1. Principles of Accounting
Asst.Prof.Dr. Panchat Akarak
School of Accounting
Chiangrai Rajabhat University
Accounting I

2. Exercises 8 1. Vocabulary 2. Completion and exercises 3
Exercises 8 1. Vocabulary 2. Completion and exercises 3. True-False Questions 4. Multiple Choice Questions 5. Matching 6. Demonstration Problem

3. Vocabulary Items Meaning in Thai Sales Revenues Gross Sales Net Sales
Trade Discount
Cash Discount
Sale Discount
Sale Returns and Allowances
Inventories

4. Vocabulary Purchases of Merchandise Purchases Returns and Allowances
Purchases Discount
Cost of Goods Sold
Transportation Costs
Transportation-In
Transportation-Out
Beginning Inventory

5. Vocabulary Net cost of purchases Cost of goods available for sale
Ending Inventory
Operating Expense
Gross margin
Gross Profit
Other revenues
Other expense
Selling expense
Administrative expense

6. 2. Completion and exercises
1. Determine the missing amounts in the following data. The Individual cases are not related. The Relationship in the income statement
Sale
40,000
?(2)
90,000
80,000
Gross margin
10,000
30,000
?(3)
Purchases
60,000
50,000
?(5)
Beginning inventory
? (1)
Ending inventory
20,000
?(4)
Answers
(1)
(2)
(3)
(4)
(5)

7. 2. Completion and exercises
1. Determine the missing amounts in the following data. The Individual cases are not related. The Relationship in the income statement
Sale
40,000
?(2)
90,000
80,000
Gross margin
10,000
30,000
?(3)
Purchases
60,000
50,000
?(5)
Beginning inventory
? (1)
Ending inventory
20,000
?(4)
Solutions
Answers
70,000

8. 2. Completion and exercises
2. Determine the amount to be paid in full settlement of each of the following invoices assuming that the credit memorandum was received prior to payment and that the invoices were paid within the discount period
Purchase Invoice: (a) (b)
Merchandise $1,800 $1,920
Transportation 60 Prepaid
Credit Terms FOB Shipping Point FOB Destination
2/10,n/30 1/10,n/30
Credit memorandum:
Merchandise Returned $70 $130

9. 2. Completion and exercises
2. Determine the amount to be paid in full settlement of each of the following invoices assuming that the credit memorandum was received prior to payment and that the invoices were paid within the discount period
Solutions a b
Purchase
1,800.00
1,920.00
Less Return
70.00
130.00
sub total
1,730.00
1,790.00
Transportation
60.00 --
Discount
34.60
17.90
Total
1,755.40
1,772.10

10. 2. Completion and exercises
3. Using the following information, prepare the necessary closing
entries for the Somsak Company.
Sales ,000
Merchandise inventory 1/1/ ,000
Merchandise inventory 12/31/ ,000
Purchases ,000
Purchases discounts ,000
Purchases returns and allowances 2,000
Transportation-in ,000
Selling expense ,500
Administrative expense 3,800

11. 2. Completion and exercises
Solutions closing entries for the Somsak Company.
Dr. Merchandise Inventory 26,000
Purchases Discounts ,000
Purchases Returns & Allowance ,000
Sales 85,000
Cr. Income Summary account 114,000
To Closing entries Credit balance
Dr. Income Summary account 86,300
Cr. Merchandise inventory ,000
Purchases ,000
Transportation-in ,000
Selling expense ,500
Administrative expense 3,800

12. 2. Completion and exercises
4. Use the information in Question 3 to prepare an Income Statement.

13. Somsak Company Income Statement For the year ended December 31, 2015
Sales
85,000
Cost of Goods Sole.-
Merchandise Inventory 1/1
20,000
Added Purchases
55,000
Transportation-In
3,000
total
58,000
Less Purchases Discount
1,000
Purchases Returns & Allowance
2,000
Cost of goods available for sale
75,000
Less Merchandise Inventory 12/31
26,000
49,000
Gross margin
36,000

14. Somsak Company Income Statement For the year ended December 31, 2015
Gross margin
36,000
Operating Expense.-
Selling Expenses
4,500
Administrative Expense
3,800
8,300
Net Income
27,700

15. 2. Completion and exercises
5. The following data pertain to a particular purchase:
Date of invoice August 23
List price 2,000
Trade discount 40%
Prepaid freight
Terms 2/10,n/30: FOB. Shipping point
A. When the invoice is received from the vendor, the purchaser
should expect the total of the invoice to be what amount?
B. What is the last day on which the purchaser may make
payment and still be entitled to the cash discounts?
C. What is the amount of cash discount that can be taken if the
invoice is paid within the discount period?

