Journal Entries

Journal Entries

Dave ran an electronics store, Dave's Automotive Supplies,
and had set up the following account names and codes:

Accounts Payable 1 Interest Payable 17
Accounts Receivable 2 Interest Receivable 18
Accumulated Amortization 3 Merchandise Inventory 19
Allowance for Doubtful Accounts 4 Notes Payable 20
Amortization Expense 5 Notes Receivable 21
Bad Debt Expense 6 Office Supplies Expense 22
Cash 7 Petty Cash 23
Cash Over/Short 8 Prepaid Rent 24
Cost of Goods Sold 9 Rent Expense 25
Delivery Expense 10 Salaries Expense 26
Equipment 11 Sales 27
Dave, Capital 12 Sales Discounts 28
Dave, Withdrawls 13 Sales Returns and Allowances 29
Income Summary 14 Unearned Revenue 30
Interest Earned 15 Utilities Expense 31
Interest Expense 16 NO ENTRY NE

Required:

a)
Use the account code(s) above to record the following transactions in
Dave's Automotive Supplies' accounting records. Note: Where more
than 1 account is debited or credited, include both account numbers
as shown in the example.

Date Transaction Debit Credit
Dave invested additional cash along with
Example equipment into his business, Dave's 7 & 11 12
Automotive Supplies.
Nov. 1 Borrowed money from the bank; interest
will be paid on the first of each month.
Nov. 2 Purchased merchandise inventory; terms
1/10, n30; FOB shipping point
Nov. 2 Paid for the delivery charges regarding
the November 2 purchase.
Nov. 3 Sold merchandise inventory; terms 2/10,
n30; FOB destination
Nov. 3 Paid for the delivery charges regarding the
November 3 sale.
Nov. 4 Returned half of the merchandise
purchased on November 2 due to defects.
Nov. 12 Paid for the office supplies purchased last
month (on October 12) with terms 1/15, n30
Nov. 12 Paid for the merchandise purchased on
November 2.
Nov. 15 Collected the amount owed from the
customer of November 3.
Nov. 15 Determined that an account receivable
was uncollectable and wrote it off.
Nov. 15 Paid mid-month salaries to employees.

Nov. 15 Received cash from a customer for work
to be performed in December.
Nov. 16 Paid for rent on a new warehouse from
December through the end of May.
Nov. 30 The owner withdrew cash for personal use

Nov. 30 Recorded Amortization for November.

Nov. 30 Accrued interest on the note issued on
November 1.
The business incurred a net loss for the
Nov. 30 month of November. Dave's closes it's
books monthly. Close the net loss.
Dec. 1 Paid the interest accrued on November 30.

b)
Which GAAP requires the preparation of adjusting journal entries?
Explain Why.