Equipment-$3700, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$24000, and Retained Earnings-$104800. The following transactions took place in Smallville Company during April of the current year (2020). April 1 - Issued $2500 new shares of common stock for $346000 April 3 - Purchased merchandise of $7500 on account from Pr

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Smallville Company was organized on January 1, 2020. It is authorized to issue 102000 shares of $120 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts.

Cash-$58000, Merchandise Inventory- $75800, Prepaid Insurance-$4900, 10% Notes Payable-$25200, Equipment-$143000, Accumulated Depreciation: Equipment-$3700, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$24000, and Retained Earnings-$104800.

The following transactions took place in Smallville Company during April of the current year (2020).

April 1 - Issued $2500 new shares of common stock for $346000

April 3 - Purchased merchandise of $7500 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $300.

April 4 - Sold merchandise for cash, $83600. The cost of the merchandise sold was $48000.

April 5 - Purchased merchandise on account from Stafford Co., $23000, terms FOB shipping point, 2/10, n/30. The appropriate paid the freight charge of $700.

April 6 - Returned $510 of merchandise purchased on April 3 from Prescott Co.

April 13 - Paid Prescott Co. on account for purchase of April 3.

April 15 - Paid Stafford Co. on account for purchase of April 5.

April 17 - Purchased merchandise for cash $1600.

April 20 - Received refund for poor quality merchandise from supplier on cash purchase $180.

REQUIREMENTS: download the excel file given at the link below and answer the follow questions and then upload the completed excel file via link given at the bottom of the page:

(1) Journalize the transactions for the month of April. (Assume that the company follows perpetual inventory system).

(2) Post the April journal entries to the ledger. (Remember, the ledger accounts should start with the beginning balances (if any)

(3) Prepare a trial balance on April 30, 2020.

Additional Information on Smallville Company:

A review of the ledger of Smallville Company at April 30, 2020, produces the following data pertaining to the preparation of monthly adjusting entries.

(a) Notes Payable $25200. This balance consists of a note for 6 months at an annual interest rate of 12%, dated January 1, 2020.

(b) There are five workers in Smallville Company who are paid wages weekly. The five workers are paid $870 each for a 5-day work week (Monday to Friday). April 30 is a Tuesday and workers are paid on Fridays.

(c) Annual depreciation is $12200 on equipment.

(d) Physical check reveals inventory actually on hand on April 30, 2020 is $56810.2.

(4) Journalize the adjusting entries at April 30, 2020.

(5) Prepare an adjusted trial balance.

(6) Using the balances from the adjusted trial balance, prepare a multi-step income statement and owner’s equity statement for the one month ended April 30. (Assume that the company falls under 30% tax bracket).

(Answer From Step 4)

A
B
E
F
Cash a/c
Prepaid insuarnce a/c
1
2 Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
3 Balance b/d
Balance b/d
$
57,000
$ 3,96,000
$ 4,77,500
5,100
01-Apr| $ 3,39,000
01-Apr $
05-Apr
13-Apr
15-Apr
17-Apr
20-Apr $
4
10% Notes payable a/c
81,500
$
680 $
4,76,820
Date
Debit
Credit
Balance
7,552 $
Balance b/d
$
7
4,69,268
25,000
$
22,540 $
8
4,46,728
$
1,600 $ 4,45,128
Accounts payable a/c
10
150
$
4,44,978
Date
Debit
Credit
Balance
03-Apr
05-Apr
06-Apr $
13-Apr $
15-Apr $
8,280 $
23,000 $
11
$
8,280
12
Merchandise inventory a/c
31,280
13 Date
Debit
Credit
Balance
580
30,700
14 Balance b/d
7,700
$
75,600
83,600
33,600
23,000
$
03-Apr $
04-Apr
05-Apr $
06-Apr
13-Аpr
15-Apr
17-Apr $
20-Apr
15
8,000
23,000
16
50,000 $
23,000
$
Equipment a/c
17
56,600
18
580 $
56,020
Date
Debit
Credit
Balance
148 $
Balance b/d
$ 1,35,000
19
55,872
55,412
57,012
56,862
20
460 $
Accumulated depreciation a/c
Credit
21
1,600
22
$
150 $
Date
Debit
Balance
23
Balance b/d
$
3,900
%24
%24
Transcribed Image Text:A B E F Cash a/c Prepaid insuarnce a/c 1 2 Date Debit Credit Balance Date Debit Credit Balance 3 Balance b/d Balance b/d $ 57,000 $ 3,96,000 $ 4,77,500 5,100 01-Apr| $ 3,39,000 01-Apr $ 05-Apr 13-Apr 15-Apr 17-Apr 20-Apr $ 4 10% Notes payable a/c 81,500 $ 680 $ 4,76,820 Date Debit Credit Balance 7,552 $ Balance b/d $ 7 4,69,268 25,000 $ 22,540 $ 8 4,46,728 $ 1,600 $ 4,45,128 Accounts payable a/c 10 150 $ 4,44,978 Date Debit Credit Balance 03-Apr 05-Apr 06-Apr $ 13-Apr $ 15-Apr $ 8,280 $ 23,000 $ 11 $ 8,280 12 Merchandise inventory a/c 31,280 13 Date Debit Credit Balance 580 30,700 14 Balance b/d 7,700 $ 75,600 83,600 33,600 23,000 $ 03-Apr $ 04-Apr 05-Apr $ 06-Apr 13-Аpr 15-Apr 17-Apr $ 20-Apr 15 8,000 23,000 16 50,000 $ 23,000 $ Equipment a/c 17 56,600 18 580 $ 56,020 Date Debit Credit Balance 148 $ Balance b/d $ 1,35,000 19 55,872 55,412 57,012 56,862 20 460 $ Accumulated depreciation a/c Credit 21 1,600 22 $ 150 $ Date Debit Balance 23 Balance b/d $ 3,900 %24 %24
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education