16. 2. Completion and exercises
5. The following data pertain to a particular purchase:
Date of invoice August 23
List price 2,000
Trade discount 40%
Prepaid freight
Terms 2/10,n/30: FOB. Shipping point
Solutions
A. When the invoice is received from the vendor, the purchaser
should expect the total of the invoice to be what amount?
2,000 x 60% = 1, =1,300
B. What is the last day on which the purchaser may make
payment and still be entitled to the cash discounts?
September 2
C. What is the amount of cash discount that can be taken if the
invoice is paid within the discount period?
1,200 x 2% =24

17. 2. Completion and exercises
6. The following information is given:
Invoice Date May 21
List Price $900
Trade Discounts 10%
Credit Terms 2/10,n/30
Date Paid June 17
The amount to be recorded as the selling price is…………
The amount that was actually paid is………………….. 

18. 2. Completion and exercises
6. The following information is given:
Invoice Date May 21
List Price $900
Trade Discounts 10%
Credit Terms 2/10,n/30
Date Paid June 17
Solutions
The amount to be recorded as the selling price is $810
Computed x 10%= – 90 = 810
The amount that was actually paid is $810

19. 2. Completion and exercises
7. Cee sold $1,000 of merchandise to Dee under terms 2/15,n/30 f.o.b. Destination, freight of $50 prepaid.
The transportation company would receive payment from …………………..
Who would charge (debit) the amount paid to………………………….

20. 2. Completion and exercises
7. Cee sold $1,000 of merchandise to Dee under terms 2/15,n/30 f.o.b. Destination, freight of $50 prepaid.
Solutions
The transportation company would receive payment from Cee
Who would charge (debit) the amount paid to Transportation-Out (Freight Expense)

21. 2. Completion and exercises
8. E sold merchandise to F, list price $10,000, less 50 percent and 20 percent, under term of 2/10,n/30 fob. Shipping point, freight of $100 collect, if F paid E within the discount period, F would send a check in the amount of …………………….

22. 2. Completion and exercises
8. E sold merchandise to F, list price $10,000, less 50 percent and 20 percent, under term of 2/10,n/30 fob. Shipping point, freight of $100 collect, if F paid E within the discount period, F would send a check in the amount of ………………
Solutions
10,000 x 50% = 5,000
5,000 x 20% = 1,000
5, ,000 = 4,000 x 2% = 80
4, = 3,920
The transportation company would collect $100 from F.

23. 2. Completion and exercises
9. A purchased merchandise from B, invoice price,$1,000; term 2/10,n/30. A returned $200 of the merchandise and them paid the balance due on the invoice after the discount period had expired, Give the entries required on A’s books.

24. 2. Completion and exercises
9. Solutions
Dr. Purchases 1,000
Cr. Accounts Payable 1,000
To record net invoice price of goods purchased.
Dr. Accounts Payable 200
Cr. Purchases Returns and Allowances 200
To record return of merchandise
Dr. Accounts Payable 800
Cr. Cash
To record payment of invoice after discount period has expired.

25. 2. Completion and exercises
10. Accounts which appear on the work sheet of a merchandising company which do not appear on that of a service company are the following (in any order):
1……………………………. 2………………………………….
3……………………………. 4…………………………………..
5……………………………. 6…………………………………..
7…………………………….. 8………………………………….. 9.…………………………….

26. 2. Completion and exercises
10. Accounts which appear on the work sheet of a merchandising company which do not appear on that of a service company are the following (in any order): Solutions 1. Inventory 2. Purchases 3. Purchases Returns and Allowance 4. Purchases Discounts 5. Transportation-In 6. Sales 7. Sales Returns and Allowance 8. Sales Discounts 9. Transportation-out

27. 3. True-False Questions
Indicate whether the following statements are true or false by inserting in the blank space provided a capital “T” for True or “F” for false. F 1
Sales Returns and Allowances is debited and Income Summary is credited in the closing entry. 2
Trade discounts are terms which allow deductions to customers if they pay their bills within a definite period of time.

