Professional Documents
Culture Documents
Chapter 2
and
Financial Statements
Accounting Transactions
QUESTIONS
EXERCISES
Exercise 2-1 (10 minutes)
a) $80,000 $65,000 = $15,000 net income
b) $92,000 $149,000 = $57,000 net loss
c) $10,000 + 0 0 + x = $86,000
x = $86,000 $10,000
x = $76,000 net income
(b)
(c)
(d)
(e)
Proofs:
Owners equity, January 1.................
$
0 $
0 $92,000
Owners investments
during the year ..................................60,000
36,000
31,500
37,000 150,000
40,500
(4,500) 21,500
(8,000)
Owners withdrawals
during the year .................................
(24,750) (27,000) (15,000) (15,750) (63,000)
Owners equity, December
$51,000 $49,500 $12,000 $42,750 $171,00
31 .....................................................................
0
$18,000
$6,000
2,550
1,680
660
10,890
$ 7,110
$
84,000
7,110
91,110
$91,110
3,360
$87,750
Analysis component:
The owner, Jean Dobbs, invested $84,000 of assets during the month, which
caused equity to increase. Also, net income earned during the month was
$7,110 also causing equity to increase during November. The total increases
in equity during the month were a total of $91,110 ($84,000 + $7,110).
NOTE: Students might point out that equity decreased by a total of $3,360 in
withdrawals which in combination with the total increase of $91,110 caused a
net increase in equity of $87,750.
$12,000
17,000
2,250
36,000
28,000
$95,250
Liabilities
Accounts payable ...................
Owners Equity
Jean Dobbs, capital ................
Total liabilities and
owners equity.....................
$ 7,500
87,750
$95,250
Analysis component:
$4,200
300
$ 4,500
$2,500
1,540
580
4,620
$ 120
$ 1,000
120
$ 7,400
1,200
$ 8,600
1,120
$ 7,480
Analysis component:
Withdrawals of $1,000 by the owner, George Pelzer, caused equity to
decrease during July, 2011. Also, the net loss of $120 caused equity to
decrease in July. The total decrease in equity during the month of July
was $1,120 (calculated as $1,000 + $120).
NOTE: Students might point out that equity increased by $1,200 of owner
investments which, in combination with the total decrease of $1,120, caused a
net increase in equity of $80.
Exercise 2-8 (15 minutes)
EXCEL LEARNING SERVICES
Balance Sheet
July 31, 2011
Assets
Cash ..............................................
Accounts receivable ....................
Supplies ........................................
Furniture .......................................
Computer equipment ...................
$ 1,600
2,680
600
1,800
2,200
$8,880
Liabilities
Accounts payable ...................
$ 1,400
Owners Equity
George Pelzer, capital ............
Total liabilities and
7,480
owners equity................................
$8,880
Analysis component:
$1,400 or 15.77% (calculated as $1,400/$8,880 100) of the total
$8,880 assets held by Excel Learning Services are financed by debt.
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
Description
B
D
$58,000
42,000
$100,000
An alternative calculation:
$90,000 + x - $42,000 = $148,000; x = $100,000
c.
$58,000
65,000
$ 7,000
An alternative calculation:
$90,000 + $65,000 + x = $148,000; x = ($7,000) where the negative
represents a loss.
d. Net increase in owners equity ...................................
Add: Withdrawals (12 months @ $3,500) ...................
Gross increase in owners equity ...............................
Less: Additional investment .......................................
Net income ...................................................................
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
$58,000
42,000
$100,000
50,000
$50,000
7
An alternative calculation:
$90,000 + $50,000 - $42,000 + x = $148,000; x = $50,000
Exercise 2-11 (10 minutes)
a.
If assets decreased by $5,000 during August, then
$20,000 + $5,000 = $25,000 Assets at August 1, 2011.
Therefore, Owners Equity at August 1, 2011 = $25,000 - $1,000 =
$24,000
b.
If liabilities increased by $3,000 during August, then
$1,000 + $3,000 = $4,000 Liabilities at August 31, 2011.
Therefore, Owners Equity at August 31, 2011 = $20,000 - $4,000 =
$16,000
Exercise 2-12 (15 minutes)
Assets
Cash
a)
Accounts
Payable
Noel Bridges,
+
Capital
+ $2,500
2,500
2,500
b)
Totals
Totals
Accounts
Office
+ Receivable + Supplies =
+ $2,500
Totals
c)
2,500
+
+ $200
+ $200
200
200
600
3,100
2,500
+
200
200
600
3,100
d)*
Totals
e)
Totals
3,100
200
3,100
1,500
1,500
1,600
f)
Totals
200
200
200
1,600
+ $1,250
$1,600
$1,250
+ 1,250
$200
$3,050
$200
=
$2,850
$3,050
10
Accounts
Parts
Equipmen
Accounts
Janine Commry,
+ Receivable + Supplies +
t
= Payable +
Capital
a)
+ $7,000
+ $ 7,000
b)
- 2,500
- 2,500
Totals
$4,500
$ 4,500
c)
Totals
e)
Totals
+ $1,200
$1,200
$1,200
$4,500
d)
Totals
+ $1,200
+ $3,400
$4,500
$3,400
$ 4,500
+ $ 3,400
$1,200
$ 950
$1,200
$7,900
+ $950
$3,550
$3,400
$1,200
$950
$1,200
$7,900
$3,550
$3,400
$1,200
$950
$1,200
$ 7,900
f)*
Totals
g)
Totals
h)
Totals
i)
Totals
$1,200
$2,350
$1,200
$3,400
$1,200
$950
+ $1,400
$3,750
+ $ 1,400
$3,400
$1,200
$950
$2,700
$1,050
$7,900
$9,300
$ 2,700
$3,400
$1,200
$950
$6,600
$6,600
$6,600
10
11
d.
e.
f.
g.
11
12
+ Accounts
Receivable
a. $25,000
Investment
Equip- =
ment
$5,000
$30,000
b.
1,300
Rent Expense
$1,300
$23,700
$5,000
c.
$23,700
$28,700
+6,000
+6,000
$11,000
$6,000
d.
+ 500
Revenue
$24,200
e.
Revenue
f.
$11,000
$6,000
+$1,000
$24,200
$1,000
4,000
$20,200
$29,200
$11,000
$6,000
$30,200
$6,000
$30,200
+ 4,000
$1,000
$15,000
1,200
$19,000
$1,000
250
250
500
+ 1,000
g.
