Problem -
McBride Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.
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GENERAL LEDGER
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Account Number
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Account Title
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January 1 Opening Balance
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101
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Cash
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$35,750
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|
112
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Accounts Receivable
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13,000
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|
115
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Notes Receivable
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39,000
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|
120
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Inventory
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18,000
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|
126
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Supplies
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1,000
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|
130
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Prepaid Insurance
|
2,000
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|
157
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Equipment
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6,450
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|
158
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Accumulated Depreciation-Equip.
|
1,500
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|
201
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Accounts Payable
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35,000
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|
301
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Owner's Capital
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78,700
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Schedule of Accounts Receivable
(from accounts receivable subsidiary ledger)
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Schedule of Accounts Payable
(from accounts payable subsidiary ledger)
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Customer
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January 1 Opening Balance
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Creditor
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January 1 Opening Balance
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R. Kotsay
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$1,500
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S. Otero
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9,000 $
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B. Boxberger
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7,500
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R. Rasmus
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15,000
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S. Andrus
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4,000
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D. Baroni
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11,000
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In addition, the following transactions have not been journalized for January 2017.
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3 Jan.
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Sell merchandise on account to B. Berg $3,600, invoice no. 510, and J. Lutz $1,800, invoice no. 511.
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5
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Purchase merchandise on account from S. Colt $5,000 and D. Kahn $2,700.
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7
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Receive checks for $4,000 from S. Andrus and $2,000 from B. Boxberger.
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8
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Pay freight on merchandise purchased $180.
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9
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Send checks to S. Otero for $9,000 and D. Baroni for $11,000.
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9
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Issue credit of $300 to J. Lutz for merchandise returned.
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10
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Cash sales from January 1 to January 10 total $15,500. Make one journal entry for these sales.
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11
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Sell merchandise on account to R. Kotsay for $2,900, invoice no. 512, and to S. Andrus $900, invoice no. 513.
Post all entries to the subsidiary ledgers.
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12
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Pay rent of $1,000 for January.
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13
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Receive payment in full from B. Berg and J. Lutz.
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15
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Withdraw $800 cash by I. McBride for personal use.
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16
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Purchase merchandise on account from D. Baroni for $12,000, from S. Otero for $13,900, and from S. Colt for $1,500.
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17
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Pay $400 cash for supplies.
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18
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Return $200 of merchandise to S. Otero and receive credit.
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20
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Cash sales from January 11 to January 20 total $17,500. Make one journal entry for these sales.
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21
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Issue $15,000 note to R. Rasmus in payment of balance due.
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21
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Receive payment in full from S. Andrus.
Post all entries to the subsidiary ledgers.
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22
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Sell merchandise on account to B. Berg for $3,700, invoice no. 514, and to R. Kotsay for $800, invoice no. 515.
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23
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Send checks to D. Baroni and S. Otero in full payment.
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25
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Sell merchandise on account to B. Boxberger for $3,500, invoice no. 516, and to J. Lutz for $6,100, invoice no. 517.
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27
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Purchase merchandise on account from D. Baroni for $12,500, from D. Kahn for $1,200, and from S. Colt for $2,800.
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28
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Pay $200 cash for office supplies.
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31
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Cash sales from January 21 to January 31 total $22,920. Make one journal entry for these sales.
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31
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Pay sales salaries of $4,300 and office salaries of $3,600.
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Instructions -
(a) Record the January transactions in the appropriate journal-sales, purchases, cash receipts, cash payments, and general.
(b) Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.
(c) Prepare a trial balance at January 31, 2017, using a worksheet. Complete the worksheet using the following additional information.
- 1. Supplies at January 31 total $700.
- 2. Insurance coverage expires on October 31, 2017.
- 3. Annual depreciation on the equipment is $1,500.
- 4. Interest of $30 has accrued on the note payable.
- 5. Inventory at January 31 is $15,000.
(d) Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.
(e) Prepare and post the adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.