Account Debit Credit Adjusting Journal Entries Date 12 31 12 Supplies Expense Supplies 12 31 12 Depreciation Expense Accumulated Depreciation 12 31 12 Insurance Expense Prepaid Insurance 12 31 12 Unearned Revenue Service Revenue 12 31 12 Salaries Expense Salaries Payable 12 31 12 Interest Expense Interest Payable 12 31 12 Accounts Receivable Service Revenue 250 125 150 600 375 50 250 125 150 600 375 50 2 000 2 000 Closing Journal Entries Date 12 31 12 12 31 12 Service Revenue Income Summary Income Summary Salaries Expense Rent Expense Advertising Expense Supplies Expense Insurance Expense Utilities Expense Telephone Expense Depreciation Expense Interest Expense 12 31 12 Income Summary Retained Earnings 12 31 12 Retained Earnings Dividends closing journal entries revenue expenses dividends NOT UNEARNED REVENUE Account Debit Credit 4 600 3 800 800 500 4 600 675 2 000 200 250 150 250 100 125 50 800 500 Prepare the journal entries for the following transactions occuring in March for Perfect Purses Inc 1 Mar Purchased 20 handbags at 50 each from Purse Distributors with terms 2 10 n 30 Accounts Inventory Debit 1 000 Credit Accounts Payable 1 000 20 50 1 000 1 Mar Paid 100 for freight of purses bought from Purse Distributors Accounts Inventory Cash Debit 100 Credit 100 5 Mar Returned 2 defective purses to Purse Distributors Accounts Accounts Payable Inventory Debit 100 Credit 100 2 50 100 7 Mar Sold 4 purses for 80 each for cash Purses had a cost of 50 each Accounts Cash Sales Debit 320 Credit 320 Accounts Cost of Goods Sold Inventory Debit 200 Credit 200 4 80 320 4 50 200 9 Mar Paid Purse Distributors balance due Accounts Accounts Payable Cash Inventory Debit 900 Credit 882 18 1 000 100 900 900 18 882 900 02 18 10 Mar Sold 8 purses to Fashions Etc for 80 each on account with terms 1 10 n 30 Purses had a cost of 50 each Accounts Accounts Receivable Sales To record the sale Debit 640 Credit 640 Accounts Cost of Goods Sold Inventory Debit 400 Credit 400 To record the costs related to the sale 8 80 640 8 50 400 11 Mar Granted Fashions Etc a 20 allowance due to purses not meeting customer expectations Accounts Sales Ret Allowances Debit 20 Credit Accounts Receivabl 20 14 Mar Received balance due from Fashions Etc Accounts Cash Sales Discounts Credit Debit 613 80 6 20 Accounts Reveivabl 620 00 620 6 20 613 80 620 01 6 20 640 20 620 Based on the above transactions determine the Gross Profit for the month of March for Perfect Purses Sales Less Sales Returns and Allowances Less Sales Discounts Net Sales Cost of Goods Sold Gross Profit 960 00 20 00 6 20 933 80 600 00 333 80 12 15 17 600 900 1 190 2 690 Cost of Goods Available for Sale Units 50 60 70 100 50 60 70 180 Units 50 50 100 Units 70 30 100 Sports Warehouse had the following information related to its inventory of footballs for the year 2012 Cost Price 12 15 17 Total Cost 600 900 1 190 Sales during the year 25 2 500 Determine Cost of Goods Available For Sale Date Beg Balance 2 15 purchase 9 1 purchase Beg Balance 2 15 purchase 9 1 purchase Date Beg Balance 2 15 purchase Determine Ending Inventory and Cost of Goods Sold assuming the FIFO method is used Cost Price 12 15 Total Cost 600 750 Cost of Goods Available for Sale Cost of Goods Sold 1 350 Cost of Goods Sold 2 690 1 350 1 340 Ending Inventory Determine Ending Inventory and Cost of Goods Sold assuming the LIFO method is used Date 9 1 purchase 2 15 purchase Cost Price 17 15 Total Cost 1 190 450 Cost of Goods Available for Sale Cost of Goods Sold 1 640 Cost of Goods Sold 2 690 1 640 1 050 Ending Inventory Determine Ending Inventory and Cost of Goods Sold assuming the Average Cost method is used 2 690 180 14 94 14 94 100 1 494 Cost of Goods Sold Cost of Goods Available for Sale Cost of Goods Sold 2 690 1 494 1 196 Ending Inventory Assuming the FIFO method is used what is the gross profit for the year Sales for the year Cost of Goods Sold 2 500 1 350 1 150 Gross Profit Tiger Tail Company s accountant prepared the following single step income statement for the year ended December 31 2012 The company owner reviewed it and requested that the accountant prepare the statement using the multipe step format so that the components of net income could be analyzed better Using the information from the single step income statement below prepare a multiple step income statement Tiger Tail Company Income Statement For the year ended December 31 2012 Revenues Net Sales Interest Revenue Gain on Sale of Equipment Total Revenues Expenses Cost of Goods Sold General and Administration Expenses Salaries Expense Selling Expenses Depreciation Expense Income Tax Expense Bad debt expense Interest Expense Freight Out Total Expenses Net Income 1 000 000 10 000 5 000 1 015 000 600 000 100 000 70 000 40 000 30 000 25 000 13 000 12 000 5 000 895 000 120 000 Tiger Tail Company Income Statement For the year ended December 31 2012 Net Sales Cost of Goods Sold Gross Profit Operating Expenses 1 000 000 600 000 400 000 General and Administration Expenses Salaries Expense Selling Expenses Depreciation Expense Bad debt expense Freight Out Income from Operations 100 000 70 000 40 000 30 000 13 000 5 000 142 000 Other Revenue and Gains Interest Revenue Gain on Sale of Equipment Other Expenses and Losses Interest Expense Income before income taxes Income Tax Expense Net Income 10 000 5 000 12 000 145 000 25 000 120 000 Prepare a June 30th bank reconciliation for Justice Company based on the following facts 1 The bank statement shows a balance of 16 233 on June 30 2 The general ledger shows a balance of 17 500 on June 30 3 The bank statement shows 20 of interest was earned on the account in June 4 The daily deposit on June 30th of 2 500 was not shown on the bank statement 5 The bank statement shows a debit memo of 75 for the return of a customer s check as NSF 6 Outstanding checks total 1 277 7 While looking at the cleared checks the bookkeeper noticed that check 355 correctly cleared for 215 When originally recorded the check was posted for 251 The check was a payment on account to a vendor 8 The bank statement showed a 25 fee for failure to maintain the required minimum balance in the account during the month Justice Company Bank Reconciliation June 30 Bank Balance Add Deposit in transit 16 233 2 500 Less Outstanding Checks 1 277 Adjusted Bank Balance Book Balance Add Less Adjusted Book Balance Interest earned Correction on Check 355 Debit Memo Cust Check NSF Bank Fee 251 215 36 17 456 17 500 20 36 75 …