Reference no: EM13549033
The following trial balance was prepared for Village Cycle Sales and Service on December 31, 2013, after the closing entries were posted:
Debit Credit
Cash $46,200
Accounts Receivable $21,300
Allowance for Doubtful Accounts $1,350
Inventory $85,600
Accounts Payable $28,000
Common Stock $80,000
Retained Earnings $43,750
Total $153,100 $153,100
Village Cycle had the following transaction in 2014:
1. Purchased merchandise on account for $260,000.
2. Sold merchandise that cost $243,000 on account for $340,000.
3. Performed $80,000 of services for cash.
4. Sold merchandise for $60,000 to credit card customers. The merchandise cost $41, 250. The credit card company charges a 5 percent fee.
5. Collected $348,000 cash from accounts receivable.
6. Paid $265,000 cash on accounts payable.
7. Paid $115,000 cash for selling and administrative expenses.
8. Collected cash for the full amount due from the credit card company. (see item 4).
9. Loaned $50,000 to Lee Supply. The note had a 9 percent interest and a one-year term to maturity.
10. Wrote off $830 of accounts as uncollectible.
11. Made the following adjusting entries:
(a) Recorded three months' interest on the note at December 31, 2014 (see item 9)
(b) Estimated uncollectible accounts expense to be .5 percent of sales on account.