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The general ledger of Ziper storage Solution at December 22, 2017 is provided. Zips Storage uses a perpetual inventory system.
Trial balance:
| Debit | Credit | |
| Cash | 39,970 | |
| Accounts Receivvable | 27,900 | |
| Allowance for Uncollectible Account | 100 | |
| Supplies | 6000 | |
| Prepaid Insurance | 12,000 | |
| Inventory | 83,230 | |
| Equipment | 36,000 | |
| Accumlated Depreciation | 80,000 | |
| Accounts Payable | 6,700 | |
| Notes Payable | 10,000 | |
| Interest Payable | ||
| Common stock | 100,000 | |
| Retained Earning | 17,200 | |
| Dividends | 2,000 | |
| Sales | 1,009,300 | |
| Cost of goods Sold | 803,000 | |
| Salaries Expense | 100,000 | |
| Bad Debt Expense | ||
| Depreciation Expense, Equipment | ||
| Supplies Expense | ||
| Insurance Expense | ||
| Interest Expense | ||
| Operation Expense | 36,000 | |
| Income Tax Expense | 5,000 | |
| 1,151,200 | 1,151,200 | |
| Net Income (Loss) |
The follwing are the balance of the transaction for the month of Decenber:
December 22 Purcased inventory for $14,100 on account, terms 2/10, N/30.
December 24 Returned $600 of inventory purchased 12/22 due to a problem with the order.
December 27 Paid for the inventory purchased on 12/22.
December 28 Sold 600 storage bins at a price of $6 each with a cost of $5 per bin.
December 30 Wrote-off an account for a customer who declared bankruptcy, $1,100.
Required:
1. Record each of the summary transaction listed above.
2. Post the transactions to the accounts.
3. Complete the worksheet. Insurance expired during the year is $5,000. Supplies remaining on hand at the end of the year equal $2,000. Depreciation on the equipment of $2,000. Zips Storage Solution estimates the percentage of uncollectible account to be 30% of the receivables. The note payable is 6%, 2-year note dated 6/1/2016.
4. Journalize the necessary adjucting entries.
5. Post the adjusting entries.
6. Complete the income statement, statement of stockholder’s equity and classified balance sheet as of December 32, 2018.
7. Record the closing entries.
8. Post the closing entries.
9. Complete a post-closing trial balance.
Expert Answer
Solution:
1) Recording of summary transaction
| Date | General Journal | Debit | Credit |
| Dec.22 | Inventory | $14,100 | |
| Accounts Payable | $14,100 | ||
| Dec.24 | Accounts Payable | $600 | |
| Inventory | $600 | ||
| Dec.27 | Accounts Payable | $13,500 | |
| Cash | $13,230 | ||
| Cash Discount Received
((14,100 – 600)*2%) |
$270 | ||
| Dec.28 | Accounts Receivable | $3,600 | |
| Sales Revenue (600*6) | $3,600 | ||
| Dec.28 | Cost of Goods Sold (600*5) | $3,000 | |
| Inventory | $3,000 | ||
| Dec.30 | Allowance for Uncollectible Account | $1,100 | |
| Accounts Receivable | $1,100 |
2) Posting of transaction
| T-Account | |||
| Allowance for Uncollectible Account | |||
| Debit | Credit | ||
| Account Receivable | $1,100 | 100 | Beg Balance |
| Inventory | |||
| Debit | Credit | ||
| Balance on Dec.22 | 83230 | 600 | Dec.24 Return |
| Dec.22 Purchase | 14100 | 3000 | Cost of Goods Sold |
| Accounts Payable | |||
| Debit | Credit | ||
| Dec.24 Return | 600 | 6700 | Beginning Bal |
| Dec.27 Payment | 13500 | 14100 | Dec.22 Purchase |
| 270 | Cash Discount | ||
| Accounts Receivable | |||
| Debit | Credit | ||
| Beg. Bal | 27900 | 1100 | Allowance for Uncollectible Account |
| Dec.28 Sales Revenue | 3600 | ||
| Cost of Goods Sold | |||
| Debit | Credit | ||
| Beg Balance | 803000 | ||
| Inventory | 3000 | ||
| Cash | |||
| Debit | Credit | ||
| Beg. Balance | 39970 | 13230 | Dec.27 Accounts Payable |
