Walsh trading company started on 2018, its first year of
operations. Here are all the business transactions occurred:
Nov.30 Walsh Trading Company Issued common stock and raised
$42,000 cash from the owners to start the business .
Nov.30 A check was written to Pay office rent of Dec,
$1,000.
Nov.30 Purchased office furniture, filing cabinets from
Davidson office supply Company at a cost of $5,000. A cash down
payment of $2,000 was made by check and the balance to be paid in
three equal installments due Dec.31, Jan.31 and Feb. 29.
Nov.30 purchased a microcomputer system from A Computer Store,
for $2,500 by check.
Dec. 1 Purchased office supplies From Lim Supplies Company on
account, $1,600. Cash will be paid at the end of the month.
Dec. 2 Purchased merchandise to be sold from X Trading Company
on account, $6,500.Cash will be paid at the end of the month.
Dec. 2 Sold merchandise to Douglas Company with a price $1,000
on account, cash will be collected within 20 days. The cost of
merchandise sold was $600.
Dec. 3 Purchased merchandise on account from Floyd Co.,
$4,000, terms FOB shipping point, 2/10, n/30.
Dec. 4 Purchased merchandise on account from Kramer Co.,
$8,500, terms FOB destination, 1/10, n/30.
Dec. 4 Sold merchandise on account to C. F. Howell Co., list
price $4,000, trade discount 30%, terms 2/10, n/30. The cost of the
merchandise sold was $1,125.
Dec. 5 Purchased office supplies for cash, $150.
Dec. 6 Returned merchandise purchased on Dec.4 from Kramer
Co., $1,000.
Dec.12 Paid Floyd Co. on account for purchase of Dec.3, less
discount.
Dec.13 Paid Kramer Co. on account for purchase of Dec.4, less
return of Dec.6 and discount.
Dec.14 Received cash on account from sale of Dec.4 to C. F.
Howell Co., less discount.
Dec.16 Sold merchandise on account to American Express,
$2,450. The cost of the merchandise sold was $980.
Dec.17 Sold merchandise on account to Comer Co., $3,480, terms
2/10, n/30. The cost of the merchandise sold was $1,400.
Dec.18 Sold merchandise for cash, $4,350. The cost of the
merchandise sold was $1,750.
Dec.19 Received merchandise returned by Comer Co. from sale on
Dec.17, $1,480.The cost of the returned merchandise was $600.
Dec.21 Received cash from Douglas Company $1,000
Dec.22 Walsh Trading Company paid a dividend of $1,000 cash to
its owners.
Dec.25. Received cash from American Express sales of Dec.
16,
Dec.29 paid office rent for next year $1,200.
Dec.30 paid the following: utilities expense, $325;
miscellaneous expense, $75.
Dec.31 paid all that need to be paid as of this date.
Instructions:
1. Journalize each transaction in a two-column journal.
2. Post the journal to the ledger (T-account), extending the
month-end balances to the appropriate balance columns after each
posting.
3. Prepare a balance sheet for Nov.
4. Prepare a trial balance as of Dec.31
5. Prepare the necessary adjusting journal entries.
Use straight-line method for the depreciation of property (5
years); wages are paid in the beginning of every month ($900 for
Dec.) Supplies on hand on December 31 are $900.
6. Determine the balance of the accounts affected by the
adjusting entries and prepare the adjusted trial balance.
7. Prepare the appropriate closing entries for the company and
a post-closing trial balance. (Income tax rate 15%)
8.Prepare the balance sheet, the statement of owner’s equity
and the income statement of 2018 for the company.
9. Prepare the statement of cash flows of 2018 for the
company.