ABC Company is a merchandising business

ABC Company is a merchandising business.  Below are the routing transactions for ABC Company for the month of December.
Dec 1Paid rent for December, $8000.
Dec 3Purchased merchandise from Goat Company for $7,000 under terms 1/15, n/30, FOB Shipping Point.
Dec 4Paid $400 cash for freight charges on purchase of Dec 3.
Dec 5Sold merchandise to Beaver company for $21,100 under credit terms 2/10, n/60, FOB Shipping Point.  The merchandise had a cost of $8800.
Dec 6Purchased merchandise from Duck Company for 27,500, under terms n/eom.
Dec 8Received $23,000 on account from Warthog Company, no discount.  This sale was made in November.
Dec 9After negotiations with Goat Company concerning problems with the merchandise purchased on Dec 3, ABC Company received an credit memorandum from Goat Company granting an allowance of $1,000.
Dec 10Paid part-time sales clerk for two weeks salary including the amount owed on December 1st, $3000.
Dec 11Sold merchandise on account to Cow Company, terms 2/10, n/60, FOB destination, $22,000.  The merchandise had a cost of $10,000.
Dec 12Paid $350 cash for shipping charges related to the Dec 11 sale to Cow Company.
Dec 13Paid the amount due to Goat Company for the Dec 3 purchase less the allowance granted.
Dec 15Received balance due from Beaver Company for merchandise sold on Dec 5.
Dec 16Cow company returned merchandse from the Dec 11 sale that had cost ABC Company $1000 and been sold for $5,500.  The merchandise was restored to inventory.
Dec 21Received amount due from Cow company for the Dec 11 sale less the sale return on Dec 16.
Dec 23Paid advertising expense for ads running the last week of December, $800.
Dec 24Paid part-time sales clerk for two weeks’ salary, $3000.
Dec 27Purchased office supplies on account, $500.
Dec 31Paid Duck Company amount due from the Dec 6 purchase.
At the end of December, the following adjustment data were assembled.
aAfter a physical count of inventory, it was determined that $127,200 of inventory exists at December 31.
b1% of sales is expected to be refunded.
cEstimated Cost of Merchandise that will be returned in the next year is  $5500
dInsurance Expired during the year, $2200.
eOffice supplies on hand at Dec 31, $1250.
fDepreciation for December is $1400.
gSales clerk earned $1500 of unpaid and unrecorded salary as of Dec 31.
1.Journalize the routine transactions above on the Journal-December tab.
2Use the Unadjusted Trial Balance and adjusting information provided above  to journalize the 7 adjusting entries on the Journal – December tab (below the routine entries).
3Use the Adjusted Trial Balance provided to prepare an income statement appropriate to a merchandising business, a statement of owner’s equity, and a report form balance sheet.  These should be completed on the Financial Statements tab.
You should use this template file to complete your midterm.  Please rename the file to begin with your last name, first name.  You may use another spreadsheet program as long as Excel can open the file.

Leave a Reply

Your email address will not be published. Required fields are marked *