Question

Comprehensive Accounting Cycle Review 6 On December 1, 2017, Blue Spruce Corp. had the account balances shown below. Debits Credits Cash $4,810 Accumulated Depreciation—Equipment $1,550 Accounts Receivable 3,740 Accounts Payable 3,150 Inventory (3,300 x $0.60) 1,980 Common Stock 9,900 Equipment 22,700 Retained Earnings 18,630 $33,230 $33,230 The following transactions occurred during December. Dec. 3 Purchased 4,300 units of inventory on account at a cost of $0.70 per unit. 5 Sold 4,700 units of inventory on account for $0.80 per unit. (It sold 3,300 of the $0.60 units and 1,400 of the $0.70.) 7 Granted the December 5 customer $80 credit for 100 units of inventory returned costing $50. These units were returned to inventory. 17 Purchased 2,300 units of inventory for cash at $0.90 each. 22 Sold 2,000 units of inventory on account for $0.99 per unit. (It sold 2,000 of the $0.70 units.) Adjustment data: 1. Accrued salaries and wages payable $450. 2. Depreciation on equipment $190 per month. 3. Income tax expense was $220, to be paid next year.

Journalize the December transactions and adjusting entries, assuming Blue Spruce Corp. uses the perpetual inventory method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Date	Account Title	Debit	Credit
December
3	Inventory	$           3,010
	Accounts payable		$          3,010
	(being inventory purchased)
5	Accounts Receivable	$           3,760
	Sales Revenue		$          3,760
	(being inventory sold)
5	Cost of Goods Sold	$           2,960
	Inventory		$          2,960
	(being cost of goods sold recognized)
7	Sales return and Allowances	$                 80
	Accounts Receivable		$                80
	(being goods returned from customer)
7	Inventory	$                 50
	Cost of Goods Sold		$                50
	(being cost of goods sold reversed)
17	Inventory	$           2,070
	Cash		$          2,070
	(being inventory purchased)
22	Accounts Receivable	$           1,980
	Sales Revenue		$          1,980
	(being inventory sold)
22	Cost of Goods Sold	$           1,400
	Inventory		$          1,400
	(being cost of goods sold recognized)
	Adjusting Entries
31	Salaries and Wages Expense	$               450
	Salaries and Wages Payable		$             450
	(being accrued salaries and wages accounted)
31	Depreciation Expense	$               190
	Accumulated Depreciation-Equipment		$             190
	(being depreciation expense accounted)
	**Assumed that pending for december only
31	Income tax expense	$               220
	Income tax payable		$             220
	(being income tax expense accounted)

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