1) Post beginning balances in ledger accounts (t-accounts) from the December 31, 2009 post-closing trial balance.
2) Prepare journal entries to record each transaction for DeeDee’s Designs. (A general journal is provided. Multiple pages will be needed.)
3) Post the journal entries from requirement 2.
4) Prepare an unadjusted trial balance as of January 31, 2010
5) Prepare a bank reconciliation for DeeDee’s Designs for January 31, 2010. Use the information on the “Bank Reconciliation Information” page following the January journal entries.
6) Prepare all necessary adjusting entries and entries associated with the bank reconciliation. Post these entries to the accounts in the ledger.
7) Prepare an adjusted trial balance as of January 31, 2010
Jan. 1 Established an Allowance for Doubtful Accounts in the amount using the estimate of 7% of Accounts Receivable.
Jan. 2 Received $16,500 from Salon C and $7,200 from Louie’s Café on account.
Jan. 3 Issued ck #127 to Bank One ($12,000 borrowed on December 2nd) for accrued
interest of $80.
Jan. 4 Performed decorating services for Ryan Banks on account for $1,250.
Jan. 5 Issued ck. #128 to Sarah Allsop for accrued salary of $1,200.
Jan. 7 Purchased $20,000 inventory on account from Haydel’s Furniture, 2/10, n/30.
Jan. 8 Issued ck. #129 for $435 for January office rent.
Jan. 10 Returned to Haydel’s $2,000 worth of inventory purchased on Jan. 7.
Jan. 11 Received $3,000 from Melissa Trosclair for services to redecorate her new home
Jan. 12 Performed decorating services for $5,200 for C&C Records on account.
Jan. 12 Issued ck. #130 for $600 in payment of advertising for the month.
Jan. 14 Completed the decorating work for Diane Thompson (Diane paid DeeDee $4,500 for this work in December).
Jan. 15 Purchased supplies on account from Fabrics Etc. for $500.
Jan. 16 Paid for purchase made on Jan.7 less the portion returned and discount on Jan. 10 (used ck. #131).
Jan. 22 Sold $9,500 of inventory on account to Kristie Breaud. The cost
Jan. 23 Received $5,000 cash from the sale of a sofa set. The cost was $3,500.
Jan. 25 Granted a return to Kristie Breaud for one the items purchased. The item was
sold to Ms. Breaud for $700 and had a cost to Dee Dee of $550.
Jan. 26 Performed services on account to Evergreen Apartments in connection with
decorating their lobby, $10,400.
Jan. 29 DeeDee learns that Coffee Café flooded earlier in the month which forced them to shut down and file bankruptcy. DeeDee doubts that she will be able to collect on her account balance from Coffee Café. DeeDee decides to write-off their $2,000 account receivable.
Jan. 29 Received payment from Kristie Breaud for purchase on Jan.22 (less amount returned).
Jan. 30 Issued ck. #132 for $105 to pay the utilities bill for the month.
Jan. 30 Issued ck. #133 for $20 in payment of the telephone bill for the month.
Jan. 30 Issued ck. #134 for $50 for postage.
Jan. 30 Issued ck. #135 for $200 for business automobile expenses.
Jan. 30 Issued ck. #136 to Sarah Allsop in the amount of $1036 for payroll. Her gross salary was $1,200. (Payroll taxes are considered in this entry.) Federal income taxes withheld from the pay were $72. Additionally, FICA at 7.65% was withheld. As required by law, the employer is matching the employee’s FICA at 7.65%. HINT: Payroll tax expense should only be debited for the employer’s share of FICA. Round all amounts to nearest dollar.
Note: DeeDee is preparing the following adjusting entries for the month of January. Round all amounts to nearest dollar.
Jan 31 Expired insurance for the period $79.
Jan 31 Record the provision for doubtful accounts based on an estimate of 7% of
accounts receivable being uncollectible.
Jan 31 Supplies on hand at the end of January, $650.
Jan 31 The company’s furniture is expected to have a ten year life with no salvage value.
Jan 31 The office equipment is expected to have a six year life with no salvage value.
Jan 31 Accrue interest on the notes payable is $80.
Jan 31 Record the necessary journal entries associated with the January 31 bank reconciliation (use Bank Reconciliation worksheet in the working papers to prepare the bank reconciliation).
Bank Reconciliation Information
DeeDee used an online bank statement dated January 31, 2010 to prepare the bank reconciliation for January 31, 2010. DeeDee noted the following items on the January 31st bank statement:
a. Bank balance at closing bank hours on January 31st: $46,998.
b. DeeDee took the cash receipt from Kristie Breaud (received on January 29th) to the bank on January 31 but it is not included on the January 31st bank statement.
c. DeeDee’s checking account earned $50 of interest during January 2009.
d. DeeDee’s account was debited for a $5 monthly bank service charge on January 31st.
e. Checks #132-#136 have not cleared the bank. All other checks have cleared the bank.
Accounts Receivable Ending Balance is $19,850
Dee Dee Designs
Postclosing Trial Balance
December 31, 2009
Accounts Receivable 28,700
Prepaid Insurance 712
Prepaid Rent 435
Furniture and Fixtures 7,000
Accumulated Depreciation 717
Notes Payable 12,000
Unearned Revenue 4,500
Salaries Payable 1,200
Interest Payable 80
Common Stock 45,000
Retained Earnings 34,193