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Meyer Company was started on November 1^st of the current year, by owner, Annie Meyer. The company is a sole proprietorship that sells a special line of handmade greeting cards to local stores.

Additional information:

Meyer prepares financial statements on a monthly basis and her fiscal year-end is December 31.

Meyer will prepare closing entries at year-end ONLY.

Meyer Company uses the FIFO perpetual inventory system.

Meyer makes all credit sales on terms of 2/10, n/30.

Meyer records monthly depreciation on all assets using the straight-line method.

Meyer calculates interest based on a 365-day year.

Meyer uses the following accounts:

101 Cash 1

102 Accounts Receivable

103 Allowance for Uncollectible Accounts

105 Inventory Thank You

106 Inventory Birthday

107 Interest Receivable

108 Supplies

110 Prepaid Insurance

120 Prepaid Rent

130 Notes Receivable, Short-term

140 Computers & Furniture

141 Accumulated Depreciation Computers & Furniture

150 Van

151 Accumulated Depreciation -- Van

200 Accounts Payable

203 Interest Payable

220 Notes Payable, Long-term

300 Meyer, Capital

310 Meyer, Withdrawals

400 Sales Revenue

401 Sales Returns and Allowances

402 Sales Discounts

405 Interest Revenue

500 Cost of Goods Sold

506 Rent Expense

507 Depreciation Expense

508 Insurance Expense

509 Utilities Expense

510 Supplies Expense

512 Interest Expense

513 Bad Debt Expense

600 Income Summary

DECEMBER

Sold inventory on account to Patina:

Inventory Item Sales Price per item Quantity Sold

Thank You $3.00 1000

Birthday $3.50 1000

Received a payment from Tidbits for the November 11 sale less the return on November 14.

Paid the amount owed to Cards Etc. from the November 4 purchase.

Meyer granted a sales allowance of $30 to Patina for damaged inventory sold on December 1. Patina decided to keep the damaged inventory.

Received merchandise back from Patina for a mistake in the December 1 shipment. Meyer accidentally included 200 Birthday cards that should have been Thank You cards. So, the actual shipment included 800 Thank You cards and 1200 Birthday cards. (Meyer recorded the cards thinking that she had correctly shipped them.) Patina sent the 200 Birthday cards back for credit they did not want Meyer to resend the correct cards.

Purchased inventory on credit terms of 2/10, n/30 from Greetings!:

Inventory Item Cost per item Quantity Purchased

Thank You $0.45 1000

Sold inventory on account to Occasions:

Inventory Item Sales Price per item Quantity Sold

Thank You $3.00 700

After all of the problems Patina had with its orders from Meyer, it paid off its account in full within the discount period. The payment includes the December 1 purchase, the December 4 allowance, the December 5 return, and the discount.

Paid Greetings! balance in full including the November 21 purchase (no discount) and the December 6 purchase less the discount.

Thingsville asked to transfer its accounts receivable balance into a note. Since Thingsville is a new company, the owners realized that they need more time to pay off their bill. Meyer agreed to a 3-month note receivable at 10% interest. The principal and interest will be due at the maturity date.

Sold inventory on account to Tidbits:

Inventory Item Sales Price per item Quantity Sold

Birthday $3.50 500

After hearing that Occasions was having financial problems, Meyer began to worry about collecting from them. She decided to set up an Allowance for Uncollectible Accounts so that her Balance Sheet would reflect the amount of realistically collectible receivables. She decided that she would probably be able to collect half of the December 7 sale.

Annie Meyer (the owner) made a personal withdrawal of $2,000.

Purchased $60 worth of supplies for cash.

Paid utilities of $300.

Prepare month-end adjusting entries for rent, insurance, depreciation, interest expense, and interest revenue for the month of December. Also, $40 worth of supplies was on hand at the end of the month.

Required:

1. Journalize and post the required journal entries for December.

2. Show the subsidiary balances for A/R and A/P as of December 31. (In other words, prepare a list that shows each customer and each vendor balance separately.)

3. Prepare Meyer Companys Income Statement and Statement of Owners Equity for December. Prepare the Balance Sheet as of December 31.

4. Journalize and post the year-end closing entries on December 31.

5. Prepare a post-closing trial balance at December 31.

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