a) Journalize the transactions for the month of April. (Assume that the company follows perpetual inventory system). (b) Post the April journal entries to the ledger. (Remember, the ledger accounts should start with the beginning balances (if any) (c) Prepare a trial balance on April 30, 2020.
Smallville Company was organized on January 1, 2020. It is authorized to issue 114000 shares of $120 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts.
Cash-$58000, Merchandise Inventory- $75500, Prepaid Insurance-$4900, 10% Notes Payable-$26000, Equipment-$138000,
The following transactions took place in Smallville Company during April of the current year (2020).
April 1 - Issued $2400 new shares of common stock for $335000
April 3 - Purchased merchandise of $7500 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $260.
April 4 - Sold merchandise for cash, $85700. The cost of the merchandise sold was $48000.
April 5 - Purchased merchandise on account from Stafford Co., $21000, terms FOB shipping point, 2/10, n/30. The appropriate paid the freight charge of $630.
April 6 - Returned $550 of merchandise purchased on April 3 from Prescott Co.
April 13 - Paid Prescott Co. on account for purchase of April 3.
April 15 - Paid Stafford Co. on account for purchase of April 5.
April 17 - Purchased merchandise for cash $1500.
April 20 - Received refund for poor quality merchandise from supplier on cash purchase $190.
(a) Journalize the transactions for the month of April. (Assume that the company follows perpetual inventory system).
(b) Post the April
(c) Prepare a
Additional Information on Smallville Company:
A review of the ledger of Smallville Company at April 30, 2020, produces the following data pertaining to the preparation of monthly
- Notes Payable $26000. This balance consists of a note for 6 months at an annual interest rate of 15%, dated January 1, 2020.
- There are five workers in Smallville Company who are paid wages weekly. The five workers are paid $840 each for a 5-day work week (Monday to Friday). April 30 is a Tuesday and workers are paid on Fridays.
- Annual depreciation is $12200 on equipment.
- Physical check reveals inventory actually on hand on April 30, 2020 is $54331.0.
(c) Journalize the adjusting entries at April 30, 2020.
(d) Prepare an adjusted trial balance.
(e) Using the balances from the adjusted trial balance, prepare a multi-step income statement and owner’s equity statement for the one month ended April 30. (Assume that the company falls under 40% tax bracket).
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