1,200
Wages Expense
h.
$28,700
$15,000
$6,000
$29,000
12
13
$19,250
i.
$750
$15,000
$6,000
6,000
$13,250
$29,000
6,000
$750
$15,000
$29,000
j. 250
Withdrawal
$13,000
$750
$15,000
$28,750
Revenue
($500 + $1,000)
=
Expenses
($1,300 + $1,200)
=
=
250
$28,750
$28,750
Net loss
$1,000
13
14
The business purchases office supplies (or some other asset) for cash.
b. The owner withdraws cash (or some other asset) from the business; also,
the business incurs an expense paid with cash.
c.
The owner invests cash (or some other asset); or, the business earns a
revenue and accepts cash or an account receivable.
f.
The business pays an account payable (or some other liability) with cash.
Liabilitie +
s
a)
b)
Totals
d)
Totals
Owner
+$2,500 Investment
+ $2,500
+ $4,000
$4,000
+$4,000 Revenue
$
c)
Totals
Owners Equity
$ 0
$2,500
+ $150
$4,000
$150
$ 0
$6,500
+ $150
$2,500
$150
$ 450
$6,500
$ 450 Sal. Expense
$3,550
$150
$2,500
$150
$6,050
$3,550
$150
$2,500
$150
$6,050
e)*
Totals
f)
Totals
g)
$ 1,400
$2,150
$ 1,400 Rent
Expense
$
$150
+ $2,000
$2,500
$150
$4,650
+$2,000 Revenue
14
15
Totals
$2,150
$2,000
$150
$6,800
$2,500
$150
=
$6,650
$6,800
15
16
Revenues:
Freelance writing revenue
$6,000
Operating expenses:
Salaries expense
$ 450
Rent expense
1,400
1,850
$4,15
0
Net income
$2,500
4,15
0
6,650
$6,65
0
16
17
Assets
Cash
$2,15
0
Accounts receivable
2,000
Supplies
Equipment
Accounts payable
$ 15
0
150
2,500
Owners Equity
Annie Deweerd, capital
Total assets
$6,80
0
6,650
17
18
a)
$500
+$400
$500
Owner
+$15,500 Investment
+$15,000
c)
Totals
Owners Equity
b)
Totals
Liabilitie +
s
$400
+$400
$15,000
+$600
$400
$15,500
+$600
$500
$1,000
$15,000
$1,000
$15,500
$500
$1,000
$15,000
$1,000
$15,500
d)*
Totals
e)
Totals
+$550
$500
f)
$550
+$550 Revenue
$1,000
$15,000
$1,000
+$600
Totals
$500
g)
-$200
Totals
$300
h)
-$250
$1,150
$16,050
+$600 Revenue
$1,000
$15,000
$1,000
$16,650
-$200
$1,150
$1,000
$15,000
$800
$16,650
-$250 Adv. Expense
18
19
Totals
$50
$1,150
$1,000
$17,200
$15,000
$800
=
$16,400
$17,200
19
20
$1,150
Operating expenses:
Advertising expense
250
Net income
$ 900
Petes Yard Care
Statement of Owners Equity
For Month Ended March 31, 2011
$15,500
Net income
900
16,400
$16,40
0
Assets
Cash
$ 50
Accounts receivable
1,150
Accounts payable
$ 800
20
21
Supplies
Equipment
1,000
15,000
Owners Equity
Pete Jong, capital
16,400
$17,200
owners equity
$17,20
0
Analysis component:
The $900 of net income does not represent cash because all of the
revenues ($550 + $600 = $1,150) were on account. The $250 of
advertising expense was paid in cash. The net income or net loss on an
income statement represents accrual net income (loss) as opposed to a
cash basis net income (loss). Recall that accrual basis net income
represents revenues and expenses that occurred regardless of when
cash is actually received/paid.
21
22
Owners Equity
Bal.
$4,000
$1,200
a)
+$1,000
-$1,000
Totals
$5,000
$200
b)
-$2,000
Totals
$3,000
c)
+$700
Totals
$3,700
d)
-$500
Totals
$3,200
e)
-$1,200
Totals
$2,000
f)
-$600
Totals
$1,400
g)
Totals
Liabilitie +
s
$900
$7,500
$4,000
$9,600
$900
$7,500
$4,000
$9,600
-$2,000
$200
$900
$7,500
$2,000
$9,600
+$700 Revenue
$200
$900
$7,500
$2,000
$10,300
-$500 Wage Exp.
$200
$900
$7,500
$2,000
$9,800
-$1,200 Rent Exp.
$200
$900
$7,500
$2,000
$8,600
-$600 Utilities
Exp.
$200
$900
$7,500
$2,000
+$400
$8,000
+$400 Revenue
$1,400
$600
$900
$7,500
$2,000
$8,400
$1,400
$600
$900
$7,500
$2,000
$8,400
h)*
Totals
$10,400
$10,400
22
23
$1,100
Operating expenses:
Rent expense
$ 1,200
Wages expense
500
Utilities expense
600
2,300
$1,20
0
Net loss
$ 9,600
1,200
$ 8,40
0
23
24
Liabilities
Assets
Cash
$1,400
Accounts receivable
600
Supplies
900
Equipment
Accounts payable
$ 2,000
7,500
Owners Equity
Otto Ingles, capital
8,400
$10,400
owners equity
$10,40
0
Analysis component:
$8,400 or 80.77% (calculated as $8,400/$10,400 100) of the assets are financed
by Otto Ingles, the owner. $2,000 or 19.23% (calculated as $2,000/$10,400 100)
of the assets are financed by debt.
Chapter 2
and
Financial Statements
Accounting Transactions
QUESTIONS
EXERCISES
Exercise 2-1 (10 minutes)
e) $80,000 $65,000 = $15,000 net income
f) $92,000 $149,000 = $57,000 net loss
g) $10,000 + 0 0 + x = $86,000
x = $86,000 $10,000
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
24
25
(b)
(c)
(d)
(e)
Proofs:
Owners equity, January 1.................
$
0 $
0 $92,000
Owners investments
during the year ..................................60,000
36,000
31,500
37,000 150,000
40,500
(4,500) 21,500
(8,000)
Owners withdrawals
during the year .................................
(24,750) (27,000) (15,000) (15,750) (63,000)
Owners equity, December
$51,000 $49,500 $12,000 $42,750 $171,00
31 .....................................................................
