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The following trial balance is for Jackson Sales Company, a home improvement retailer, at January 1, 2012:
Allowance for Doubtful Accounts
Accumulated Depreciation – Buildings
Accumulated Depreciation – Equipment
Common Stock, $10 par
INSTRUCTIONS: Journalize the appropriate entries for the following transactions for the period January 1, 2012 to December 31, 2012. The company uses a perpetual inventory system and FIFO cost method. Beginning inventory on January 1 consisted of 1,000 units at $20.20 per unit.
Paid $3,750 accounts payable balance due to a supplier.
Received $2,500 partial payment on a $5,000 accounts receivable balance. Wrote off the rest of the account as uncollectible.
Purchased on account 2,500 units merchandise for resale at $21.50 per unit, with 2/10, n/30 terms.
Paid the invoice for April 1 purchase
Sold 700 units of merchandise for a cash price of $40/unit.
Borrowed $20,000 at 6% interest for 5 years with annual payments of principal and interest on October 31. Used the loan proceeds plus cash to purchase a $25,000 delivery truck.
Bought back 500 shares of outstanding stock, paying $15/share.
Sold 2,400 units of merchandise on account for $41/unit. Payment terms on the invoice were 1/10, n/30.
Of the merchandise sold on December 5, 50 units were returned.
Paid $3,000 for rent of a warehouse facility. The payment covers rent for December and January.
Declared a $1/share cash dividend, payable January 14 to shareholders of record on January 3.
Purchased office supplies of $1,600 on account.
Recorded depreciation for the year
Buildings have a 30-year life, a $6,000 residual value and use straight-line depreciation
Equipment has a 5-year life, no residual value and use double-declining balance depreciation
NOTE: Equipment was all purchased January 1, 2011
Vehicles have a 5-year life, no residual value and use straight-line depreciation
The allowance for doubtful accounts balance is estimated as follows:
2% of current balances are estimated as uncollectible
20% of past-due balances are estimated as uncollectible.
A count of office supplies shows $550 still on hand on December 31.
January 2, 2013
Paid salaries of $24,500 for the pay period December 31 through January 4. Salaries are earned evenly during the pay period.
PART 2 – TRIAL BALANCE
INSTRUCTIONS: Prepare a trial balance as of December 31, 2012.
PART 3—FINANCIAL STATEMENTS
INSTRUCTIONS: Prepare a December 31, 2012 Classified Balance Sheet, Classified Income Statement and Statement of Cash Flows