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Problem 5-5B (Concluded)
Part 4
Current assets
Cash ........................................................................... $ 7,400
Merchandise inventory ............................................. 21,300
*$6,600 - $2,800 = $3,800
Quick assets (Cash in this case)................................ $ 7,400
Current liabilities.......................................................... $ 18,000
Acid-test ratio ($7,400 / $18,000)..................................... 0.41
5-1
Problem 5-6BB (50 minutes)
FOSTER PRODUCTS COMPANY
Work Sheet
For Year Ended October 31, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement Balance Sheet
Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash........................................... 7,400 7,400 7,400
Sales.......................................... 227,100 227,100 227,100
Sales discounts........................ 1,000 1,000 1,000
0
Totals..........................................
320,100
320,100
14,500
14,500
323,100
323,100
203,100 227,100 120,000 96,000
Net income................................ 24,00
0
______ ______ 24,000
5-2
Totals.......................................... 227,100
227,100
120,000
120,000
5-3
SERIAL PROBLEM — SP 5
Serial Problem — SP 5, Business Solutions (150 minutes) Part 1
Journal entries
Jan. 4..............................................................................Wages Expense
623 ..............................................................................125
..............................................................................Wages Payable
5..............................................................................Cash 101
25,000
7..............................................................................Merchandise Inventory
..............................................................................119 5,800
..................................................................................Accounts Payable 201
..................................................................................5,800
Purchased merchandise on credit.
9..............................................................................Cash 101
2,668
..................................................................................Accounts Receivable—
Gomez Co. ......................................................................106.6 2,668
Collected accounts receivable.
11.............................................................................Accounts Receivable—
Alex’s Eng. Co.................................................................106.1 5,500
13.............................................................................Accounts Receivable—
5,200
Sold merchandise on credit.
5-4
To record cost of Jan. 13 sale.
15.............................................................................Merchandise Inventory
..............................................................................119 600
..................................................................................Cash 101
600
Paid freight on incoming merchandise.
5-5
Education.
Serial Problem — SP 5 (Continued)
Jan. 17.............................................................................Accounts Payable
..............................................................................201 5,800
(Discount taken = $5,800 x .01 = $58)
20*............................................................................Sales Returns and
Allowances .....................................................................414 500
...............................................................Cost of Goods Sold 502 320
22.............................................................................Cash 101
4,653
..............................................................................Sales Discounts
415 ..............................................................................47
24.............................................................................Accounts Payable
201 ..............................................................................496
119.............................................................................9,000
..................................................................................Accounts Payable 201
..................................................................................9,000
Purchased merchandise for resale.
31.............................................................................Wages Expense
623..............................................................................1,250
..................................................................................Cash 101
1,250
Paid employee wages.
5-7
Serial Problem — SP 5 (Continued)
Feb. 1..............................................................................Prepaid Rent
131 .............................................................................. 2,475
..................................................................................Cash 101
2,475
Paid three months’ rent in advance.
8,414
Paid account payable within discount period.
January 26 purchase.........................
.............................................................
$9,000
Less credit allowed...........................
(496)
$8,414
5.............................................................................Advertising Expense
655 ..............................................................................600
..................................................................................Cash 101
600
Purchased ad in local newspaper.
4,800
Owner withdrew cash.
23 .............................................................................Accounts Receivable—
5-8
Delta Co...........................................................................106.7 3,220
..................................................................................Sales 413
3,220
Sold merchandise on credit.
1,000
Paid employee.
27.............................................................................Mileage Expense
676.............................................................................192
..................................................................................Cash 101
192
Reimbursed Rey for business mileage.
5-9
Serial Problem — SP 5 (Continued)
11.............................................................................Repairs Expense–
Computer .......................................................................684 960
..................................................................................Cash 101
960
Paid for computer repairs.
16.............................................................................Cash 101
5,260
..................................................................................Computer Services
Revenue .........................................................................403 5,260
Collected cash revenue from customer.
Billed customer for services.
25 ............................................................................Accounts Receivable—
Wildcat Services.....................................................................106.2 2,800
..................................................................................Sales 413
2,800
Sold merchandise on credit.
25.............................................................................Cost of Goods Sold
502..............................................................................2,002
..................................................................................Merchandise Inventory
119 ................................................................................. 2,002
5-10
To record cost of March 25 sale.
30.............................................................................Accounts Receivable—
IFM Co. ...........................................................................106.4 2,220
..................................................................................Sales 413
2,220
Sold merchandise on credit.
128
Reimbursed Rey for business mileage.
5-11
Serial Problem — SP 5 (Continued)
Part 2
Ledger accounts as of March 31 before posting of March 31 adjusting entries
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 48,372
Jan. 4 625 47,747
5 25,000 72,747
9 2,668 75,415
15 4,800 65,687
26 1,000 64,687
27 192 64,495
Mar. 9 3,220 67,715
11 960 66,755
16 5,260 72,015
19 3,830 68,185
31 128 68,057
Accounts Receivable—Alex’s Engineering Co. Acct. No. 106.1
Date Explanation PR Debit Credit Balance
5-12
Serial Problem — SP 5 (Continued)
Accounts Receivable—Easy Leasing Acct. No. 106.3
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Mar. 24 9 ,047 9 ,047
Accounts Receivable—IFM Co. Acct. No. 106.4
Date Explanation PR Debit Credit Balance
Accounts Receivable—Gomez Co. Acct. No. 106.6
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 2,668
Jan. 9 2 ,668 0
Accounts Receivable—Delta Co. Acct. No. 106.7
Date Explanation PR Debit Credit Balance
5-13
Serial Problem — SP 5 (Continued)
Accounts Receivable—Dream, Inc. Acct. No. 106.9
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Merchandise Inventory Acct. No. 119
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Jan. 7 5,800 5,800
13 3,560 2,240
Mar. 25 2,002 1,894
30 1,048 846
Computer Supplies Acct. No. 126
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 580
Mar. 8 2,730 3,310
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
5-14
Serial Problem — SP 5 (Continued)
Accumulated Depreciation—Office Equipment Acct. No. 164
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 400
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
Accounts Payable Acct. No. 201
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 1,100
Jan. 7 5,800 6,900
Wages Payable Acct. No. 210
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 500
Jan. 4 500 0
Unearned Computer Services Revenue Acct. No. 236
Date Explanation PR Debit Credit Balance
5-15
