I need to post the entries to T- accounts, and prepare an income statement, a st
ID: 2714999 • Letter: I
Question
I need to post the entries to T- accounts, and prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flow for 2017
The following trial balance was prepared for Tile, Etc., Inc., on December 31, 2016, after the closing entries were posted:
account title debit credit
cash $125,000
account receivable 128,000
allowance for doubful accounts $19,500
inventory 431,000
account payable 98,000
common stock 465,000
retained earning 101,500
totals $684,000 $684,000
Tile, Et. had the following transactions in 2017:
1. Purchased merchandise on account for $595,000
2. Sold merchandise that cost $435,000 for $920,000 on account
3. Sold for $260,000 cash merchandise that had cost $166,000
4. Sold merchandise for $205,000 to credit card customers. The merchandise had cost $102,000. The credit card company charges a 3 percent fee.
5. Collected $650,000 cash from accounts receivalbe
6. Paid $625,000 cash on accounts payable
7. Paid $148,000 cash for selling and administrative expenses
8. Collected cash for the full amount due from the credit card company (see item 4)
9. Loaned $75,000 to J. Parks. The note had an 6 percent interest rate and a one year term to maturity
10. Wrote off $7,800 of accounts as uncollectible
11. Made the following adjusting entries:
a. Recorded uncollectible accounts expense estimated at 1 percent of sales on account
b. recorded seven months of accrued interest on the note at December 31, 2017 (see item 9)
Required:
a. Prepare general journal entries for these transactions, post the entries to T- accounts, and prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flow for 2017
Explanation / Answer
JOURNAL ENTRIES
PARTICULARS DEBIT($) CREDIT($) 1.PURCHASE A/C DR 5,95,000 TO ACCOUNTS PAYABLE A/C 5,95,000 (BEING GOODS PURCHASED ON CREDIT) 2.ACCOUNTS RECEIVABLE A/C DR 9,20,000 TO SALES A/C 9,20,000 (BEING GOODS SOLD ON CREDIT) 3.CASH A/C DR 2,60,000 TO SALES A/C 2,60,000 (BEING GOODS SOLD) 4.CREDIT CARD COMPANY A/C DR 1,98,850 CREDIT CARD FEE A/C DR 6,150 TO SALES A/C 2,05,000 (BEING GOODS SOLD) 5.CASH A/C DR 6,50,000 TO ACCOUNTS RECEIVABLE A/C 6,50,000 (BEING CASH RECEIVED ON ACCOUNTS RECEIVABLE) 6.ACCOUNTS PAYABLE A/C DR 6,25,000 TO CASH A/C 6,25,000 (BEING CASH PAID ON ACCOUNTS PAYABLE) 7.SELLING AND ADMINISTRATIVE EXPENSE A/C DR 1,48,000 TO CASH A/C 1,48,000 (BEING CASH PAID FOR SELLING AND ADMINISTRATIVE EXPENSE) 8.CASH A/C DR 1,98,850 TO CREDIT CARD COMPANY A/C 1,98,850 (BEING AMOUNT DUE COLLECTED FROM CREDIT CARD COMPANY) 9.LOAN TO J.PARKS A/C DR 75,000 TO CASH A/C 75,000 (BEING LOAN GIVEN TO J.PARKS) 10.BADDEBT A/C DR 7,800 TO ACCOUNTS RECEIVABLE A/C 7,800 (BEING AMOUNT WRITTENOFF AS BADDEBT) 11.(a)BADDEBT A/C DR 13,850 TO ACCOUNTS RECEIVABLE A/C 13,850 (BEING UNCOLLECTIBLE ACCOUNTS EXPENSE ESTMATED AT 1% OF SALES) (b)LOAN TO J.PARKS A/C DR 2,625 TO ACCRUED INTEREST A/C 2,625 (BEING ACCRUED INTEREST RECORDED)