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

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 4. Salaries are earned evenly during the pay period.