Assignment One: Individual Assignment (20%)

Submission Date:
COMPREHENSIVE ACCOUNTING CYCLE PROBLEM
South Coast Boards Co. is a merchandising business. The account balances for South
Coast Boards Co. as of July 1, 2010 (unless otherwise indicated), are as follows:

110 Cash $ 63,600

112 Accounts Receivable 153,900
115 Merchandise Inventory 602,400
116 Prepaid Insurance 16,800
117 Store Supplies 11,400
123 Store Equipment 469,500
124 Accumulated Depreciation—Store Equipment 56,700
210 Accounts Payable 96,600
211 Salaries Payable —
310 Rocky Hansen, Capital, August 1, 2009 555,300
311 Rocky Hansen, Drawing 135,000
312 Income Summary —
410 Sales 3,221,100
411 Sales Returns and Allowances 92,700
412 Sales Discounts 59,400
510 Cost of Merchandise Sold 1,623,000
520 Sales Salaries Expense 334,800
521 Advertising Expense 81,000
522 Depreciation Expense —
523 Store Supplies Expense —
529 Miscellaneous Selling Expense 12,600
530 Office Salaries Expense 182,100
531 Rent Expense 83,700
532 Insurance Expense —
539 Miscellaneous Administrative Expense 7,800
During July, the last month of the fiscal year, the following transactions were
completed: July 1. Paid rent for July, $5,000.
3. Purchased merchandise on account from Belmont Co., terms 2/10, n/30, FOB shipping point,
$40,000.
4. Paid freight on purchase of July 3, $600.
6. Sold merchandise on account to Modesto Co., terms 2/10, n/30, FOB shipping point,
$25,000. The cost of the merchandise sold was $15,000.
7. Received $26,500 cash from Yuba Co. on account, no discount.
10. Sold merchandise for cash, $80,000. The cost of the merchandise sold was $50,000.
13. Paid for merchandise purchased on July 3, less discount.
14. Received merchandise returned on sale of July 6, $6,000. The cost of the
merchandise returned was $4,500.
15. Paid advertising expense for last half of July, $7,500.
16. Received cash from sale of July 6, less return of July 14 and discount.
19. Purchased merchandise for cash, $36,000.
19. Paid $18,000 to Bakke Co. on account, no discount.
20. Sold merchandise on account to Reedley Co., terms 1/10, n/30, FOB shipping point, $40,000.
The cost of the merchandise sold was $25,000.
21. For the convenience of the customer, paid freight on sale of July 20, $1,100.
21. Received $17,600 cash from Owen Co. on account, no discount.
21. Purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB destination, $20,000.
24. Returned $2,000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26. Refunded cash on sales made for cash, $3,000. The cost of the merchandise returned was
$1,800.
28. Paid sales salaries of $22,800 and office salaries of $15,200.
29. Purchased store supplies for cash, $2,400.
30. Sold merchandise on account to Whitetail Co., terms 2/10, n/30, FOB shipping point,
$18,750. The cost of the merchandise sold was $11,250.
30. Received cash from sale of July 20, less discount, plus freight paid on July 21.
31. Paid for purchase of July 21, less return of July 24 and discount.

Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-
column account. Write Balance in the item section, and place a check mark (✓) in the Posting
Reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate
balance columns after all posting is completed. In this problem, you are not required to update or
post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare an unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data
to complete (5) and (6).
a. Merchandise inventory on July 31
$589,850 b. Insurance expired during the year
12,500 c. Store supplies on hand on July
314,700 d. Depreciation for the current year
18,800 e. Accrued salaries on July 31:
Sales salaries $4,400
Office salaries 2,700 7,100
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet
(work sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare and post the closing entries. Indicate closed accounts by inserting a line in
both the Balance columns opposite the closing entry. Insert the new balance in the
owner’s capital account.
10. Prepare a post-closing trial balance.