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Thurston's Department store: Journalize transactions, post, prepare trial balance, prepare balance sheet and income statement

Review of Accounting

Thurston's Department store had the following transactions during 2010 (the company's fiscal year is Jan, 1- Dec. 31).

Jan 1 The company issued common stocks for $300,000 cash to start the business. (#of stock issued: 10,000 par value :$25/sh)
Jan 1 Issued bonds for $300,000. (Par value of bond =$300,000)

Jan 1 Brought equipment( copy machine) for $5,000 cash. (useful life= 5 years no salvage value)

Mar 3 Brought merchandise for $40,000 cash

Mar 11 Bought $5,000 merchandise from a supplier on account

Apr 10 Sold Merchandise for $20,000 cash.
The merchandise sold had a cost of $10,000

Jul 20 Paid 3,000 for insurance

Oct 15 Received payment on account from the customer ($12,000 cash)

Oct 20 Paid back $4,000 to the supplier

1. Journalize the transaction
2. Post journal entries to the general ledger
3. Prepare a Trial Balance
4. Assume today is Dec 31, 2011. do an adjustment entry for depreciation. Use the straight line method
5. Prepare a Trial Balance
6. Close the accounts on the ledger.
7. Prepare the balance sheet
8. Prepare the income statement

Solution Preview

1 General journal

2 General ledger showing postings of transactions and adjusting ...

Solution Summary

A comprehensive solution to the posted problem is provided herewith in a separate Excel file. It covers the general journal, general ledger, income statement and balance sheet, and closing entries and post closing trial balance.