Foundations of Accounting I Accounting Project Karen Pitsch Alli Co. is a merchandising business. The account balances for Alli Co. as of November 30, 2012 (unless otherwise indicated), are as follows: 110 Cash $ 73,920 112 Accounts Receivable 37,875 113 Allowance for Doubtful Accounts 3,500 115 Merchandise Inventory 133,900 116 Prepaid Insurance 3,750 117 Store Supplies 2,850 123 Store Equipment 100,800 124 Accumulated Depreciation-Store Equipment 20,160 210 Accounts Payable 21,450 211 Salaries Payable 0 218 Interest Payable 0 220 Note Payable (Due 2017) 10,000 310 P. Williams, Capital (January 1, 2012) 89,510 311 P. Williams, Drawing 40,000 312 Income Summary 0 410 Sales 853,040 411 Sales Returns and Allowances 20,600 412 Sales Discounts 13,200 510 Cost of Merchandise Sold 414,575 520 Sales Salaries Expense 74,400 521 Advertising Expense 18,000 522 Depreciation Expense 0 523 Store Supplies Expense 0 529 Miscellaneous Selling Expense 2,800 530 Office Salaries Expense 40,500 531 Rent Expense 18,600 532 Insurance Expense 0 533 Bad Debt Expense 0 539 Miscellaneous Administrative Expense 1,650 550 Interest Expense 240 Alli Co. uses the perpetual inventory system and the last-in, first-out costing method. Transportation-in and purchase discounts should be added to the Inventory Control Sheet, but since this will complicate the computation of the Last-in, first-out costing method, please ignore this step in the process. They also use the Allowance Method for bad debt. The Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the Inventory Control Sheet should be updated as each transaction affects them (daily). Alli Co. sells four types of television entertainment units. The sale prices of each are: TV A: $3,500 TV B: $5,250 TV C: $6,125 PS D: $9,000 During December, the last month of the accounting year, the following transactions were completed: Dec. 1. Issued check number 2632 for the December rent, $2,200. 3. Purchased four TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $14,800. 4. Issued check number 2633 to pay the transportation changes on purchase of December 3, $400. (NOTE: Do not include shipping and purchase discounts to the Inventory Control sheet for this project.) 6. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point. 10. Sold two project systems for cash. 11. Purchased store supplies on account from Matt Co., terms n/30, $620. 13. Issued check to Prince Co. number 2634 for full amount due (November’s balance plus December 3rd transaction), less discount allowed. 14. Issued credit memo for on.

1. Foundations of Accounting I
Accounting Project
Karen Pitsch
Alli Co. is a merchandising business. The account balances for
Alli Co. as of November 30, 2012 (unless otherwise indicated),
are as follows:
110
Cash
$ 73,920
112
Accounts Receivable
37,875
113
Allowance for Doubtful Accounts

2. 3,500
115
Merchandise Inventory
133,900
116
Prepaid Insurance
3,750
117
Store Supplies
2,850
123
Store Equipment
100,800

3. 124
Accumulated Depreciation-Store Equipment
20,160
210
Accounts Payable
21,450
211
Salaries Payable
0
218
Interest Payable
0
220

4. Note Payable (Due 2017)
10,000
310
P. Williams, Capital (January 1, 2012)
89,510
311
P. Williams, Drawing
40,000
312
Income Summary
0
410
Sales

5. 853,040
411
Sales Returns and Allowances
20,600
412
Sales Discounts
13,200
510
Cost of Merchandise Sold
414,575
520
Sales Salaries Expense
74,400

6. 521
Advertising Expense
18,000
522
Depreciation Expense
0
523
Store Supplies Expense
0
529
Miscellaneous Selling Expense
2,800
530
Office Salaries Expense

7. 40,500
531
Rent Expense
18,600
532
Insurance Expense
0
533
Bad Debt Expense
0
539
Miscellaneous Administrative Expense