28. 3. True-False Questions T 3
The Purchase Returns and Allowance account normally has a credit balance. F 4
Cash discounts taken on goods acquired for resale should be debited to a Sales Discounts account. 5
Periodic inventory procedure provides more control over inventory than does the perpetual inventory procedure. 6
A cash discount is synonymous with a trade discount.

29. 3. True-False Questions F 7
Buyers determine their cash discount on the total amount of the invoice, including the freight charge under the terms FOB shipping point when the seller prepays the freight. 8
Using periodic inventory procedure, the cost of goods sold is reflected in the balance of the purchase account. 9
An error that understates the ending inventory will overstate net income is the year of the error.

30. 3. True-False Questions F 10
Typically, neither a trade discount nor a cash discount is recorded by seller or buyer. 11
Assume that inventory was not counted and was omitted from the Merchandise Inventory account at year-end: this omission would cause inventory and owner’s equity on the balance sheet to be understated because cost of goods sold would be understated. T 12
The merchandise inventory amount in the Balance Sheet debit column of the work sheet is the ending inventory.

31. 3. True-False Questions T 13
Cost of goods sold is the net cost of purchases of the period adjusted for any difference between beginning and ending inventories. 14
An income statement which separates revenues and expenses into operating and nonoperating items is called a classified or multiple-step income statement. F 15
The work sheet of a merchandising company eliminates the need for adjusting and closing journal entries.

32. 3. True-False Questions F 16
Using the credit terms 2/10, n/30 means that the buyer may deduct 10 percent of the amount of the invoice it payment is made by the 2nd of the following mount. 17
Cash discounts are substantial reductions from the list price granted to retailers and wholesalers in differing amount to reflect variety of quantities purchased.

33. 3. True-False Questions T 18
A company’s cost of goods sold would be $53,000 for a period in which purchases were $35,000, beginning inventory was $18,000 and ending inventory was zero. F 19
Sales would be $150,000 for a company whose data are: Beginning inventory $36,000; Ending inventory $40,000; Cost of goods sold $80,000; Gross margin from Sale $50,000.

34. 3. True-False Questions T 20
In a sale of merchandise, the buyer should receive an invoice from the seller 21
With trade discounts of 20%, 10% and 5% and a list price of $ 100, the sale should be recorded in the journal as $68.40 22
If the accountant mistakenly places a revenue account balance in the Balance Sheet credit column of the work sheet, the work sheet columns will still balance.

35. 3. True-False Questions T F 23
Merchandise on consignment should not appear as inventory on the consignee’s balance sheet. F 24
The balances of the Purchases Returns and Allowances account and the Purchases Discount account are subtracted from Purchases on the Income Statement to show Goods Available for Sale. 25
Consigned goods should be included in the owner’s inventory even though the owner may have delivered them to another party.

36. Solutions-True-False Questions1 F 11 21 T 2 12 22 3 13 23 4 14 24 5 15 25 6 16 7 17 8 18 9 19 10 20

37. 4. Multiple Choice Questions
For each of the following questions, indicate the single, best answer by circling the appropriate letter.
1. In the Income Statement: A
Operating expenses are usually classified as either “Administrative expense” or “Selling expenses” B
Ending Inventory is added to Purchases to determine Goods Available for Sale. C
“Net Income from Operation and “Net Income” are synonymous. D
The amount shown as “Net Sales” Includes all cash sales plus only those charge sales for which cash has been received. E
Expenses are subtracted from Revenues to determine the balance of the owner’s Capital account.