0
25
26
$18,000
$6,000
2,550
1,680
660
10,890
$ 7,110
$
84,000
7,110
91,110
$91,110
3,360
$87,750
Analysis component:
The owner, Jean Dobbs, invested $84,000 of assets during the month, which
caused equity to increase. Also, net income earned during the month was
$7,110 also causing equity to increase during November. The total increases
in equity during the month were a total of $91,110 ($84,000 + $7,110).
NOTE: Students might point out that equity decreased by a total of $3,360 in
withdrawals which in combination with the total increase of $91,110 caused a
net increase in equity of $87,750.
26
27
$12,000
17,000
2,250
36,000
28,000
$95,250
Liabilities
Accounts payable ...................
Owners Equity
Jean Dobbs, capital ................
Total liabilities and
owners equity.....................
$ 7,500
87,750
$95,250
Analysis component:
$4,200
300
$ 4,500
$2,500
1,540
580
4,620
$ 120
27
28
$ 1,000
120
$ 7,400
1,200
$ 8,600
1,120
$ 7,480
Analysis component:
Withdrawals of $1,000 by the owner, George Pelzer, caused equity to
decrease during July, 2011. Also, the net loss of $120 caused equity to
decrease in July. The total decrease in equity during the month of July
was $1,120 (calculated as $1,000 + $120).
NOTE: Students might point out that equity increased by $1,200 of owner
investments which, in combination with the total decrease of $1,120, caused a
net increase in equity of $80.
Exercise 2-8 (15 minutes)
EXCEL LEARNING SERVICES
Balance Sheet
July 31, 2011
Assets
Cash ..............................................
Accounts receivable ....................
Supplies ........................................
Furniture .......................................
Computer equipment ...................
$ 1,600
2,680
600
1,800
2,200
$8,880
Liabilities
Accounts payable ...................
$ 1,400
Owners Equity
George Pelzer, capital ............
Total liabilities and
7,480
owners equity................................
$8,880
Analysis component:
$1,400 or 15.77% (calculated as $1,400/$8,880 100) of the total
$8,880 assets held by Excel Learning Services are financed by debt.
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
28
29
29
30
Description
B
D
$58,000
42,000
$100,000
An alternative calculation:
$90,000 + x - $42,000 = $148,000; x = $100,000
c.
$58,000
65,000
$ 7,000
An alternative calculation:
$90,000 + $65,000 + x = $148,000; x = ($7,000) where the negative
represents a loss.
d. Net increase in owners equity ...................................
Add: Withdrawals (12 months @ $3,500) ...................
Gross increase in owners equity ...............................
Less: Additional investment .......................................
Net income ...................................................................
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
$58,000
42,000
$100,000
50,000
$50,000
30
31
An alternative calculation:
$90,000 + $50,000 - $42,000 + x = $148,000; x = $50,000
Exercise 2-11 (10 minutes)
a.
If assets decreased by $5,000 during August, then
$20,000 + $5,000 = $25,000 Assets at August 1, 2011.
Therefore, Owners Equity at August 1, 2011 = $25,000 - $1,000 =
$24,000
b.
If liabilities increased by $3,000 during August, then
$1,000 + $3,000 = $4,000 Liabilities at August 31, 2011.
Therefore, Owners Equity at August 31, 2011 = $20,000 - $4,000 =
$16,000
Exercise 2-12 (15 minutes)
Assets
Cash
a)
Accounts
Payable
Noel Bridges,
+
Capital
+ $2,500
2,500
2,500
b)
Totals
Totals
Accounts
Office
+ Receivable + Supplies =
+ $2,500
Totals
c)
2,500
+
+ $200
+ $200
200
200
600
3,100
2,500
+
200
200
600
3,100
d)*
31
32
Totals
e)
Totals
3,100
200
3,100
1,500
1,500
1,600
f)
Totals
200
200
200
1,600
+ $1,250
$1,600
$1,250
+ 1,250
$200
$3,050
$200
=
$2,850
$3,050
32
33
Accounts
Parts
Equipmen
Accounts
Janine Commry,
+ Receivable + Supplies +
t
= Payable +
Capital
a)
+ $7,000
+ $ 7,000
b)
- 2,500
- 2,500
Totals
$4,500
$ 4,500
c)
Totals
e)
Totals
+ $1,200
$1,200
$1,200
$4,500
d)
Totals
+ $1,200
+ $3,400
$4,500
$3,400
$ 4,500
+ $ 3,400
$1,200
$ 950
$1,200
$7,900
+ $950
$3,550
$3,400
$1,200
$950
$1,200
$7,900
$3,550
$3,400
$1,200
$950
$1,200
$ 7,900
f)*
Totals
g)
Totals
h)
Totals
i)
Totals
$1,200
$2,350
$1,200
$3,400
$1,200
$950
+ $1,400
$3,750
+ $ 1,400
$3,400
$1,200
$950
$2,700
$1,050
$7,900
$9,300
$ 2,700
$3,400
$1,200
$950
$6,600
$6,600
$6,600
33
34
d.
e.
f.
g.
34
35
+ Accounts
Receivable
a. $25,000
Investment
Equip- =
ment
$5,000
$30,000
b.
1,300
Rent Expense
$1,300
$23,700
$5,000
c.
$23,700
$28,700
+6,000
+6,000
$11,000
$6,000
d.
+ 500
Revenue
$24,200
e.
Revenue
f.
$11,000
$6,000
+$1,000
$24,200
$1,000
4,000
$20,200
$29,200
$11,000
$6,000
$30,200
$6,000
$30,200
+ 4,000
$1,000
$15,000
1,200
$19,000
$1,000
250
250
500
+ 1,000
g.
1,200
Wages Expense
h.
$28,700
$15,000
$6,000
$29,000
35
36
$19,250
i.
$750
$15,000
$6,000
6,000
$13,250
$29,000
6,000
$750
$15,000
$29,000
j. 250
Withdrawal
$13,000
$750
$15,000
$28,750
Revenue
($500 + $1,000)
=
Expenses
($1,300 + $1,200)
=
=
250
$28,750
$28,750
Net loss
$1,000
36
37
The business purchases office supplies (or some other asset) for cash.
b. The owner withdraws cash (or some other asset) from the business; also,
the business incurs an expense paid with cash.
c.
The owner invests cash (or some other asset); or, the business earns a
revenue and accepts cash or an account receivable.
f.
