Background Information: Wolfpack Corp, a calendar year-end company, is located in Raleigh, NC. It purchases inventory for resale to mainly local customers. It uses the periodic inventory system and the gross method for recording purchase and sales discounts. Wolfpack uses a manual accounting system with the following five types of journals: • Sales Journal (SJ) – this journal is exclusively used to record all credit sales. • Purchases Journal (PJ) – this journal is exclusively used to record all purchases of asset items on account. • Cash Receipts Journal (CRJ) – this journal is exclusively used to record all transactions that involve a receipt of cash. • Cash Disbursements Journal (CDJ) – this journal is exclusively used to record all transactions that involve a cash payment. • General Journal (GJ) – this journal is used to record all transactions that are not recorded in one of the special journals above. Wolfpack also uses subsidiary ledgers for its accounts receivable and accounts payable accounts. Further details regarding these two ledgers as well as the chart of accounts are provided later in these instructions. January through November transactions for 20X5 have already been recorded and posted to the general ledger. It is currently December 1, 20X5. As a recently hired accountant, you have been asked to complete the accounting cycle for 20X5 by doing the following in two phases: Phase I: • Record December transactions in the applicable journal. • Post from the journals to the general ledger. • Update subsidiary ledgers when appropriate. At year-end, verify that the sum of the accounts receivable and accounts payable subsidiary ledger balances matches their respective accounts receivable and accounts payable general ledger balances. • Prepare an “Unadjusted Trial Balance” for the year end. Phase II: • If applicable, correct account balances in the general ledger. • Prepare adjusting entries. • Post adjusting entries to the general ledger. • Prepare an “Adjusted Trial Balance” for the year end. • Prepare an income statement, statement of stockholders’ equity, and balance sheet using proper accounting formatting rules. • Prepare closing entries. • Post closing entries to the general ledger. • Prepare a “Post-Closing Trial Balance”. Subsidiary Ledger Information: Wolfpack uses subsidiary ledgers to maintain extra details related to its accounts receivable and accounts payable accounts. The subsidiary ledgers provided later in this practice set show the customer/vendor names and amounts due or owed, but you will need further details for each subsidiary ledger in order to properly record some of the December transactions. These further details are as follows: Accounts Receivable Subsidiary Ledger Details Customer Name Customer Account # Date of Sale to Customer Sales Discount Terms Balance Owed on Dec 1 Clayton 110-12 7/20/X5 2/15, n/30 $ 10,000 Murphy 110-25 9/13/X5 2/15, n/30 18,000 Summers 110-33 10/25/X5 2/15, n/30 12,000 Evans 110-44 11/24/X5 2/15, n/30 64,000 Warren 110-46 11/24/X5 2/15, n/30 16,000 Carroll 110-47 11/28/X5 2/15, n/30 30,000 Total $150,000 Other Notes: A payment received from a customer is first applied towards the customer’s oldest balance in determining any applicable discount. All sales on account have discount terms of 2/15, n/30. Accounts Payable Subsidiary Ledger Details Supplier/Vendor Name Vendor Account # Date of Purchase Purchase Discount Terms Balance Owed on Dec 1 Tarheel Industries 210-17 11/07/X5 2/30, n/60 $30,000 Pirates Inc. 210-20 11/18/X5 3/15, n/30 18,000 Goodson Corp. 210-22 11/27/X5 n/30 42,000 Total $90,000 Note: Discount terms for a particular vendor are consistent (ex. Tarheel Industries always has discount terms of 2/30, n/60) Chart of Accounts Information: Account Number Account Title 100 Cash 110 Accounts Receivable 115 Allowance for Doubtful Accounts (AFDA) 120 Interest Receivable 130 Inventory 135 Supplies 140 Prepaid Rent 145 Prepaid Insurance 150 Investments (non-current) 160 Land 170 Buildings 175 Accumulated Depreciation – Buildings 180 Equipment 185 Accumulated Depreciation – Equipment 190 Patents 210 Accounts Payable 220 Salaries Payable 225 Utilities Payable 230 Interest Payable 235 Unearned Rent 240 Income Taxes Payable 245 Dividends Payable 250 Notes Payable (non-current) 300 Common Stock ($1 par) 310 Additional Paid-In Capital 320 Retained Earnings 325 Dividends 330 Accumulated Other Comprehensive Income 350 Treasury Stock 400 Sales Revenue 402 Sales Returns & Allowances 404 Sales Discounts 410 Interest Revenue 420 Rent Revenue 430 Dividend Revenue 500 Cost of Goods Sold 505 Purchases 507 Purchase Returns & Allowances 508 Purchase Discounts 510 Salaries Expense 515 Bad Debt Expense 520 Rent Expense 525 Supplies Expense 530 Depreciation Expense – Buildings 535 Depreciation Expense – Equipment 540 Patent Amortization Expense 550 Utilities Expense 560 Insurance Expense 570 Interest Expense 590 Income Tax Expense
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