A PRACTICE SET TO ACCOMPANY
Intermediate Accounting, by Kieso, Weygandt, and Warfield
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 counter in the local area. You have been hired as of Wednesday, December 26, 2012, to replace the controller, who has resigned. As controller, you are responsible for the corporation's accounting records, preparation of the financial statements, safeguarding the corporate assets, and providing management with financial information to set prices and to monitor and control operations. You have an assistant who keeps the payroll records, the plant asset ledger, and the perpetual inventory (by quantity only). The corporation secretary maintains the stockholder records, and the receptionist/secretary acts as the petty cashier.
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 ten-column 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 ...