The following trial balance is for Jackson Sales Company, a home improvement retailer, at January 1, 2012 : Debit Credit Cash $49,950 Accounts Receivable 14,000 Allowance for Doubtful Accounts $2,600 Merchandise Inventory 20,200 Land 50,000 Buildings 81,000 Accumulated Depreciation – Buildings 37,500 Equipment 45,000 Accumulated Depreciation – Equipment 18,000 Accounts Payable 3,750 Notes Payable 38,500 Common Stock, $10 par 40,000 Retained Earnings 119,800 $260,150 $260,150 PART 1—TRANSACTIONS – 150 points INSTRUCTIONS: Journalize the appropriate entries for the following transactions for the period January 1, 2012 to December 31, 2012. The company uses a perpetual inventory system and FIFO cost method. Beginning inventory on January 1 consisted of 1,000 units at $20.20 per unit. February 1 Paid $3,750 accounts payable balance due to a supplier. March 15 Received $2,500 partial payment on a $5,000 accounts receivable balance. Wrote off the rest of the account as uncollectible. April 1 April 15 Purchased on account 2,500 units merchandise for resale at $21.50 per unit, with 2/10, n/30 terms. Paid the invoice for April 1 purchase October 10 Sold 700 units of merchandise for a cash price of $40/unit. November 1 Borrowed $20,000 at 6% interest for 5 years with annual payments of principal and interest on October 31. Used the loan proceeds plus cash to purchase a $25,000 delivery truck. December 1 Bought back 500 shares of outstanding stock, paying $15/share. December 5 Sold 2,400 units of merchandise on account for $41/unit. Payment terms on the invoice were 1/10, n/30. December 7 Of the merchandise sold on December 5, 50 units were returned. December 15 Paid $3,000 for rent of a warehouse facility. The payment covers rent for December and January. December 15 Declared a $1/share cash dividend, payable January 14 to shareholders of record on January 3. December 18 Purchased office supplies of $1,600 on account. December 31 Recorded depreciation for the year Buildings have a 30-year life, a $6,000 residual value and use straight-line depreciation Equipment has a 5-year life, no residual value and use double-declining balance depreciation NOTE: Equipment was all purchased January 1, 2011 Vehicles have a 5-year life, no residual value and use straight-line depreciation December 31 The allowance for doubtful accounts balance is estimated as follows: 2% of current balances are estimated as uncollectible 20% of past-due balances are estimated as uncollectible. December 31 A count of office supplies shows $550 still on hand on December 31. January 2, 2013 Paid salaries of $24,500 for the pay period December 31 through January.

1. The following trial balance is for Jackson Sales Company, a
home improvement retailer, at
January 1, 2012
:
Debit
Credit
Cash
$49,950

2. Accounts Receivable
14,000
Allowance for Doubtful Accounts
$2,600
Merchandise Inventory

3. 20,200
Land
50,000
Buildings
81,000

4. Accumulated Depreciation – Buildings
37,500
Equipment
45,000
Accumulated Depreciation – Equipment

5. 18,000
Accounts Payable
3,750
Notes Payable
38,500

6. Common Stock, $10 par
40,000
Retained Earnings
119,800
$260,150

7. $260,150
PART 1—TRANSACTIONS – 150 points
INSTRUCTIONS: Journalize the appropriate entries for the
following transactions for the period January 1, 2012 to
December 31, 2012. The company uses a perpetual inventory
system and FIFO cost method. Beginning inventory on January
1 consisted of 1,000 units at $20.20 per unit.
February 1
Paid $3,750 accounts payable balance due to a supplier.

8. March 15
Received $2,500 partial payment on a $5,000 accounts
receivable balance. Wrote off the rest of the account as
uncollectible.
April 1
April 15
Purchased on account 2,500 units merchandise for resale at
$21.50 per unit, with 2/10, n/30 terms.
Paid the invoice for April 1 purchase
October 10
Sold 700 units of merchandise for a cash price of $40/unit.

9. November 1
Borrowed $20,000 at 6% interest for 5 years with annual
payments of principal and interest on October 31. Used the loan
proceeds plus cash to purchase a $25,000 delivery truck.
December 1
Bought back 500 shares of outstanding stock, paying $15/share.
December 5
Sold 2,400 units of merchandise on account for $41/unit.
Payment terms on the invoice were 1/10, n/30.
December 7

10. Of the merchandise sold on December 5, 50 units were returned.
December 15
Paid $3,000 for rent of a warehouse facility. The payment
covers rent for December and January.
December 15
Declared a $1/share cash dividend, payable January 14 to
shareholders of record on January 3.
December 18
Purchased office supplies of $1,600 on account.

11. December 31
Recorded depreciation for the year
Buildings have a 30-year life, a $6,000 residual value and use
straight-line depreciation
Equipment has a 5-year life, no residual value and use double-
declining balance depreciation
NOTE: Equipment was all purchased January 1, 2011
Vehicles have a 5-year life, no residual value and use straight-
line depreciation
December 31
The allowance for doubtful accounts balance is estimated as
follows:
2% of current balances are estimated as uncollectible
20% of past-due balances are estimated as uncollectible.

12. December 31
A count of office supplies shows $550 still on hand on
December 31.
January 2, 2013
Paid salaries of $24,500 for the pay period December 31
through January 4. Salaries are earned evenly during the pay
period.

13. PART 2 – TRIAL BALANCE – 30 points
INSTRUCTIONS: Prepare a trial balance as of December 31,
2012.
PART 3—FINANCIAL STATEMENTS – 120 points
INSTRUCTIONS: Prepare a December 31, 2012 Classified
Balance Sheet, Classified Income Statement and Statement of
Cash Flows