On December 1, 2012, Bluemond Company had the following account balances.
Debits Credits
Cash 18,200 Accumulated depreciation-
Notes Receivable 2200 Equipment 3000
Accounts Receivable 7500 Accounts Payable 6100
Inventory 16000 Common Stock 20000
Prepaid Insurance 1600 Retained Earnings 44400
Equipment 28000
73500 73500

During December, the company completed the following transactions.

Dec 7 Received $3600 cash from customers in payment of account (no discount allowed)
Dec 12 Purchase Merchandise on account for the Klump Co. $12000 terms 1/10, n/30
Dec 17 Sold merchandise on account $15000, terms 2/10, n/30. The cost of the merchandise sold was $10,000.
Dec 19 Paid salaries $2500.
Dec 22 Paid Klump Co. in full, less discount
Dec 26 received collections in full, less discounts, from customers billed on December 17

Adjustment data:
1. Depreciation $200 per month
2. Insurance expired $400
3. Income tax expense was $425. It was unpaid at December 31.
Instructions:
1. Journalize the December transactions (assume perpetual system)
2. Enter the Dec 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, Sales discount, Income taxes payable, and income tax expense.
3. The statement form Jackson County bank on December 31 showed a balance of $21994. A comparison of the bank statement with the cash account revealed the following facts.
a. The bank collected a note receivable of $2200 for Bluemond Co. on Dec 15.
b. The Dec 31 receipts of $2736 were not included in the bank deposits for December. The company deposited these receipts in a night deposit vault on Dec 31.
c. Checks outstanding on Dec 31 totaled $1210.
d. On Dec 31, the bank statement showed a NSF charge of $800 for a check received by the company from L. Shur, a customer on account.
4. Prepare bank reconciliation as of December 31based on the available information. (The cash balance per books is $22120. This can be proven by finding the balance in the cash account from parts a & b.
5. Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.
6. Post the adjusting entries to the ledger T accounts.
7. Prepare an adjusted trial balance.
8. Prepare an income statement for December and a classified balance sheet at Dec 31.
Totals: $89, 125
Net income: $1,175
Total assets: $72,100

What is your question: Step one is to set up T accounts for all of your accounts, then you need to journalize your transactions. Next you need to post your transactions to your T accounts, then prepare a trial balance. After the trial balance you need to do a bank reconcilliation and do adjusting entries, then do an adjusted trial balance. From the adjusted trial balance you can prepare your income statement and balance sheet.

What he said

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