Accounting-Purchased 240 shares of Redhawk Corporation common stock for $19.00

Yes

16

Ordered the following inventory on account from Velocity Sporting Goods, using purchase
order No. 328 (Doc. No. 16).
Units
115
60
70
85
Vendor address:
Freight carrier:
Freight charges:
Allowances:

Yes

16

19

Follow flowchart on page 22.
Use purchase order No. 325 (Doc. No. 16) as a guide.
Use the price list (Doc. No. 3).
No receiving or recording occurs at this point for this transaction.
Tear document apart and file, following the flowchart guidance.

Borrowed $80,000 from First American Bank and Trust by issuing a two-year note payable
(Doc. No. 14) with a stated annual interest rate of 6%. Check No. 545 (Doc. No. 8) for
$80,000 was received from the bank and deposited. Reviewed the terms and conditions of the
note and signed it (Ray Kramer) as the borrower.

Yes

Restrictively endorse means to write the following on the back of the check: “For
deposit only. Waren Sports Supply.”
See flowchart, page 21, for recording and depositing.
Detach the bottom portion of the check and file in the Shipping/Banking file tab.
File the note in the Shipping/Banking file tab.

Received customer purchase order No. ST3107 (Doc. No. 4) in the mail from Clayborn
University, approved their credit and shipped the goods. All goods ordered were shipped,
except that only 55 shoulder pad sets were available for shipment.

Th

Carrier & number:
Freight charges:
Route:
Truck & driver:
Freight rate:
Shipment:

B

1285 Colgrove Avenue, Pierre, SD 57501
Interstate Motor Freight
Collect (i.e., paid by Waren Sports Supply)
None

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Description
Basketball pole pad
Basketball bag
Portable inflation pump
Trainer’s first aid kit

Allied Trucking; Carrier number 2154
FOB shipping point; Billed to buyer (i.e., paid by Clayborn)
Express
Truck 2961XZ, Linda Arensmeier
$15.00 per 100 lbs.
3 cartons/goal and rim sets @ 26 lbs./carton
6 cartons/backboards @ 125 lbs./carton
5 cartons/shoulder pad sets @ 40 lbs./carton
4 cartons/football helmets @ 24 lbs./carton

See flowchart, pages 18 and 19; follow all steps carefully.
You will use several documents and record an entry in the sales journal and the
accounts receivable subsidiary ledger for this transaction.
For guidance in preparing the bill of lading, see pages 35–36 of the Reference book.

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2

December
Yes

20

Received sales return request No. R8034 (Doc. No. 12) in the mail from Eastern Wisconsin
University (EWU). The request was approved and the acknowledgment copy mailed to EWU.

No

20

Increased employee pay rates, and employees changed their federal income tax withholding
amounts, both effective December 16. There were no changes in filing status or withholding
allowances.
New Federal Income Tax
New Pay Rate
Withholding Amt.
Ray Kramer
$3,700.00 semimonthly
$491.71
Jim Adams
$23.00 per hour
$392.34
Nancy Ford
$18.40 per hour
$143.12

23

No accounting entries are necessary, but you must update the pay rate history
information in the Employee Earnings Subsidiary Ledger.

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Yes

Follow the flowchart steps on page 20.

Received merchandise from Velocity Sporting Goods as listed on purchase order No. 328. All
merchandise listed on the purchase order was delivered in good condition and in the quantities
ordered, except that only 105 basketball pole pads (Item No. BB-019) were received. The
goods were placed immediately in the inventory warehouse.
Freight carrier:
Freight bill:

Yes

23

No

23

Received legal notification from Benson, Rosenbrook, and Martinson, P.C., attorneys at law,
that Stevenson College had filed bankruptcy and will be unable to pay any of its outstanding
debts to its suppliers. Write off the account as a bad debt.

Received all goods that Waren had authorized Eastern Wisconsin University (EWU) to return
on EWU’s return request No. R8034 for credit against their account balance.

24

Process and record the sales return now.

Received check No. 49326 (Doc. No. 8) for $9,000 from Eastern Wisconsin University in
partial payment of the remaining amount (after sales return) on charge invoice No. 729, and
deposited the check.

B

Remember that Waren Sports Supply uses the “Allowance” method rather than
“Direct write-off” for accounting for bad debts.

Th
24

Yes

Remember to follow the flowchart on page 22. You can’t record a purchase yet
because the invoice hasn’t been received.

Received check No. 28564 (Doc. No. 8) from Branch College for payment in full for charge
invoice No. 730, and deposited the check.

Yes

Interstate Motor Freight
No. 26425 (Doc. No. 19), received with shipment

Do not finalize a deposit slip until you determine whether there are other cash receipts
on the same day.

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3

December
Yes

24

Received vendor invoice No. 34719 (Doc. No. 18) from Velocity Sporting Goods for goods
ordered December 16 and received December 23.

