ACCOUNTING 101 - PRACTICE SET Fall 2019 Taj Ramaj, a sole-proprietor, created Juicy Lemonade on December 1, 2019. Juicy Lemonade is a wholesaler that specializes in selling organic flavored lemonades...

ACCOUNTING 101 - PRACTICE SET

Fall 2019

Taj Ramaj, a sole-proprietor, created Juicy Lemonade on December 1, 2019. Juicy Lemonade is a wholesaler that specializes in selling organic flavored lemonades to colleges and universities, restaurants and grocery stores. This merchandising company uses the perpetual inventory system, the gross method and adjusts its books monthly. The transactions for the month of December are as follow:

12/1 Taj Ramaj invested $100,000 cash, a $20,000 computer system and $5,000 of office equipment into the company.

12/1 The company paid $2,000 cash for rent for the retail store space for the month of December.

12/1 The company purchased $50,000 of inventory from Organic Juices Unlimited. The credit terms are 3/10, n/30.

12/2 The company purchased office supplies for $2,780 cash.

12/2 The company purchased a delivery vehicle for $15,000 cash.

12/2 The company purchased a 12-month insurance policy for $4,800 cash.

12/3 The company purchased $15,000 of inventory from Juice Power. The credit terms are 2/15, n/30.

12/5 The company sold merchandise to Delaware Technical Community College on credit for $43,750, terms 2/15, net 30. The merchandise sold had a cost of $25,000.

12/7 The company purchased inventory from JC Juice for $30,000 cash.

12/8 The company returned $5,000 of inventory to Juice Power and received full credit.

12/10 The company sold merchandise to Good Life Eats for $70,000 cash. The merchandise sold had a cost of $40,000.

12/10 Paid the amount due on the 12/1 purchase from Organic Juices Unlimited.

12/12 Good Life Eats discovered they received the wrong flavor, but they decided to keep the merchandise anyway. The company issued a credit memorandum and returned $10,000 cash to Good Life Eats for the error.

12/15 Delaware Technical Community College paid for the merchandise sold on 12/5.

12/18 The company paid the amount due, less the return on the 12/3 purchase from Juice Power.

12/20 The owner withdrew $5,000 cash for personal use.

Required:

1. Using the chart of accounts provided for you, prepare journal entries for the transactions for the month of December.

2. Post the December transactions using the T-accounts provided for you.

3. Create an unadjusted trial balance.

Soft Due Date: November 13th

4. Once you have verified that your unadjusted trial balance is correct, prepare the following adjusting entries.

a. A physical count of the Office Supplies account showed that there was $2,000 worth of office supplies on hand. The balance of the Office Supplies account on the unadjusted trial balance is $2,780.

b. One month’s insurance expired on the 12-month insurance policy purchased on December 1^st
for $4,800.

c. Depreciation expense on the computer equipment, office equipment, and the vehicle totaled $750 for the month of December.

d. Juicy Lemonade pays their 3 part-time employees on a monthly basis. The employees will receive their paychecks totaling $3,000 on January 2^nd
2020.

5. Post the adjusting entries to the T-accounts provided.

6. Create an adjusted trial balance.

Soft Due Date: November 18th

7. Once you have verified that your adjusted trial balance is correct, prepare a multiple-step income statement (see page 181 in your text book for guidance), a statement of owner’s equity (see page 131), and a balance sheet (see page 131).

Soft Due Date: November 27th

8. Prepare closing entries.

9. Post the closing entries to the T-accounts provided.

10. Prepare a post-closing trial balance.

Due Date: December 2nd

Chart of Accounts