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PROBLEM 13.4B (continued)
PAGE
POST.
REF.
1 1
2 2013 (Adjustment g) 2
3 Dec. 31 Depreciation Expense—Store Fixtures 205000 3
4 Accumulated Depreciation—Store Fixtures 205000 4
13 13
14 (Adjustment i) 14
15 31 Salaries Expense 145000 15
16 Salaries Payable 145000 16
17 To record accrued salaries 17
18 18
19 (Adjustment j) 19
20 31 Payroll Taxes Expense 1 1 0 93 20
26 26
27 (Adjustment k) 27
28 31 Payroll Taxes Expense 8 7 00 28
29 Federal Unemployment Tax Payable 1 4 50 29
36 36
37 37
Adjusting Entries
30
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
PROBLEM 13.4B (continued)
PAGE
POST.
REF.
1 1
2 2013 2
3 Dec. 31 Sales 23656000 3
4 Purchases Returns and Allowances 200000 4
5 Income Summary 23856000 5
6 6
7 31 Income Summary 23737293 7
8 Sales Returns and Allowances 600000 8
9 Purchases 16000000 9
27 27
28 28
29 29
Closing Entries
GENERAL JOURNAL 31
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 13.4B (continued)
PAGE
POST.
REF.
11
2 2014 2
3 Jan. 1 Interest Payable 9 0 00 3
4 Interest Expense 9 0 00 4
5 To reverse adjusting entry (h) made Dec. 31, 2013 5
20 20
21 21
22 22
23 23
PAGE
POST.
REF.
1 2014 1
2 Jan. 4 Salaries Payable 145000 2
Reversing Entries
GENERAL JOURNAL 33
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL 32
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 13.5B
PAGE
POST.
REF.
1 1
2 2013 (Adjustment a) 2
3 Dec. 31 Advertising Expense 737500 3
4 Prepaid Advertising 737500 4
5 To record expired advertising on $17,700, 5
6 one year contract paid August 1, 2013 6
7 7
22 22
23 31 (Adjustment e) 23
24 Payroll Taxes Expense 3 3 6 60 24
25 Social Security Tax Payable 2 7 2 80 25
26 Medicare Tax Payable 6 3 80 26
Adjusting Entries
GENERAL JOURNAL 25
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 13.5B (continued)
PAGE
POST.
REF.
1 1
2 2014 2
3 Jan. 1 Salaries Payable 440000 3
4 Salaries Expense 440000 4
5 To reverse adjusting entry (d) made Dec. 31, 2013 5
Reversing Entries
26
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
CRITICAL THINKING PROBLEM 13.1
1 Cash 1528000
2 Accounts Receivable 2660000
3 Allowance for Doubtful Accounts 9 5 00 (c) 1 2 2 5 00
17 Income Summary (a) 62 3 7 5 00 (b) 67 8 5 0 00
18 Sales 51498000
19 Sales Returns and Allowances 960000
20 Purchases 31943000
21 Freight In 360000
22 Purchases Returns and Allowances 714500
23 Purchases Discounts 576000
24 Rent Expense 1450000
25 Telephone Expense 216400
26 Salaries Expense 9200000 (h) 2 1 0 0 00
35
36
Programs Plus
Worksheet
Year Ending December 31, 2013
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
CRITICAL THINKING PROBLEM 13.1 (continued)
1528000 1528000 1
2660000 2660000 2
132000 132000 3
6785000 6785000 4
6237500 6785000 6237500 6785000 17
51498000 51498000 18
960000 960000 19
31943000 31943000 20
360000 360000 21
714500 714500 22
576000 576000 23
1450000 1450000 24
216400 216400 25
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
CRITICAL THINKING PROBLEM 13.1 (continued)
Operating Revenue
Sales 51498000
Less Sales Returns and Allowances 960000
Net Sales 50538000
Cost of Goods Sold
Merchandise Inventory, January 1, 2013 6237500
Operating Expenses
Rent Expense 14 5 0 0 00
Telephone Expense 2 1 6 4 00
Salaries Expense 94 1 0 0 00
Programs Plus
Income Statement
Year Ended December 31, 2013
CRITICAL THINKING PROBLEM 13.1 (continued)
Yasser Tousson, January 1, 2013 9362000
Current Assets
Less Accumulated Depreciation 1570000 1830000
Total Plant and Equipment 1830000
Total Assets 12892000
Current Liabilities
Notes Payable 726400
Accounts Payable 650000
Programs Plus
Statement of Owner's Equity
Year Ended December 31, 2013
December 31, 2013
Assets
Liability and Owner’s Equity
Programs Plus
Balance Sheet
CRITICAL THINKING PROBLEM 13.1 (continued)
PAGE
POST.
REF.
1 1
2 2013 (Adjustment a) 2
3 Dec. 31 Income Summary 6237500 3
4 Merchandise Inventory 6237500 4
5 To transfer beginning inventory 5
6 6
17 17
18 (Adjustment d) 18
19 31 Supplies Expense 572000 19
20 Supplies 572000 20
21 To record supplies used during 2013 21
Adjusting Entries
25
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
CRITICAL THINKING PROBLEM 13.1 (continued)
PAGE
POST.
REF.
