The post$-$closing trial balance for Wilson Corp., a retailer, at December $31$ of Year $1$ follows.

Acct. No$.$

Account

Debit

Credit

$101$

Cash

$.........................................$

$ $27,000$

$102$

Accounts receivable

$.............................$

$21,000$

$103$

Allowance for doubtful accounts

$....................$

$

$1,000$

$104$

Inventory $($perpetual inventory system$)$

$..............$

$35,000$

$105$

Prepaid insurance $(20$ months remaining$)$

$............$

$900$

$200$

Equipment $(20-$year estimated life, no residual value$)...$

$50,000$

$201$

Accumulated depreciation$$Equipment

$..............$

$22,500$

$300$

Accounts payable

$...............................$

$7,500$

$301$

Salaries payable

$................................$

$302$

Income taxes payable $($for Year $1)$

$...................$

$4,000$

$400$

Common stock, par $$1$

$...........................$

$80,000$

$401$

Retained earnings

$..............................$

$18,900$

$500$

Sales

$.........................................$

$600$

Cost of goods sold

$..............................$

$601$

Operating expenses

$.............................$

$602$

Income tax expense

$.............................$

$700$

Income summary

$...............................$

Totals

$........................................$

$$133,900$

$$133,900$

The following transactions occurred during Year $2$ in the order shown $($use the number at the left in place of a date$).$

$1.$

Sales revenue was $$30,000,$ of which $$10,000$ was on credit; the cost of goods sold, using perpetual inven$-$

tory, was $$19,500.$

$2.$

Collected $$17,000$ cash on accounts receivable.

$3.$

Paid $$4,000$ cash toward income taxes payable $($for Year $1).$

$4.$

Purchased $$40,000$ of merchandise, of which $$8,000$ was on credit.

$5.$

Paid $$6,000$ cash toward accounts payable.

$6.$

Sales revenue was $$72,000($in cash$)$; cost of goods sold was $$46,800.$

$7.$

Paid $$19,000$ cash in operating expenses.

$8.$

On July $1,$ Year $2,$ issued $1,000$ shares of common stock, par $$1,$ for $$1,000$ cash.

$9.$

Purchased $$100,000$ of merchandise, of which $$27,000$ was on credit.

$10.$

Sales revenue was $$98,000,$ of which $$30,000$ was on credit; cost of goods sold, $$63,700.$

$11.$

Collected $$26,000$ cash toward accounts receivable.

$12.$

Paid $$28,000$ cash toward accounts payable.

$13.$

Paid $$18,000$ cash for various operating expenses.

Required

a$.$

Prepare general journal entries for each of the transactions for Year $2.$

b$.$

Set up T$-$accounts as the general ledger for each of the accounts listed in the trial balance and enter the De$-$

cember $31,$ Year $1,$ balances. Post the journal entries from

a

$.$

c$.$

Prepare an unadjusted trial balance.

d$.$

Prepare December $31,$ Year $2,$ adjusting entries for the following additional information.

$1.$

Increase Allowance for Doubtful Accounts

by $$200.$

Hint:

Debit Operating Expenses.

$2.$

Accrued income tax expense is $$11,784.$

Hint:

Credit Income Taxes Payable.

$3.$ Accrued salaries were $$300.$

$4.$

Use straight$-$line depreciation for equipment.

$5.$

Adjust Prepaid Insurance for current

year expense.

Problem $2-53$

Journaling, Posting,

and Preparing an

Unadjusted Trial

Balance

LO$2,3$

MBC

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