You have just landed at temporary assignment at a small retail company in your area. The accountant, who had completed the books through the end of November, went out on maternity leave during the first week of December. The task you have been given is to take the ending Trial Balance for November, prepare December transactions, prepare the December financials, and close the books.

The manager of the company has indicated that salaries, rent and depreciation for December are the same as the 11 months preceding (employees are paid at the end of the month). Additional transaction information follows:

December Advertising = $900 December Utilities = $700 December Communications = $500

The manager is pretty sure that they use LIFO for inventory, but it could be FIFO. Given the November transactions, determine which of the two methods is used. Then, use that same method to value ending inventory for December. Compute December Sales and Cost of Goods Sold, as well, and prepare the journal entries. Assume all inventory purchases are on credit. Also assume 80% of Sales are credit sales and the rest are for cash.

November

11 - 01 begin with 500 units @ $22.00 each

11 - 03 sold 250 units @ $35.00 each

11 - 05 purch 500 units @ $23.00 each

11 - 10 sold 250 units @ $36.00 each

11 - 15 purch 450 units @ $26.00 each

11 - 19 purch 300 units @ $28.00 each

11 - 23 sold 200 units @ $37.00 each

11 - 29 purch 300 units @ $30.00 each

December

12 - 01 begin with 1,350 units @ $36,000

12 - 04 sold 350 units @ $38.00 each

12 - 10 purch 500 units @ $29.00 each

12 - 13 sold 600 units @ $40.00 each

12 - 18 purch 600 units @ $31.00 each

12 - 20 sold 600 units @ $41.00 each

12 - 21 purch 400 units @ $30.00 each

12 - 24 sold 550 units @ $42.00 each

During December, supplies purchased totaled $1,100. A physical count showed that there were $1,850 remaining at the end of the year. Prepare the necessary adjusting entry.

It was discovered that the insurance policy was renewed on December 1st; coverage will cost $6,720 for the next 12 months. Prepare the necessary entries.

Collected $18,500 in cash from previous sales on credit. Those customers received $350.00 in discounts.

The manager would like you to write off an uncollectible customer account worth $5,200. You also need to ensure
that the ending allowance is equal to 6.0% of ending A/R (round to the nearest whole dollar).
Paid $22,000 towards accounts payable; received $500 in discounts for prompt payment.
The company will also distribute $15,000 to the owners of the business.
Use the November 30th trial balance shown on the worksheet (page 4) for beginning balances and other information. You
may wish to complete the worksheet before preparing the financial statements. Using the information given, please prepare the inventory analyses, journal entries, worksheet (page 4), December financials, closing entries, and the post-closing trial balance. Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Account Title Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit cash 27,100 accounts receivable 8,720 allowance for BD 2,100 inventory 36,000 supplies 2,200 prepaid insurance - land 50,000 equipment 75,000 accum. dep. - equip. 71,000 accounts payable 30,200 paid-in capital 70,000 retained earnings 18,900 distributions - sales 259,710 sales discounts 23,650 sales return/allowance 11,000 cost of goods sold 118,800 salaries expense 32,230 rent expense 24,200 insurance expense 5,500 advertising expense 9,020 depreciation expense 11,000 utilities expense 6,930 communications exp 4,620 supplies expense 3,740 bad debts expense 2,200 other income - other expense - 451,910 451,910 net income