Comprehensive Accounting Problem
Wholesale Computer Distributor, Inc.
BUS 322 - Intermediate Accounting
fall 2007 - Tad Miller
Instructions
Be sure to save a copy of your files on your hard drive or a floppy disk.
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Include a cover sheet with your final project
Skip a line between journal entries
Each T-account needs to have a title and account number
Postings to T-accounts need a date next to the dollar amount
Accounts in Trial Balance and T-accounts should be arranged by account number
There is only one General Journal and one set of T-accounts. All entries need to
be recorded in the same General Journal and posted to the same set of T-accounts.
 T-accounts should have subtotals just prior to Adjusting Journal Entries, and
totals after all Adjusting Journal Entries have been posted.
 No late assignments.
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10.
Prepare journal entries to record each of the following transactions. You do not
need to write explanations below the journal entries.
Create T-accounts for each account in the chart of accounts and post each of the
journal entries to an existing T-account.
Subtotal the T-accounts just prior to preparing the unadjusted trial balance.
Prepare an unadjusted trial balance
Prepare adjusting journal entries. Besides the information provided for adjusting
journal entries, review the transactions and review your unadjusted trial balance
for any other adjusting journal entries you may need to prepare.
Post each of the adjusting journal entries to the same T-accounts you previously
created.
Total the T-accounts just prior to preparing the adjusted trial balance.
Prepare an adjusted trial balance
Prepare the following financial statements, in good form
o Multistep income statement you do not need to distinguish between selling
expense and general & administrative expenses
o Statement of retained earnings
o Classified balance sheet
Prepare a post closing trial balance
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Chart of Accounts to start
1002
Checking
1011
Accounts Receivable Cuesta Computer
1012
Accounts Receivable Mustang Computer
1013
Accounts Receivable SLO CPU
1121
Inventory -Xtreme game systems
1122
Inventory HP office systems
1123
Inventory Gateway home systems
1500
Investment in land
1600
Supplies
1800
Land
1810
Building
1811
accumulated depreciation
1820
Equipment
1821
accumulated depreciation
2001
Accounts Payable Xtreme
2002
Accounts Payable HP
2003
Accounts Payable Gateway
2100
Payroll Liabilities
2101
Wages and Salaries Payable
2103
IRS income tax withheld payable
2104
IRS FICA payable
2105
payable to Franchise Tax Board
2200
Sales Tax Payable
2501
Note Payable
2502
Mortgage Payable
2510
Bonds Payable
2511
discount on Bonds Payable
3010
Capital Stock
3021
Additional Paid in Capital
3099
Retained Earnings
4011
Sales Xtreme game systems
4012
Sales HP office systems
4013
Sales Gateway home systems
4030
Sales Discounts
5000
Cost of Goods Sold
5301
Purchase discounts
6150
Depreciation Expense
6240
Miscellaneous
6560
Wage & Salary Expenses
6770
Supplies expense
7010
Interest Income
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8010
Interest Expenses
8011
Mortgage Interest
8012
Note Interest
8013
Bond Interest
8020
Loss on sale of land
Suppliers
Xtreme -game systems
HP -office systems
Gateway -home systems
Customers
Cuesta Computer
Mustang Computer
SLO CPU
walk-in customers
price
$ 3,000.00
2,000.00
900.00
cost
2,400.00
1,700.00
720.00
terms
1% 15, net 30
1%/20, net/30
2%/10, net/30
terms 2%/10 net 30
terms 2%/10 net 30
terms 2%/10 net 30
cash only - no discount
Dec 25
Issued 10,000 shares of $1 par value common stock for $15 per share.
Dec 30
Made a $50,000 down payment and signed a $600,000 mortgage to
purchase land and building, which will be used as the distribution center.
The land comprised of three (3) lots which appraised at $132,000 each
($396,000 total) and the building appraised for $264,000. The building
occupies one (1) lot, one (1) lot will serve as parking and WCD intends to
sell the third lot.
The loan is a ten (10) year, 8.0% mortgage requiring monthly payments
consisting of principle and interest.
Dec 30
Issued a 100 bonds with $1,000 face value and 6% coupon rate. The bonds
mature in ten (10) years and pay interest semi-annually. The bonds sell at
a price to yield an 8% effective interest rate.
