The following post-closing trial balance was drawn from the accounts of Little G

Question

The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31, 2017 Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings $ 5,830 18,830 $ 1,650 22,130 10,050 19,800 15,290 Transactions for 2018 1. Acquired an additional $9,500 cash from the issue of common stock 2. Purchased $58,400 of inventory on account. 3. Sold inventory that cost $61,900 for $96,600. Sales were made on account. 4. The company wrote off $1,490 of uncollectible accounts 5. On September 1, LGS loaned $10,500 to Eden Co. The note had an 5 percent interest rate and a one-year term 6. Paid $16,410 cash for operating expenses 7. The company collected $70,370 cash from accounts receivable 8. A cash payment of $51,210 was paid on accounts payable

Explanation / Answer

Working Notes 1 - Journal entries worksheet

Dividend a/c Debit

Cash a/c Credit

Uncollectible accounts expenses. Debit

Allowance for doubtful accounts. Credit

(2% * $96600)

Interest Receivable. Debit

Interest Income Credit

($10500 * 5% * 4/12)

(Recording Interest receivable for four months from september to December)

Working Notes 2 - Ledger accounts worksheet

cash account

8

9

$51210

$4300

Accounts receivable account

Allowance for doubtful accounts

Merchandise Inventory

Accounts payable

Part 1

Little Grocery Supplier (LGS)

Income statement

For the year ended December 31, 2018

Part 2 - Statement of changes in stakeholder's equity

Part 3 Balance sheet as on december 31, 2018

Part 4 cash flow statement

Entry Number Journal Debit Credit 1 Cash $9500 Common stock $9500 2 Merchandise Inventory $58400 Accounts payable $58400 3 Accounts receivable $96600 Cost of goods sold $61900 Sales $96600 Merchandise Inventory $61900 4 Allowance for doubtful debts $1490 Accounts receivable $1490 5 Note receivable $10500 Cash $10500 6 Operating expenses $16410 Cash $16410 7 Cash $70370 Accounts receivable $70370 8 Accounts payable $51210 Cash $51210 9

Dividend a/c Debit

Cash a/c Credit

$4300 $4300 10

Uncollectible accounts expenses. Debit

Allowance for doubtful accounts. Credit

(2% * $96600)

$1932 $1932 11

Interest Receivable. Debit

Interest Income Credit

($10500 * 5% * 4/12)

(Recording Interest receivable for four months from september to December)

$175 $175

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