Chapter 15, Problem 1.5COP

Comprehensive Problem 2:

Accounting Cycle with Subsidiary Ledgers, Part 1

During the second half of December 20-1, TJ’s Specialty Shop engaged in the following transactions:

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Dec. 16 Received payment from Lucy Greene on account, $1,960.

16 Sold merchandise on account to Kim Fields, $160, plus sales tax of $8. Sale No. 640.

17 Returned merchandise to Evans Essentials for credit, $150.

18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of $1,250, less the credit received on December 17.

19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31. Sale No. 641.

22 Received payment from John Dempsey on account, $1,560.

23 Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies)

24 Purchased merchandise on account from West Wholesalers, $1,200.

Invoice No. 465, dated December 24, terms n/30.

26 Purchased merchandise on account from Nathen Co., $800.

Invoice No. 817, dated December 26, terms 2/10, n/30.

27 Issued Check No. 815 to KC Power & Light (Utilities Expense) for the month of December, $630.

27 Sold merchandise on account to John Dempsey, $2,020, plus tax of $101. Sale No. 642.

29 Received payment from Martha Boyle on account, $2,473.

29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, $1,100.

30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, $200.

As of December 16, TJ’s account balances were as follows:

TJ’s also had the following subsidiary ledger balances as of December 16:

5. Prepare a year-end spreadsheet, an income statement, a statement of owner’s equity, and a balance sheet. The mortgage payable includes $600 that is due within one year.