38. 4. Multiple Choice Questions
2. If merchandise purchased cost $25,000, what was the company’s Cost of Goods Sold if beginning inventory was $9,000 and ending inventory was $19,000? A
$35,000 B
$53,000 C
$15,000 D
None of these

39. 4. Multiple Choice Questions
3. Which of the following correctly describes the make-up of the cost of goods sold section of the income statement under periodic inventory procedures? A
Beginning Inventory + Purchases + Transportation-in minus Purchase discounts + Ending Inventory B
Beginning Inventory minus Purchases + Transportation-in minus Purchase Discounts minus Ending Inventory C
Beginning Inventory + Purchases minus Transportation-in minus Purchase Discounts + Ending Inventory D
Beginning Inventory + Purchases minus Transportation-in minus Purchase Discounts minus Ending Inventory E
None of the above

40. 4. Multiple Choice Questions
4. Cost of Goods sold refers to: A
Purchases plus beginning inventory. B
Cost of goods available less ending inventory. C
Cost prices which are indentified with the items which are identified with the items which were sold during the period. D
Net sales less gross margin. E
All above except A.

41. 4. Multiple Choice Questions
5. The entry on the books of the seller to record the return of merchandise sold on account for which no payment has been received is: A
Dr. Sale xx
Cr. Accounts Receivable xx B
Dr. Accounts Receivable xx
Cr. Sales Returns & Allowances xx C
Dr. Sales Returns & Allowance xx
Cr. Cash xx D
Dr. Sales Returns & Allowances xx
Cr. Sales xx E
None of these.

42. 4. Multiple Choice Questions
In the following equations identify the item designated by X
6. Merchandise Inventory (Beginning) + X = Merchandise available for sale: A
Purchase discount B
Net cost of purchases C
Cost of Goods sold D
Merchandise inventory ending E
None of these

43. 4. Multiple Choice Questions
7. Net sales – X = Gross margin A
Net purchases B
Net profit C
Ending inventory D
Cost of merchandise sold E
None of these

44. 4. Multiple Choice Questions
8. An Account Payable of $200 is subject to a 2 percent discount if paid within the 60-day discount period. Part of the entry to record this payment would be: A
A credit to Accounts Payable of $200. B
A credit to Accounts Payable of $196. C
A debit to Accounts Payable of $200. D
A credit to Cash of $200. E
A debit to purchase Discount of $4.

45. 4. Multiple Choice Questions
9. Determine the amount to be paid in full settlement of the invoice, assuming that credit for returns and allowances was received prior to payment and that the invoice was paid within the discount period. Merchandise $1,300, Transportation $50. Returns & Allowances $100. And terms FOB. Shipping point, 1/10,n/30, Freight prepaid. A
$1,237.50 B
$1,238.00 C
$1,130.00 D
$1,225.00 E
None of these

46. 4. Multiple Choice Questions
10. Partial closing entries for Brown Company are given below.
Commissions Earned 5,000
Merchandise Inventory 3,500
Income Summary 8,500
The debit item of $3,500 is: A
The cost of the ending inventory. B
The cost of the beginning inventory. C
The cost of purchases made during the period D
The cost of goods available for sale during the period. E
None of the above.

47. 4. Multiple Choice Questions
Given the following information for Questions
Purchases $44,000
Operating expense $14.000
Ending Inventory $12,000
Net Income $10,000
Cost of Goods sold $54,000
11. What is beginning inventory?

48. 4. Multiple Choice Questions
11. What is beginning inventory? A
$66,000 B
$22,000 C
$56,000 D
$12,000

49. 4. Multiple Choice Questions
12. What is gross margin? A
$66,000 B
$10,000 C
$24,000 D
$4,000

50. 4. Multiple Choice Questions
13. What are sales? A
$66,000 B
$22,000 C
$78,000 D
$64,000

51. 4. Multiple Choice Questions
14. Merchandise on hand July I was $5,400: purchases during July were $28,200: transportation-out was $700: transportation-in was $1,500: purchase returns were $600: inventory, July 31, was found to be $6,200. The Cost of Goods Sold for the month of July was: A
$28,300 B
$34,500 C
$27,600 D
$40,700 E
$29,000

52. 4. Multiple Choice Questions
15. In the income statement the inventory that was on hand at the beginning of the period is treated as: A
An asset item. B
An addition in the computation
of cost of goods sold. C
A deduction from purchases. D
A direct deduction from gross sales.