The business pays an account payable (or some other liability) with cash.
Liabilitie +
s
a)
b)
Totals
d)
Totals
Owner
+$2,500 Investment
+ $2,500
+ $4,000
$4,000
+$4,000 Revenue
$
c)
Totals
Owners Equity
$ 0
$2,500
+ $150
$4,000
$150
$ 0
$6,500
+ $150
$2,500
$150
$ 450
$6,500
$ 450 Sal. Expense
$3,550
$150
$2,500
$150
$6,050
$3,550
$150
$2,500
$150
$6,050
e)*
Totals
f)
Totals
g)
$ 1,400
$2,150
$ 1,400 Rent
Expense
$
$150
+ $2,000
$2,500
$150
$4,650
+$2,000 Revenue
37
38
Totals
$2,150
$2,000
$150
$6,800
$2,500
$150
=
$6,650
$6,800
38
39
Revenues:
Freelance writing revenue
$6,000
Operating expenses:
Salaries expense
$ 450
Rent expense
1,400
1,850
$4,15
0
Net income
$2,500
4,15
0
6,650
$6,65
0
39
40
Assets
Cash
$2,15
0
Accounts receivable
2,000
Supplies
Equipment
Accounts payable
$ 15
0
150
2,500
Owners Equity
Annie Deweerd, capital
Total assets
$6,80
0
6,650
40
41
a)
$500
+$400
$500
Owner
+$15,500 Investment
+$15,000
c)
Totals
Owners Equity
b)
Totals
Liabilitie +
s
$400
+$400
$15,000
+$600
$400
$15,500
+$600
$500
$1,000
$15,000
$1,000
$15,500
$500
$1,000
$15,000
$1,000
$15,500
d)*
Totals
e)
Totals
+$550
$500
f)
$550
+$550 Revenue
$1,000
$15,000
$1,000
+$600
Totals
$500
g)
-$200
Totals
$300
h)
-$250
$1,150
$16,050
+$600 Revenue
$1,000
$15,000
$1,000
$16,650
-$200
$1,150
$1,000
$15,000
$800
$16,650
-$250 Adv. Expense
41
42
Totals
$50
$1,150
$1,000
$17,200
$15,000
$800
=
$16,400
$17,200
42
43
$1,150
Operating expenses:
Advertising expense
250
Net income
$ 900
Petes Yard Care
Statement of Owners Equity
For Month Ended March 31, 2011
$15,500
Net income
900
16,400
$16,40
0
Assets
Cash
$ 50
Accounts receivable
1,150
Accounts payable
$ 800
43
44
Supplies
Equipment
1,000
15,000
Owners Equity
Pete Jong, capital
16,400
$17,200
owners equity
$17,20
0
Analysis component:
The $900 of net income does not represent cash because all of the
revenues ($550 + $600 = $1,150) were on account. The $250 of
advertising expense was paid in cash. The net income or net loss on an
income statement represents accrual net income (loss) as opposed to a
cash basis net income (loss). Recall that accrual basis net income
represents revenues and expenses that occurred regardless of when
cash is actually received/paid.
44
45
Owners Equity
Bal.
$4,000
$1,200
a)
+$1,000
-$1,000
Totals
$5,000
$200
b)
-$2,000
Totals
$3,000
c)
+$700
Totals
$3,700
d)
-$500
Totals
$3,200
e)
-$1,200
Totals
$2,000
f)
-$600
Totals
$1,400
g)
Totals
Liabilitie +
s
$900
$7,500
$4,000
$9,600
$900
$7,500
$4,000
$9,600
-$2,000
$200
$900
$7,500
$2,000
$9,600
+$700 Revenue
$200
$900
$7,500
$2,000
$10,300
-$500 Wage Exp.
$200
$900
$7,500
$2,000
$9,800
-$1,200 Rent Exp.
$200
$900
$7,500
$2,000
$8,600
-$600 Utilities
Exp.
$200
$900
$7,500
$2,000
+$400
$8,000
+$400 Revenue
$1,400
$600
$900
$7,500
$2,000
$8,400
$1,400
$600
$900
$7,500
$2,000
$8,400
h)*
Totals
$10,400
$10,400
45
46
$1,100
Operating expenses:
Rent expense
$ 1,200
Wages expense
500
Utilities expense
600
2,300
$1,20
0
Net loss
$ 9,600
1,200
$ 8,40
0
46
47
Liabilities
Assets
Cash
$1,400
Accounts receivable
600
Supplies
900
Equipment
Accounts payable
$ 2,000
7,500
Owners Equity
Otto Ingles, capital
8,400
$10,400
owners equity
$10,40
0
Analysis component:
$8,400 or 80.77% (calculated as $8,400/$10,400 100) of the assets are financed
by Otto Ingles, the owner. $2,000 or 19.23% (calculated as $2,000/$10,400 100)
of the assets are financed by debt.
Chapter 2
and
Financial Statements
Accounting Transactions
QUESTIONS
EXERCISES
Exercise 2-1 (10 minutes)
i) $80,000 $65,000 = $15,000 net income
j) $92,000 $149,000 = $57,000 net loss
k) $10,000 + 0 0 + x = $86,000
x = $86,000 $10,000
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
47
48
(b)
(c)
(d)
(e)
Proofs:
Owners equity, January 1.................
$
0 $
0 $92,000
Owners investments
during the year ..................................60,000
36,000
31,500
37,000 150,000
40,500
(4,500) 21,500
(8,000)
Owners withdrawals
during the year .................................
(24,750) (27,000) (15,000) (15,750) (63,000)
Owners equity, December
$51,000 $49,500 $12,000 $42,750 $171,00
31 .....................................................................
0
48
49
$18,000
$6,000
2,550
1,680
660
10,890
$ 7,110
$
84,000
7,110
91,110
$91,110
3,360
$87,750
Analysis component:
The owner, Jean Dobbs, invested $84,000 of assets during the month, which
caused equity to increase. Also, net income earned during the month was
$7,110 also causing equity to increase during November. The total increases
in equity during the month were a total of $91,110 ($84,000 + $7,110).
NOTE: Students might point out that equity decreased by a total of $3,360 in
withdrawals which in combination with the total increase of $91,110 caused a
net increase in equity of $87,750.
49
50
$12,000
17,000
2,250
36,000
28,000
$95,250
Liabilities
Accounts payable ...................
Owners Equity
Jean Dobbs, capital ................
