Smallville Company was organized on January 1, 2020. It is authorized to issue 104000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts. Cash-$57000, Merchandise Inventory- $75600, Prepaid Insurance-$5100, 10% Notes Payable-$25000, Equipment-$135000, Accumulated Depreciation: Equipment-$3900, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$22000, and Retained Earnings-$97800. The following transactions took place in Smallville Company during April of the current year (2020). April 1 - Issued 2600 new shares of common stock for $339000 April 3 - Purchased merchandise of $8000 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $280. April 4 - Sold merchandise for cash, $81500. The cost of the merchandise sold was $50000. April 5 - Purchased merchandise on account from Stafford Co., $23000, terms FOB shipping point, 2/10, n/30. The appropriate paid the freight charge of $680. April 6 - Returned $580 of merchandise purchased on April 3 from Prescott Co. April 13 - Paid Prescott Co. on account for the purchase of April 3. April 15 - Paid Stafford Co. on account for the purchase of April 5. April 17 - Purchased merchandise for cash $1600. April 20 - Received refund for poor quality merchandise from a supplier on cash purchase $150. 1. Post the April journal entries to the ledger with explanation. (Remember, the ledger accounts should start with the beginning balances (if any) Additional Information on Smallville Company: A review of the ledger of Smallville Company on April 30, 2020, produces the following data pertaining to the preparation of monthly adjusting entries. (a) Notes Payable $25000. This balance consists of a note for 6 months at an annual interest rate of 15%, dated January 1, 2020. (b) There are five workers in Smallville Company who are paid wages weekly. The five workers are paid $860 each for a 5-day work week (Monday to Friday). April 30 is a Tuesday and workers are paid on Fridays. (c) Annual depreciation is $12600 on equipment. (d) Physical check reveals inventory actually on hand on April 30, 2020 is $55041.6. 2. Journalize the adjusting entries on April 30, 2020. 3. Prepare an adjusted trial balance.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Smallville Company was organized on January 1, 2020. It is authorized to issue 104000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts.


Cash-$57000, Merchandise Inventory- $75600, Prepaid Insurance-$5100, 10% Notes Payable-$25000, Equipment-$135000, Accumulated Depreciation: Equipment-$3900, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$22000, and Retained Earnings-$97800.


The following transactions took place in Smallville Company during April of the current year (2020).

April 1 - Issued 2600 new shares of common stock for $339000

April 3 - Purchased merchandise of $8000 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $280.

April 4 - Sold merchandise for cash, $81500. The cost of the merchandise sold was $50000.

April 5 - Purchased merchandise on account from Stafford Co., $23000, terms FOB shipping point, 2/10, n/30. The appropriate paid the freight charge of $680.

April 6 - Returned $580 of merchandise purchased on April 3 from Prescott Co.

April 13 - Paid Prescott Co. on account for the purchase of April 3.

April 15 - Paid Stafford Co. on account for the purchase of April 5.

April 17 - Purchased merchandise for cash $1600.

April 20 - Received refund for poor quality merchandise from a supplier on cash purchase $150.


1. Post the April journal entries to the ledger with explanation. (Remember, the ledger accounts should start with the beginning balances (if any)


Additional Information on Smallville Company:

A review of the ledger of Smallville Company on April 30, 2020, produces the following data pertaining to the preparation of monthly adjusting entries.

(a) Notes Payable $25000. This balance consists of a note for 6 months at an annual interest rate of 15%, dated January 1, 2020.
(b) There are five workers in Smallville Company who are paid wages weekly. The five workers are paid $860 each for a 5-day work week (Monday to Friday). April 30 is a Tuesday and workers are paid on Fridays.
(c) Annual depreciation is $12600 on equipment.
(d) Physical check reveals inventory actually on hand on April 30, 2020 is $55041.6.


2. Journalize the adjusting entries on April 30, 2020.
3. Prepare an adjusted trial balance.
4. 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 the 20% tax bracket).

Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Earning per share and Dilutive securities
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education