On december 1, 2014, westmoreland company had the following account

On December 1, 2014, Westmoreland Company had the following account balances.

 

 

Debit

 

Credit

Cash

$18,200

Accumulated Depreciation Equipment

$3,000

Notes receivable

2,000

Accounts payable

6,100

Accounts receivable

7,200

Common stock

50,000

Inventory

16,000

Retained earnings

14,200

Prepaid insurance

1,600

 

 

Equipment

28,000

 

 

 

$73,300

 

$73,300

During December, the company completed the following transactions.

 

 

Dec. 7 Received $3,600 cash from customers in payment of account (no discount allowed).

12 Purchased merchandise on account from Alice Co. $12,000, terms 1/10, n/30.

17 Sold merchandise on account $16,000, terms 2/10, n/30. The cost of the merchandise sold was $10,000.

19 Paid salaries $2,200.

22 Paid Alice Co. in full, less discount.

26 Received collections in full, less discounts, from customers billed on December 17.

31 Received $2,700 cash from customers in payment of account (no discount allowed).

 

 

Adjustment data:

1. Depreciation $200 per month.
2. Insurance expired $400.

Instructions

(a) Journalize the December transactions. (Assume a perpetual inventory system.)

(b) Enter the December 1 balances in the ledger T-accounts and post the December transactions. Use Cost of Goods Sold, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Sales Revenue, and Sales Discounts.

(c) The statement from Dodge County Bank on December 31 showed a balance of $25,930.

A comparison of the bank statement with the Cash account revealed the following facts.

1. The bank collected a note receivable of $2,000 for Westmoreland Company on December 15.

2. The December 31 receipts were deposited in a night deposit vault on December 31.

These deposits were recorded by the bank in January.

3. Checks outstanding on December 31 totaled $1,210.

4. On December 31, the bank statement showed a NSF charge of $680 for a check received by the company from K. Quinn, a customer, on account.
Prepare a bank reconciliation as of December 31 based on the available information.
(d) Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.
(e) Post the adjusting entries to the ledger T-accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare an income statement for December and a classified balance sheet at December31.

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