Comprehensive Problem
 
More Co. is a merchandising business.
 
The account balances for More Co. as of November 30, 2012 (unless otherwise indicated), are as follows:
 
           
110
    
Cash
                                                                         
$
 
13,920
           
112
    
Accounts Receivable
                                             
   
34,220
           
115
    
Merchandise Inventory
                                          
 
133,900
           
116
    
Prepaid Insurance
                                                  
     
3,750
           
117
    
Store Supplies
                                                         
     
2,550
           
123
    
Store Equipment
                                                     
 
114,300
           
124
    
Accumulated Depreciation-Store Equipment
    
   
12,600
           
210
    
Accounts Payable
                                                  
   
21,450
           
211
    
Salaries Payable
                                                     
        
    
0
           
218
    
Interest Payable
                                                                  
 
0
           
220
    
Note Payable (Due 2017)
                                      
   
10,000
           
310
    
P. Williams, Capital (January 1, 2012)
                
 
103,280
           
311
    
P. Williams, Drawing
                                              
   
10,000
           
312
    
Income Summary
                                                                
0
           
410
    
Sales
                                                                         
 
715,800
           
411
    
Sales Returns and Allowances
                           
   
20,600
           
412
    
Sales Discounts
                                                      
   
13,200
           
510
    
Cost of Merchandise Sold
                                     
 
360,500
           
520
    
Sales Salaries Expense
                                        
   
74,400
           
521
    
Advertising Expense
                                              
   
18,000
           
522
    
Depreciation Expense
                                                       
 
0
           
523
    
Store Supplies Expense
                                        
         
   
0
           
529
    
Miscellaneous Selling Expense
                          
     
2,800
           
530
    
Office Salaries Expense
                                        
   
40,500
           
531
    
Rent Expense
                                                         
   
18,600
           
532
    
Insurance Expense
                                                
            
0
           
539
    
Miscellaneous Administrative Expense
             
     
1,650
           
550
   
Interest Expense
                                                     
 
       
240
 
 
More Co. uses the perpetual inventory system and the last-in, first-out costing method.
 
Transportation-in and purchase discounts should be added to the Inventory Control Sheet, but since this will complicate the computation of the Last-in, first-out costing method, please ignore this step in the process.
 
 
More Co. sells four types of television entertainment units.
 
The sales price of each are:
 
TV A:
 
$3,500
TV B:
 
$5,250
TV C:
 
$6,125
PS D: $9,000
 
 
 
 
During December, the last month of the accounting year, the following transactions were completed:
 
Dec.
   
1.
  
Issued check number 2632 for the December rent, $1,600.
3.
   
Purchased four TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $14,800.
4.
   
Issued check number 2633 to pay the transportation changes on purchase of December 3, $400.
 
(NOTE:
 
Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)
6.
   
Sold four TV A and 4 TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.
7.
   
Received $7,500 cash from Marie Co. on account, no discount.
10.
 
Sold two project systems for cash.
11.
 
Purchased store supplies on account from Matt Co., terms 1/10, n/30,
     
$620.
13.
 
Issued check number 2634 for merchandise purchased on December 3, less discount.
14.
 
Issued credit memo for one TV A unit returned on sale of December 6.
 
15.
 
Issued check number 2635 for advertising expense for last half of December, $1,500.
16.
 
Received cash from sale of December 6, less return of December 14 and discount.
19.
 
Issued check number 2636 for two TV C units, $7,600.
19.
 
Issued check number 2637 for $6,100 to Joseph Co. on account.
20.
  
Sold three TV C units on account to Cameron Co., invoice number
      
892, terms 1/10, n/30, FOB shipping point.
 
20.
 
For the convenience of the customer, issued check number 2638 for shipping charges on sale of December 20, $600.
21.
 
Received $11,750 cash from McKenzie Co. on account, no discount.
21.
 
Purchased three projector systems on account from Elisha Co., terms 1/10, n/30, FOB destination, $15,600.
24.
 
Issued a debit memo for return of $5,200 because of a damaged projection system purchased on December 21, receiving credit from the seller.
26.

 
Issued check number 2639 for refund of cash on sales made for cash, $1,000.
  
(Customer was going to return goods until partial refund was arranged.)
27. Issued check number 2640 for sales salaries of $1,750 and office
      
salaries of $950.
28.

 
Purchased store equipment on account from Matt Co., terms 2/10, n/30, FOB
     
destination, $800.
29.

 
Issued check number 2641 for store supplies, $550.
30.

 
Sold four TV C units on account to Randall Co., invoice number 893,
 
terms 2/10, n/30, FOB shipping point.
30.

 
Received cash from sale of December 20, less discount, plus transportation
      
paid on December 20.
30.

 
Issued check number 2642 for purchase of December 21, less return
 
of December 24 and discount.
30.

 
Issued a debit memo for $200 of the purchase returned from
      
December 28.
 
 
 
 
Instructions:
 
1.
   
Enter the balances of each of the accounts in the appropriate balance column of a four-column account (General Ledger).
 
Write Balance in the item section, and place a check mark (√) in the Post Reference column.
2.
   
Journalize the transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal as illustrated in chapter 7.
 
Also post to the Accounts Receivable and Accounts Payable Subsidiary ledgers.
3.
   
Total each column on the special journals and prove the journal.
4.
   
Post the totals of the account columns and individually post the other columns as well as the general journal.
5.
   
Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).
6.
   
 
Prepare the unadjusted trial balance on the worksheet.
7.
   
Complete the worksheet for the year ended December 31, 2012, using the following adjustment data:
a.
   
Merchandise inventory on December 31
                            
$111,040
b.
   
Insurance expired during the year
                                       
     
1,250
c.
   
Store supplies on hand on December 31
                           
        
975
d.
   
Depreciation for the current year needs to be calculated.
 
More Co. uses the
Straight-line method, the store equipment has a useful life of 10 years with no salvage value.
 
(NOTE: the purchase and return will not be included as the dates of the transactions were after the 15
th
of the month).
e.
   
Accrued salaries on December 31:
                             
Sales salaries
                                        
$350
                             
Office salaries
                                       
180
               
       
530
f.
  
The note payable terms are at 8%, payment is not being made until Jan. 3, 2013.
 
Interest must be recognized for one month (round answer to the nearest dollar amount).
 
 
8.
 
Prepare a multiple-step income statement, a statement of owner’s equity, and a
    
classified balance sheet in good form.
9.
 
Journalize and post the adjusting entries.
10.
  
Journalize and post the closing entries.
 
Indicate closed accounts by inserting a line
in both balance columns opposite the closing entry.
11.
  
Prepare a post-closing trial balance.