Accounting Project
Written by:Â 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                                                                        $ 74,770
112    Accounts Receivable                                                  5,580
113    Allowance for Doubtful Accounts                                200
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
220Â Â Â Â Note Payable (Due 2017)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 30,000
310Â Â Â Â Randiddle, Capital (January 1, 2012)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 45,690
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
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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:Â $199
1000 watt microwave:Â $299
1200 watt microwave:Â $499
During December, the last month of the accounting year, the following transactions were completed:
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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: 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.
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.
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.
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 $299 because of damage to one 1200 watt
microwave purchased on December 21, receiving credit from the seller.
27. Â 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.)
31. Â Issued check number 2643 for purchase of December 21, less return
of December 25 and discount. (Round discount to the nearest dollar.)
31. Â Issued a debit memo for $200 of the purchase returned from
December 28.
Instructions:
1.    Enter the balances of each of the accounts in the appropriate balance column of the General Ledger (B-S and I-S Ledger). Write Balance in the item section, and place a (x) in the Post Reference column.
2.    Journalize the transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal as illustrated in chapter 7. Also post to the Accounts Receivable and Accounts Payable Subsidiary ledgers and Inventory Control Sheet as needed.
3.    Total each column on the special journals and prove the journals.
4.    Post the totals of the account named columns and individually post the “Other Accounts†columns as well to the General Ledger.
5.    Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).
6.     Prepare the unadjusted trial balance on the worksheet.
7.    Complete the worksheet for the year ended December 31, 2012, using the following adjustment data:
a.   Merchandise inventory on December 31                               $1,090
b.   Insurance expired during the year                                            2,250
c.   Store supplies on hand on December 31                                   850
d.   Depreciation for the current year needs to be calculated. The business uses
the Straight-line method, the store equipment has a useful life of 10 years
with no salvage value. (NOTE: the purchase and return will not be included
as the dates of the transactions were after the 15th of the month).
e.   Accrued salaries on December 31:
Sales salaries                                        $1,075
Office salaries                                            540                $1,615
f.  The note payable terms are at 8%, payment is not being made until Jan. 3, 2013. Interest must be recognized for one month.
g. Calculate the Bad Debt adjustment amount; net realizable value of Accounts Receivable is determined to be $6,313.
8. Prepare a multiple-step income statement, a statement of owner’s equity, and a
classified balance sheet in good form. (Recommend review of “Current Liabilities†on page 149.)
9. Journalize and post the adjusting entries.
10.   Journalize and post the closing entries. Indicate closed accounts by inserting a zero
in both balance columns opposite the closing entry.
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