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UWI Open Campus

ACCT 1002
INTRODUCTION TO
FINANCIAL ACCOUNTING
Worksheet 1

Unit # 6 Worksheet

Accounting for Merchandising

Operations
Question 1

The following adjusted trial balance is shown below for the year ended December 31st, 2013 for
Campbell Distributers Ltd.

Debit Credit
Cash $12,600
Accounts receivable 2,400
Prepaid rent 800
Inventory 28,000
Accounts payable $4,200
Salary payable 1,000
Notes payable 800
Capital 13,800
Drawing 1,000
Sales revenue 96,000
Sales returns and
1,600
allowances
Sales discounts 400
Cost of goods sold 25,000
Salary expense 21,000
Rent expense 14,000
Depreciation expense 8,500
Supplies expense 500
Total $115,800 $115,800

Requirements:
1. Journalize the closing entries at December 31, 2013
2. Prepare the company’s:
a. Income statement
b. Statement of owner’s equity
c. Balance sheet
d. Post-closing trial balance
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Question 2

An adjusted trial balance for Woods Company is presented below.

Required:

1. Prepare the company’s closing entries.

2. Prepare a multiple-step income statement, statement of owner’s equity and balance for the
company.
3. Prepare the post-closing trial balance.
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Question 3

The following trial balance was extracted from the books of Trask Corporation at June 30, the end of the company’s
fiscal year. The company is owned by Conrad Fuller and is in the business of buying and selling sundry household
items.

Trask Corporation

Trial Balance as at June 30, 2011

Dr $ Cr $
Cash 170,000
Accounts Receivable 142,000
Allowance for Bad-Debts 8,000
Merchandise Inventory 192,000
Store Supplies 83,000
Prepaid Insurance 54,000
Furniture & Fixtures 800,000
Accumulated Depreciation: Furniture & Fixtures 285,000
Computer Equipment 450,000
Accumulated Depreciation: Computer Equipment
Accounts Payable 267,000
Wages Payable
Interest Payable
nearned Sales Revenue 89,000
Notes Payable, Long-Term 350,000
Conrad Fuller, Capital 754,000
Conrad Fuller, Withdrawals 165,000
Sales Revenue Earned 985,000
Sales Discount 5,000
Sales Returns & Allowances 12,000
Cost of Goods Sold 390,000
Wages Expense 171,000
Insurance Expense
Utilities Expense 84,000
Depreciation Expense – Furniture & Fixtures
Depreciation Expense – Equipment
Store Supplies Expense
Bad-Debt Expense
Interest Expense 20,000
Total 2,738,000 2,738,000

The following additional information is available at June 30, 2011:

a) Store supplies on hand at June 30, 2011 amounted to $33,000

b) Insurance of $54,000 was paid on June 1, 2011 for the 3-months to August 31, 2011.
c) The furniture and fixtures has an estimated useful life of 8 years and is being depreciated on the
straight-line method down to a residual value of $80,000.
d) The computer equipment was acquired on December 1, 2010 and is being depreciated over 5 years on the
double-declining method of depreciation, down to a residue of $50,000.
e) Wages earned by employees not yet paid amounted to $12,000 at June 30, 2011.
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f) Accrued interest expense, $3,500

g) A physical count of inventory at June 30, 2011, reveals $188,000 worth of inventory on hand.
h) At June 30, 2011, $47,000 of the previously unearned sales revenue had been earned.
i) The aging of the Accounts Receivable schedule at June 30th, 2011 indicated that the estimated
uncollectible on account receivable is $14,500.
Other data:

j) $87,000 of the notes payable is due for payment on March 31, 2012.

Required:

i) Identify the inventory system used by the business. How can you tell?
ii) Prepare the necessary adjusting journal entries on June 30, 2011.
iii) Prepare Trask’s multiple-step Income Statement Statement of Owner’s Equity for the year ended June 30, 201
1and a Classified Balance Sheet, in report form at, as at that date.