53. Multiple Choice Questions
SOLUTIONS
Multiple Choice Questions 1 A 2 C
25,000 Purchases + 9,000 Beginning Inventory -19,000 Ending Inventory= 15,000 Cos of Goods Sold 3 E
Under the periodic inventory procedure, the cost of goods sold section is composed of: Beginning Inventory + Purchases+ Transportation-in minus Purchase discounts minus Ending Inventory. 4 5
The correct entry is to debit Sales Returns and Allowance and to credit accounts Receivable

54. Multiple Choice Questions
SOLUTIONS
Multiple Choice Questions 6 B 7 D 8 C
The credit would be to Cash, $196 and to Purchase Discounts,$4 9
$1,300 Merchandise -$100 Returns and Allowance=$1,200: $1,200 - $12 Discount + $50Transportation=$1,238 10 A

55. Multiple Choice Questions
SOLUTIONS
Multiple Choice Questions 11 B
$54,000 Cost of Goods Sold +$12,000 Ending Inventory= $66,000-$44,000 Purchases=$22,000 Beginning Inventory 12 C
$10,000 Net Income +$14,000 Operating Expense=$24,000 Gross Margin 13
$24,000 Gross Margin + $54,000 Cost of Goods Sold=$78,000 14 A
$5,400 Beginning Inventory +$28,200 Purchases+ $1,500 Transportation-in-$600 Purchases Returns=$34,500Cost of Goods Available for Sale- $6,200 Ending Inventory=$28,300 Cost of Goods Sold 15

56. 5. Matching
Referring to the terms listed in the left column, place the appropriate letter next to the corresponding description. A term may be used more than once.
a. F.o.b. shipping point
b. Freight prepaid
c. Chain discount
d. Sales discounts
e. F.o.b. destination
f. Freight collect
g. Purchase discounts
h. Operating revenues
i. Non-operating revenues
j. Credit
k. Debit
l. Cost of goods sold
m. Gross margin
n. Selling expenses
o. Administrative expense

57. 5. Matching A 1
The term used when the buyer incurs all transportation costs after the merchandise is loaded at the point of shipment. F 2
This term is used when the buyer pays the freight bill upon arrival of the goods. C 3
This term is applied when a list price is subject to several trade discounts. G 4
Cash discounts as recorded on the books of the buyer.

58. 5. Matching E 5
The term used when goods are shipped to their destination without charge to the buyer. B 6
This term is used when the seller pays the freight at the time of shipment. H 7
Revenues generated by the major activities of the business. 8
The term used when the seller bears all the transportation charges.

59. 5. Matching J 9 The normal balance of the Purchase Discounts account.10
Net sales – Cost of Goods Sold. N 11
Expenses incurred in performing and facilitating the marketing effort. I 12
Beginning inventory + Net cost of purchases- Ending inventory.

60. 5. Matching O 13
Operating expenses incurred in the overall management of a business. N 14
Advertising expense, Warehousing and Handling Expense, and Salaries Expense – Marketing Manager are grouped into this category. G 15
Are deducted along with purchase returns and allowances from gross purchase to arrive at net purchases.

61. Solutions-Matching 1 9 2 10 3 11 4 12 5 13 6 14 7 H 15 8 A J F M C N GE 13 O 6 B 14 7 H 15 8

62. 6. Demonstration Problem
1. Hill-ton Company informs you that the following business transactions occurred in 2016:
Jan. 1 Hilton transferred $250,000 cash from a personal bank account, $240,000 Inventory, $500,000 building, $650,000 Land, and $100,000 Equipment to his business.
(Inventory cost $12 each)
2016:
Jan. 1 Dr. Cash $250,000
Inventory $240,000
Building $500,000
Land $650,000
Equipment $100,000
Cr. Capital ,740,000 To Recorded Opening entries

63. 1. Hill-ton Company
Jan 1
A Vehicle costing $250,000 were purchased. Cash in the amount of 50,000 was paid and a mortgage note 8% 150 day was given for the remainder.
2016:
Jan. 1 Dr. Vehicle 250,000
Cr. Cash 50,000
Mortgage Note 8% 200,000

64. 1. Hill-ton Company
Jan 2
Premiums for Vehicle insurance were paid in the amount of $ 5,000 for Jan.
2016:
Jan. 2 Dr. Insurance Exp. 5,000
Cr. Cash 5,000

65. 1. Hill-ton Company
Jan 3
Paid for purchase 10,000 units
2016:
Jan. 3 Dr. Purchase 120,000
Cr. Cash ,000
(10,000x12)

