CASE 4-1 PC DepotPC Depot was a retail store for personal computers and hand-held calculators, selling several national brands in each product line. The store was opened in early September by Barbara Thompson, a young woman previously employed in direct computer sales for a national firm specializing in business computers. Thompson knew the importance of adequate records. One of her first decisions, therefore, was to hire Chris Jarrard, a local accountant, to set up her bookkeeping system. Jarrard wrote up the store’s preopening financial transactions in journal form to serve as an example (Exhibit 1). Thompson agreed to write up the remainder of the store’s September financial transactions for Jarrard’s later review. Entry Account Amount Number Dr. Cr. (1) Cash 65,000 Bank Loan Payable (15%) 100,000 Proprietor’s Capital 65,000 (2) Rent Expense (September) 1,485 Cash 1,485 (3) Merchandise Inventory 137,500 Account Payable 137,500 (4) Furniture and Fixtures (10-year life) 15,500 Cash 15,500 (5) Advertising Expense 1,320 Cash 1.320 (6) Wages Expense 935 Cash 935 (7) Office Supplies Expense 1,100 Cash 1,100 (8) Utilities Expense 275 Cash 275 At the end of September. Thompson had the following items to record: Entry Account Amount Number Cr. (9) Cash sales for September $38,000 (10) Credit sales for September 14,850 (11) Cash received from credit customers 3,614 (12) Bills paid to merchandise supplier 96,195 (13) New merchandise received on credit from supplier 49,940 (14) Ms. Thompson ascertained the cost of merchandise sold was 38,140 (15) Wages paid to assistant 688 (16) Wages earned but unpaid at the end of September 440 (17) Rent paid for October 1,485 (18) Insurance bill paid for one year (September 1-August 31) 2,310 (19) Bills received, but unpaid, from electric company 226 (20) Purchased sign, paying $660 cash and agreeing to pay the $1,100 balance by December 31 1,760 resolving them into their debit and credit elements. Explain the events that probably gave rise to journal entries 1 through 8 of Exhibit 1. Why are these adjusting entries required? Prepare journal entries for them and post to ledger accounts. What new ledger accounts are required? Why? 6. Set up a ledger account (in T account form) for each account named in the general journal. 2. Prepare closing entries and post to ledger accounts.Questions 1. Analyze the facts listed as 9 through 20. Consider any other transactions that should be recorded. Prepare an income statement for September and a balance sheet as of September 30. Prepare journal entries and post to the ledger accounts. (Do not prepare closing entries. 5. 3.) 4. . using the entry number as a crows-reference. Post entries 1 through 8 to these accounts. telephone. electricity) paid with cash $ 275.500.485 rent for September period. The firm paid $ 1. Office supplies purchased by cash $ 1. 6. 3. Advertising expense paid with cash $1. 1 1. . Answer of Case 4-1 PC Depot Answer of No. 5.320. 8. 4.100.e water.000 in the business and the firm borrowed $ 100. Wages of employee paid by cash $ 935. 7. The expected life of these was 10 years. Furniture and fixtures was purchased with cash $ 15. Marchandise inventory was purchased on account $ 137.500. On September Barbara Thompson as owner of PC Depot invested $ 65. Utilities expense (i.000 from a bank on 15% note payable. 2. 940 Accounts payable 49.5 Cash 2310 (19) Utilities expense (electricity) 226 Accrued utilities payable 226 (20) Sign 1760 Cash 660 Notes payable 1100 Answer of No. accrued wages expense.614 Accounts receiveble 3.140 (15) Wages expense 688 Cash 688 (16) Wages expense 440 Accrued wages payable 440 (17) Rent expense (October) 1485 Cash 1485 (18) Insurance expense (September) 192. The kind of transactions that entered to adjusting entries are deferred revenues. 3 Entry Amount ($) Account Number Dr Cr (9) Cash 38.195 (13) Marchandise inventory 49.Answer of No.614 (12) Accounts payable 96. 4 For the case 4-1 “PC Depot” require for the adjusting entries due to adjust account balances into actual balances as of the end of the period.000 Sales revenue on September 38.940 (14) Cost of marchandise sales 38.195 Cash 96.5 Prepaid insurance 2117.850 (11) Cash 3. the transaction that entered to journal adjusting are rent expense.850 Sales revenue on September 14. prepaid insurance. accrued revenues. deferred expenses and accrued expenses. depreciation of furniture and fixtures.000 (10) Accounts receiveble 14.140 Marchandise inventory 38. . For these case. accrued electricity expenses and accrued interest expense. 320 Wages expense 2.250 Proprietor's capital 65.250 312.5 Prepaid insurance 192.760 Prepaid Rent 1.485 Prepaid insurance 2117.485 Prepaid rent 1.661 Accounts receivable 11.5 Rent expense 1.240.250 Accrued interest 1.17 (23) Wages expense 440 Accrued wages 440 (24) Insurance expense 192.236 Marchandise inventory 149.140 Advertising expense 1.17 312.250 TRIAL BALANCE of PC DEPOT on September 30 Account Balance $ Debit Credit Cash 84.Journal Entries Entry Amount ($) Account Number Dr Cr (21) Rent expense 1.850 Cost of marchandise sales 38.485 Interest expense 1.17 Accumulated depreciation 129.240.5 (25) Electricity expense 226 Accrued electricity 226 (26) Interest expense 1.17 Accumulated depreciation 129.345 Notes payable 100.17 .100 Insurance expense 192.485 (22) Depreciation of furniture and fixture expense 129.17 Accounts payable 92.000 Accrued wages payable 440 Accrued utilities (electricity) payable 226 Accrued interest 1.5 Furniture and fixtures 15.063 Utilities expense 501 Office supplies expense 1.300 Sign 1.500 Depreciation of furniture and fixtures 129.000 Sales revenue 52. 33 BALANCE SHEET .850 (C) 1.17 Total Expenses $ 8.5 (H) 1. Income Summary (B) 38.100 Insurance expense 192.485 Interest expense 1.67 52.250 Depreciation of furniture and fixtures 129.063 Utilities expense 501 Office supplies expense 1.850 6.5 Rent expense 1.320 Wages expense 2.100 (F) 501 (G) 192. 5 Yes. 6 INCOME STATEMENT for The Month September Sales revenue $ 52.041 Net Income $ 6.669.180. After we close sales revenue accounts and credit it into the income summary and also close expenses accounts and debit them into it also.710 Expenses: Advertising expense $ 1.063 (E) 1.250 46. we require new ledger accounts that is an income summary.17 (J) 1.140 Gross Margin $ 14.850 Cost of marchandise sales $ 38.669.485 (I) 129.320 (D) 2. Total debit and total credit to income summary should match with total revenue and total expense into income statement.Answer of No.33 Answer of No.140 (A) 52. 760 payable 226 Prepaid Rent 1.300 Accrued wages payable 440 Accrued utilities (electricity) Sign 1.930.930.33 Total Liabilities & Owner's Equity $ 265.33 Total Fix Assets $ 15.17 Retained earnings 6.345 Accounts receivable 11.661 Accounts payable $ 92.50 Owner's Equity Furniture and fixtures 15.559.261 Total Current Assets $ 250.5 Total Liabilities $ 194.485 Accrued interest 1.000 Accumulated depreciation 129. As of September.33 Total Assets $ 265.83 Total Owner's Equity $ 71.236 Notes payable 100.500 Proprietor's capital $ 65.370.669. 30 Assets Liabilities Cash $ 84.669.250 Prepaid insurance 2117.33 .000 Marchandise inventory 149.