Alli Co. is a merchandising business. The account balances

Alli
Co. is a merchandising business. The
account balances for Alli Co. as of November 30, 2012 (unless otherwise
indicated), are as follows:

110 Cash $ 73,920
112 Accounts
Receivable 37,875
113 Allowance
for Doubtful Accounts 3,500
115 Merchandise
Inventory 133,900
116 Prepaid
Insurance 3,750
117 Store
Supplies 2,850
123 Store
Equipment 100,800
124 Accumulated
Depreciation-Store Equipment 20,160
210 Accounts
Payable 21,450
211 Salaries
Payable 0
218 Interest
Payable 0
220 Note
Payable (Due 2017) 10,000
310 P.
Williams, Capital (January 1, 2012) 89,510
311 P.
Williams, Drawing 40,000
312 Income Summary 0
410 Sales
853,040
411 Sales
Returns and Allowances 20,600
412 Sales
Discounts 13,200
510 Cost
of Merchandise Sold 414,575
520 Sales
Salaries Expense 74,400
521 Advertising
Expense 18,000
522 Depreciation
Expense 0
523 Store
Supplies Expense 0
529 Miscellaneous
Selling Expense 2,800
530 Office
Salaries Expense 40,500
531 Rent
Expense 18,600
532 Insurance
Expense 0
533 Bad
Debt Expense 0
539 Miscellaneous
Administrative Expense 1,650
550 Interest Expense 240

Alli
Co. uses the perpetual inventory system and the last-in, first-out costing
method. Transportation-in and purchase
discounts should be added to the Inventory Control Sheet, but since this will
complicate the computation of the Last-in, first-out costing method, please
ignore this step in the process. They
also use the Allowance Method for bad debt.

The
Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the
Inventory Control Sheet should be updated as each transaction affects them
(daily).

Alli Co. sells four types of television
entertainment units.

The
sale prices of each are:

TV
A: $3,500
TV
B: $5,250
TV
C: $6,125
PS
D: $9,000

During
December, the last month of the accounting year, the following transactions
were completed:

Dec. 1.
Issued check number 2632 for the December rent, $2,200.
3. Purchased four TV
C units on account from Prince Co., terms 2/10, n/30, FOB shipping point,
$14,800.
4. Issued check
number 2633 to pay the transportation changes on purchase of December 3,
$400. (NOTE: Do not include shipping and purchase
discounts to the Inventory Control sheet for this project.)
6. Sold four TV A and
four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping
point.
10. Sold two project
systems for cash.
11. Purchased store
supplies on account from Matt Co., terms n/30, $620.
13. Issued check to
Prince Co. number 2634 for full amount due, less discount allowed.
14. Issued credit memo
for one TV A unit returned on sale of December 6.
15. Issued check
number 2635 for advertising expense for last half of December, $1,500.
16. Received cash from
Albert Co. for full amount due (less return of December 14 and discount).
19.
Issued check number 2636 to buy two TV C units, $7,600.
19.
Issued check number 2637 for $6,100 to Joseph Co. on account.
20. Sold three TV C
units on account to Cameron Co., invoice number

892, terms 1/10, n/30, FOB shipping point.
20. For the
convenience of the customer, issued check number 2638 for shipping charges on
sale of December 20, $600.
21. Received $12,250
cash from McKenzie Co. on account, no discount.
21. Purchased three
projector systems on account from Elisha Co., terms 1/10, n/30, FOB
destination, $15,600.
25.
Received notification that Marie Co. has been granted bankruptcy with no
amount of recovery. We are to write-off her amount due. (Note: See page
402 for entry required.)
24. Issued a debit
memo for return of $5,200 because of a damaged projection system purchased on
December 21, receiving credit from the seller.
26. Issued check
number 2639 for refund of cash on sales made for cash, $1,000. (Customer was going to return goods until an
allowance was arranged.)
27. Issued check number 2640 for sales
salaries of $1,750 and office

salaries of $950.
28. Purchased store
equipment on account from Matt Co., terms n/30, FOB

destination, $800.
29. Issued check
number 2641 for store supplies, $550.
30. Sold four TV C
units on account to Randall Co., invoice number 893,
terms 2/10, n/30, FOB shipping point.
30. Received cash from
sale of December 20, less discount, plus transportation

paid on December 20. (Round
calculations to the nearest dollar.)
30. Issued check
number 2642 for purchase of December 21, less return
of December 24 and discount.
30. Issued a debit
memo for $200 of the purchase returned from

December 28.

Instructions:

1. Enter the balances
of each of the accounts in the appropriate balance column of a four-column
account (General Ledger). Write Balance
in the item section, and place a check mark (v) in the Post Reference column.
2. Journalize the
transactions in a sales journal, purchases journal, cash receipts journal, cash
payments journal, or general journal as illustrated in chapter 7. Also post to the Accounts Receivable and
Accounts Payable Subsidiary ledgers and when needed the Inventory Control
Sheet.
3. Total each column
on the special journals and prove the journal.
4. Post the totals of
the account named columns and individually post the “other” columns as well to
the General Ledger.
5. Prepare the
Schedule of Accounts Receivable and the Schedule of Accounts Payable (their
total amount must equal the amount in their controlling general ledger
account).
6. Prepare the
unadjusted trial balance on the worksheet.
7. Complete the
worksheet for the year ended December 31, 2012, using the following adjustment
data:
a.
Merchandise inventory on December 31 $110,200
b.
Insurance expired during the year 1,250
c.
Store supplies on hand on December 31 975
d.
Depreciation for the current year needs to be calculated. Alli Co. uses the
Straight-line method, the store
equipment has a useful life of 10 years with no salvage value. (NOTE: the purchase and return will not be
included as the dates of the transactions were after the 15th of the
month).
e.
Accrued salaries on December 31:
Sales salaries $480
Office salaries 260 530
f. The note payable terms are at 8%, payment is
not being made until Jan. 3, 2013.
Interest must be recognized for one month (round answer to the nearest
dollar amount).
g. Net realizable value of Accounts Receivable
is determined to be $30,000.

8. Prepare a multiple-step income statement, a
statement of owner’s equity, and a
classified balance sheet in good form.
9. Journalize and post the adjusting entries.
10. Journalize and
post the closing entries. Indicate
closed accounts by inserting a line
in both balance columns opposite the
closing entry.
11. Prepare a
post-closing trial balance.