Problem 3-70A Comprehensive Problem: Reviewing the Accounting Cycle

Tarkington Freight Service provides delivery of merchandise to retail grocery stores in the Northeast. At the beginning of 2013, the following account balances were available:

During 2013 the following transactions occurred:

Tarkington performed deliveries for customers, all on credit, for $2,256,700. Tarkington also made cash deliveries for $686,838.

There remains $286,172 of accounts receivable to be collected at December 31, 2013.

Tarkington purchased advertising of $138,100 during 2013 and debited the amount to prepaid advertising.

Supplies of $27,200 were purchased on credit and debited to the supplies account.

Accounts payable at the beginning of 2013 were paid early in 2013. There remains $5,600 of accounts payable unpaid at year end.

Wages payable at the beginning of 2013 were paid early in 2013. Wages were earned and paid during 2013 in the amount of $666,142.

During the year, Trish Hurd, a principal stockholder, purchased an automobile costing $42,000 for her personal use.

One-half year's interest at 6% annual rate was paid on the note payable on July 1, 2013.

Property taxes were paid on the land and buildings in the amount of $170,000.

Dividends were declared and paid in the amount of $25,000.

The following data are available for adjusting entries:

Supplies in the amount of $13,685 remained unused at year end.

Annual depreciation on the warehouse building is $70,000.

Annual depreciation on the warehouse equipment is $145,000.

Wages of $60,558 were unrecorded and unpaid at year end.

Interest for 6 months at 6% per year on the note is unpaid and unrecorded at year end.

Advertising of $14,874 remained unused at the end of 2013.

Income taxes of $482,549 related to 2013 are unpaid at year end.

Enter the 2013 beginning balances to T-accounts (presented below part 2). Prepare journal entries for Transactions a through j and post the journal entries to T-accounts. If no entry is required, type "No entry required" and leave the amount boxes blank. Enter amounts in the same order as given in the list of transactions.
a.
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Record earned Revenue
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Record earned Revenue
b.
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Record receipt of cash
c.
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?		?
Record Prepaid advertising
d.
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record purchase of supplies account
e.
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record payment on account
f.
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?		?
record payment of wages from prior year
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?		?
record wages expense
g.
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record purchase of automobile
h.
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?		?
record interest expense
i.
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?		?
Record property tax
j.
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record payment dividends

2. Prepare the adjustments and post the adjustments to the T-accounts given below. Note: For the T accounts, be sure you have entered in the the beginning balances and transactions from part 1 first.

31-Dec
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Record use of supplies
31-Dec
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?		?
record depreciation on building
31-Dec
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?		?
record depreciation on equipment
31-Dec
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?		?
record wages due to employees
31-Dec
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?		?
record unpaid interest on note
31-Dec
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?		?
record use of prepaid advertising
31-Dec
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?		?
record income taxes owed