question archive Review the opening account balances in Winters Company's general and subsidiary ledgers on January 1, 2021

Review the opening account balances in Winters Company's general and subsidiary ledgers on January 1, 2021

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Review the opening account balances in Winters Company's general and subsidiary ledgers on January 1, 2021. All accounts have normal debit and credit balances. Winters uses a perpetual inventory system. The cost of all merchandise sold was 40% of the sales price. Assume Winters Company reports under ASPE.

General Ledger
Account No. Account Title January 1, 2021
Opening Balance
101 Cash $  35,050
112 Accounts receivable     14,000
115 Notes receivable     39,000
120 Merchandise inventory     20,000
125 Supplies       1,000
130 Prepaid insurance       2,000
140 Land     50,000
145 Building   100,000
146 Accumulated depreciation—building     25,000
157 Equipment       6,450
158 Accumulated depreciation—equipment       1,500
201 Accounts payable     36,000
275 Mortgage payable   125,000
301 A. Winters, capital     80,000
Accounts Receivable
Subsidiary Ledger
Customer January 1, 2021
Opening Balance
R. Draves $1,500
B. Jacovetti      7,500
S. Tang   5,000
Accounts Payable
Subsidiary Ledger
Creditor January 1, 2021
Opening Balance
Liazuk Co. $10,000
Mikush Bros.   15,000
Nguyen & Son     11,000

Winters' January transactions follow:

Jan.   3 Sold merchandise on credit to B. Sota $3,100, invoice no. 510, and J. Ebel $1,800, invoice no. 511.
5 Purchased merchandise on account from Welz Wares for $3,000 and Laux Supplies for $2,700.
7 Received cheques for $5,000 from S. Tang and $2,000 from B. Jacovetti on accounts.
8 Paid freight on merchandise purchased, $180.
9 Sent cheques to Liazuk Co. for $10,000 and Nguyen & Son for $11,000 in full payment of accounts.
9 Issued credit memo for $400 to J. Ebel for merchandise returned. The merchandise was restored to inventory.
10 Summary cash sales totalled $16,500.
11 Sold merchandise on credit to R. Draves for $1,900, invoice no. 512, and to S. Tang for $900, invoice no. 513.
15 Withdrew $2,000 cash for Winters's personal use.
16 Purchased merchandise on account from Nguyen & Son for $15,000, from Liazuk Co. for $13,900, and from Welz Wares for $1,500.
17 Purchased supplies on account from Laux Supplies, $400.
18 Returned $500 of merchandise to Liazuk and received credit.
20 Summary cash sales totalled $17,500.
21 Issued $15,000 note to Mikush Bros. in payment of balance due. The note bears an interest rate of 10% and is due in three months.
21 Received payment in full from S. Tang.
22 Sold merchandise on credit to B. Soto for $1,700, invoice no. 514, and to R. Draves for $800, invoice no. 515.
23 Sent cheques to Nguyen & Son and Liazuk Co. in full payment of accounts.
25 Sold merchandise on credit to B. Jacovetti for $3,500, invoice no. 516, and to J. Ebel for $6,100, invoice no. 517.
27 Purchased merchandise on account from Nguyen & Son for $14,500, from Laux Supplies for $1,200, and from Welz Wares for $2,800.
28 Purchased supplies on account from Laux Supplies, $800.
31 Summary cash sales totalled $19,920.
31 Paid salaries of $6,900.
31 Received payment in full from B. Soto and J. Ebel on account.

In addition to the accounts identified in the trial balance, the chart of accounts shows the following: No. 200 Notes Payable, No. 230 Interest Payable, No. 300 Income Summary, No. 310 A. Winters, Drawings, No. 401 Sales, No. 410 Sales Returns and Allowances, No. 505 Cost of Goods Sold, No. 711 Depreciation Expense, No. 718 Interest Expense, No. 722 Insurance Expense, No. 725 Salaries Expense, and No. 728 Supplies Expense.

Instructions

  1. Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.
  2. Enter the opening balances in general and subsidiary ledger accounts. Post the journals to the general and subsidiary ledgers. New accounts should be added and numbered in an orderly fashion as needed.
  3. Prepare an unadjusted trial balance at January 31, 2021. Determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
  4. Prepare and post adjusting journal entries. Prepare an adjusted trial balance, using the following information:
    1. Supplies at January 31 total $700.
    2. Insurance coverage expires on September 30, 2021.
    3. Annual depreciation on the building is $6,000 and on the equipment is $1,500.
    4. Interest of $45 has accrued on the note payable.
    5. A physical count of merchandise inventory has found $44,850 of goods on hand.
  5. Prepare a multiple-step income statement and a statement of owner's equity for January, and a classified balance sheet at the end of January.
  6. Prepare and post the closing entries.
  7. Prepare a post-closing trial balance.

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