Example 2-ABC Company
On May, 2020 ABC Company transactions for the month are:
1. Company bought a computer for use by cash $1,000
5. Sold goods to ACA customer $8,000 by cash
9. Purchase goods from XYZ Company $20,000 on credit
13. Sold goods to BBB Company $12,000 on credit
16. Paid office supplies $50
21. Paid XYZ $15,000 for credit purchase on May, 9
28. Received cash from BBB company $11,960 and discount allowed $40 for credit sale on 13 May
31. Paid rental expense $1,000
31. Paid salary expense $3,000
Additional information
-
Assume Depreciation Expense of computer $20 .
-
Utilities expenses are estimated $450 for May
-
Assume ending inventory $19,000
-
After Closing Trial Balance
ABC Company |
||
After Closing Trial Balance |
||
31-April-2020 |
||
Debit |
Credit |
|
Cash |
69,000 |
|
Office Furniture (note 1) |
12,000 |
|
Account Receivable |
5,000 |
|
Accumulated Depreciation |
200 |
|
Inventory |
18,000 |
|
Account Payable |
5,000 |
|
Β Ending Equity |
98,800 |
|
Total |
10,4000 |
104,000 |
Note 1: assume depreciation expense for office furniture $200
Required:
-
Prepare General Journal
-
Prepare General Ledger
-
Prepare Trial Balance
-
Make Adjusting Entry
-
Prepare Adjusted Trial Balance
-
Prepare income statement
-
Β Statement of Change in Equity
-
Prepare balance sheet
-
Make closing entry
-
Prepare Post (After) Closing Trial Balance
Answer
-
Prepare General Journal
Company bought a computer for use by cash $1,000 |
||||
Dr. Computer |
Β 1,000 ( 8) |
|||
Cr. Cash |
1,000 ( 1) |
|||
Sold goods to ACA customer $8,000 by cash |
||||
Dr. Cash |
8,000 ( 1) |
|||
Cr. Sale |
8,000 ( 9) |
|||
Purchase goods from XYZ Company $20,000 on credit |
||||
Dr. Purchase |
20,000 ( 10) |
|||
Cr. AP |
20,000 ( 6) |
|||
Sold goods to BBB Company $12,000 on credit |
||||
Dr. AR |
12,000 ( 3) |
|||
Cr. Sale |
12,000 ( 9) |
|||
Paid office supplies $50 |
||||
Dr. Office Supplies Expense |
50 ( 11) |
|||
Cr. Cash |
50 ( 1) |
|||
Paid XYZ $15,000 for credit purchase on May, 9 |
||||
Dr. AP |
15,000 ( 6) |
|||
Cr. Cash |
15,000 ( 1) |
|||
Received cash from BBB company $11,960 and discount allowed $40 for credit sale on May, 13
Dr. Cash |
11,960 ( 1) |
|||
Dr. Discount allowed |
40 ( 12 ) |
|||
Cr. AR |
12,000 ( 3) |
|||
Paid rental expense $1,000 |
||||
Dr. Rental Expense |
1,000 ( 13) |
|||
Cr. Cash |
1,000 ( 1) |
|||
Paid salary expense $3,000 |
||||
Dr. Salary Expense |
3,000 ( 14 ) |
|||
Cr. Cash |
3,000 ( 1) |
3. Trial Balance (14 balances from general Ledger)
ABC Company |
||
Trial Balance |
||
31-May-2020 |
||
Debit |
Credit |
|
Cash |
68,910 |
|
Office Furniture |
12,000 |
|
AR |
5,000 |
|
Accumulated Depreciation |
200 |
|
Inventory |
18,000 |
|
AP |
10,000 |
|
Capital |
98,800 |
|
Computer |
1,000 |
|
Sale |
20,000 |
|
Purchase |
20,000 |
|
Office Supply Expense |
50 |
|
Discount allowed |
40 |
|
Rental Expense |
1,000 |
|
Salary Expense |
3,000 |
|
Total |
129,000 |
129,000 |
4. Adjusting Entry
a. Depreciation Expense |
||||
Dr. Depreciation Expense |
220 ( 15) |
|||
Cr. Accumulated Depreciation |
220 ( 4) |
|||
b. Accrued Utilities |
||||
Dr. Utilities Expense |
450 ( 16 ) |
|||
Cr. Accrued Utilities |
450 ( 17) |
c. Cost of goods sold= beginning inventory + purchase β ending inventory
= 18,000 + 20,000-19,000= 19,000
Beginning inventory |
||||
Dr. Cost of goods sold |
18,000 ( 18) |
|||
Cr. Inventory |
18,000 ( 5) |
|||
Purchase |
||||
Dr. Cost of goods sold |
20,000 ( 18) |
|||
Cr. Purchase |
20,000 ( 10) |
|||
Ending Inventory |
||||
Dr. Inventory |
19,000 ( 5 ) |
|||
Cr. Cost of goods sold |
19,000 ( 18) |
|||