Question

On December 1, 2017, Prosen Distributing Company had the following account balances.

		Debit				Credit
Cash		$7,500		Accumulated Depreciation—Equipment		$2,640
Accounts Receivable		4,600		Accounts Payable		4,900
Inventory		12,400		Salaries and Wages Payable		1,000
Supplies		1,400		Common Stock		30,000
Equipment		26,400		Retained Earnings		13,760
		$52,300				$52,300

During December, the company completed the following summary transactions.

Dec. 6		Paid $1,800 for salaries and wages due employees, of which $800 is for December and $1,000 is for November salaries and wages payable.
8		Received $1,900 cash from customers in payment of account (no discount allowed).
10		Sold merchandise for cash $6,800. The cost of the merchandise sold was $4,200.
13		Purchased merchandise on account from Maglio Co. $8,900, terms 2/10, n/30.
15		Purchased supplies for cash $1,800.
18		Sold merchandise on account $12,600, terms 3/10, n/30. The cost of the merchandise sold was $8,200.
20		Paid salaries and wages $1,500.
23		Paid Maglio Co. in full, less discount.
Adjustment data: 1. Accrued salaries and wages payable $700. 2. Depreciation $240 per month. 3. Supplies on hand $1,700. e-Prepare an income statement.		27 Received collections in full, less discounts, from customers billed on December 18.

Answer 1

	Prosen Distributing Company
Date	Particular	Amount (Dr)	Amount (Cr)
6-Dec	Salary & Wages Payable	$           1,000.00
	Salaries & Wages	$               800.00
	To Cash		$                                            1,800.00
	(Being amount paid for salaries & wages)
8-Dec	Cash	$           1,900.00
	To Accouns Receivable		$                                            1,900.00
	(Being amount of cash received from customers)
10-Dec	Cash	$           6,800.00
	To Sales		$                                            6,800.00
	(Being amount of Sales)
10-Dec	Cost of goods sold	$           4,200.00
	To Mercendise Inventory		$                                            4,200.00
	(Being amount of cost of goods sold)
13-Dec	Merchandise Inventory	$           8,900.00
	To Accounts Payable		$                                            8,900.00
	(Beingnamount of Merchandise Inventory purchased on terms 2/10,n/30)
15-Dec	Supplies	$           1,800.00
	To Cash		$                                            1,800.00
	(Being amount of Supplies purchased)
18-Dec	Accounts Receivable	$         12,600.00
	To Sales		$                                          12,600.00
	(Being amount of Sales on terms 3/10,n/30)
18-Dec	Cost of Goods Sold	$           8,200.00
	To Merchandise Inventory		$                                            8,200.00
	(Being amount of Cost of goods sold)
20-Dec	Salaries & Wages	$           1,500.00
	To Cash		$                                            1,500.00
	(Being amount of Salaries & Wages Paid)
23-Dec	Accounts Payable	$           8,900.00
	To Cash($8900*98%)		$                                            8,722.00
	To Merchandise Inventory($8900*2%)		$                                                178.00
	(Being amount paid to Magilo after discount)
27-Dec	Cash($12600*97%)	$         12,222.00
	Sales return & allowances($12600*3%)	$               378.00
	To Cash		$                                          12,600.00
	(Being amount paid to customer after discount of 3%)
	Adjusting Entries
31-Dec	Salaies & Wages	$               700.00
	To Salaries & Wages outstanding		$                                                700.00
	(Being amount of Salaries & Wages Payable)
		$               240.00
31-Dec	Depreciation		$                                                240.00
	To Accumulated Depreciation-Equipment
	(Being amount of Depreciation)
31-Dec	Supplies Expenses($1400+$1800-$1700)	$           1,500.00
	To Supplies		$                                            1,500.00
	(Being amount of Supplies Expenses)
	Income Statement
	Sales Revenue(Net)=($6800+$12600-378)	$         19,022.00
	Less: Cost of goods sold=($4200+$8200)	$         12,400.00
	Gross Profit	$           6,622.00
	Less:Operating Expenses
	Salaries & Wages($800+$700)	$           1,500.00
	Supplies Expenses	$           1,500.00
	Depreciation	$               240.00
	Net Income	$           3,382.00