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Section 2– Chapters 4, 5 and 6 (4 parts)
Part 1 – General Journal (LO5-1 – LO5-8)– Post the following journal entries to the general
journal. Inventory transactions should be recorded using the perpetual method.
Purchase 200 units of inventory with cash.
Provide 45 hours of services to customers on account (calculate using your hourly service rate).
Pay the $300 utility bill received Feb. 28th.
Provide 30 hours of services to customers for cash with a 10% trade discount.
Due to a customer complaint book a sales allowance for 5 hours of the Mar. 3rd sales on account
Sell 100 units of inventory on account. (Perpetual method)
Sell 50 units of inventory to a customer on account with a sales discount of 2/10, n/30.
Purchase an additional 300 units of inventory on account.
The customer who purchased product on Mar. 20th pays the amount due (within discount period).
Provide the remaining 10 hours of services that were paid in advance on Feb. 23rd.
Sell 200 units of inventory to a customer who signs a 6 month promissory note at 10% interest for the balance due.
Pay employee salaries of $1,200
Part 2 – General Ledger (LO2-5) – Post the information from the above journal entries into the general ledger. Use the ending balances from section 1 as your beginning balances for section 2.
Part 3 – Trial Balance (LO2-6) – Prepare a trial balance from the information in the general ledger.
Part 1 cont. – Adjusting journal Entries – (LO3-3) – Post the following adjusting entries to the general journal
Record the portion of the Prepaid Rent used in March.
The company has $200 of supplies left at month end
Record one month of depreciation on the equipment. The equipment has a useful life of 10 years
Record the receipt of a $300 utilities bill for March due on April 5th.
Record accrued interest on the $30,000 – 5 year note. The annual interest rate is 10%.
The company estimates that 3% of the ending Accounts Receivable will be uncollectible.
Part 2 cont. – General Ledger – Post the adjusting entries to the General Ledger.
Part 4 – Adjusted Trial Balance (LO3-4) – Post the ending balances from the General Ledger to the Adjusted Trial Balance. Debits should equal credits if you have done the prior steps correctly.
Service Revenue Per Hour: $94.25
Sales Revenue Per Unit: $99.25
Cost of Inventory Per Unit: $59.5