JW's Lock & Key had the following transactions in December. Dec. 1 Paid December's rent, check #
Question:
JW's Lock & Key had the following transactions in December. Dec. 1 Paid December's rent, check # 6287, $3,100 2 Paid annual premiums on property and casualty insurance policies, check # 6288, $1,900. 3 Performed locksmith services on new house, sent invoice # 601 to the homeowner, Sam Mason, $2,700. 4 Issued Invoice # 602 to Hastings who purchased a new safe on account, $3,550. Cost of Merchandise Sold was $1,250. 5 Purchased office supplies, check # 6289, $620. 6 Purchased inventory from Key Supplies Co., $5,500. terms 1/10, n/30 7 Paid UPS $419 cash for delivery of the inventory purchased on December 6. 7 Jake deposited an additional $8,000 cash in the business. 8 Returned damaged inventory to Key Supplies Co., $500 8 Received $2,500 cash, an advance payment for locksmith services. 9 Unlocked a safe for a customer and received $1,000 cash. 9 Bought a new computer (equipment) from Office Depot on account, $1,576 10 Sold 2 safes and received cash, 2,200. Cost of Merchandise Sold was $800. 11 Purchased 5 safes to restock inventory on account from Brinks Co, $4,338 terms, 2/5, n/45. 12 Customer returned one of the safes purchased on December 10, refunded the customer $1,100 cash. Cost of Merchandise Sold was $475. 13 Paid Verizon for wireless telephone services, $495, check # 6290. 14 Paid Key Supplies Co for the purchase on December 6, less return and discount, check # 6291. 14 Received cash on account, $1,500, From Nathan Dean. Dean did not pay his November invoice #590 within the credit terms 2/10. The discount was forfeited. 15 Recorded cash sales for the store from the 1st to the 15th, $13,208. Cost of Merchandise Sold was $4,783. 16 Received $1,900 from Hastings on account. 17 Paid Office Depot on account, $500, check # 6292. 18 Performed locksmith services on account for Larry Contractor, $700. 19 Paid electricity bill for December, check # 6293, $1,760. 19 Paid for Domino's pizza delivery for the December office party, check #6294, $175 20 Jake withdrew $10,500 for a vacation. 25 Paid the water bill for December, check # 6295, $120. 25 Paid Brinks Co. on account, $2,500, check # 6296. 26 Paid part time employees their salary, $2,700 27 Received cash on account from Larry Contractor, $700. 30 Recorded cash sales for the store from the 16th to the 30th, $8,735. Cost of Merchandise Sold was $2,784. Background |
JW’s Lock & Key is owned and operated by Jake Walters and is located in Odessa, TX. Jake is a locksmith and provides locksmith services and has a store that sells everything from keys to safes. You have just been hired as the accountant as of December 1, 2020. |
Required |
1. The general ledger contains the current balances for all accounts as of November 30, 2020. The subsidiary ledgers for A/R and A/P also contain the current balances as of November 30, 2020. Review the information in these accounts before beginning the project. |
2. Journalize the December transactions in the general journal. Descriptions are not required. |
3. Post daily to the Accounts Receivable Subsidiary Ledger and the Accounts Payable Subsidiary Ledger. Place a checkmark in the Post Reference column of the General Ledger next to the GL account number; i.e. 201/√. The checkmark denotes that you have posted to the Subsidiary Ledger account. On December 31, post to the General Ledger. |
4. Prepare an Unadjusted Trial Balance, using the worksheet. Complete the worksheet using the following adjustment information for December: |
Office supplies on hand on December 31 are $1,225. |
A physical count of inventory showed an ending inventory cost of $44,500. |
Recorded depreciation on equipment for the month, $4,200. |
Insurance expired during December is $300. |
Earned $1,975 worth of the unearned service revenue. |
Sales refunds estimated for the year $10,000 |
Cost of estimated returns for the year $2,000 |
5. Journalize and post the ADJUSTING entries in the GJ, Ledger and subsidiary ledgers. |
6. Journalize and post the CLOSING entries in the GJ, Ledger and subsidiary ledgers. |
7. Prepare JW’s Lock & Key’s financial statements for the year ended December 31, 2020. |
Note: Jake Walter’s Capital at January 1, 2020 was $262,643. |
8. Prepare a Post-Closing Trial Balance. |
Check Figures: |
Unadjusted Trial Balance: $911,013 |
Cash Account Balance: $164,835 |
Net Income (Loss): $506,498 |
Principles of Risk Management and Insurance
ISBN: 978-0132992916
12th edition
Authors: George E. Rejda, Michael McNamara