It is Monday, May 1, the first business day of the month, and you have just been hired as the accountant for Alpine Company, which operates with monthly accounting periods. All of the company’s accounting work has been completed through the end of April and its ledgers show April 30 balances detailed in the April 30 post-closing trial balance immediately below. These represent the opening balances for the month of May.
Post Closing Trial Balance
|Accumulated Depreciation, Office Equipment||9,898|
|Accumulated Depreciation, Store Equipment||17,556|
|Clint Barry, Capital||308,338|
Alpine Company uses a perpetual inventory system. The terms of all credit sales are 2/10, n/30. During your first month on the job, the following transactions occur for Alpine Company.These are exactly the same transactions as contained in the textbook from which this case is taken.
May 1 Issued cheque #3410 to S&M Management Co. in payment of the May rent, $3,400. Use two Rent Expense accounts to record the transaction. Charge 80% of the rent to Rent Expense: Selling Space and the balance to Rent Expense:Office Space.
2 Sold merchandise on credit to Essex Company, invoice 8785, $6,100. Cost $3,660.
2 Issued a $175 credit memorandum to Nabors, Inc., for defective merchandise sold on April 28 and discarded when returned by Nabors, Inc. (cost $105)for credit. The total selling price was $4,725.
3 Received a $798 credit memorandum from Parkay Products for merchandise – received on April 29 and returned for credit.
4 Purchased on credit from Thompson Supply Co.: merchandise, $37,072; store supplies, $574; and office supplies, $83. Invoice dated May 4, terms n/10 EOM.
5 Received payment from Nabors, Inc. from the sale of April 28.
8 Issued cheque #3411 to Parkay Products to pay for the $7,098 of merchandise received on April 29. The terms of this purchase are 2/10, n/30)
9 Sold store supplies to the merchant next door at cost for cash, $350.
10 Purchased office equipment on credit from Thompson Supply Co., invoice dated May 10, terms n/10 EOM, $4,074.
11 Received payment from Essex Company for the May 2 sale.
11 Received merchandise and an invoice dated May 10, terms 2/10, n/30, from Gale, Inc., $8,800.
12 Received an $854 Credit memorandum from Thompson Supply Co. for defective office equipment received on May 10 and returned for credit.
15 Issued cheque #3412, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cashed the cheque and paid the employees.
15 Cash sales for the first half of the month, $65,220. Cost $37,432. Suchsales are normally recorded daily. They are recorded only twice in this problem to reduce the repetitive entries.
16 Sold merchandise on credit to Essex Company, invoice 8786, $3,990. Cost $2,394.
17 Received merchandise and an invoice dated May 14, terms 2/10, n/60, from Chandler Corp., $13,650.
19 Issued cheque #3413 to Gale, Inc. in payment of its May 10 invoice.
22 Sold merchandise to Oscar Services, invoice 8787, $6,850, terms 2/10, n/60. Cost $4110.
23 Issued cheque #3414 to Chandler Corp. in payment of its May 14 invoice.
24 Purchased on credit from Thompson Supply Co.: merchandise, $8,120; store supplies, $630; and office supplies, $280. Invoice dated May 24, terms n/10 EOM.
25 Received merchandise and an invoice dated May 23, terms 2/10, n/30, from Parkay Products, $3,080.
26 Sold merchandise on credit to Deaver Corp., invoice 8788, $14,210. Cost
26 Issued cheque #3415 to Trinity Power in payment of the April electric bill,
29 The owner, Clint Barry, withdrew $7,000 from the business for personal use, using cheque #3416.
30 Received payment from Oscar Services for the May 22 sale.
30 Issued cheque #3417, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cashed the cheque and paid the employees.
31 Cash sales for the last half of the month were $68,250. Cost $39,630.
a) Expired insurance, $553.
b) Ending store supplies inventory, $2,632.
c) Ending office supplies inventory, $504.
d) Estimated depreciation of store equipment, $567.
e) Estimated depreciation of office equipment, $329.
f) Ending merchandise inventory, $191,000.
1. Your new employer needs you to prepare a detailed, multi-step Income Statement for the month of May (like the one for Z-Mart on page 289 of your text) & a classified Balance Sheetas at May 31 for Alpine Company.
2. Complete the closing entries. You may choose to do these before you prepare the Financial Statements or after, it’s up to you.
a) You can use your textbook & any paperwork you choose including a Super-T or a Worksheet.
b) You are to complete the above required individually or in a group of 2-4 people of your choosing.
c) Hand in only one completed assignment per group. Put all group members’ names (first & last) on the assignment.
d) Each person in the group will receive the same grade.
e) If you are not sure about the meaning of certain words or information, make an assumption that is consistent with the facts presented and that allows you to show the most knowledge and carry on accordingly.