Question

Answer ALL the following questions. Show calculations for full credit:

Question # 1: (CLO 4)     

The following items were the account balances of Perth Company:
Accumulated depreciation £5,455 Unearned Revenues £   743
Accounts payable 1,244 Patent 680
Notes payable after 2020 168 Equipment 11,300
Shaer capital-ordinary 9,800 Land held for investment 464
Retained earnings 3,263 Short-term investments 3,490
Accounts receivable 1,496 Notes payable in 2020 681
Cash 2,868 Inventories 1,056

Instructions: Prepare a classified statement of financial position in good form as of December 31, 2019.


Question #2: (CLO 5)  

Sawyer Stores is a merchandising company that uses a perpetual inventory system. The following selected transactions occurred during April, 2018:

 April 1, purchased merchandise for $6,200 on account from Clark Company terms 2/15, n/30, FOB Destination. The appropriate party made a cash payment of $200 for freight on that date.
 April 6, returned $200 of the merchandise purchased on April 1 from Clark Company.
 April 10, sold merchandise for $7,500 (costing $5,000), on account to Nolan Company terms 2/10, n/30, FOB Destination. The appropriate party made a cash payment of $200 in freight charges on that date.
 April 12, Nolan Company returned defective merchandise for $500 (costing $300) from April 10 sale.
 April 14, paid the amount due to Clark Company for the purchases on account on April 1.
 April 23, received cash in full settlement of the account related to the sale of April 10 to Nolan Company.
 April 24, purchased merchandise from Ford Company for $1,600 Cash.
 April 26, returned $100 of the merchandise purchased on April 24 from Ford Company.

Instructions: Journalize the April transactions on the books of Sawyer Stores:

Question 3: (CLO 4 and 5)  

The adjusted trial balance of Miracle Company contained the following information:
Debit        Credit
Sales $1,420,000
Interest Revenue 100,000
Sales Returns and Allowances $40,000
Sales Discounts 14,000
Cost of Goods Sold 872,000
Freight-out 4,000
Advertising Expense 30,000
Interest Expense 36,000
Store Salaries Expense 110,000
Utilities Expense 56,000
Depreciation Expense 14,000
Dividends 50,000


Instructions:
1) Use the above information to prepare an income statement for the year ended December 31, 2019.
2) Prepare the closing entries for Miracle Company at December 31, 2019.

Answer 1

1)

Balance Sheet
Assets	Amount in £	Amount in £
Cash		2868
Account Receivables		1496
Inventories		1056
Short Term Investment		3490
Total Current asset		8910
Equipment	11300
Less: Accumulated depreciation	5455	5845
Land held for Investment		464
Patent		680
Total Assets		15899
Liabilities	Amount of £	Amount of £
Accounts Payables		1244
Notes Payables in 2020		681
Unearned Revenue		743
Total Current Liabilities		2668
Notes payables after 2020		168
Share capital		9800
Retained Earnings		3263
Total Equity		13063
Total Equity and Liabilities		15899

2)

Journal entries
Date	Particulars	Notes	Debit $	Credit $
01-Apr	Merchandise Inventory		6200
	Accounts Payables - Clark Company			6200
	( Being Inventory purchased on account from Clark company)
06-Apr	Accounts Payables - Clark Company		200
	Merchandise Inventory			200
	(Being Return of Purchases of Inventory to Clark company)
10-Apr	Accounts Receivables - Nolan Company		7500
	Sales			7500
	Freight Out
	(Being On account Sales Recorded)
	Cost of Goods Sold Freight Out		5000 200
	Merchandise Inventory			5000
	Cash			200
	( Being Cost of goods Sold recorded and freight expenses paid in cash)
12-Apr	Sales Return		500
	Accounts Receivables - Nolan Company			500
	(Being sales Return Recorded)
	Merchandise Inventory		300
	Cost of Goods Sold			300
14-Apr	Accounts Payables - Clark Company		6000
	Merchandise Inventory (6000*2% Discount)			120
	Cash			5880
	(Being cash paid and discount received)
23-Apr	Cash		4500
	Accounts Receivables - Nolan Company			4500
	(BeingCash received)
24-Apr	Merchandise Inventory		1600
	Cash			1600
	(Being Purchases of Inventory for cash from Ford company recorded)
26-Jan	Cash		100
	Merchandise Inventory			100
	(Being Return of Purchases of Inventory in cash to ford company)

3)

Income Statement
Particulars	Amount $	Amount $
Revenue
Sales	1420000
Less: Sales Return	40000
Less: Sales discount	14000
Net sales	1366000
Interest Revenue	100000	1466000
Expenses
Cost of Goods Sold.		872000
Freight out		4000
Advertising Expenses		30000
Interest Expenses		36000
Store and Salaries		110000
Utility Expenses		56000
Depreciation Expenses		14000
Net Income		344000

3)

Closing entries

Journal entries
Date	Particulars	Notes	Debit $	Credit $
a	Sales		1420000
	Interest Revenue		100000
	Income summary			1520000
	( Being balance of sales transferred to Income summary)
b	Income Summary		1176000
	Sales Returns and Allowance			40000
	Sale Discount			14000
	Cost of Good Sold			872000
	Freight Out			4000
	Advertising expenses			30000
	Interest Expenses			36000
	Store salaries expenses			110000
	Utilities expenses			56000
	Depreciation expense			14000
	( Being balance of Expenses account transferred to Income summary)
c	Income Summary		344000
	Retained Earning (1520000-1176000)			344000
	(Being income summary balance transferred to Retained earning)
d	Retained Earnings		50000
	Dividends			50000
	(Being Dividend of $ 50000 declared)