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Wednesday, September 9, 2009

Accounting Principles Exercise Solution for Cornerstone Merchandising

Following is the series of transactions in an accounting entity. Creating a complete solution to it is what the author did. However, the solution is in an excel format and not easy to have it posted here. If you are interested for the solution, please contact the author via email at weblogstuffs@gmail.com. The solutions costs £1 (just for the effort of sending). The author checks this email on a daily basis. What's contained in the solution? 1. Journal Entries (Cornerstone Merchandising); 2. General Ledger Accounts Posting for the below transactions; 3. The Trial Balance Worksheet for Cornerstone Merchandising; 4. Income Statement; 5. Balance Sheet; and 6. Statement of Changes in Owner’s Equity

The Given:
Cornerstone distributing company, a single proprietary business of Mr. Owner completed the following merchandising transactions in the month of July 2008, its first month of operation.
In the morning of July 1st , Mr. Owner made a cash deposit of $9,000 for the business capital. On the same day, there was a purchased merchandise on account from DAKOTA SUPPLY cO, $6900 , TERMS /0 , N/30.

In the afternoon of July first, a supplies amounting to $600 was purchased on cash.

July 4th sold merchandise on account $5500 , FOB destination , terms 1/10, , n/30. the cost of the merchandise sold was $4100.

July 5 $240 freight on July 4 sale

Click HERE for the Tabular Answers Please be aware with the labels in the T-Account, they are difficult to be aligned using Blogger...sorry...

July 6 received credit from dakota supply co merchandise returned $500

July 11 paid dakota supply co in full less discount

July 13 received collections in full , less discounts from customers billed om July4th

July 14 purchased merchandise for cash $3800

July16 received refund from supplier for returned goods on cash ourchase of July 14 $500

July 18 purchased merchandise from skywalker distributors $4500, FOB shipping point terms 2/10, n/30

July 20
paid freight on July 8 purchase $100

July23 sold merchandise for cash $6400 , the merchandise sold had a cost of $5,120

July 26 purchase merchandise for cash $2,300

July 29 made refunds to cash customers for defective merchandise $90. the returned merchandise has a scrap value of $30

July30 sold merchandise on account $3700 terms n/30 the cost of the merchandise sold was $2800
a. The supplies at the end of the month amounted to $200
b. Portion of the 2-month advance rental payments of $1,000 was consumed.

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