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Porter Company's balance sheet at December 31, 2011, is presented below.
PORTER COMPANY
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Balance Sheet
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December 31, 2011
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Cash
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$13,100
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Accounts payable
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$ 8,750
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Accounts receivable
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19,780
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Owner's capital
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32,730
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Allowance for doubtful accounts
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(800)
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$41,480
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Inventory
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9,400
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$41,480
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During January 2012, the following transactions occurred. Porter uses the perpetual inventory method.
Jan. 1
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Porter accepted a 4-month, 8% note from Anderko Company in payment of Anderko's $1,200 account.
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3
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Porter wrote off as uncollectible the accounts of Elrich Corporation ($450) and Rios Company ($280).
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8
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Porter purchased $17,200 of inventory on account.
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11
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Porter sold for $25,000 on account inventory that cost $17,500.
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15
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Porter sold inventory that cost $700 to Fred Berman for $1,000.
Berman charged this amount on his Visa First Bank card. The service fee
charged Porter by First Bank is 3%.
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17
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Porter collected $22,900 from customers on account.
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21
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Porter paid $16,300 on accounts payable.
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24
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Porter received payment in full ($280) from Rios Company on the account written off on January 3.
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27
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Porter purchased advertising supplies for $1,400 cash.
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31
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Porter paid other operating expenses, $3,218.
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Adjustment data:
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1.
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Interest is recorded for the month on the note from January 1.
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2.
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Bad debts are expected to be 6% of the January 31, 2012, accounts receivable.
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3.
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A count of advertising supplies on January 31, 2012, reveals that $560 remains unused.
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Instructions
(You may want to set up T accounts to determine ending balances.)
(a)
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Prepare journal entries for the transactions listed above and
adjusting entries. (Include entries for cost of goods sold using the
perpetual system.)
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(b)
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Prepare an adjusted trial balance at January 31, 2012.
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(c)
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Prepare an income statement and an owner's equity statement for the
month ending January 31, 2012, and a classified balance sheet as of
January 31, 2012.
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