8. 1,650
550
Interest Expense
240
Alli Co. uses the perpetual inventory system and the last-in,
first-out costing method. Transportation-in and purchase
discounts should be added to the Inventory Control Sheet, but
since this will complicate the computation of the Last-in, first-
out costing method, please ignore this step in the process. They
also use the Allowance Method for bad debt.
The Accounts Receivable and Accounts Payable Subsidiary
Ledgers along with the Inventory Control Sheet should be
updated as each transaction affects them (daily).
Alli Co. sells four types of television entertainment units.
The sale prices of each are:
TV A: $3,500
TV B: $5,250
TV C: $6,125
PS D: $9,000
During December, the last month of the accounting year, the
following transactions were completed:

9. Dec.
1. Issued check number 2632 for the December rent, $2,200.
3. Purchased four TV C units on account from Prince Co., terms
2/10, n/30, FOB shipping point, $14,800.
4. Issued check number 2633 to pay the transportation changes
on purchase of December 3, $400. (NOTE: Do not include
shipping and purchase discounts to the Inventory Control sheet
for this project.)
6. Sold four TV A and four TV B on account to Albert Co.,
invoice 891, terms 2/10, n/30, FOB shipping point.
10. Sold two project systems for cash.
11. Purchased store supplies on account from Matt Co., terms
n/30, $620.
13. Issued check to Prince Co. number 2634 for full amount due
(November’s balance plus December 3rd transaction), less
discount allowed.
14. Issued credit memo for one TV A unit returned on sale of
December 6.
15. Issued check number 2635 for advertising expense for last
half of December, $1,500.
16. Received cash from Albert Co. for full amount due (less
return of December 14 and discount).
19. Issued check number 2636 to buy two TV C units, $7,600.
19. Issued check number 2637 for $6,100 to Joseph Co. on

10. account.
20. Sold three TV C units on account to Cameron Co., invoice
number
892, terms 1/10, n/30, FOB shipping point.
20. For the convenience of the customer, issued check number
2638 for shipping charges on sale of December 20, $600.
21. Received $12,250 cash from McKenzie Co. on account, no
discount.
21. Purchased three projector systems on account from Elisha
Co., terms 1/10, n/30, FOB destination, $15,600.
25. Received notification that Marie Co. has been granted
bankruptcy with no
amount of recovery. We are to write-off her amount due.
(Note: See page
402 for entry required.)
24. Issued a debit memo for return of $5,200 because of a
damaged projection system purchased on December 21,
receiving credit from the seller.
26. Issued check number 2639 for refund of cash on sales made
for cash, $1,000. (Customer was going to return goods until an
allowance was arranged.)
27. Issued check number 2640 for sales salaries of $1,750 and
office
salaries of $950.

11. 28. Purchased store equipment on account from Matt Co., terms
n/30, FOB
destination, $800.
29. Issued check number 2641 for store supplies, $550.
30. Sold four TV C units on account to Randall Co., invoice
number 893,
terms 2/10, n/30, FOB shipping point.
30. Received cash from sale of December 20, less discount,
plus transportation
paid on December 20. (Round calculations to the nearest
dollar.)
30. Issued check number 2642 for purchase of December 21,
less return
of December 24 and discount.
30. Issued a debit memo for $200 of the purchase returned from
December 28.
Instructions:
1. Enter the balances of each of the accounts in the appropriate
balance column of a four-column account (General Ledger).
Write Balance in the item section, and place a check mark (√) in
the Post Reference column.
2. Journalize the transactions in a sales journal, purchases

12. journal, cash receipts journal, cash payments journal, or general
journal as illustrated in chapter 7. Also post to the Accounts
Receivable and Accounts Payable Subsidiary ledgers and when
needed the Inventory Control Sheet.
3. Total each column on the special journals and prove the
journal.
4. Post the totals of the account named columns and
individually post the “other” columns as well to the General
Ledger.
5. Prepare the Schedule of Accounts Receivable and the
Schedule of Accounts Payable (their total amount must equal
the amount in their controlling general ledger account).
6. Prepare the unadjusted trial balance on the worksheet.
7. Complete the worksheet for the year ended December 31,
2012, using the following adjustment data:
a. Merchandise inventory on December 31
$110,200
b. Insurance expired during the year
1,250
c. Store supplies on hand on December 31
975

