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On December 1, 2014, Westmoreland Company had the following account balances.


On December 1, 2014, Westmoreland Company had the following account balances.

 
Debit
 
Credit
Cash
$18,200
Accumulated Depreciation Equipment
$3,000
Notes receivable
2,000
Accounts payable
6,100
Accounts receivable
7,200
Common stock
50,000
Inventory
16,000
Retained earnings
14,200
Prepaid insurance
1,600
 
 
Equipment
28,000
 
 
 
$73,300
 
$73,300


During December, the company completed the following transactions.


Dec. 7 Received $3,600 cash from customers in payment of account (no discount allowed).
12 Purchased merchandise on account from Alice Co. $12,000, terms 1/10, n/30.
17 Sold merchandise on account $16,000, terms 2/10, n/30. The cost of the merchandise sold was $10,000.
19 Paid salaries $2,200.
22 Paid Alice Co. in full, less discount.
26 Received collections in full, less discounts, from customers billed on December 17.
31 Received $2,700 cash from customers in payment of account (no discount allowed).
 
 
Adjustment data:
1. Depreciation $200 per month.
2. Insurance expired $400.


Instructions
(a) Journalize the December transactions. (Assume a perpetual inventory system.)
(b) Enter the December 1 balances in the ledger T-accounts and post the December transactions. Use Cost of Goods Sold, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Sales Revenue, and Sales Discounts.
(c) The statement from Dodge County Bank on December 31 showed a balance of $25,930.
A comparison of the bank statement with the Cash account revealed the following facts.
1. The bank collected a note receivable of $2,000 for Westmoreland Company on December 15.
2. The December 31 receipts were deposited in a night deposit vault on December 31.
These deposits were recorded by the bank in January.
3. Checks outstanding on December 31 totaled $1,210.
4. On December 31, the bank statement showed a NSF charge of $680 for a check received by the company from K. Quinn, a customer, on account.
Prepare a bank reconciliation as of December 31 based on the available information.
(d) Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.
(e) Post the adjusting entries to the ledger T-accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare an income statement for December and a classified balance sheet at December31.


TUTORIAL PREVIEW
(a)
Dec.  7
Cash
3,600
 
Accounts Receivable
 
3,600
 
12
Inventory
12,000
 
Accounts Payable
12,000
 
17
Accounts Receivable
16,000
 
Sales Revenue
 
16,000
 
 
 
Cost of Goods Sold
10,000
 
Inventory
 
10,000

 
File name: Westmoreland Company.xls File type: xls  PRICE: $15

Raymond Company’s trial balance at December 31, 2014, is presented below. All 2014 transactions have been recorded except for the items described shown below.


Raymond Company’s trial balance at December 31, 2014, is presented below. All 2014 transactions have been recorded except for the items described shown below. 

 
Debit
Credit
Cash
$28,000
 
Accounts receivable
36,000
 
Notes receivable
10,000
 
Interest receivable
0
 
Inventory
36,200
 
Prepaid insurance
4,400
 
Land
20,000
 
Buildings
160,000
 
Equipment
60,000
 
Patents
8,000
 
Allowances for doubtful accounts
 
300
Accumulated depreciation-Buildings
 
49,000
Accumulated depreciation-Equipment
 
24,000
Accounts payable
 
28,300
Income taxes payable
 
0
Salaries and wages payable
 
0
Unearned rent revenue
 
6,000
Notes payable(due in 2015)
 
11,000
Interest payable
 
0
Notes payable (due after 2015)
 
35,000
Common stock
 
50,000
Retained earnings
 
63,000
Dividends
12,000
 
Sales revenue
 
910,000
Interest revenue
 
0
Rent revenue
 
0
Gain on disposal of plant assets
 
0
Bad debt expense
0
 
Cost of goods sold
630,000
 
 
 
 

.......and so on........

 
1. On May 1, 2014, Raymond purchased equipment for $13,000 plus sales taxes of $780 (all paid in cash).
2. On July 1, 2014, Raymond sold for $3,500 equipment which originally cost $5,000.
Accumulated depreciation on this equipment at January 1, 2014, was $1,800; 2014 depreciation prior to the sale of the equipment was $450.
3. On December 31, 2014, Raymond sold for $9,400 on account inventory that cost $6,600.
4. Raymond estimates that uncollectible accounts receivable at year-end is $4,000.
5. The note receivable is a one-year, 8% note dated April 1, 2014. No interest has been recorded.
6. The balance in prepaid insurance represents payment of a $4,400 6-month premium on October 1, 2014.
7. The building is being depreciated using the straight-line method over 40 years. The salvage value is $20,000.
8. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.
9. The equipment purchased on May 1, 2014, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,000.
10. The patent was acquired on January 1, 2014, and has a useful life of 10 years from that date.
11. Unpaid salaries and wages at December 31, 2014, total $2,200.
12. The unearned rent revenue of $6,000 was received on December 1, 2014, for 4 months rent.
13. Both the short-term and long-term notes payable are dated January 1, 2014, and carry a 9% interest rate. All interest is payable in the next 12 months.
14. Income tax expense was $17,000. It was unpaid at December 31.
 
 
Instructions
(a) Prepare journal entries for the transactions listed above.
(b) Prepare an updated December 31, 2014, trial balance.
(c) Prepare a 2014 income statement and a 2014 retained earnings statement.
(d) Prepare a December 31, 2014, classified balance sheet.
 
 
TUTORIAL PREVIEW
(a)
Account title
Debit
Credit
1
Equipment
13,780
       Cash
13,780
2
Depreciation Expense
 450
        Accumulated Depreciation—Equipment
450
Cash
3,500


File name: Raymond Company.xls File type: xls  PRICE: $15