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Wendover Fashions

The purpose of this problem is to combine concepts from different chapters into a

single problem. Thus, you will find in this problem transactions for notes & interest,

bad debts, merchandise inventory, plant assets, and accruals and deferrals.

Lori Sweat owns Wendover Fashions, a small and successful firm. She uses the

allowance method for bad debts, FIFO valuation for its periodic merchandise

inventory system, and the straight method to depreciate plant assets on a monthly

basis.

Relevant account balances as of December $1,20$X$1,$ are as follows:

Account

Allowance for Doubtful Accounts

Accounts Payable

Empire Company

Livingston Company

Jesse Zealiff

Debit $)$

$$3,200$

$$350$

$950$

$800$

Directions:

Record the following selected transactions in a general journal

Dec. $1$ Issued Check No$.110$ to Black Company for a $9\%,120-$day note due

today. The face value of the note is $$1,500.$

$1$ Received a $90-$day, $8\%$ note for $$2,400$ from Jed Kissell as partial payment

on account

$4$ Purchased office equipment on credit from Modem Equipment Company

For $$1,800,$ plus freight charges of $${95}^{\text{'}}$ and an installation charge of $$180.$

$5$ The equipment purchased on December $4$ was damaged in ne process ouf

installation. Issued Check No$.111$ to Ms$.$ Fixit Co$.$ for the amount of the

repair, $t$55.$

$7$ A note from Pat Sterns for $$3,000$ that was due today was dishonored

When it was presented for payment. The $60-$day note carried interest at $12\%.$

$8$ Wrote off the account of Peg Fuller for $$2,600.$

y Purchased merchandise from Evans Company as follows: $1,200$ units & $$10$;

terms, $2/10,$n$/30.$

$10$

Issued Check No$.112$ to pay Livingston Company the December $1$ balance

due, less a $1\%$ discount.

$11$ Issued Check No$.113$ to increase the petty cash fund by $$200.$

$12$ Collected a $120-$day, $11\%$ note with a face value of $$6,000$ due today.

$16$ Sold an item of store equipment that cost $$2,800$ and had been depreciated

through the end of November at the rate of $$40$ a month for a total

denreciation of $$1920.$ Received cash of $$790$ for the

sale.

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