Question 4

1. The following trial balance and additional data are related to W en Teng Distributing Company.
Wen Teng Company
Trial Balance as at December 31, 1993

Dr Cr
$ $
Cash 5,670
Accounts Receivable 37 100
Inventory 60,500
Supplies 3,930
Prepaid Rent 6,000
Furniture and fixtures 26,500
Accumulated Depreciation 21,200
Accounts Payable 46,340
Salary Payable
Interest Payable
Unearned Sales Revenue 3,500
Note Payable, Long Term 35,000
Wen Teng, Capital 23,680
Wen Teng, Withdrawals 48,000
Sales Revenue 346,700
Sales Discounts 10,300
Sales Returns and Allowances 8,200
Cost of Goods Sold 171,770
Salary Expense 82,750
Rent Expense 7,000
Depreciation expense
Utilities Expense 5,800
Supplies Expense
Interest Expense 2,900 _______
Total 476,420 476,420
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Additional Data at December 31, 1993:

a) Supplies used during the year $2 580.

b) Prepaid rent in force, $1 000
c) Unearned sales revenue still not earned, $2 400. The company expects to earn this
amount during the next few months.
d) Depreciation. The furniture and fixtures’ estimated useful life is 1 0 years, and they are
expected to be worthless when they are retired from service.
e) Accrued salaries, $1 300.
f) Accrued interest expense, $600.
g) Inventory on hand, $65 800.

Required:

i) Adjusting journal entries

ii) Accounting worksheet.
iii) A multi-step income statement, statement of owner’s equity and a balance sheet.
iv) Prepare the necessary closing entries.

Question 5

Consider the following transactions that occurred in April 2013 for Kings:

April 3 Purchased inventory on terms 1/10, n/e.o.m. $7,000

April 4 Purchased inventory for cash $1,800

April 6 Returned $700 of inventory from April 4 purchase

April 8 Sold goods on term of 2/15, n/35 of $6,000 that cost $2,940

April 10 Paid for goods purchased on April 3

April 12 Received goods from April 8 sale of $500 that cost $220

April 23 Received payment from April 8 customer

April 25 Sold goods to Harrisons for $1,200 that cost $450. Terms of n/30 were offered.

As a courtesy to Harrisons, $125 of freight was added to the invoice for which

cash was paid directly to UPS by Kings.

April 29 Received payment from Harrison’s

Required:

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1. Journalize April transactions for kings. No explanations are required.

Question 6

1. The year-end trial balance of Latham Sales Company pertains to March 31, 20X4.
Cash $7,880
Note Receivable, Current 12,400
Interest Receivable
Inventory 130,050
Prepaid Insurance 3,600
Notes receivable, Long-Term 62,000
Furniture 6,000
Accumulated Depreciation $4,000
Accounts Payable 12,220
Sales Commission Payable
Salary Payable
Unearned Sales Revenue 9,610
Beth Latham, Capital 172,780
Beth Latham, Drawings 66,040
Sales Revenue 440,000
Sales Discounts 4,800
Sales Returns and Allowances 11,300
Interest Revenue 8,600
Purchases 233,000
Purchases Discount 3,100
Purchases Returns & Allowances 7,600
Freight In 10,000
Sales Commission Expense 78,300
Salary Expense 24,700
Rent Expense 6,000
Utilities Expense 1,840
Depreciation Expense
Insurance Expense _______ _______
Total 657,910 657,910

Additional data at March 31, 20X4

i) Accrued interest revenue, $1,030

ii) Insurance expense for the year, $3,000
iii) Furniture has an estimated life of six years. Its value is expected to be zero when it is
retired from service.

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iv) Unearned sales revenue still unearned, $7,400

v) Accrued salary expense, $1,200

vi) Accrued sales commission expense, $1,700

vii) Inventory on hand, $133,200

Required:

v) Adjusting journal entries

vi) Accounting worksheet.
vii) A multi-step income statement, statement of owner’s equity and a balance sheet.
viii) Prepare the necessary closing entries.