Page 271 - Accounting Principles (A Business Perspective)

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24 The company collected the amount due on USD 126,000 of the accounts receivable arising from the sale of
May 14.
25 The company purchased merchandise on account from Bond Company, USD 151,200; terms 2/10, n/30.

Freight terms were FOB shipping point, freight collect.
27 Of the merchandise purchased May 25, USD 25,200 was returned to the vendor.
28 A trucking company was paid USD 2,100 for delivery to The Western Wear Company of the goods purchased
May 25.
29 The company sold merchandise on open account, USD 15,120; terms 2/10, n/30.
30 Cash sales were USD 74,088.
30 Cash of USD 100,800 was received from the sale of May 14.

31 Paid Bond Company for the merchandise purchased on May 25, taking into consideration the merchandise
returned on May 27.
The inventory on hand at the close of business on May 31 is USD 299,040.
From the data given for The Western Wear Company:
a. Prepare journal entries for the transactions.
b. Post the journal entries to the proper ledger accounts. Use the account numbers in the chart of accounts
shown in a separate file at the end of the text. Assume that all postings are from page 15 of the general journal.
(There were no adjusting journal entries.)
c. Prepare a trial balance.

d. Prepare a classified income statement for the month ended 2010 May 31.
e. Prepare a classified balance sheet as of 2010 May 31.
Problem E The following data are for Leone Lumber Company:
LEONE LUMBER COMPANY
Trial Balance
2010 December 31
Acct. Account Title Debits Credits
No.
100 Cash $ 70,640
103 Accounts Receivable 159,520
105 Merchandise Inventory, 2010 January 1 285,200
107 Supplies on Hand 5,360
108 Prepaid Insurance 4,800 $ 17,600
112 Prepaid Rent 57,600 102,800
170 Equipment 88,000 200,000
171 Accumulated Depreciation—Equipment 219,640
200 Accounts Payable 1,122,360
300 Capital Stock
310 Retained Earnings, 2010 January 1 5,160 $ 1,000
410 Sales
412 Sales Returns and Allowances $ 500,840 $4,040
418 Interest Revenue
500 Purchases $7,840
502 Purchases Returns and Allowances 78,000
503 Transportation-In 138,400
505 Advertising Expense 80,800
508 Sales Salaries Expense 160,000
509 Office Salaries Expense 4,800
510 Officers' Salaries Expense 10,000
511 Utilities Expense 600
536 Legal and Accounting Expense 9,880
540 Interest Expense
567 Miscellaneous Administrative Expense
$1,667,440 $1,667,440
• A total of USD 3,400 of the prepaid insurance has expired.
• An inventory of supplies showed that USD 1,700 are still on hand.

Accounting Principles: A Business Perspective 272 A Global Text