Merchandising Operations and the Accounting Cycle - Pearson

296 Part One The Basic Structure of Accounting
July 23 Received $10,290 cash in partial settlement of the account from the customer
who purchased inventory on July 14. Granted the customer a 2% discount and
credited his account receivable for $10,500.
30 Paid for the store supplies purchased on July 5.
Required
1. Journalize the preceding transactions on the books of Segal Furniture Company Ltd.
2. Compute the amount of the receivable at July 31 from the customer to whom
Segal sold inventory on July 14. What amount of cash discount applies to this receivable
at July 31?
Problem 5S-4 Preparing a merchandiser’s accounting work sheet, financial statements, and
adjusting and closing entries under the periodic system (Obj. S3, S4, S5)
The year-end trial balance of Bliss Sales Company Ltd. on the following page pertains
to March 31, 2004.
Additional data at March 31, 2004:
a. Accrued interest revenue, $1,030.
b. Insurance expense for the year, $3,000.
c. Furniture has an estimated useful life of six years. It is expected to have no value
when it is retired from service.
d. Unearned sales revenue still not earned, $8,200.
e. Accrued salaries, $1,200.
f. Accrued sales commissions, $1,700.
g. Inventory on hand based on inventory count, $133,200.
Required
1. Enter the trial balance on an accounting work sheet, and complete the work sheet
for the year ended March 31, 2004.
2. Prepare the company’s multi-step income statement and statement of retained
earnings for the year ended March 31, 2004. Also prepare its balance sheet at
that date. Long-term notes receivable should be reported on the balance sheet
between current assets and capital assets in a separate section labelled
Investments.
3. Journalize the adjusting and closing entries at March 31, 2004.
4. Post to the Retained Earnings account and to the Income Summary account as an
accuracy check on the adjusting and closing process.