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Prepare an Income Statement from the following information:

Sales $500,000

Sales Discount $650

Sales Return as Allowance $3,000

Beginning Merchandise Inventory $85,000

Purchases $265,000 Transport In $4,200

Purchase Discount $1,500

Purchase Return Allowance $1,700

Closing Merchandise Inventory $76,000

Advertisement Expenses $4,500

Insurance Expenses $1,500

Bank and Fees $1,200

Maintenance Expenses $3,200

Payroll Tax Expenses $7,600

Rent Expenses $12,000

Salaries Expenses $36,000

Supplies Expenses $3,200

Utilities Expenses $1,700

Federal Corporation IncomeTax Expenses $ 1,200

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Jean Keeling
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28 Sep 2019

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American Meter Company closes its books and prepares financial statements at the end of each month. American uses the perpetual inventory system. The company completed the following transactions during August, 2017:

Aug 1 Issued check no. 682 for August rent of $1,000

2. Issued check no. 683 to pay salaries of $1,240, which includes salary payable of $930 from July 31 (ignore payroll deductions).

2. Issued invoice no. 503 for sale on account to R. T. Loeb, $600. American’s cost of this merchandise was $190.

3. Purchased inventory on credit terms of 1/15, n/60 from Grant, Inc., $1,400

4. Received net amount of cash on account from Fullam Company, $2,156, within the discount period. The invoice, dated July 26 with terms of 2/10, net 30, was in the amount of $2,200.

4. Sold inventory for cash, $330 (cost, $104)

5. Received from Park-Hee, Inc. merchandise that had been sold earlier for $550 (cost, $174)

5. Issued check no. 684 to purchase supplies for cash, $780

6. Collected interest revenue of $1,100

7. Issued invoice no. 504 for sale on account to K. D. Skipper, $2,400 (cost, $759)

8. Issued check no. 685 to pay Federal Company $2,600 of the amount owed at July 31. This payment occurred after the discount period.

11. Issued check no. 686 to pay Grant, Inc. the net amount owed from August 3

12. Received cash from R. T. Loeb in full settlement of her account receivable from August 2

16. Issued check no. 687 to pay salary expense of $1,240

19. Received half the July 31 amount receivable from K. D. Skipper—after the end of the discount period

19. Purchased inventory for cash $850, issuing check no. 688

22. Purchased furniture on credit terms of 3/15, n/60 from Beaver Corporation, $510

23. Sold inventory on account to Fullam Company, issuing invoice no. 505 for $9,966 (cost, $3,152)

25. Issued check no. 689 to pay utilities, $432

26. Purchased supplies on credit terms 2/10, n/30 from Federal Company, $180

30. Returned damaged inventory to company from whom American made the cash purchase on August 19, receiving cash of $850

30. Granted a sales allowance of $175 to K. D. Skipper

31. Purchased inventory on credit terms 1/10, n/30 from Suncrest Supply, $8,330

31. Issued check no. 690 to Lester Mednick, owner of the business, for personal withdrawal, $1,700

The chart of accounts with account balances as of July 31, 2017 are as follows:

General Ledger

101 Cash $ 8,650 401 Sales Revenue

102 Accounts Receivable 19,560 402 Sales Discounts

104 Interest Receivable 403 Sales Returns & Allowances

105 Merchandise Inventory 41,800 410 Interest Revenue

109 Supplies 2,150 501 Cost of Goods Sold

117 Prepaid Insurance 2,200 510 Salary Expense

140 Note Receivable, Long-Term 11,000 513 Rent Expense

160 Furniture 37,270 514 Depreciation Expense

161 Accumulated Depreciation 10,550 516 Insurance Expense

201 Accounts Payable 13,410 517 Utilities Expense

204 Salary Payable 930 519 Supplies Expense

207 Interest Payable 320 523 Interest Expense

220 Note Payable, Long-Term 42,000

301 Lester Mednick, Capital 55,420

302 Lester Mednick, Withdrawals

400 Income Summary

Accounts Receivable Subsidiary Ledger:

Fullam Company, $3,200

R T. Loeb, 0

Park-Hee Inc., 7,590

K.D. Skipper, 8,770

Accounts Payable Subsidiary Ledger:

Beaver Corporation $ 0

Federal Company 13,410

Grant, Inc, 0

Suncrest Supply 0

Post daily to the general ledger. Also post to the accounts receivable subsidiary ledger and the accounts payable subsidiary ledger when appropriate. On August 31 post to the general ledger.