Dec 30
Borrowed $100,000 from First Bank to purchase shelving for the
warehouse. The shelving cost $100,000 and is expected to last five (5)
years. The note is a three (3) year, 9% note that requires principle and
interest payments on the last day or each month.
Dec 30
Purchase inventory
150 systems from Gateway at $720 per system
100 systems from HP at $1,700 per system
40 systems from Xtreme at $2,400 per system
terms 2%/10, net/30
terms 1%/20, net/30
terms 1% 15, net 30
Jan 1
Paid $1,000 for supplies.
Jan 5
Sold Cuesta Computer sixty (60) Gateway sytstems and forty (40) HP
systems, on account. Although, Cuesta Computer is a retailer and should
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not have to pay sales tax, in order to make our problem more realistic,
assume Cuesta pays 7.5% sales tax.
Jan 6
Paid Gateway bill in full (in the discount period)
Jan 10
Sold SLO CPU twenty-five (25) Xtreme systems. Although, SLO CPU is
a retailer and should not have to pay sales tax, in order to make our
problem more realistic, assume SLO CPU pays 7.5% sales tax.
Jan 14
Received payment in full from Cuesta Computer (in the discount period).
Jan 14
Sold Mustang Computer fifty (50) Gateway sytstems and fifty (50) HP
systems. Although, Mustang Computer is a retailer and should not have to
pay sales tax, in order to make our problem more realistic, assume
Mustang Computer pays 7.5% sales tax.
Jan 14
Paid HP bill in full (in the discount period)
Jan 15
Purchase inventory
75 systems from Gateway at $720 per system
50 systems from HP at $1,700 per system
25 systems from Xtreme at $2,400 per system
terms 2%/10, net/30
terms 1%/20, net/30
terms 1%/15, net 30
Jan 16
Paid salaries totaling $5,000 for the first half of the month. In order to
make this entry you must know that 15% was withheld for federal income
tax, 5% was withheld for state income tax, 7.65% (6.2% social security
and 1.45% medicare) was withheld for FICA. Don't forget that the
employer is also responsible for matching the employee's contribution to
FICA.
Jan 17
Paid the $xxxxx owed the State Board of Equalization for the sales tax on
sales through Jan. 15th.
Jan 17
Paid the $xxxxx the Franchise Tax Board the amounts withheld for state
income tax and the IRS the amounts owed for income tax and FICA.
Jan 20
Sold Cuesta Computer forty (40) Gateway systems and forty (40) HP
systems, on account. Although, Cuesta Computer is a retailer and should
not have to pay sales tax, in order to make our problem more realistic,
assume Cuesta pays 7.5% sales tax.
Jan 22
Sold SLO CPU twenty-five (25) Xtreme systems. Although, SLO CPU is
a retailer and should not have to pay sales tax, in order to make our
problem more realistic, assume SLO CPU pays 7.5% sales tax.
Jan 23
Received payment in full from Mustang Computers (in discount period).
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Jan 24
Jan 25
Paid Gateway bill in full (in the discount period)
Received payment in full from SLO CPU. The first invoice was out of
discount period and the second invoice was in the discount period.
Jan 27
Sold the extra parcel of land, which was held as an investment, for
$125,000.
Jan 28
Paid Xtreme bill in full (first invoice out of the discount period)
Paid Xtreme bill in full (second invoice in the discount period)
Jan 29
Paid HP bill in full (in the discount period)
Jan 29
Received payment in full from Cuesta Computer (in the discount period).
Jan 30
Sold Mustang Computer fifty (50) Gateway systems and ten (10) HP
systems. Although, Mustang Computer is a retailer and should not have to
pay sales tax, in order to make our problem more realistic, assume
Mustang Computer pays 7.5% sales tax.
Additional information
Depreciation on:
building - 20 years
shelving - 5 years
Monthly payment on: mortgage payment 10 years at 8%
note 3 year at 9%
Interest payment on $100,000, 6% bond issued to yield 8%
Supplies worth $175 are on hand at the end of the month
Accrue salaries for the second half of the month (same amount)
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