66. 1. Hill-ton Company Jan 4 Paid for Transportation-in $1,200. 2016:
Jan. 4 Dr. Transportation-in 1,200
Cr. Cash 1,200

67. 1. Hill-ton Company
Jan 5
Cash received form Sale, 1,000 Units
2016:
Jan. 5 Dr. Cash 20,000
Cr. Sales 20,000

68. 1. Hill-ton Company
Jan 8
Office Supplies costing $5,000 and equipment costing $18,000 were purchased on account.
2016:
Jan. 8 Dr. Office Supplies 5,000
Equipment 18,000
Cr. Accounts Payable 23,000

69. 1. Hill-ton Company Jan 15 Cash received form Sale, 2,000 Unite@$20.
2016:
Jan. 15 Dr. Cash 40,000
Cr. Sales 40,000

70. 1. Hill-ton Company 2016: Jan. 16 Dr. Purchases 60,000
Purchase 5,000 units term payment
2/10,n/30.
2016:
Jan Dr. Purchases 60,000
Cr. Accounts Payable 60,000

71. 1. Hill-ton Company
Jan 17
Sold 14,000 units that cost $20 each on credit term
2/10n/30.
2016:
Jan. 17 Dr. Accounts Receivables 280,000
Cr. Sales ,000

72. 1. Hill-ton Company Jan 18 Paid cash to creditors on account, $15,000.
2016:
Jan. 18 Dr. Accounts Payable 15,000
Cr. Cash 15,000

73. 1. Hill-ton Company
Jan 19
Returned portion of the Inventory 10 unites they were not of the proper grade.
2016:
Jan. 19 Dr. Accounts Payable 120
Cr. Purchases Returns 120

74. 1. Hill-ton Company
Jan 20
Returned portion of the supplies costing $1,000 since they were not of the proper grade.
2016:
Jan. 20 Dr. Accounts Payable 1,000
Cr. Office Supplies 1,000

75. 1. Hill-ton Company
Jan 22
Received cash from clients on account Jan 17.
2016:
Jan. 22 Dr. Cash 274,400
Sales Discounts ,600
Cr. Accounts Receivable 280,000

76. 1. Hill-ton Company Jan 23 Paid Transportation-out $500. 2016:
Jan. 23 Dr. Transportation-out 500
Cr. Cash

77. 1. Hill-ton Company
Jan 26 Paid cash to creditors on account form purchase Jan 16.
2016:
Jan. 26 Dr. Accounts Payable 59,880
Cr. Cash 58,682.40
Purchases Discount 1,197.60

78. 1. Hill-ton Company Jan 27 Paid utility bill, $2,500. 2016:
Jan. 27 Dr. Utility Exp. 2,500
Cr. Cash 2,500

79. 1. Hill-ton Company
Jan 29 Sold 15,000 Units that cost$20 each on cash.
2016:
Jan. 29 Dr. Cash 300,000
Cr. Sale ,000

80. 1. Hill-ton Company Jan 30 Paid monthly salaries, $15,000. 2016:
Jan. 30 Dr. Salary Exp. 15,000
Cr. Cash 15,000

81. 1. Hill-ton Company Jan 31 Paid gasoline expense $2,000 for Jan. 2016:
Jan. 31 Dr. Gasoline Exp. 2,000
Cr. Cash 2,000

82. 1. Hill-ton Company
Jan 31
Sale Returns in January 29, 500 Units that were not miss color.
2016:
Jan. 31 Dr. Sale Returns 10,000
Cr. Cash 10,000

83. 1. Hill-ton Company Required:
Record the above transactions in general journal. Open T-account ledger accounts approximate for Hillton Company. (Omit explanations)
Post the journal entries to the ledger accounts.
Prepare a trial balance as of January 31, 2016.
Prepare an Income Statement for month end January 31, 2016.
(Inventory on hand at January 31, have a cost of $43,500.)

