COMPREHENSIVE ACCOUNTING CYCLE PROBLEM South Coast Boards Co. is a merchandising business. The account balances for South Coast Boards Co. as of July 1, 2010 (unless otherwise indicated), are as follows: 110 Cash $ 63,600 112 Accounts Receivable 153,900 115 Merchandise Inventory 602,400 116 Prepaid Insurance 16,800 117 Store Supplies 11,400 123 Store Equipment 469,500 124 Accumulated Depreciation—Store Equipment 56,700 210 Accounts Payable 96,600 211 Salaries Payable — 310 Rocky Hansen, Capital, August 1, 2009 555,300 311 Rocky Hansen, Drawing 135,000 312 Income Summary — 410 Sales 3,221,100 411 Sales Returns and Allowances 92,700 412 Sales Discounts 59,400 510 Cost of Merchandise Sold 1,623,000 520 Sales Salaries Expense 334,800 521 Advertising Expense 81,000 522 Depreciation Expense — 523 Store Supplies Expense — 529 Miscellaneous Selling Expense 12,600 530 Office Salaries Expense 182,100 531 Rent Expense 83,700 532 Insurance Expense — 539 Miscellaneous Administrative Expense 7,800 During July, the last month of the fiscal year, the following transactions were completed: July 1. Paid rent for July, $5,000. Purchased merchandise on account from Belmont Co., terms 2/10, n/30, FOB shipping point, $40,000. Paid freight on purchase of July 3, $600. Sold merchandise on account to Modesto Co., terms 2/10, n/30, FOB shipping point, $25,000. The cost of the merchandise sold was $15,000. Received $26,500 cash from Yuba Co. on account, no discount. Sold merchandise for cash, $80,000. The cost of the merchandise sold was $50,000. Paid for merchandise purchased on July 3, less discount. Received merchandise returned on sale of July 6, $6,000. The cost of the merchandise returned was $4,500. Paid advertising expense for last half of July, $7,500. Received cash from sale of July 6, less return of July 14 and discount. Purchased merchandise for cash, $36,000. Paid $18,000 to Bakke Co. on account, no discount. Sold merchandise on account to Reedley Co., terms 1/10, n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $25,000. For the convenience of the customer, paid freight on sale of July 20, $1,100. Received $17,600 cash from Owen Co. on account, no discount. Purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB destination, $20,000. Returned $2,000 of damaged merchandise purchased on July 21, receiving credit from the seller. Refunded cash on sales made for cash, $3,000. The cost of the merchandise returned was $1,800. Paid sales salaries of $22,800 and office salaries of $15,200. Purchased store supplies for cash, $2,400. Sold merchandise on account to Whitetail Co., terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250. Received cash from sale of July 20, less discount, plus freight paid on July 21. Paid for purchase of July 21, less return of July 24 and discount. 7.Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owner’s equity, and a balance sheet. 9. Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

COMPREHENSIVE ACCOUNTING CYCLE PROBLEM South Coast Boards Co. is a merchandising business. The account balances for South Coast Boards Co. as of July 1, 2010 (unless otherwise indicated), are as follows: 110 Cash $ 63,600 112 Accounts Receivable 153,900 115 Merchandise Inventory 602,400 116 Prepaid Insurance 16,800 117 Store Supplies 11,400 123 Store Equipment 469,500 124 Accumulated Depreciation—Store Equipment 56,700 210 Accounts Payable 96,600 211 Salaries Payable — 310 Rocky Hansen, Capital, August 1, 2009 555,300 311 Rocky Hansen, Drawing 135,000 312 Income Summary — 410 Sales 3,221,100 411 Sales Returns and Allowances 92,700 412 Sales Discounts 59,400 510 Cost of Merchandise Sold 1,623,000 520 Sales Salaries Expense 334,800 521 Advertising Expense 81,000 522 Depreciation Expense — 523 Store Supplies Expense — 529 Miscellaneous Selling Expense 12,600 530 Office Salaries Expense 182,100 531 Rent Expense 83,700 532 Insurance Expense — 539 Miscellaneous Administrative Expense 7,800 During July, the last month of the fiscal year, the following transactions were completed: July 1. Paid rent for July, $5,000. Purchased merchandise on account from Belmont Co., terms 2/10, n/30, FOB shipping point, $40,000. Paid freight on purchase of July 3, $600. Sold merchandise on account to Modesto Co., terms 2/10, n/30, FOB shipping point, $25,000. The cost of the merchandise sold was $15,000. Received $26,500 cash from Yuba Co. on account, no discount. Sold merchandise for cash, $80,000. The cost of the merchandise sold was $50,000. Paid for merchandise purchased on July 3, less discount. Received merchandise returned on sale of July 6, $6,000. The cost of the merchandise returned was $4,500. Paid advertising expense for last half of July, $7,500. Received cash from sale of July 6, less return of July 14 and discount. Purchased merchandise for cash, $36,000. Paid $18,000 to Bakke Co. on account, no discount. Sold merchandise on account to Reedley Co., terms 1/10, n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $25,000. For the convenience of the customer, paid freight on sale of July 20, $1,100. Received $17,600 cash from Owen Co. on account, no discount. Purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB destination, $20,000. Returned $2,000 of damaged merchandise purchased on July 21, receiving credit from the seller. Refunded cash on sales made for cash, $3,000. The cost of the merchandise returned was $1,800. Paid sales salaries of $22,800 and office salaries of $15,200. Purchased store supplies for cash, $2,400. Sold merchandise on account to Whitetail Co., terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250. Received cash from sale of July 20, less discount, plus freight paid on July 21. Paid for purchase of July 21, less return of July 24 and discount. 7.Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owner’s equity, and a balance sheet. 9. Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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COMPREHENSIVE ACCOUNTING CYCLE PROBLEM