Total liabilities and
owners equity.....................
$ 7,500
87,750
$95,250
Analysis component:
$4,200
300
$ 4,500
$2,500
1,540
580
4,620
$ 120
50
51
$ 1,000
120
$ 7,400
1,200
$ 8,600
1,120
$ 7,480
Analysis component:
Withdrawals of $1,000 by the owner, George Pelzer, caused equity to
decrease during July, 2011. Also, the net loss of $120 caused equity to
decrease in July. The total decrease in equity during the month of July
was $1,120 (calculated as $1,000 + $120).
NOTE: Students might point out that equity increased by $1,200 of owner
investments which, in combination with the total decrease of $1,120, caused a
net increase in equity of $80.
Exercise 2-8 (15 minutes)
EXCEL LEARNING SERVICES
Balance Sheet
July 31, 2011
Assets
Cash ..............................................
Accounts receivable ....................
Supplies ........................................
Furniture .......................................
Computer equipment ...................
$ 1,600
2,680
600
1,800
2,200
$8,880
Liabilities
Accounts payable ...................
$ 1,400
Owners Equity
George Pelzer, capital ............
Total liabilities and
7,480
owners equity................................
$8,880
Analysis component:
$1,400 or 15.77% (calculated as $1,400/$8,880 100) of the total
$8,880 assets held by Excel Learning Services are financed by debt.
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
51
52
52
53
Description
B
D
$58,000
42,000
$100,000
An alternative calculation:
$90,000 + x - $42,000 = $148,000; x = $100,000
c.
$58,000
65,000
$ 7,000
An alternative calculation:
$90,000 + $65,000 + x = $148,000; x = ($7,000) where the negative
represents a loss.
d. Net increase in owners equity ...................................
Add: Withdrawals (12 months @ $3,500) ...................
Gross increase in owners equity ...............................
Less: Additional investment .......................................
Net income ...................................................................
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 3
$58,000
42,000
$100,000
50,000
$50,000
53
54
An alternative calculation:
$90,000 + $50,000 - $42,000 + x = $148,000; x = $50,000
Exercise 2-11 (10 minutes)
a.
If assets decreased by $5,000 during August, then
$20,000 + $5,000 = $25,000 Assets at August 1, 2011.
Therefore, Owners Equity at August 1, 2011 = $25,000 - $1,000 =
$24,000
b.
If liabilities increased by $3,000 during August, then
$1,000 + $3,000 = $4,000 Liabilities at August 31, 2011.
Therefore, Owners Equity at August 31, 2011 = $20,000 - $4,000 =
$16,000
Exercise 2-12 (15 minutes)
Assets
Cash
a)
Accounts
Payable
Noel Bridges,
+
Capital
+ $2,500
2,500
2,500
b)
Totals
Totals
Accounts
Office
+ Receivable + Supplies =
+ $2,500
Totals
c)
2,500
+
+ $200
+ $200
200
200
600
3,100
2,500
+
200
200
600
3,100
d)*
54
55
Totals
e)
Totals
3,100
200
3,100
1,500
1,500
1,600
f)
Totals
200
200
200
1,600
+ $1,250
$1,600
$1,250
+ 1,250
$200
$3,050
$200
=
$2,850
$3,050
55
56
Accounts
Parts
Equipmen
Accounts
Janine Commry,
+ Receivable + Supplies +
t
= Payable +
Capital
a)
+ $7,000
+ $ 7,000
b)
- 2,500
- 2,500
Totals
$4,500
$ 4,500
c)
Totals
e)
Totals
+ $1,200
$1,200
$1,200
$4,500
d)
Totals
+ $1,200
+ $3,400
$4,500
$3,400
$ 4,500
+ $ 3,400
$1,200
$ 950
$1,200
$7,900
+ $950
$3,550
$3,400
$1,200
$950
$1,200
$7,900
$3,550
$3,400
$1,200
$950
$1,200
$ 7,900
f)*
Totals
g)
Totals
h)
Totals
i)
Totals
$1,200
$2,350
$1,200
$3,400
$1,200
$950
+ $1,400
$3,750
+ $ 1,400
$3,400
$1,200
$950
$2,700
$1,050
$7,900
$9,300
$ 2,700
$3,400
$1,200
$950
$6,600
$6,600
$6,600
56
57
d.
e.
f.
g.
57
58
+ Accounts
Receivable
a. $25,000
Investment
Equip- =
ment
$5,000
$30,000
b.
1,300
Rent Expense
$1,300
$23,700
$5,000
c.
$23,700
$28,700
+6,000
+6,000
$11,000
$6,000
d.
+ 500
Revenue
$24,200
e.
Revenue
f.
$11,000
$6,000
+$1,000
$24,200
$1,000
4,000
$20,200
$29,200
$11,000
$6,000
$30,200
$6,000
$30,200
+ 4,000
$1,000
$15,000
1,200
$19,000
$1,000
250
250
500
+ 1,000
g.
1,200
Wages Expense
h.
$28,700
$15,000
$6,000
$29,000
58
59
$19,250
i.
$750
$15,000
$6,000
6,000
$13,250
$29,000
6,000
$750
$15,000
$29,000
j. 250
Withdrawal
$13,000
$750
$15,000
$28,750
Revenue
($500 + $1,000)
=
Expenses
($1,300 + $1,200)
=
=
250
$28,750
$28,750
Net loss
$1,000
59
60
The business purchases office supplies (or some other asset) for cash.
b. The owner withdraws cash (or some other asset) from the business; also,
the business incurs an expense paid with cash.
c.
The owner invests cash (or some other asset); or, the business earns a
revenue and accepts cash or an account receivable.
f.
The business pays an account payable (or some other liability) with cash.
