Question

This is the only information that it gives me.

During the second half of December 20-1, TJ’s Specialty Shop engaged in the following transactions:

Dec.	16	Received payment from Lucy Greene on account, $1,960.
	16	Sold merchandise on account to Kim Fields, $160, plus sales tax of $8. Sale No. 640.
	17	Returned merchandise to Evans Essentials for credit, $150.
	18	Issued Check No. 813 to Evans Essentials in payment of December 1 balance of $1,250, less the credit received on December 17.
	19	Sold merchandise on account to Lucy Greene, $620, plus tax of $31. Sale No. 641.
	22	Received payment from John Dempsey on account, $1,560.
	23	Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies)
	24	Purchased merchandise on account from West Wholesalers, $1,200. Invoice No. 465, dated December 24, terms n/30.
	26	Purchased merchandise on account from Nathen Co., $800. Invoice No. 817, dated December 26, terms 2/10, n/30.
	27	Issued Check No. 815 to KC Power & Light (Utilities Expense) for the month of December, $630.
	27	Sold merchandise on account to John Dempsey, $2,020, plus tax of $101. Sale No. 642.
	29	Received payment from Martha Boyle on account, $2,473.
	29	Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, $1,100.
	30	Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, $200.

As of December 16, TJ’s account balances were as follows:

TJ’s also had the following subsidiary ledger balances as of December 16:

Accounts Receivable Ledger			Accounts Payable Ledger
Customer	Balance		Vendor	Balance
Martha Boyle			Evans Essentials
12 Jude Lane			34 Harry Ave
Hartford, CT 06117	$3,796		East Hartford, CT 05234	$3,600
Anne Clark			Nathen Co.
52 Juniper Road			1009 Drake Rd.
Hartford, CT 06118	2,100		Farmington, CT 06082	—
John Dempsey			Owen Enterprises
700 Hobbes Dr.			43 Lucky Lane
Avon, CT 06108	1,560		Bristol, CT 06007	—
Kim Fields			West Wholesalers
5200 Hamilton Ave.			888 Anders Street
Hartford, CT 06117	—		Newington, CT 06789	—
Lucy Greene
236 Bally Lane
Simsbury, CT 06123	2,800

At the end of the year, the following adjustments (a)–(j) need to be made:

a., b.	Merchandise inventory as of December 31, $19,700.
c., d., e.	Jones estimates that customers will be granted $400 in refunds of this year’s sales next year, and the merchandise expected to be returned will have a cost of $300.
f.	Unused supplies on hand, $525.
g.	Unexpired insurance on December 31, $1,000.
h.	Depreciation expense on the building for the year, $800.
i.	Depreciation expense on the store equipment for the year, $450.
j.	Wages earned but not paid as of December 31, $330.

Required

For those not using working papers:

• 1.

  If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the December 16 balance of each of the accounts, with a check mark in the Posting Reference column.

For working paper users and nonusers:

• 2.

  Enter transactions for the second half of December in the general journal. Post immediately to the accounts receivable and accounts payable ledgers.

• 3.

  Post from the journal to the general ledger.

• 4.

  Prepare schedules of accounts receivable and accounts payable.

• 5.

  Prepare a year-end spreadsheet, an income statement, a statement of owner’s equity, and a balance sheet. The mortgage payable includes $600 that is due within one year.

• 6.

  Journalize and post adjusting entries.

• 7.

  Journalize and post closing entries. (Hint: Close all expense and revenue account balances. Then, close Income Summary and Tom Jones, Drawing to Tom Jones, Capital.)

• 8.

  Prepare a post-closing trial balance.

• 9.

  Journalize and post reversing entries for the adjustments where appropriate, as of January 1, 20-2.

Answer 1

INCOME STATEMENT	$	$
SALES		127,700
SR		(1,430)
		126,270
OP INV	21,800
PURCHAS	66,400
P/R	(610)
FREIGHT	175
CLO INV	(78,700)	(9,065)
GROSS PROFIT		117,205
DIS		698
		117,903
EXPENSES
WAGES	27,530
ADVT	4,700
INSU	380
TELE	2,180
UTI	7,530
MISC	2,700
INT	1,350
SUPPLIES	630
DEP	1,250	(48,250)
NET PROFIT		69,653

BALANCE SHEET
FIXED ASSETS
LAND	8,700
BLDG	42,000
EQUIP	19,000	69,700
CURRENT ASSETS
CLOING INV	78,700
SUPPLIES	525
AR	7,203
PREPAID	1,000
CASH	12,548
TOTAL		99,976
		169,676
C/ LIAB
AP	4,150
WAGES PAY	330
SALES TAX	1,518	(5,998)
LTL MORTGAGE		(12,525)
CAPITAL		(90,000)
DRAWINGS		8,500
PROFIT		(69,653)
		169,676

	$	$
CASH	12,548
ACC REC	7,203
OP INV	21,800
PREPAID INSU	1,000
SUPPLIES	1,155
LAND	8,700
BLDG	52,000
ACC DEP BLDG		10,000
EQUIP	28,750
ACC DEP EQ		9,750
ACC PAY		4,150
DEP BLG	800
DEP EQUIP	450
WAGES PAYABLE		330
SALES TAX PAYABLE		1,518
WAGES	27,530
MORTGAGE		12,525
CAPITAL		90,000
DRAWINGS	8,500
SALES		127,700
SRTN	1,430
PURCH	66,400
PUR RTN		610
PUR DIS		698
FREIGHT IN	175
ADVT	4,700
TELE	2,180
UTI	7,530
MIS	2,700
INTER	1,350
	257,281	257,281