South Coast Boards Co. is a merchandising business. The account balances for South Coast Boards Co. as of July 1, 2010 (unless otherwise indicated), are as follows:

110	Cash	$ 63,600
112	Accounts Receivable	153,900
115	Merchandise Inventory	602,400
116	Prepaid Insurance	16,800
117	Store Supplies	11,400
123	Store Equipment	469,500
124	Accumulated Depreciation—Store Equipment	56,700
210	Accounts Payable	96,600
211	Salaries Payable	—
310	Rocky Hansen, Capital, August 1, 2009	555,300
311	Rocky Hansen, Drawing	135,000
312	Income Summary	—
410	Sales	3,221,100
411	Sales Returns and Allowances	92,700
412	Sales Discounts	59,400
510	Cost of Merchandise Sold	1,623,000
520	Sales Salaries Expense	334,800
521	Advertising Expense	81,000
522	Depreciation Expense	—
523	Store Supplies Expense	—
529	Miscellaneous Selling Expense	12,600
530	Office Salaries Expense	182,100
531	Rent Expense	83,700
532	Insurance Expense	—
539	Miscellaneous Administrative Expense	7,800

During July, the last month of the fiscal year, the following transactions were completed: July 1. Paid rent for July, $5,000.

Purchased merchandise on account from Belmont Co., terms 2/10, n/30, FOB shipping point,

$40,000.

Paid freight on purchase of July 3, $600.
Sold merchandise on account to Modesto Co., terms 2/10, n/30, FOB shipping point,

$25,000. The cost of the merchandise sold was $15,000.

Received $26,500 cash from Yuba Co. on account, no discount.
Sold merchandise for cash, $80,000. The cost of the merchandise sold was $50,000.
Paid for merchandise purchased on July 3, less discount.
Received merchandise returned on sale of July 6, $6,000. The cost of the merchandise returned was $4,500.
Paid advertising expense for last half of July, $7,500.
Received cash from sale of July 6, less return of July 14 and discount.

Purchased merchandise for cash, $36,000.
Paid $18,000 to Bakke Co. on account, no discount.
Sold merchandise on account to Reedley Co., terms 1/10, n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $25,000.
For the convenience of the customer, paid freight on sale of July 20, $1,100.
Received $17,600 cash from Owen Co. on account, no discount.
Purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB destination, $20,000.
Returned $2,000 of damaged merchandise purchased on July 21, receiving credit from the seller.
Refunded cash on sales made for cash, $3,000. The cost of the merchandise returned was

$1,800.

Paid sales salaries of $22,800 and office salaries of $15,200.
Purchased store supplies for cash, $2,400.
Sold merchandise on account to Whitetail Co., terms 2/10, n/30, FOB shipping point,

$18,750. The cost of the merchandise sold was $11,250.

Received cash from sale of July 20, less discount, plus freight paid on July 21.
Paid for purchase of July 21, less return of July 24 and discount. 7.Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.

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