Home / Questions / The following trial balance is for Jackson Sales Company, a home improvement retailer, at
The following trial balance is for Jackson Sales Company, a home improvement retailer, at January 1, 2012:
Debit Credit
Cash $49,950
Accounts Receivable 14,000
Allowance for Doubtful Accounts $2,600
Merchandise Inventory 20,200
Land 50,000
Buildings 81,000
Accumulated Depreciation – Buildings 37,500
Equipment 45,000
Accumulated Depreciation – Equipment 18,000
Accounts Payable 3,750
Notes Payable 38,500
Common Stock, $10 par 40,000
Retained Earnings 158,300
$260,150 $260,150
PART 1—TRANSACTIONS – 40 points
INSTRUCTIONS: Journalize the appropriate entries for the following transactions for the period January 1, 2012 to December 31, 2012. The company uses a perpetual inventory system and FIFO cost method. Beginning inventory on January 1 consisted of 1,000 units at $20.20 per unit.
February 1 Paid $3,750 accounts payable balance due to a supplier.
March 15 Received $2,500 partial payment on a $5,000 accounts receivable balance. Wrote off the rest of the account as uncollectible.
April 1
April 15 Purchased on account 2,500 units merchandise for resale at $21.50 per unit, with 2/10, n/30 terms.
Paid the invoice for April 1 purchase
October 10 Sold 700 units of merchandise for a cash price of $40/unit.
November 1 Borrowed $20,000 at 6% interest for 5 years with annual payments of principal and interest on October 31. Used the loan proceeds plus cash to purchase a $25,000 delivery truck.
December 1 Bought back 500 shares of outstanding stock, paying $15/share.
December 5 Sold 2,400 units of merchandise on account for $41/unit. Payment terms on the invoice were 1/10, n/30.
December 7 Of the merchandise sold on December 5, 50 units were returned.
December 15 Paid $3,000 for rent of a warehouse facility. The payment covers rent for December and January.
December 15 Declared a $1/share cash dividend, payable January 14 to shareholders of record on January 3.
December 18 Purchased office supplies of $1,600 on account.
December 31 Recorded depreciation for the year
Buildings have a 30-year life, a $6,000 residual value and use straight-line depreciation
Equipment has a 5-year life, no residual value and use double-declining balance depreciation
NOTE: Equipment was all purchased January 1, 2011
Vehicles have a 5-year life, no residual value and use straight-line depreciation
December 31 The allowance for doubtful accounts balance is estimated as follows:
2% of current balances are estimated as uncollectible
20% of past-due balances are estimated as uncollectible.
December 31 A count of office supplies shows $550 still on hand on December 31.
January 2, 2013 Paid salaries of $24,500 for the pay period December 31 through January 4. Salaries are earned evenly during the pay period.
PART 2 – TRIAL BALANCE – 10 points
INSTRUCTIONS: Prepare a trial balance as of December 31, 2012.
PART 3—FINANCIAL STATEMENTS – 75 points
INSTRUCTIONS: Prepare a December 31, 2012 Classified Balance Sheet, Classified Income Statement and Statement of Cash Flows
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