Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organize

Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized

in 1981, under the laws of the State of Illinois, with an authorized capitalization of 10,000 shares

of no-par common stock with a stated value of $30 per share. The common stock is sold over the

the counter in the local area. You have been hired as of Thursday, December 25, 2014, to replace the

controller, who has resigned. As controller, you are responsible for the corporation's accounting

recrods, preparation of the financial statements, safeguarding the corporate assets, and providing

management with financial information to set prices and to monitor and control operations.



Rockford Corporation closes its books annually on December 31 but prepares financial statements

quarterly. Adjusting entries are posted to the general ledger only at year-end; at the end of the

first, second, and third quarter the adjustments are entered only on a work sheet, not in the general

ledger. Therefore, the adjusting entries to be recorded on December 31 are annual adjustments that

you must journalize and the post to the general ledger accounts before preparing the financial

statements.



Rockford Corporation maintains a perpetual inventory system and takes a physical count each year

to adjust the inventory carrying amount. Purchases are recorded at the gross amount (discounts

taken are recognized at the date of payment) of the supplier's invoice, and the terms vary with

each supplier. Sales on account are subject to terms of 2/10, n/30. Discounts are taken and granted

only when the terms are met. The cost of all inventory sold in December was 80% of the sales price.

The corporation uses the following journals and ledgers:



Journals

1. A sales journal (S) - to record sales of merchandise on account.

2. A purchase journal (P)- to record purchases of merchandise on account.

3. A cash receipts journal (CR) - to record all cash receipts.

4. A cash disbursements journal (CD) - to record all cash payments.

5. A general journal (J) - to record all transacitons that cannot be recorded in the other journals.



Ledgers

1. A general ledger

2. An accounts receivable subsidiary ledger.

3. An accounts payable subsidiary ledger.



In recording sales transactions, each sale should be posted on the day of the sale directly to the

customer's account in the subsidiary ledger, using the invoice number as the posting reference

number in the subsidiary account. Also, cash receipts from customers should be posted to the

subsidiary ledger on the day they are received. The purchase order number should be used as

the posting reference number in the subsidiary ledger for purchases on account from suppliers.

Purchases from suppliers and payments to them should be posted daily. All other individual posting

may be made weekly or at the month-end. Account numbers should be used as posting reference

numbers in the journals. Officers and office personnel are salaried employees and are paid monthly

on the last day of each month. The delivery truck drivers and warehouse employees are hourly wage

employees and are paid biweekly. Each biweekly pay period ends Friday. On the following Monday

you assistants provide you with a payroll summary from which you prepare general journal entries

to record the biweekly payroll and the employer's taxes on the payroll. The biweekly employees'

paychecks are distributed on the following day (Tuesday).



The January 1, 2014, balances appear in the general ledger accounts as well as the Noverber 30, 2014,

balances, for those accounts whose balances have changed. All transacitons affecting the non-

current accounts from January 1, 2014, through Noverber 30, 2014, with explanations, appear in

these accounts to facilitate the preparation of the statement of cash flows.



Subsidiary ledger account balances as of Noverber 30, 2014, are as follows:



Accounts Receivable Acct No Amount

Boecker Builders 117 62,920

The Potts Company 122 50,300

Swanson Brothers Contruction 133 24,050

A & B Hardware 143 -

Trudy's Plumbing 155 15,100

Coconino Contractors Inc 160 27,800

Rankin Plumbing Corp 166 74,350

Beverly's Building Products 175 14,000

Bilder Construction Co 180 45,200

Iwanaga Plumbing and Heating 190 3,700

Total 317,420