Please Can you dojournal entries for each event. 2. Prepareadjusting entries, and Closing entries

The 2014 balance sheet of the Captain Jet Inc. is attached.During 2015, the following events occurred.
1. On January 10, sell merchandise on account to Rayms $9,800 andFischer $8,600. Terms 1/10, n/30. Freight $100 for each sale,F.O.B. shipping point.
2. On January 12, purchase merchandise on account from Zapfel$3,000 and Liotta $2,400. Terms 2/10, n/30. Freight $120 for eachsale, F.O.B. destination.
3. On January 13, receive checks, $4,000 from Longhini and $2,000from Hall, for sales on account after discount period haslapsed.
4. On January 15, send checks to Joosten for 9,000 less 2% cashdiscount, and to Maida for $11,000 less 1% cash discount.
5. On January 16, issue credit of $100 to Fieber for merchandisereturned.
6. On January 18, summary daily cash sales total $17,520.
7. On January 21, pay off the balances to Zapfel and Liotta for thepurchases on January 12.
8. On Feburary 9, receive payment in full from Rayms andFischer.
9. On March 1, pay rent of $6,000 for a two-year term.
10. On April 1, sell merchandise on account to Dunlap $1,600, term2/10, n/30. Freight $100, F.O.B. shipping point.
11. Pay $500 cash for office supplies on May 1.
12. Cash dividends totaling $900 are declared on June 13 and paidto stockholders on June 23.
13. Issue a note of $120,000 to bank (one year, annual interestrate 2%) for cash on July 1.
14. On July 5, purchase merchandise from Maida $33,000, terms 2/10,n/30.
15. On July 7, issue common stock 1000 shares, $10 par, in exchangeof a land with a fair market value of $15,000.
16. On July 8, return $200 of merchandise to Maida and receivecredit.
17. On August 1, sell merchandise to Lachey on account $80,000,term 1/10, n/30. Freight $1,500, F.O.B. shipping point.
18. On August 4, pay off the balance to Maida.
19. On August 10, receive half of the payment from Lachey.
20. On August 14, write off $1,300 bad debt for one account,Tooket.
21. On August 21, pay utilities expense, $10,092.
22. On August 31, Lachey pays off its balance.
23. On September 1, pay cash $7,500 to Farmington for merchandisepurchased last year.
24. On October 1, pay off notes payable $110,000 and associatedaccrued interest $6,000, of which $1,500 was shown on the balancesheet.
25. Over the year, sales and office employees earned $45,500 insalaries and wages, of which $1,500 was still payable at the end ofyear.
26. An unpaid utilities bill (December, $1,250) is due on January10 next year.

Additional Information at the end of the year:

1. Depreciation expense for the year was $13,250.
2. The company estimated that it has to pay federal income tax,$3,250.
3. After physically counting, the company decided that the endinginventories worth $40,146.
4. Based on its historical data, the company estimated that the baddebts were about 1% of net credit

1

sales.
5. Unearned revenue is decreased by $12,000.

6. The company expenses all of the supplies purchased during theyear.
7. No insurance policy is effective during the year.
8. The company used the gross method to record its purchases andsales on credit. 9. The company adopts the periodic inventorysystem.

Instructions:

Prepare journal entries for each event. 2. Prepare adjustingentries. Closing entries

CAPTAIN JET INC. BALANCE SHEETDECEMBER 31, 2014

Current Assets

Cash 42,500
Notes Receivable 16,000
Accounts Receivable 41,800
Less: Allowance for Doubtful Accounts I (3,000)

Nventories 38,000
Prepaid Insurance 540
Prepaid Rent 600

Total Current Assets 136,440

Non-Current Assets

Long-term Investments
Investments in held-for-maturity securities 52,000

Land held for future development 45,500

Property, Plant, and Equipment

Land 85,000

Buildings 675,000

Less: Accumulated Depreciation (187,500)

Intangible Assets

Capitalized Development Costs 8,000

Goodwill 76,700
Other Identifiable Intangible Assets 48,000

Total Non-Current Assets 802,700

Total Assets 939,140

Current Liabilities

Notes Payable 110,000

Accounts Payable 33,500

Unearned Revenues 12,000

Income Taxes Payable 8,440

Property Taxes Payable 6,600

Interest Payable 1,500

Total Current Liabilities 172,040

Non-Current Liabilities

Provisions Related to Pensions 84,100

Bonds Payable 300,000

Total Non-Current Liabilities 384,100

Total Liabilities 556,140

Stockholders' Equity

Common Stock 100,000
Preferred Stock 100,000
Paid-in-capital - Common Stock 27,500

