Assignment Overview You are an accountant for Water Works. Your knowledge of mer
ID: 2572815 • Letter: A
Question
Assignment Overview You are an accountant for Water Works. Your knowledge of merchandising operations is critical as you prepare several reports, including: • Purchase and sales transactions. • Multi-step income statement. • Closing entries. This assignment is intended to provide additional practice applying Generally Accepted Accounting Principles (GAAP) to accounting problems. Assignment Details: Perform the following tasks: • Complete the reading assignment and the interactive lesson before attempting this assignment. • Attend the instructor session to prepare for this assignment. • Review the transactions that occurred in September for Water Works, on page 2-3. • Using the Week 5 Assignment Worksheet and the tables below, complete the following reports: o Journalize the transactions. No explanations are needed. Identify each accounts payable and accounts receivable with vendor or customer name. o Prepare the multi-step income statement for Water Works, as of September 30. o Journalize the closing entries for Water Works. • Submit the Week 5 Assignment via Blackboard by clicking on the “Week 5 Assignment” link. • Include the proper file naming convention: ACC105_wk5_assn_jsmith_mmddyyyy. Transactions for Water Works - September Date Transaction Description September 3 Purchased merchandise inventory on account from Simmon Wholesalers, $3,500. Terms 2/15, n/EOM, FOB shipping point. September 4 Paid freight bill of $60 on September 3 purchase. September 4 Purchased merchandise inventory for cash of $2,400. September 6 Returned $900 of inventory from September 3 purchase. September 8 Sold merchandise inventory to Hilton Company, $5,700, on account. Terms 1/15, n/35. Cost of goods, 42,280. September 9 Purchase merchandise inventory on account from Teaton Wholesalers, $10,500. Terms 3/10, n/30, FOB destination. September 10 Made payment to Simmon Wholesalers for goods purchased on September 3, less return and discount. September 12 Received payment from Hilton Company, less discount. September 13 After negotiations, received a $500 allowance from Teaton Wholesalers. September 15 Sold merchandise inventory to Jesper Company, $3,200, on account. Terms 2/10, n/EOM. Cost of goods, $1,408. September 22 Made payment, less allowance, to Teaton Wholesalers for goods purchased on September 9. September 23 Jesper Company returned $600 of the merchandise sold on September 15. Cost of goods, $264. September 25 Sold merchandise inventory to Sundun for $1,800 on account that cost $792. Terms 2/10, n/30 were offered, FOB shipping point. As a courtesy to Sundan, $40 of freight was added to the invoice for which cash was paid by Orange Glove. September 26 After negotiations, granted a $250 allowance to Sundan for merchandise purchased on September 25. September 29 Received payment from Sundan, less allowance and discount. September 30 Received payment from Jesper Company, less return. The Adjusted Trial Balance for Water Works at September 30 Water Works Adjusted Trial Balance September 30 Account Title Balance Debit Credit Cash $ 3,900 Accounts Receivable 38,300 Merchandise Inventory 18,100 Office Supplies 550 Furniture 39,200 Accumulated Depreciation— Furniture $ 8,100 Accounts Payable 13,700 Salaries Payable 850 Unearned Revenue 7,000 Notes Payable, long-term 16,000 Water Works, Capital 23,600 Water Works, Withdrawals 39,500 Sales Revenue 190,000 Sales Returns and Allowances 4,000 Sales Discounts 3,000 Cost of Goods Sold 76,000 Selling Expense 19,400 Administrative Expense 15,500 Interest Expense 1,800 Total $ 259,250 $ 259,250
Transactions for Water Works - September
Date
Transaction Description
September 3
Purchased merchandise inventory on account from Simmon Wholesalers, $3,500.
Terms 2/15, n/EOM, FOB shipping point.
September 4
Paid freight bill of $60 on September 3 purchase.
September 4
Purchased merchandise inventory for cash of $2,400.
September 6
Returned $900 of inventory from September 3 purchase.
September 8
Sold merchandise inventory to Hilton Company, $5,700, on account. Terms 1/15, n/35. Cost of goods, 42,280.
September 9
Purchase merchandise inventory on account from Teaton Wholesalers, $10,500. Terms 3/10, n/30, FOB destination.
September 10
Made payment to Simmon Wholesalers for goods purchased on September 3, less return and discount.
September 12
Received payment from Hilton Company, less discount.
September 13
After negotiations, received a $500 allowance from Teaton Wholesalers.
