On December 1, 2014, Westmoreland Company had the
following account balances.
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Debit
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Credit
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Cash
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$18,200
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Accumulated Depreciation
Equipment
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$3,000
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Notes receivable
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2,000
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Accounts payable
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6,100
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Accounts receivable
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7,200
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Common stock
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50,000
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Inventory
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16,000
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Retained earnings
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14,200
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Prepaid insurance
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1,600
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Equipment
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28,000
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$73,300
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$73,300
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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
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(a)
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Dec. 7
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Cash
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3,600
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Accounts
Receivable
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3,600
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12
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Inventory
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12,000
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Accounts
Payable
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12,000
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17
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Accounts
Receivable
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16,000
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Sales
Revenue
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16,000
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Cost of
Goods Sold
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10,000
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Inventory
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10,000
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