Liabilitie +
s
a)
b)
Totals
d)
Totals
Owner
+$2,500 Investment
+ $2,500
+ $4,000
$4,000
+$4,000 Revenue
$
c)
Totals
Owners Equity
$ 0
$2,500
+ $150
$4,000
$150
$ 0
$6,500
+ $150
$2,500
$150
$ 450
$6,500
$ 450 Sal. Expense
$3,550
$150
$2,500
$150
$6,050
$3,550
$150
$2,500
$150
$6,050
e)*
Totals
f)
Totals
g)
$ 1,400
$2,150
$ 1,400 Rent
Expense
$
$150
+ $2,000
$2,500
$150
$4,650
+$2,000 Revenue
60
61
Totals
$2,150
$2,000
$150
$6,800
$2,500
$150
=
$6,650
$6,800
61
62
Revenues:
Freelance writing revenue
$6,000
Operating expenses:
Salaries expense
$ 450
Rent expense
1,400
1,850
$4,15
0
Net income
$2,500
4,15
0
6,650
$6,65
0
62
63
Assets
Cash
$2,15
0
Accounts receivable
2,000
Supplies
Equipment
Accounts payable
$ 15
0
150
2,500
Owners Equity
Annie Deweerd, capital
Total assets
$6,80
0
6,650
63
64
a)
$500
+$400
$500
Owner
+$15,500 Investment
+$15,000
c)
Totals
Owners Equity
b)
Totals
Liabilitie +
s
$400
+$400
$15,000
+$600
$400
$15,500
+$600
$500
$1,000
$15,000
$1,000
$15,500
$500
$1,000
$15,000
$1,000
$15,500
d)*
Totals
e)
Totals
+$550
$500
f)
$550
+$550 Revenue
$1,000
$15,000
$1,000
+$600
Totals
$500
g)
-$200
Totals
$300
h)
-$250
$1,150
$16,050
+$600 Revenue
$1,000
$15,000
$1,000
$16,650
-$200
$1,150
$1,000
$15,000
$800
$16,650
-$250 Adv. Expense
64
65
Totals
$50
$1,150
$1,000
$17,200
$15,000
$800
=
$16,400
$17,200
65
66
$1,150
Operating expenses:
Advertising expense
250
Net income
$ 900
Petes Yard Care
Statement of Owners Equity
For Month Ended March 31, 2011
$15,500
Net income
900
16,400
$16,40
0
Assets
Cash
$ 50
Accounts receivable
1,150
Accounts payable
$ 800
66
67
Supplies
Equipment
1,000
15,000
Owners Equity
Pete Jong, capital
16,400
$17,200
owners equity
$17,20
0
Analysis component:
The $900 of net income does not represent cash because all of the
revenues ($550 + $600 = $1,150) were on account. The $250 of
advertising expense was paid in cash. The net income or net loss on an
income statement represents accrual net income (loss) as opposed to a
cash basis net income (loss). Recall that accrual basis net income
represents revenues and expenses that occurred regardless of when
cash is actually received/paid.
67
68
Owners Equity
Bal.
$4,000
$1,200
a)
+$1,000
-$1,000
Totals
$5,000
$200
b)
-$2,000
Totals
$3,000
c)
+$700
Totals
$3,700
d)
-$500
Totals
$3,200
e)
-$1,200
Totals
$2,000
f)
-$600
Totals
$1,400
g)
Totals
Liabilitie +
s
$900
$7,500
$4,000
$9,600
$900
$7,500
$4,000
$9,600
-$2,000
$200
$900
$7,500
$2,000
$9,600
+$700 Revenue
$200
$900
$7,500
$2,000
$10,300
-$500 Wage Exp.
$200
$900
$7,500
$2,000
$9,800
-$1,200 Rent Exp.
$200
$900
$7,500
$2,000
$8,600
-$600 Utilities
Exp.
$200
$900
$7,500
$2,000
+$400
$8,000
+$400 Revenue
$1,400
$600
$900
$7,500
$2,000
$8,400
$1,400
$600
$900
$7,500
$2,000
$8,400
h)*
Totals
$10,400
$10,400
68
69
$1,100
Operating expenses:
Rent expense
$ 1,200
Wages expense
500
Utilities expense
600
2,300
$1,20
0
Net loss
$ 9,600
1,200
$ 8,40
0
69
70
Liabilities
Assets
Cash
$1,400
Accounts receivable
600
Supplies
900
Equipment
Accounts payable
$ 2,000
7,500
Owners Equity
Otto Ingles, capital
8,400
$10,400
$10,40
0
owners equity
Analysis component:
$8,400 or 80.77% (calculated as $8,400/$10,400 100) of the assets are financed
by Otto Ingles, the owner. $2,000 or 19.23% (calculated as $2,000/$10,400 100)
of the assets are financed by debt.
Chapter 3
EXERCISES
25,500
Accounts Payable
750 (b)
(d)
(h)
2,250
Balance
1,050 (g)
2,000 (i)
12,850
(e)
14,100
14,100 (c)
0 Balance
25,500 (a)
25,500 Balance
Accounts Receivable
70
71
(f)
5,400
Balance
3,150
2,250 (h)
(i)
2,000
Balance
2,000
Office Supplies
(b)
750
Balance
750
Fees Earned
3,000 (d)
5,400 (f)
Office Equipment
(c)
14,100
Balance
14,100
8,400 Balance
Rent Expense
(g)
1,050
Balance
1,050
71
72
Jan. 31
Feb.
700
4,000
Feb. 14
2,800
60
23
20
2,400
1,000
25
800
26
Bal.
800 Jan. 31
800 Bal.
40
Accounts Receivable
Jan. 31
1,200
Feb. 12
15,000
18
1,900
Bal.
2,400
Feb. 20
Jan. 31
-0-
Feb. 25
1,000
Bal.
1,000
Service Revenue
2,600 Jan. 31
15,700
2,800 Feb.
Prepaid Insurance
Jan. 31
-0-
Feb. 14
4,000
Bal.
4,000
15,000
12
1,900
18
22,300 Bal.
Wages Expense
Computer Equipment
Jan. 31
480
Feb. 10
7,600
Bal.
8,080
Jan. 31
1,080
Feb. 26
800
Bal.
1,880
Accounts Payable
Feb. 23
60
60 Jan. 31
-0- Bal.
72
73
Notes Payable
-0- Jan. 31
7,600 Feb. 10
7,600 Bal.
Analysis component:
Revenue recognition requires that when a transaction has occurred, it must be
recorded whether cash has been received or not. A transaction has occurred when
there has been an economic exchange when something has been given up or
received. On February 12, services were performed and, although cash will not be
received until a future date, a revenue must be recorded because an economic
exchange has occurred.
73
74
Cash
Mar. 31
1,800
Apr. 2
780
19
2,000
Bal.
400 Apr. 10
Mar. 31
500
300
15
Apr. 29
1,000
1,000
29
Bal.
1,500
2,880
Repair Revenue
14,000 Mar. 31
Accounts Receivable
Mar. 31
4,800
Apr. 18
1,200
Bal.