1 1
2 2013 (Adjustment g) 2
3 Dec. 31 Interest Expense 3 2 5 00 3
11 11
12 (Adjustment i) 12
13 31 Payroll Taxes Expense 1 6 0 65 13
22 22
23 23
Adjusting Entries
26
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
CRITICAL THINKING PROBLEM 13.1 (continued)
PAGE
POST.
REF.
1 1
2 2013 2
3 Dec. 31 Sales 51498000 3
4 Purchase Returns and Allowances 714500 4
5 Purchase Discounts 576000 5
6 Income Summary 52788500 6
7 7
8 31 Income Summary 46509965 8
27 27
28 28
29 29
Closing Entries
GENERAL JOURNAL 27
DATE DESCRIPTION DEBIT CREDIT
CRITICAL THINKING PROBLEM 13.1 (continued)
PAGE
POST.
REF.
1 1
2 2014 2
3 Jan. 1 Interest Payable 3 2 5 00 3
4 Interest Expense 3 2 5 00 4
5 To reverse adjusting entry (g) made Dec. 31, 2013 5
6 6
7 1 Salaries Payable 210000 7
17 17
18 18
19 19
20 20
21 21
22 22
23 23
24 24
25 25
Reversing Entries
28
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
CRITICAL THINKING PROBLEM 13.2
Current Assets
Cash 15000000
Current Liabilities
Accounts Payable 13200000
Salaries Payable 1800000
Liability and Owner’s Equity
Kim-Yi Jewelry
Balance Sheet
December 31, 2012
Assets
CRITICAL THINKING PROBLEM 13.2 (continued)
Current Assets
Cash 3500000
Accounts Receivable 9600000
Inventory 23600000
2. From 2012 to 2013, Kim-Yi Jewelry’s cash decreased by $115,000. At the same time, current
3. A classified balance sheet permits the reader to make more meaningful comparisons of balance sheet
Kim-Yi Jewelry
Balance Sheet
Assets
December 31, 2013
SOLUTIONS TO BUSINESS CONNECTIONS
Managerial Focus:
2. Increase in accounts receivable resulting from slow collections from customers or an unwarranted
growth in inventories; payment of long-term debt or purchase of property.
4. Reveal trends or changes in specific items that need to be investigated.
6. Yes, compare increase in selling expenses to the increase in sales. Investigate levels of sales returns
and allowances. Review each selling expense account for accuracy.
7. Reveals variances out-of-line with industry averages; areas where costs should be controlled.
Ethical Dilemma:
You should follow the generally accepted accounting principles (GAAP) and do the proper adjusting
entry. You might suggest the owner seek different forms of financing that would not require
maintenance of a 1.5 current ratio. Additionally, you can offer to meet with the banker and try to
obtain a waiver of the current ratio current ratio requirement for the current period.
Financial Statement Analysis:
1. 2009: 1.2 ($970.5 ÷ $818.2)
Teamwork:
Answers will vary depending on the year.
SOLUTIONS TO PRACTICE TEST
Part A True-False
1. FALSE 14. FALSE
MINI-PRACTICE SET 2
MERCHANDISING BUSINESS ACCOUNTING CYCLE
PAGE 10
1 2013 1
2 Oct. 3 241 Dimitri Sayegh ✔2 6 0 4 00 1 2 4 00 2 4 8 0 00 2
9 9
10 10
11 11
12 12
13 13
14 14
10
2013
ACCOUNTS
RECEIVABLE
DEBIT
SALES TAX
PAYABLE
CREDIT SALES CREDITCUSTOMER’S NAME
TERMS
INVOICE
DATE
PURCHASES
DR./ACCOUNTS
PAYABLE
CREDIT
POST.
REF.
DATE
DATE
SALES
SLIP NO.
POST.
REF.
PURCHASES JOURNAL
PURCHASED FROM
SALES JOURNAL
INVOICE
NUMBER
MINI-PRACTICE SET 2 (continued)
PAGE
ACCOUNT NAME
POST.
REF.
2013
Oct. 2 Megan Greening ✔5 2000 52000
5 Emily Tran ✔1 7 0000 170000
CASH RECEIPTS JOURNAL 10
DATE DESCRIPTION
POST.
REF.
ACCOUNTS
RECEIVABLE
CREDIT
SALES TAX
PAYABLE
CREDIT
SALES
CREDIT
OTHER ACCOUNTS CREDIT
CASH
DEBIT
MINI-PRACTICE SET 2 (continued)
PAGE
ACCOUNT NAME
POST.
REF.
2013
Oct. 1 601 City Properties Rent Expense 629 420000 420000
1 602 Cable Station KOTV Prepaid Advertising 135 360000 360000
2 603 State Tax Com. Sales Tax Payable 231 1782000 1782000
Employee Income Tax Payable 223 102000 102000
10 609 The City Daily Advertising Expense 611 222500 222500
12 610 Ace Freight Co. Freight In 502 3 0 0 00 3 0 0 00
16 611 Acme Jobbers Purchases 501 525000 525000
ACCOUNT
S
PAYABLE
DEBIT
OTHER ACCOUNTS DEBIT
DATE
CK.
NO.
CASH
CREDIT
10CASH PAYMENTS JOURNAL
DESCRIPTION
POST.
REF. AMOUNT
PURCHAS
ES
DISCOUNT
CREDIT
