Question

In 2018, Skip Slider launched a curling supplies company called “Curling Rocks,” which buys and sells a variety of curling supplies.  

With the recent Olympic Gold Medal win by the men’s team, Skip Slider has reached out to you and asked if you could analyze the entries for the month of May and prepare the company’s first set of financial statements as of May 31, 2018. Here are some company details:

1. The company is set up as a sole proprietorship
2. May 31 is the company’s fiscal year end
3. Terms for all credit sales are 2/10, n/30 unless stated differently
4. The company uses a perpetual inventory system

Needed items include:

1) General Journal Entries - transactions for May, Adjusting Journal Entries, and Closing Entries

2) General Ledger - complete with everything posted out to the individual accounts

3) Worksheet - complete and tied out

May 1 - Issued Check No. 5200 to L&J Management Co. in payment of the May rent, $5,000. (Use two lines to record the transaction. Charge 80% of the rent to Rent Expense – Selling Space and the balance to Rent Expense – Office Space.)

May 2 – Sold merchandise on credit to Yellow Rock Company, Invoice No. 9501, for $4,500 (cost is $ 2,000)

May 3 - Issued a $150 credit memorandum to Yellow Rock Company for defective (worthless) merchandise sold on May 2 and returned for credit.

May 4 – Purchased the following on credit from Jerry’s Curling Supply Co. Invoice dated May 4, terms n/10 EOM.

Merchandise $27,027.00

Store supplies $754

Office supplies $38

Total $27,819.00

May 8 – Issued Check No. 5201 to Jerry’s Curling Supply Company for merchandise purchased on May 4^th.

May 9 – Sold store supplies to the merchant next door at their cost of $220 cash. (Hint – what are we selling to the next door neighbor, it is not Merchandise Inventory and does not have a cost associated with it) May 10 – Purchased $2,047 of office equipment on credit from Jerry’s Curling Supply Co., invoice dated May 10, terms n/10 EOM.

May 11 – Purchased $6,200 of merchandise from Red Rock, Inc., invoice dated May 10, terms 2/10, n/30.

May 12 – Received a $97 credit memorandum from Jerry’s Curling Supply for the return of defective office equipment received on May 10. May 15 – Issued Check No. 5202, payable to Payroll, in payment of sales salaries, $3,230, and office salaries, $1,510. Cashed the check and paid the employees.

May 15 – Cash sales for the first half of the month are $31,280 (cost is $13,200). (Cash sales are recorded daily but are recorded in a lump sum format through two entries May 15 and May 31)

May 16 – Sold merchandise on credit to House Curling Company, Invoice No. 9502, for $3,990 (cost is $1,890)

May 17 – Purchased $23,650 of merchandise from Olympics Gold, invoice dated May 17, terms 2/10, n/60.

May 19 – Issued Check No. 5203 to Red Rock, Inc. in payment of its May 11 invoice less the discount.

May 22 – Sold merchandise to Sweep Services, Invoice No. 9503, for $8,650 (cost is $4,990), terms 2/10, n/60.

May 23 – Issued Check No. 5204 to Olympics Gold in payment of its May 17 invoice less the discount.

May 24 – Purchased the following on credit from Jerry’s Curling Supply Company Invoice dated May 24, terms n/10 EOM.

May 25 – Purchased $3,080 of merchandise from Burned Stone Curling, invoice dated May 25, terms 2/10, n/30.

May 26 – Sold merchandise on credit to Draw Weight, Invoice No. 9504, for $21,315 (cost is $12,230).

May 26 – Issued Check No. 5205 to Pebble Power in payment of the May electric bill, $983.

May 29 – The owner of Curling Rocks, Skip Slider, used Check No. 5206 to withdraw $4,800 cash from the business for personal use.

May 30 – Received payment from Sweep Services for the May 22 sale less the discount.

May 30 – Issued Check No. 5207, payable to Payroll, in payment of sales salaries, $3,230, and office salaries, $1,510. Cashed the check and paid the employees.

May 31 – Cash sales for the last half of the month are $46,025 (cost is $22,500)

Answer 1

In the books of Curling Rocks:

Date	General Journal	Debit	Credit
2018		$	$
May 1	Rent Expense: Selling Space	4,000
	Rent Expense: Office Space	1,000
	Cash		5,000
May 2	Accounts Receivable: Yellow Rock Company	4,500
	Sales		4,500
May 2	Cost of Goods Sold	2,000
	Inventory		2,000
May 3	Sales Returns and Allowances	150
	Accounts Receivable: Yellow Rock Company		150
May 3	Inventory	66.67
	Cost of Goods Sold		66.67
May 4	Inventory	27,027
	Store Supplies	754
	Office Supplies	38
	Accounts Payable: Jerry's Curling Supplies Co.		27,819
May 8	Accounts Payable: Jerry's Curling Supplies Co.	27,819
	Cash		27,819
May 9	Cash	220
	Store Supplies		220
May 10	Office Equipment	2,047
	Accounts Payable: Jerry's Curling Supplies Co.		2,047
May 11	Inventory	6,200
	Accounts Payable: Red Rock Inc.		6,200
May 12	Accounts Payable: Jerry's Curling Supplies Co.	97
	Office Equipment		97
May 15	Sales Salaries Expense	3,230
	Office Salaries Expense	1,510
	Cash		4,740
May 15	Cash	31,280
	Sales		31,280
	Cost of Goods Sold	13,200
	Inventory		13,200
May 16	Accounts Receivable: House Curling Co.	3,990
	Sales		3,990
May 16	Cost of Goods Sold	1,890
	Inventory		1,890
May 17	Inventory	23,650
	Accounts Payable : Olympics Gold		23,650
May 19	Accounts Payable: Red Rock Inc.	6,200
	Inventory		124
	Cash		6,076
May 22	Accounts Receivable: Sweep Services	8,650
	Sales		8,650
May 22	Cost of Goods Sold	4,990
	Inventory		4,990
May 23	Accounts Payable: Olympics Gold	23,650
	Inventory		473
	Cash		23,177

Contd.

May 24		???
			???
May 25	Inventory	3,080
	Accounts Payable: Burned Stone Curling		3,080
May 26	Accounts Receivable: Draw Weight	21,315
	Sales		21,315
May 26	Cost of Goods Sold	12,230
	Inventory		12,230
May 26	Electricity Expense	983
	Cash		983
May 29	Skip Slider, Withdrawals	4,800
	Cash		4,800
May 30	Cash	8,477
	Sales Discount	173
	Accounts Receivable: Sweep Services		8,650
May 30	Sales Salaries Expense	3,230
	Office Salaries Expense	1,510
	Cash		4,740
May 31	Cash	46,025
	Sales		46,025
May 31	Cost of Goods Sold	22,500
	Inventory		22,500