4,000
2,000 Apr. 19
780 Apr.
1,200
18
15,980 Bal.
Repair Supplies
Rent Expense
Mar. 31
1,400
Mar. 31
950
Apr. 9
890
Apr. 25
250
Bal.
Bal.
2,290
1,200
Equipment
Mar. 31
7,400
Apr. 15
300
Bal.
7,700
Accounts Payable
Apr. 10
400
500 Mar. 31
890 Apr.
250
9
25
74
75
1,240 Bal.
2,350 Mar. 31
2,350 Bal.
75
76
GENERAL JOURNAL
Account Titles and Explanations
PR
Date
2011
July 1 Cash ....................................................
Sue Ware, Capital........................
To record investment by owner.
Page 1
Credit
Debit
101
301
5,000
10 Equipment ..........................................
Accounts Payable .......................
Purchased equipment on credit.
150
201
2,500
12 Cash ....................................................
Revenue .......................................
Performed services for cash.
101
401
10,000
14 Expenses ............................................
Cash .............................................
Paid expenses.
501
101
3,500
106
401
1,500
302
101
250
5,000
2,500
10,000
3,500
1,500
250
76
77
Cash
July 1
5,000
12
10,000
Balance
11,250
101
3,500 July 14
250
Accts. Receivable
July 15
150
2,500
Accounts Payable
2,500
Sue Ware,
Capital
5,000
Sue Ware,
Withdrawals
July 31
106
1,500
Equipment
July 10
31
201
July 10
301
July 1
302
250
77
78
Revenue
401
10,000
1,500
15
11,500
Balance
Expenses
July 14
July 12
501
3,500
78
79
Cash
Date
Explanation
PR
Debit
Credit
Balance
2011
July
G1
5,000
5,000
12
G1
10,000
15,000
14
G1
3,500
11,500
31
G1
250
11,250
Accounts Receivable
Date
Explanation
PR
Debit
Credit
Balance
2011
July 15
G1
1,500
1,500
Equipment
Date
Explanation
PR
Debit
Credit
Balance
2011
July 10
G1
2,500
2,500
Accounts Payable
Date
Explanation
PR
Debit
Credit
Balance
2011
July 10
G1
2,500
Date
Explanation
2,500
PR
Debit
Credit
Balance
79
80
2011
July
G1
5,000
Date
Explanation
5,000
PR
Debit
Credit
Balance
2011
July 31
G1
250
250
Revenue
Date
Explanation
PR
Debit
Credit
Balance
2011
July 12
G1
10,000
10,000
15
G1
1,500
11,500
Expenses
Date
Explanation
PR
Debit
Credit
Balance
2011
July 14
G1
3,500
3,500
Acct.
No.
101
106
150
201
301
302
DelaWare
Trial Balance
July 31, 2011
Account Title
Cash .................................................
Accounts receivable .......................
Equipment ........................................
Accounts payable ............................
Sue Ware, capital .............................
Sue Ware, withdrawals ....................
Debit
$11,250
1,500
2,500
250
Credit
$ 2,500
5,000
80
81
401
501
Revenue ...........................................
Expenses..........................................
Totals................................................
5.
3,5
00
11,500
$19,000 $19,000
DelaWare
Income Statement
For Month Ended July 31, 2011
Revenue ..........................................................
Expenses.........................................................
Net income ......................................................
$11,500
3,500
$8,000
DelaWare
Statement of Owners Equity
For Month Ended July 31, 2011
Sue Ware, capital, July 1 ................................
$
0
Add: Investments by owner ..........................
$5,000
Net income.............................................
8,000 13,000
Total .............................................................
13,000
Less: Withdrawals by owner .........................
250
Sue Ware, capital, July 31 ..............................
$12,750
81
82
DelaWare
Balance Sheet
July 31, 2011
Assets
Cash ......................................................
$11,250
1,500
Equipment .........................................
2,500
Liabilities
$ 2,500
Owners Equity
12,750
$15,250
$15,250
Analysis component:
Accounts receivable result from credit sales to customers (debit accounts
receivable and credit a revenue). Sales, or revenue, is part of equity. As
revenues on account are recorded, assets on the one side of the accounting
equation increase and equity on the opposite side of the accounting equation
also increases. Therefore, accounts receivable are financed by, or created by,
an equity transaction.
Exercise 3-5 (10 minutes)
Note: Students could choose any account number within the specified range.
Account
Number
Account Name
110
Cash
115
Accounts Receivable
160
Office Equipment
210
Accounts Payable
215
Unearned Revenue
82
83
310
320
410
Consulting Revenues
510
Salaries Expense
520
Rent Expense
530
Utilities Expense
83
84
Cash
110
Accounts Receivable
11,500 2,000 Feb 5 Bal
6,000
8,500
500
17
2,500 10,000
28
10,000
Unearned Revenue
500
2,500
3,000
Salaries Expense
Bal
10,000
Feb 28 10,000
Bal
20,000
215
Bal
Feb 10
Bal
510
115
Rent Expense
Bal
7,500
160
Accounts Payable
210
Feb 5 2,000 3,000 Bal
1,000 Bal
Consulting Revenues
410
37,500 Bal
8,500 Feb 1
46,000 Bal
Bal
520
Office Equipment
12,500
Utilities Expense
Bal
1,000
530
91
85
General Journal
Account Titles and Explanations
PR
Page G1
Credit
Debit
Cash ..................................................
Consulting Revenues ...............
Performed work for cash.
101
410
8,500
210
101
2,000
10
Cash ..................................................
Unearned Revenue....................
Received cash in advance.
101
215
2,500
12
No entry.
17
320
101
500
28
Salaries Expense..............................
Cash ...........................................
Paid salaries.
510
101
10,000
8,500
2,000
2,500
500
10,000
3.
Acct.
No.
101
115
160
210
215
310
320
410
510
520
530
Bosse Advisors
Trial Balance
February 28, 2011
Account Title
Cash...............................................................
Accounts receivable ....................................
Office equipment ..........................................
Accounts payable .........................................
Unearned revenue ........................................
Wes Bosse, capital .......................................
Wes Bosse, withdrawals ..............................
Consulting revenues ....................................
Salaries expense...........................................
Rent expense ................................................
Utilities expense ...........................................
Debit
$ 10,000
6,000
12,500
2,500
20,000
7,500
1,000
Credit
$ 1,000
3,000
9,500
46,000
85
86
Totals .............................................................