September 15
Sold merchandise inventory to Jesper Company, $3,200, on account. Terms 2/10, n/EOM. Cost of goods, $1,408.
September 22
Made payment, less allowance, to Teaton Wholesalers for goods purchased on September 9.
September 23
Jesper Company returned $600 of the merchandise sold on September 15. Cost of goods, $264.
September 25
Sold merchandise inventory to Sundun for $1,800 on account that cost $792.
Terms 2/10, n/30 were offered, FOB shipping point. As a courtesy to Sundan, $40 of freight was added to the invoice for which cash was paid by Orange Glove.
September 26
After negotiations, granted a $250 allowance to Sundan for merchandise purchased on September 25.
September 29
Received payment from Sundan, less allowance and discount.
September 30
Received payment from Jesper Company, less return.
The Adjusted Trial Balance for Water Works at September 30
Water Works
Adjusted Trial Balance
September 30
Account Title
Balance
Debit
Credit
Cash
$
3,900
Accounts Receivable
38,300
Merchandise Inventory
18,100
Office Supplies
550
Furniture
39,200
Accumulated Depreciation—
Furniture
$
8,100
Accounts Payable
13,700
Salaries Payable
850
Unearned Revenue
7,000
Notes Payable, long-term
16,000
Water Works, Capital
23,600
Water Works, Withdrawals
39,500
Sales Revenue
190,000
Sales Returns and Allowances
4,000
Sales Discounts
3,000
Cost of Goods Sold
76,000
Selling Expense
19,400
Administrative Expense
15,500
Interest Expense
1,800
Total
$
259,250
$
259,250
Date
Transaction Description
September 3
Purchased merchandise inventory on account from Simmon Wholesalers, $3,500.
Terms 2/15, n/EOM, FOB shipping point.
September 4
Paid freight bill of $60 on September 3 purchase.
September 4
Purchased merchandise inventory for cash of $2,400.
September 6
Returned $900 of inventory from September 3 purchase.
September 8
Sold merchandise inventory to Hilton Company, $5,700, on account. Terms 1/15, n/35. Cost of goods, 42,280.
September 9
Purchase merchandise inventory on account from Teaton Wholesalers, $10,500. Terms 3/10, n/30, FOB destination.
September 10
Made payment to Simmon Wholesalers for goods purchased on September 3, less return and discount.
September 12
Received payment from Hilton Company, less discount.
September 13
After negotiations, received a $500 allowance from Teaton Wholesalers.
September 15
Sold merchandise inventory to Jesper Company, $3,200, on account. Terms 2/10, n/EOM. Cost of goods, $1,408.
September 22
Made payment, less allowance, to Teaton Wholesalers for goods purchased on September 9.
September 23
Jesper Company returned $600 of the merchandise sold on September 15. Cost of goods, $264.
September 25
Sold merchandise inventory to Sundun for $1,800 on account that cost $792.
Terms 2/10, n/30 were offered, FOB shipping point. As a courtesy to Sundan, $40 of freight was added to the invoice for which cash was paid by Orange Glove.
September 26
After negotiations, granted a $250 allowance to Sundan for merchandise purchased on September 25.
September 29
Received payment from Sundan, less allowance and discount.
September 30
Received payment from Jesper Company, less return.
Explanation / Answer
Water Works Income Statement For the Month Ended Sep 30 Sales Revenue Sales 190,000.00 Less: Sales Return & Allowances 4,000.00 Less: Sales Discounts 3,000.00 Net Sales 183,000.00 Less: Cost of Goods Sold 76,000.00 Gross Margin 107,000.00 Less: Selling & Adminitrative Expenses Selling Expenses 35,500.00 Administrative Expenses 15,500.00 51,000.00 Net Operating Income 56,000.00 Other Income & Losses Interest Expense 1,800.00 Net Income (Loss) 54,200.00 Post Closing Journal Entry Date Particulars Dr. Amt. Cr. Amt. 30-Sep Income Summary Dr. 135,800.00 To Sales return & Allowances 4,000.00 To Sales Discounts 3,000.00 To Cost of Goods Sold 76,000.00 To Selling Expenses 35,500.00 To Administrative Expenses 15,500.00 To Interest Expense 1,800.00 30-Sep Sales Dr. 190,000.00 To Income Summary 190,000.00 30-Sep Income Summary Dr. 54,200.00 To Water Works, Capital 54,200.00 30-Sep Water Works, Capital Dr. 39,500.00 To Water Works, Drawimg 39,500.00
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