84. Trial Balance Account Balance
2. The Peenut Company
2. The Trial balance of the Peenut Company at December 31, Contains the following account balance (your skill in sorting amounts to the proper work sheet columns.)
Peenut Company
Trial Balance Account Balance
Cash
125,000
Accounts Receivable
30,000
Allowance for doubtful debt
1,000
Note Receivable
25,000
Inventory January 31
15,000

85. 2. The Peenut Company Supplies on hand 14,000 Prepaid Insurance 12,000
Prepaid rent
18,000
Long term Investment
100,000
Land
800,000
Building
1,000,000
Accumulated Depreciation-Building
50,000
Vehicle
1,500,000
Accumulated Depreciation-Vehicle
120,000

86. 2. The Peenut Company Equipment 50,000
Accumulated Depreciation-Equipment
5,000
Intangible asset-Patent
10,000
Account Payable
25,000
Note Payable
30,000
Short term Loan
180,000
Unearned Service
12,000
Tax property payable
2,000
Long term Loan
300,000

87. 2. The Peenut Company Sales 880,000 Sale returns 5,000 Sale discounts
2,800
Rent Revenue
38,000
Purchases
525,000
Transportation-In
1,800
Purchases Returns
1,900
Purchases discounts
2,000

88. 2. The Peenut Company Salaries expense 95,000 Transportation-out 3,500
Gasoline expense
24,000
Advertising expense
8,000
Miscellaneous expense
2,300
Interest expense
6,000
Repair and Maintenance expense
12,000
Using the account balances given above and the additional
information presented below, prepare a work sheet for
the Peenut Company.

89. 2. The Peenut Company Additional data:
1. Inventory on hand at December 31, have a cost of $30,000
2016:
Dec. 31 Dr. Inventory Ending 30,000
Cr. Income Summary 30,000
To recorded Inventory Ending

90. 2. The Peenut Company
2. Store supplies on hand at December 31, have a cost of $2,000.
2016:
Dec. 31 Dr. Supplies Exp. 12,000
Cr. Supplies on hand 12,000
To recorded Supplies exp.

91. 2. The Peenut Company
3. The balance in the Prepaid Insurance account represents the cost of a year insurance policy beginning, April 1, 2016.
2016:
Dec. 31 Dr. Insurance Exp. 9,000
Cr. Prepaid Insurance 9,000
To recorded Insurance exp.

92. 2. The Peenut Company
4. The Peenut Company rented a warehouse on November 1, 2016, at a monthly rental of $6,000, paying 3 months’ rent in advance.
2016:
Dec. 31 Dr. Rent Exp. 12,000
Cr. Prepaid Rent ,000
To recorded Rent exp.

93. 2. The Peenut Company
5. The building was purchased for $ 1,000,000. It has an estimated useful life of 20 years with no salvage value (Residual value). Straight-line depreciation is used.
2016:
Dec. 31 Dr. Depreciation exp. 50,000
Cr. Accumulated Depreciation
-Building 50,000
To recorded Depreciation-building
1,000,000 x5%=50,.000

94. 2. The Peenut Company
6. The Vehicle & Equipment are estimated useful life of 10 years with no salvage value. Straight-Line depreciation is used.
2016:
Dec. 31 Dr. Depreciation-exp ,000
Cr. Accumulated Depreciation Vehicle ,000
Accumulated Depreciation Equipment ,000
To recorded Depreciation-fixed assets

95. 2. The Peenut Company
7. The Peenut Company borrows $300,000 on October 1, 2016 for 24 months with interest payable at the maturity of the loan at the rate of 12% per year.
2016:
Dec. 31 Dr. Interest Exp. 9,000
Cr. Interest Payable 9,000
To recorded Interest exp.
300,000x12%x3/12=9,000

96. 2. The Peenut Company
8. Assume that 5 percent of the $30,000 of accounts receivable is estimated to be uncollectible. There is a credit balance of $1,000 in Allowance for Doubtful Accounts.
2016:
Dec. 31 Dr. Doubtful Account Exp. 500
Cr. Allowance for Doubtful Account 500
To recorded Doubtful Account exp.
30,000x5%=1,500-1,000=500

97. 2. The Peenut Company Required:
1. Prepare the Work Sheet 10 column’s completes.
2. Recorded the Adjusted entries in a General Journal.
3. Prepare Income Statement.
4. Prepare Financial Position Statement.
5. Recorded the Closing entries in a General Journal. Answer
Trial Balance=4,414,400

98. The End