Merchandising Operations and the Accounting Cycle - Pearson

Summary Problem
for Your Review
250 Part One The Basic Structure of Accounting
The following trial balance and additional data are related to Jan King Distributing
Company Ltd.
JAN KING DISTRIBUTING COMPANY LTD.
Trial Balance
December 31, 2003
Cash.................................................................................................... $ 5,670
Accounts receivable ......................................................................... 37,100
Inventory ........................................................................................... 60,500
Supplies.............................................................................................. 3,930
Prepaid rent....................................................................................... 6,000
Furniture............................................................................................ 26,500
Accumulated amortization—furniture ......................................... $ 21,200
Accounts payable ............................................................................. 46,340
Salary payable...................................................................................
Interest payable.................................................................................
Unearned sales revenue .................................................................. 3,500
Note payable, long-term.................................................................. 35,000
Common stock .................................................................................. 10,000
Retained earnings............................................................................. 13,680
Dividends .......................................................................................... 48,000
Sales revenue..................................................................................... 346,700
Sales discounts.................................................................................. 10,300
Sales returns and allowances.......................................................... 8,200
Cost of goods sold ............................................................................ 171,770
Amortization expense—furniture..................................................
Interest expense ................................................................................ 2,900
Rent expense ..................................................................................... 7,000
Salary expense................................................................................... 82,750
Supplies expense ..............................................................................
Utilities expense................................................................................ 5,800
Total .................................................................................................... $476,420 $476,420
Additional data at December 31, 2003:
a. Supplies used during the year, $2,580.
b. Prepaid rent remaining 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. Amortization. The furniture’s estimated useful life is ten years, and it is expected
to have no value when it is retired from service.
e. Accrued salaries, $1,300.
f. Accrued interest expense, $600.
g. Inventory still remaining on hand, $65,800.
Required
1. Enter the trial balance on a work sheet and complete the work sheet.
2. Journalize the adjusting and closing entries at December 31, 2003. Post to the
Income Summary account as an accuracy check on the entries affecting that account.
The credit balance closed out of Income Summary should equal net income
computed on the work sheet.