13. d. Depreciation for the current year needs to be calculated.
Alli Co. uses the
Straight-line method, the store equipment has a useful life of 10
years with no salvage value. (NOTE: the purchase and return
will not be included as the dates of the transactions were after
the 15th of the month).
e. Accrued salaries on December 31:
Sales salaries
$480
Office salaries
260
530
f. The note payable terms are at 8%, payment is not being
made until Jan. 3, 2013. Interest must be recognized for one
month (round answer to the nearest dollar amount).
g. Net realizable value of Accounts Receivable is determined to
be $30,000.
8. Prepare a multiple-step income statement, a statement of
owner’s equity, and a

14. classified balance sheet in good form.
9. Journalize and post the adjusting entries.
10. Journalize and post the closing entries. Indicate closed
accounts by inserting a line
in both balance columns opposite the closing entry.
11. Prepare a post-closing trial balance.
SJSALES JOURNALPage No. 6INVOICEPOSTACCTS. REC.
DR.COST OF SALE DR.DATENO.ACCOUNT
DEBITEDREFSALES CR.INVENTORY CR.112233445566
CRJCASH RECEIPTS JOURNALPage No.
4POSTOTHERACCOUNTSCOST/SOLD
DR.SALESCASHDATEACCOUNT CREDITEDREFACCTS -
CR.SALES - CRREC. - CR.INVENTORY CR.DISC. -
DR.DR.112233445566778899
PJPURCHASES JOURNALPage No.
11POSTOTHERACCOUNTSSTOREMERCH.DATEACCOUNT
CREDITEDREF(SUNDRY)PAYABLESUPPLIESINVENORYA
CCTS - DR.CR.DR.DR.1122334455667788
CPJCASH PAYMENTS JOURNALPage
No.8CK.POSTOTHERACCOUNTSMERCH.DATENO.ACCOUN
T
DEBITEDREF(SUNDRY)PAYABLEINVENTORYCASHACCT
S -
DR.DR.CR.CR.1122334455667788991010111112121313141415
151616
JournalJOURNALPage No.
53POSTDATEDESCRIPTIONREFDEBITCREDIT112.23344556
67788991010111112121313141415151616171718181919202021
21222223232424252526262727282829293030313132323333343

15. 43535363637373838393940404141JOURNALPage No.
54POSTDATEDESCRIPTIONREFDEBITCREDIT11223344556
67788991010111112121313141415151616171718181919202021
21222223232424252526262727282829293030313132323333343
43535363637373838393940404141
InventoryInventory Control SheetTV A:52 inch Flat Screen
TelevisionPurchasesCost of Goods Sold
(Sales)INVENTORYDateUnitscost per unitAmountUnitscost per
unitAmountUnitscost per
unitAmount11/30/1225$2,000$50,000TV B:68 inch Flat Screen
TelevisionPurchasesCost of Goods Sold
(Sales)INVENTORYDateUnitscost per unitAmountUnitscost per
unitAmountUnitscost per
unitAmount11/30/1210$3,000$30,000TV C:72 inch Flat Screen
TelevisionPurchasesCost of Goods Sold
(Sales)INVENTORYDateUnitscost per unitAmountUnitscost per
unitAmountUnitscost per
unitAmount11/30/128$3,500$28,000PS D:6 foot x 10 foot
Projector SystemPurchasesCost of Goods Sold
(Sales)INVENTORYDateUnitscost per unitAmountUnitscost per
unitAmountUnitscost per
unitAmount11/30/125$5,180$25,900Ending Inventory Value:
AR-SUBACCOUNTS RECEIVABLE SUBSIDIARY
LEDGER(CUSTOMERS)Customer Name: Albert
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/20/12SJ 510,50010,500Customer Name: Marie
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/20/12SJ 56,1256,125Customer Name: Cameron
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/15/12SJ 59,0009,000Customer Name: McKenzie
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/27/12SJ 512,25012,250Customer Name: Randall
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE
AP-SUBACCOUNTS PAYABLE SUBSIDIARY
LEDGER(VENDERS)Vendor Name: Prince

16. Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/26/12PJ 109,7009,700Vendor Name: Joseph
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/16/12PJ 106,1006,100Vendor Name: Elisha
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCE11/29/12PJ 105,6505,650Vendor Name: Matt
Co.POSTRUNNINGDATETRANSACTIONREFDEBITCREDIT
BALANCEVendor
Name:POSTRUNNINGDATETRANSACTIONREFDEBITCRED
ITBALANCE
SCH-SUBSchedule of Accounts ReceivableTotal Accounts
ReceivableSchedule of Accounts PayableTotal Accounts
Payable
B-S LedgerGENERAL LEDGERBalance Sheet
AccountsCashACCOUNT
NO.110POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITAccounts ReceivableACCOUNT
NO.112POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITAllowance for Doubtful AccountsACCOUNT
NO.113POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITMerchandise InventoryACCOUNT
NO.115POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITPrepaid InsuranceACCOUNT
NO.116POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITStore SuppliesACCOUNT
NO.117POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITStore EquipmentACCOUNT
NO.123POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITAccumulated Depreciation-Store EquipmentACCOUNT
NO.124POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITAccounts PayableACCOUNT
NO.210POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITSalaries PayableACCOUNT
NO.211POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITInterest PayableACCOUNT
NO.218POSTBALANCEDATEITEMREFDEBITCREDITDEBIT

17. CREDITNote PayableACCOUNT
NO.220POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITP. Williams, CapitalACCOUNT
NO.310POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITP. Williams, DrawingACCOUNT
NO.311POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITIncome SummaryACCOUNT
NO.312POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDIT
I-S LedgerGENERAL LEDGERIncome Statement
AccountsSalesACCOUNT
NO.410POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITSales Returns and AllowancesACCOUNT
NO.411POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITSales DiscountsACCOUNT
NO.412POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITCost of Merchandise SoldACCOUNT
NO.510POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITSales Salaries ExpenseACCOUNT
NO.520POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITAdvertising ExpenseACCOUNT
NO.521POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITDepreciation ExpenseACCOUNT
NO.522POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITStore Supplies ExpenseACCOUNT
NO.523POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITMiscellaneous Selling ExpenseACCOUNT
NO.529POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITOffice Salaries ExpenseACCOUNT
NO.530POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITRent ExpenseACCOUNT
NO.531POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITInsurance ExpenseACCOUNT
NO.532POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITBad Debt ExpenseACCOUNT
NO.533POSTBALANCEDATEITEMREFDEBITCREDITDEBIT

18. CREDITMiscellaneous Administrative ExpenseACCOUNT
NO.539POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDITInterest ExpenseACCOUNT
NO.550POSTBALANCEDATEITEMREFDEBITCREDITDEBIT
CREDIT
WkSheetWorksheetUnadjustedAdjustedIncomeEquity
StatementAccount TitleTrial BalanceAdjustmentsTrial
BalanceStatementand Balance
SheetDr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.1Cash12Accounts
Receivable23Allow for Doubtful Accts34Merchandise
Inventory45Prepaid Insurance56Store Supplies67Store
Equipment78Accm. Deprec-Store Eq.89Accounts
Payable910Salaries Payable1011Interest Payable1112Note
Payable (Due 2017)1213P. Williams, Capital1314P. Williams,
Drawing1415Sales1516Sales Returns & Allow.1617Sales
Discounts1718Cost of Merchandise Sold1819Sales Salaries
Exp.1920Advertising Exp.2021Depreciation Exp.2122Store
Supplies Exp.2223Misc. Selling Exp.2324Office Salaries
Exp.2425Rent Exp.2527Insurance Exp.2726Bad Debt
Exp.2628Misc. Administrative Exp.2829Interest
Expense293030272728282929
Income StmtIncome Statement
Stmt EquityStatement of Owner's Equity
Bal SheetBalance Sheet
Post TrialPost-Closing Trial BalanceACCOUNT
TITLEDEBITCREDIT