Yes

24

Issued a check (Doc. No. 20) to Interstate Motor Freight for the amount of the freight bill
(Doc. No. 19) for the Velocity Sporting Goods shipment received December 23.

24

Follow the flowchart steps on page 23.

Received check No. 7403 (Doc. No. 8) for $9,165 and customer purchase order No. 94772
(Doc. No. 4) in the mail from Andover University for a cash sale. All goods ordered were
shipped and the cash sale was processed and recorded.

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Yes

Follow the flowchart steps on page 22.
Upon receiving the invoice, you can now record the purchase using the date on which
Waren incurred the liability for the goods, December 23.

Carrier & number:
Freight charges:
Route:
Truck & driver:
Freight rate:
Shipment:

No

24

Start with the flowchart on page 21.

Made a special promotional sale on account to Rosemont University. For the promotion, Waren
agreed to a 20% reduction in the selling prices of the following items:
Quantity

42
18

No

26

Description
Premium aluminum bat
Pitching machine

Received office supplies from Chicago Office Supply as listed on purchase order No. 327 (Doc.
No. 16), a copy of which is being held in accounting. Chicago Office Supply’s vendor invoice
No. 2378 (Doc. No. 18) was received with the goods. All supplies ordered were received in
good condition and taken directly to the office, but the invoice was not paid.

26

Sold bookshelves to Nancy Ford for $325. Nancy will pay this amount to Waren in January of
2014. The bookshelves were purchased for a cost of $975 on September 30, 2007 along with
other office furniture costing $49,775 (total purchase was $50,750). The bookshelves were fully
depreciated at the end of 2012.

B

Item No.
BA-054
BA-807

Th

Yes

Interstate Motor Freight; Carrier number 62XY404
Collect (i.e., paid by Andover University)
Direct
Truck 64, Dale Hoch
$15.00 per 100 lbs.
5 cartons/basketballs @ 23 lbs./carton
4 cartons/hip, tail, arm pad sets @ 36 lbs./carton
2 cartons/footballs @ 16 lbs./carton

Add a new general ledger account on page 36. Assign it G/L #10210 – Accounts
Receivable from Employees. Be sure to include this account in the proper section of
Waren’s 2013 financial statements.
Do not be concerned that the new account is out of sequence in the G/L. Waren
reorganizes its chart of accounts and G/L at the beginning of a new fiscal year.
Don’t forget to update the fixed asset subsidiary ledger on pages 42–43.

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4

December
No

26

Received check No. 4014 from Central Brokerage for $700 of dividend income. The dividends
were earned on various common stocks in the marketable securities general ledger account.

Yes

30

Issued check (Doc. No. 20) to Velocity Sporting Goods for payment in full of their invoice No.
34719 for goods received December 23.

No

30

Received check No. 14002 for $10,409.95 from Rosemont University in payment of the
promotional sale on account made December 24.

31

Received payroll time cards (Doc. No. 21) from Ford and Adams for the time period ended
December 31 and prepared the payroll for all three employees, including paychecks.

Yes

31

Yes

31

Received vendor invoice No. 72654 (Doc. No. 18) from University Athletic News for
advertisements Waren ran during the Christmas season and immediately issued a check (Doc.
No. 20) for payment in full.

Purchased 240 shares of Redhawk Corporation common stock for $19.00 per share plus
commission of $100.00. Immediately issued a check payable to Central Brokerage.

31

The Board of Directors declared a $2.50 per share dividend on the 3000 shares of $75 par
value common stock outstanding. The dividends will be payable on January 31, 2014 to all
stockholders of record as of January 25, 2014.

No

B

Purchase orders are not issued for services that Waren purchases.

Th

No

31

Paychecks are considered “Mailed/Given to Outsiders.”
Timecards are filed in the “Accounting” file tab.
Recall that federal income tax withholding amounts were listed earlier with employee
pay rate increases.

Received the laptop computers ordered on Waren’s purchase order No. 325 (Doc. No. 16) and
vendor invoice No. 2423 (Doc. No. 18) from Chicago Office Supply. The computers were
received in new and undamaged condition and taken directly to the office. The estimated useful
life is 5 years with no salvage value.

No

Recall that the original sale was made at a 20% promotional discount.
Because Rosemont paid within ten days of the original sale, be sure to record the
applicable discount.

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Yes

Consider the credit terms before making the payment.

31

Add a new general ledger account on page 36. Assign it G/L #29010 – Dividends
Declared. Be sure to include this account in the proper section of Waren’s 2013
financial statements.

Issued check to First American Bank and Trust for $8,000 for partial payment on the bank note,
which included no payment for interest. The terms on the back of the bank note stipulate that
prepayments can be made without early payment penalty. For purposes of the year-end
adjusting entry for accrued interest that you will be making later, assume that this payment was
not received by the bank until January 2, 2014.

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5

December
No

31

Issued check for $4,200 to First Security Insurance for the premium on Waren’s six-month
liability insurance policy. The policy period runs from December 1, 2013 to June 1, 2014.

