
50,247
Accounts Receivable
4,800
Merchandise Inventory
221,780
Office Supplies
510
Store Supplies
2,467
Prepaid Insurance
3,508
Office Equipment
22,870
Accumulated DepreciationOffice Equipment
9,778
Store Equipment
39,120
Accumulated DepreciationStore Equipment
16,606
Accounts Payable
6,100
Jenny Colo, Capital
312,818
Required:
1.1
Enter these transactions in a sales journal.(Record the transactions in the given order. Omit the “$” sign in your response.)
SALES JOURNAL
Date
Account Debited
Invoice Number
Accounts Receivable Dr.
Sales Cr.
Cost of Goods Sold Dr.
Inventory Cr.
Totals
1.2
Enter these transactions in a purchases journal.(Record the transactions in the given order. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
PURCHASES JOURNAL
Date
Account Debited
Date of Invoice
Terms
Accounts
Payable
Cr.
Merchandise Inventory Dr.
Office
Supplies
Dr.
Other
Accounts
Dr.
Totals
1.3
Enter these transactions in a cash receipts journal.(Record the transactions in the given order. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
CASH RECEIPTS JOURNAL
Date
Account Credited
Cash
Dr.
Sales
Discount
Dr.
Accounts
Receivable
Cr.
Sales
Cr.
Other
Accts.
Cr.
Cost of Goods
Sold Dr.
Inventory Cr.
Totals
1.4
Enter these transactions in a cash disbursements journal.(Record the transactions in the given order. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
CASH DISBURSEMENTS JOURNAL
Date
Ck. No.
Payee
Account Debited
Cash
Cr.
Merchandise Inventory Cr.
Other
Accounts
Dr.
Accounts
Payable
Dr.
Totals
1.5
Prepare the general journal.(Omit the “$” sign in your response.)
Date
General Journal
Debit
Credit
May 2
3
12
2.1
Prepare the adjusting entries.(Omit the “$” sign in your response.)
Date
General Journal
Debit
Credit
a.
b.
c.
d.
e.
2.2
Prepare the closing entries.(Omit the “$” sign in your response.)
Date
General Journal
Debit
Credit
May 31
May 31
May 31
May 31
2.3
Prepare a trial balance in the Trial Balance columns of the work sheet form provided below using the information for accounting adjustments for the month ended May 31, 2011.(Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
COLO COMPANY
Work Sheet for Month Ended May 31, 2011
Unadjusted Trial Balance
Adjustments
Income Statement
Balance Sheet or Statement of Owners Equity
Account
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash
Accounts receivable
Merchandise inventory
Office supplies
Store supplies
Prepaid insurance
Office equipment
Accum. depr.Office equipment
Store equipment
Accumulated depr.Store equip
Accounts payable
Jenny Colo, Capital