Paid-in-capital - Preferred Stock 10,000
Retained Earnings 153,250
Accumulated Other Comprehensive Income 5,000

Less: Treasury Stock (12,750)

Total Stockholders' Equity 383,000

Total Liabilities and Stockholders' Equity393,140

Use the following check figures

Adjusted Trial Balance: Total $1,276,055

Income Statement:
Earning after income tax: $9,827

Retained Earnings Statement:

Retained Earnings: $162,177

Balance Sheet:

Inventory: $40,146

Total assets: $939,267

Statement of Cash Flows
Net cash flows from this year: ($1,274)

Cash (ending): $41,226

American Meter Company closes its books and prepares financial statements at the end of each month. American uses the perpetual inventory system. The company completed the following transactions during August, 2017:

Aug 1 Issued check no. 682 for August rent of $1,000

2. Issued check no. 683 to pay salaries of $1,240, which includes salary payable of $930 from July 31 (ignore payroll deductions).

2. Issued invoice no. 503 for sale on account to R. T. Loeb, $600. American’s cost of this merchandise was $190.

3. Purchased inventory on credit terms of 1/15, n/60 from Grant, Inc., $1,400

4. Received net amount of cash on account from Fullam Company, $2,156, within the discount period. The invoice, dated July 26 with terms of 2/10, net 30, was in the amount of $2,200.

4. Sold inventory for cash, $330 (cost, $104)

5. Received from Park-Hee, Inc. merchandise that had been sold earlier for $550 (cost, $174)

5. Issued check no. 684 to purchase supplies for cash, $780

6. Collected interest revenue of $1,100

7. Issued invoice no. 504 for sale on account to K. D. Skipper, $2,400 (cost, $759)

8. Issued check no. 685 to pay Federal Company $2,600 of the amount owed at July 31. This payment occurred after the discount period.

11. Issued check no. 686 to pay Grant, Inc. the net amount owed from August 3

12. Received cash from R. T. Loeb in full settlement of her account receivable from August 2

16. Issued check no. 687 to pay salary expense of $1,240

19. Received half the July 31 amount receivable from K. D. Skipper—after the end of the discount period

19. Purchased inventory for cash $850, issuing check no. 688

22. Purchased furniture on credit terms of 3/15, n/60 from Beaver Corporation, $510

23. Sold inventory on account to Fullam Company, issuing invoice no. 505 for $9,966 (cost, $3,152)

25. Issued check no. 689 to pay utilities, $432

26. Purchased supplies on credit terms 2/10, n/30 from Federal Company, $180

30. Returned damaged inventory to company from whom American made the cash purchase on August 19, receiving cash of $850

30. Granted a sales allowance of $175 to K. D. Skipper

31. Purchased inventory on credit terms 1/10, n/30 from Suncrest Supply, $8,330

31. Issued check no. 690 to Lester Mednick, owner of the business, for personal withdrawal, $1,700

The chart of accounts with account balances as of July 31, 2017 are as follows:

General Ledger

101 Cash $ 8,650 401 Sales Revenue

102 Accounts Receivable 19,560 402 Sales Discounts

104 Interest Receivable 403 Sales Returns & Allowances

105 Merchandise Inventory 41,800 410 Interest Revenue

109 Supplies 2,150 501 Cost of Goods Sold

117 Prepaid Insurance 2,200 510 Salary Expense

140 Note Receivable, Long-Term 11,000 513 Rent Expense

160 Furniture 37,270 514 Depreciation Expense

161 Accumulated Depreciation 10,550 516 Insurance Expense

201 Accounts Payable 13,410 517 Utilities Expense

204 Salary Payable 930 519 Supplies Expense

207 Interest Payable 320 523 Interest Expense

220 Note Payable, Long-Term 42,000

301 Lester Mednick, Capital 55,420

302 Lester Mednick, Withdrawals

400 Income Summary

Accounts Receivable Subsidiary Ledger:

Fullam Company, $3,200

R T. Loeb, 0

Park-Hee Inc., 7,590

K.D. Skipper, 8,770

Accounts Payable Subsidiary Ledger:

Beaver Corporation $ 0

Federal Company 13,410

Grant, Inc, 0

Suncrest Supply 0

Journalize the August transactions in the general journal (page 9). Do not include the explanations. American makes all credit sales on terms of 2/10, n/30 unless otherwise indicated. I have posted the beginning balances to the general ledgers and subsidiary ledgers for you.

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