No

31

Sold 280 shares of Sohn Corporation common stock for $28.00 per share. The shares were
originally purchased on July 11, 2013 for $22.00 per share plus a commission of $62. Central
Brokerage retained a commission of $72 on the sale and forwarded check No. 4289 for the net
sale proceeds to Waren.

31

No

31

Calculate and record the gain or loss on the sale of the marketable securities.
Be sure to consider the effects of both the purchase and sale commission expenses.

Loaned $6,000 to Maple Valley Electric by issuing a four-year note receivable with a stated
annual interest rate of 10%. The funds were loaned by issuing a check. Interest payments of
$600.00 are due on December 31 of each year, beginning in 2014. The entire principal is due
four years from December 31, 2013.

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No

Remember to consider the time period to which this expenditure applies.

The company signed an agreement to sublease an office in its building to Basso & Associates at
a monthly rental rate of $1,000 . In connection with the sublease, Waren received check
No. 55941 for $3,000 from Basso & Associates covering rent for the first quarter of 2014.

Add a new general ledger account on page 36. Assign it G/L #21100 – Unearned
Revenue. Be sure to include this account in the proper section of Waren’s 2013
financial statements.

MONTH-END PROCEDURES – After you have recorded all the transactions, go to page 12 of the
Instructions, Flowcharts, and Ledgers book and complete all the month-end procedures. An additional monthend requirement for this project is:
Yes

Monthly Statement –

Prepare a monthly statement (Doc. No. 15) for Clayborn University.

YEAR-END PROCEDURES – After completing all the month-end procedures, go to page 14 of the
Instructions, Flowcharts, and Ledgers book and complete all the year-end procedures. Additional information
for the year-end procedures is:

No

No

Ending Inventory –

Th

No

A physical inventory was taken 1/1/14, before business began for the
new year. Merchandise on hand cost $189,086.00 .

Bad Debt Expense –

The expense for bad debts is estimated at the end of the year as one-half
of one percent (0.005) of net sales.

Marketable Securities –

At December 31, 2013, the market value of marketable securities held
by Waren approximated the cost of the securities.

The project is now complete. Good work! Review your materials to make certain
everything is finalized. Complete the filing of documents, records, and working
papers using the file tabs and the envelope in which the Aid is packaged. File all
materials as indicated in the flowcharts.

B

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6

Document No. 3

PRICE LISTS
CURRENT AS OF DECEMBER 1, 2013
VELOCITY SPORTING GOODS
Item No.

Description

Cost

Selling Price

Baseball items:
BA-054
BA-158
BA-199
BA-281
BA-445
BA-507
BA-667
BA-694
BA-807
BA-859

Premium aluminum bat
Baseballs – 12 game balls
Fielding glove
60 lb. dry line marker
Catcher’s mask
Baseball equipment bag
Ball bucket with seat – set of 3
Batting gloves – 1 pair
Pitching machine
Set of bases

Basketball items:
BB-008
BB-019
BB-113
BB-267
BB-358
BB-399
BB-431
BB-538
BB-688
BB-926

Basketball
Basketball pole pad
Scoreboard and timer
Goal and rim set
Backboard
Basketball net
Whistle and lanyard – set of 6
Basketball bag
Portable inflation pump
Trainer’s first aid kit

25.00
94.00
258.00
95.00
83.00
10.00
25.00
26.00
69.00
30.00

35.00
135.00
400.00
144.00
125.00
14.00
38.00
42.00
103.00
42.00

Football items:
FB-027
FB-091
FB-225
FB-344
FB-513
FB-573
FB-650
FB-812
FB-874
FB-952

Shoulder pad set
Hip, tail, arm pad set
Football helmet
Football
Portable storage locker
Kicking tees – set of 6
Football post pad
Collapsible cones – set of 8
Sideline repair kit
Portable hand warmer

89.00
39.00
55.00
21.00
135.00
16.00
96.00
27.00
83.00
26.00

135.00
58.00
77.00
29.00
204.00
22.00
137.00
39.00
128.00
37.00

209.00
63.00
71.00
105.00
67.00
34.00
36.00
37.00
250.00
170.00

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$ 139.00
42.00
46.00
65.00
48.00
27.00
23.00
24.00
164.00
111.00

CHICAGO OFFICE SUPPLY

Th

Item No.

Description

4126
4733
5433
8506
5302
6211
8843
2342
6277
7246

Laser printer toner cartridge
Copier paper – box
Rewritable CDs
Flash drive – 4GB
Invoice forms – 100
Legal pad – box of 5
Time cards – box of 50
Black ink pens – box of 12
Pencils – box of 24
Business envelopes – box of 1000

12302
12480
15321

Laptop computer
Flat panel monitor
High-speed copier

Cost

$

46.50
19.50
12.50
14.50
6.00
3.95
6.90
4.50
2.25
15.50

$ 2,150.00
195.00
6,950.00

Approved By

Ray Kramer
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