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Accounting Cs Chapter 6 Essay

2925 words - 12 pages

Ocean Atlantic Co. is a merchandising business. The account balances for Ocean Atlantic Co. as of July 1, 2012 (unless otherwise indicated), are as follows:
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During July, the last month of the fiscal year, the following transactions were completed:
July 1. Paid rent for July, $4,000.
3. Purchased merchandise on account from Lingard Co., terms 2/10, n/30, FOB shipping point, $25,000.
4. Paid freight on purchase of July 3, $1,000.
6. Sold merchandise on account to Holt Co., terms 2/10, n/30, FOB shipping point, $40,000. The cost of the merchandise sold was $24,000.
7. Received $18,000 cash from Flatt Co. on account, no discount.
10. Sold merchandise for cash, $90,000. The ...view middle of the document...

30. Sold merchandise on account to Dix Co., terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250.
30. Received cash from sale of July 20, less discount, plus freight paid on July 21.
31. Paid for purchase of July 21, less return of July 24 and discount.

Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (() in the Posting Reference column. Journalize the transactions for July starting on Page 20 of the journal.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are not required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare an unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
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5. Optional: Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries. Record the adjusting entries on Page 22 of the journal.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare and post the closing entries. Record the closing entries on Page 23 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the owner’s capital account.
10. Prepare a post-closing trial balance.

SOLUTION:

1., 2., 6., and 9.

Cash 110
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.

2012
July 1 Balance ( 63,600
1 20 4,000
4 20 1,000
7 20 18,000
10 20 90,000
13 20 24,500
15 20 9,000
16 20 32,340
19 20 22,000
19 20 23,100
21 21 1,100
21 21 17,600
26 21 12,000
28 21 38,000
29 21 2,400
30 21 40,700
31 21 26,730 98,410

Accounts Receivable 112

2012
July 1 Balance ( 153,900
6 20 40,000
7 20 18,000
14 20 7,000
16 20 33,000
20 21 40,000
21 21 1,100
21 21 17,600
30 21 18,750
30 21 41,100 137,050

Merchandise Inventory 115
Post. Balance
Date Item Ref. Dr. Cr. Dr. Cr.

2012
July 1 Balance ( 602,400
3 20 25,000
4 20 1,000
6 20 24,000
10 20 50,000
13 20 500
14 20 4,500
19 20 22,000
20 21 25,000
21 21 32,000
24 21 5,000
26 21 7,200
30 21 11,250
31 21 270 578,080
31 Adjusting 22 13,080 565,000

Prepaid Insurance 116

2012
July 1 Balance ( 16,800
31 Adjusting 22 13,400 3,400

Store Supplies 117

2012
July 1 Balance ( 11,400
29 21 2,400 13,800
31 Adjusting 22 9,900 3,900

Store Equipment 123

2012
July 1...

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