The Auto Zone Company is a well-established, publicly-held corporation, operating

W17 ACCT 202 Project Part 1, 2 AND 3

The Auto Zone Company is a well-established, publicly-held corporation, operating as a wholesaler in the auto parts industry. Specifically, Auto Zone purchases auto parts from manufacturers and sells them to large business customers. Most purchases and sales are on account, with trade credit terms (specified below).

You’re a Davenport University student pursuing a bachelor’s degree in business and employed at the Auto Zone Company this semester as an intern. You’ve worked in various departments and on several projects so far, learning a lot about the company’s business operations. Management seems impressed with your enthusiasm and the quality of your work.

The company’s accountant has just been called away for a family emergency and will likely be absent for a month or so. The General Manager asks you to take over the accountant’s regular duties on an interim basis. You’re nervous about doing so, but are confident that what you’ve learned in accounting class, plus your personal problem-solving skills, will make this a successful experience. What a great learning opportunity, not to mention an enhancement to your resume!


May 1Paid $2,100 to LG for utilities bill that was recorded in April as an Account Payable, Check #1000.

May 1Purchased 3,000 GPS units on Credit from Yamaha for $35.00 per unit.

May 1Purchases office supplies from Staples on credit for $1,800

May 1Signed a one-year 15%, $150,000 note payable with Chase Bank.

May 2Rented part of the warehouse to a new tenant and received $12,000 for three months rent (May, June, July).

May 2Sold 2,000 Aux Cords on account to Tesla for $85 per units, Invoice #2000.

May 2Sold 400 USB Ports for $70 per unit and 1,200 GPS units for $75 per unit on account to Dodge, Invoice #2001.

May 3Received a bill from the law firm of Davenport Associates for $6,300, payable upon receipt, for bond consulting fees, Check #1001.

May 4Sold 500 Aux Cords on credit to Buick for $77 per unit, Invoice #2002.

May 4Purchased 2,100 USB Ports on credit from Shure for $45 per unit.

May 5Paid for office supplies purchased at Staples on May 1st, Check #1002.

May 7Sold 200 GPS units on account to Chevrolet for $49 per unit, Invoice #2003.

May 8Issued 4,750 shares of common stock for $13 per share

May 11Purchased 1,875 GPS units on credit from Sony for $25 per unit.

May 11The Board of Directors declared a cash dividend of $7 per share for shareholders of record on May 13th, payable on May 17th.

May 12Paid in full for the May 1 purchase from Yamaha, Check #1003.

May 13Received and paid expense reports for travel and entertainment totaling $1,500, Check #1004.

May 13Took advantage of a special deal to purchase 1,500 Aux Cords on account from Panasonic for $42 per unit.

May 15Received payment in full from Tesla for the May 2nd sale.

May 15Sold 1,050 USB Ports on credit to Chevrolet for $57 per unit, Invoice #2004.

May 16Received payment from Buick for $125,000 of the $300,000 owed from April 5.

May 17Paid the dividend that was declared on May 11th, Check #1005.

May 17Check # 1006 was issued for payroll: $14,900 for salaries and $5,100 for wages.

May 20Issued a credit to Chevrolet for the return of 150 defective units from the May 7th sale. These units has a cost basis of $35 per unit.

May 20Returned the 150 defective units received from Chevrolet to Yamaha.

May 22Purchased a $500 international phone card for one of the sales representative’s upcoming European business trip, Check #1008.

May 23Issued bonds payable at face value for $420,000

May 23Purchased 2,080 USB Ports from Shure for $41 per unit paying in cash, Check #1009

May 24Check #1010 was issued for payroll: $14,900 for salaries and $5,100 for wages.

May 25Hired and paid a consultant $50,000 to devise a marketing plan. Auto Zone’s management felt this was necessary to develop brand awareness. Check #1011.

May 26While inspecting the May 11th purchase, it was discovered that the GPS units were programmed for Asia instead of North America. Auto Zone returned the entire order to Sony.

May 27A bankruptcy judge disallowed Auto Zone’s claim for $25,000 due from Jeep. Management Decided to write off this accounts receivable.

May 27Sold 500 USB Ports on credit to GMC for $61 per unit, Invoice #2005.

May 29Paid in full for the purchase from Panasonic on May 13, Check #1012.

May 29Received payment in full from GMC for the May 27th transaction.

May 30Auto Zone is behind in its mortgage payments to Fifth Third Bank. Paid a total of $20,000 ($5,000 principal and $15,000 interest), Check #1013.

May 31Paid the first month’s principal payment of $12,500 on the note payable. In addition, paid one month’s interest, Check #1007

Here’s the SOLUTION

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