David’s Entertainment is a merchandising business. Their account balances as of November 30,2012

David’s Entertainment is a merchandising business. Their account balances as of November 30,2012(unless otherwise indicated), are as follows:

110 Cash
$ 73,920

112 Accounts Receivable
34,250

113 Allowance for Doubtful Accounts 11,000

115 Merchandise Inventory
123,900

116 Prepaid Insurance
3,750

117
Store Supplies
2,850

123 Store Equipment
100,800

124 Accumulated Depreciation-Store Equipment 20,160

210 Accounts Payable
21,450

211 Salaries Payable
0

218 Interest Payable
0

220 Note Payable (Due 2017)
15,000

310 D. Williams, Capital (January 1,
2012) 73,260

311 D. Williams, Drawing
50,000

312 Income Summary
0

410 Sales
853,445

411 Sales Returns and Allowances 20,020

412 Sales Discounts 13,200

510 Cost of Merchandise Sold
414,575

520 Sales Salaries Expense
74,400

521 Advertising Expense
18,000

522 Depreciation Expense
0

523 Store Supplies Expense 0

529 Miscellaneous Selling Expense 2,800

530 Office Salaries Expense
40,500

531 Rent Expense 18,600

532 Insurance Expense
0

533 Bad Debt Expense
0

539 Miscellaneous Administrative Expense 1,650

550 Interest Expense
1,100

David’s Entertainment uses the perpetual inventory system
and the First-in, First-out costing method.
Transportation-in and purchase discounts should be added to the
Inventory Control Sheet, but since this will complicate the computation of the
First-in, First-out costing method, please ignore this step in the
process. They also use the Allowance
Method for bad debt.

The Accounts Receivable and Accounts Payable Subsidiary
Ledgers along with the Inventory Control Sheet should be updated as each
transaction affects them (daily).

David’s Entertainment
sells four types of television entertainment units.

The sale prices of each are:

TV A: $3,500

TV B: $5,250

TV C: $6,125

PS D: $9,000

During December, the last month of the accounting year, the
following transactions were completed:

Dec. 1. Issued check number 2632 for the December
rent, $2,600.

Purchased three TV C units on account from Prince Co., terms
2/10, n/30, FOB shipping point, $11,100.

Issued check number 2633 to pay the transportation changes
on purchase of December 3, $400.
(NOTE: Do not include shipping
and purchase discounts to the Inventory Control sheet for this project.)

Sold four TV A and four TV B on account to Albert Co.,
invoice 891, terms 2/10, n/30, FOB shipping point.

Sold two projector systems for cash.

Purchased store supplies on account from Matt Co., terms
n/30, $580.

Issued check to Prince Co. number 2634 for the full amount
due, less discount allowed.

Issued credit memo for one TV A unit returned on sale of
December 6.

Issued check number 2635 for advertising expense for last
half of December, $1,500.

Received cash from Albert Co. for the full amount due (less
return of December 14 and discount).

19. Issued check
number 2636 to buy two TV C units, $7,600.

19. Issued check
number 2637 for $6,100 to Joseph Co. on account.

Sold five TV C units on account to Cameron Co., invoice
number

892, terms
1/10, n/30, FOB shipping point.

For the convenience of the customer, issued check number
2638 for shipping charges on sale of December 20, $700.

Received $12,250 cash from McKenzie Co. on account, no
discount.

Purchased three projector systems on account from Elisha
Co., terms 1/10, n/30, FOB destination, $15,600.

24. Received
notification that Marie Co. has been granted bankruptcy with no

amount of recovery.
We are to write-off her amount due.
(Note: See page

402 for entry required.)

Issued a debit memo for return of $5,200 because of a
damaged projection

system
purchased on December 21, receiving credit from the seller.

26. Issued check
number 2639 for refund of cash on sales made for cash, $600. (Customer was going to return goods until an
allowance was arranged.)

27. Issued check number 2640 for sales salaries of $1,750
and office

salaries of
$950.

28. Purchased store
equipment on account from Matt Co., terms n/30, FOB

destination,
$1,200.

29. Issued check
number 2641 for store supplies, $470.

30. Sold four TV C
units on account to Randall Co., invoice number 893,

terms 2/10, n/30, FOB
shipping point.

30. Received cash
from sale of December 20, less discount, plus transportation

paid on
December 20. (Round calculations to the
nearest dollar.)

30. Issued check
number 2642 for purchase of December 21, less return

of December 25 and
discount.

30. Issued a debit
memo for $300 of the purchase returned from

December 28.

Instructions:

Enter the balances of each of the accounts in the
appropriate balance column of a four-column account (General Ledger). Write Balance in the item section, and place
a check mark (x) in the Post Reference column.

Journalize the transactions in a sales journal, purchases
journal, cash receipts journal, cash payments journal, or general journal as
illustrated in chapter 7. Also post to
the Accounts Receivable and Accounts Payable Subsidiary ledgers and Inventory
Control Sheet as needed.

Total each column on the special journals and prove the
journal.

Post the totals of the account named columns and
individually post the “other” columns as well to the General Ledger.

Prepare the Schedule of Accounts Receivable and the Schedule
of Accounts Payable (their total amount must equal the amount in their
controlling general ledger account).

Prepare the
unadjusted trial balance on the worksheet.

Complete the worksheet for the year ended December 31, 2012,
using the following adjustment data:

a. Merchandise inventory
on December 31
$90,800

b. Insurance
expired during the year
1,250

c. Store supplies
on hand on December 31 975

d. Depreciation for
the current year needs to be calculated.
The business uses

the
Straight-line method, the store equipment has a useful life of 10 years

with
no salvage value. (NOTE: the purchase
and return will not be included

as
the dates of the transactions were after the 15th of the month).

e. Accrued salaries
on December 31:

Sales salaries $1,400

Office salaries
760 2,160

f. The note payable
terms are at 8%, payment is not being made until Jan. 3, 2013. Interest must be recognized for one month.

g. Net realizable
value of Accounts Receivable is determined to be $27,950.

8. Prepare a
multiple-step income statement, a statement of owner’s equity, and a

classified balance sheet in good form. (Recommend review of
“Current Liabilities” on pages 166 & 167 and “Current Maturities of
Long-term Debt” on page 480.)

9. Journalize and
post the adjusting entries.

Journalize and post the closing entries. Indicate closed accounts by inserting a line

in both balance columns opposite the closing entry.

Prepare a post-closing trial balance.