$59,500
$59,500
86
87
Assets
Cash ....................................
Accounts receivable ...........
Office equipment ................
Total assets.........................
1 Capital
= 9,500
+ 46,000
28,500
2,500
= 24,500
Bosse Advisers
Balance Sheet
February 28, 2011
$10,000
6,000
12,500
Liabilities
Accounts payable ...................
Unearned revenue...................
Total liabilities .........................
$28,500
Owners Equity
Wes Bosse, capital .................
Total liabilities and
owners equity .....................
$ 1,000
3,000
$ 4,000
24,5001
$28,500
Opening Balance
Revenues
Salaries, Rent and Utilities expenses
Withdrawals
Closing Balance
Analysis component:
Unearned revenue occurs when cash is received from a customer in advance of the work being
done. The collection is not recorded as a revenue because it has not been earned until the work
is done. Unearned revenue is therefore a liability because the business owes the customer a
service (or work). For example, WestJet receives cash from customers in advance of the
customer actually flying. These cash collections are recorded as unearned revenue, a liability,
because the cash doesnt belong to WestJet until they have earned it which occurs when the
customer takes their flight.
87
88
Cash ............................................................................................................
7,000
Equipment ...............................................................................................
5,600
Automobiles ............................................................................................
11,000
Cash...................................................................................................
3,600
3,600
c.
Cash...................................................................................................
600
600
Equipment ...............................................................................................
200
9,400
Accounts Payable.........................................................................
9,600
e.
Cash...................................................................................
2,500
2,500
f.
Cash...................................................................................................
2,400
2,400
Cash...................................................................................................
700
700
88
89
1,500
1,500
8 Supplies .......................................................................
3,000
3,000
57,000
Cash ............................................................................................
57,000
Paid salaries.
3,000
Cash ............................................................................................
3,000
21 No entry.
9,000
9,000
29 Cash ......................................................................................................
Accounts Receivable .............................................................
3,000
3,000
89
90
1,800
1,800
90
91
2,700
c.
3,150
Cash.....................................................................................
Services Revenue .......................................................
Provided services for cash.
2,700
3,150
Revenues are inflows of assets (or decreases in liabilities) received in exchange for
goods or services provided to customers. The other transactions did not create revenues
for the following reasons:
a.
d. This transaction brought in cash, but it also created a liability because the services
have not yet been provided to the client.
e.
This transaction changed the form of the asset from accounts receivable to cash.
Total assets were not increased. Revenue was not generated.
f.
This transaction brought cash into the company and increased assets, but it also
increased a liability by the same amount.
1,125
930
1,125
930
Expenses are outflows or using up of assets (or the creation of liabilities) that occur in
the process of providing goods or services to customers. The transactions labelled a, c,
and e were not expenses for the following reasons:
a.
c.
This transaction was the purchase of an asset. The form of the companys assets
changed, but total assets did not change, and the equity did not decrease.
e.
This transaction was a distribution of cash to the owner. Even though owners equity
decreased, the decrease did not occur in the process of providing goods or services
to customers.
91
92
Cash
Date
Explanation
PR
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
850
2011
Jan.
G1
3,500
4,350
2
0
G1
3
1
G1
3
1
G1
3,000
4,350
3
1
G1
750
3,600
2,000
5,000
7,350
Accounts Receivable
Date
Explanation
2,350
PR
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
300
2011
Jan.
1
2
G1
3
1
G1
9,000
9,300
5,000
4,300
92
93
Equipment
Date
Explanation
PR
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
1,500
2011
Jan.
2
0
G1
12,000
Accounts Payable
Date
Explanation
13,500
PR
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
325
2011
Jan.
2
0
G1
10,000
Date
Explanation
10,325
PR
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
2,325
2011
Jan.
G1
3,500
5,825
93
94
Date
Explanation
PR
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
300
2011
Jan.
3
1
G1
750
Fees Earned
Date
Explanation
1,050
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
1,800
2011
Jan.
1
2
G1
9,000
Salaries Expense
Date
Explanation
10,800
Debit
Credit
Balance
2010
Dec.
3
1 Beginning balance
1,500
2011
Jan.
3
1
G1
3,000
4,500
94
95
Date
Page 1
PR
Debit
Credit
2011
Jan. 1 Cash ........................................................................................................ 10
1
3,500
3,500
9,000
9,000
12,000
Cash .............................................................................................. 10
1
2,000
10,000
5,000
5,000
3,000
95
96
2
Cash .............................................................................................. 10
1
3,000
750
Cash .............................................................................................. 10
1
750
Date
Page G1
PR
Debit
10
1
15,000
Credit
2011
Aug.
Cash............................................................
96
97
16
7
30
1
17,000
32,000
Prepaid Rent.............................................................
13
1
Cash ....................................................................
10
1
6,500
6,500
12
4
Cash ....................................................................
10
1
1,800
1,800
Cash..............................................................................
10
1
40
1
9,200
9,200
Utilities Expense..........................................
69
0
Cash ....................................................
10
1
1,100
1,100
Note: The account numbers in the PR column above would be included only during the
posting of these journal entries into the ledger accounts in Exercise 3-13.
97
98
Explanation
Debit
Credit
Balance
G1
15,000
G1
6,500
8,500
G1
1,800
6,700
2
0
G1
3
1
G1
2011
Aug.
9,200
Explanation
15,900
1,100
14,800
Office Supplies
Date
15,000
PR
Debit
Credit
Balance
2011
Aug.
G1
1,800
Prepaid Rent
Date
Explanation
1,800
PR
Debit
Credit
Balance
2011
Aug.
G1
6,500
Photography Equipment
Date
Explanation
6,500
PR
Debit
G1
17,000
Credit
Balance
2011
Aug.
17,000
98
99
Date
Explanation
PR
Debit
Credit
Balance
2011
Aug.
G1
32,000
Date
Explanation
32,000
PR
Debit
Credit
Balance
2011
Aug.
2
0
G1
9,200
Utilities Expense
Date
Explanation
9,200
Debit
Credit
Balance
2011
Aug.
3
1
G1
1,100
1,100
99
100
Acct
No.
Account Title
Debit
$ 14,800
1,800
6,500
17,000
Credit
$32,000
9,200
1,100
Totals ...................................................
$41,200
$41,200
Analysis component:
The trial balance is an internal working paper used to verify that debits and
credits in the general ledger are equal and to review account balances. The trial
balance format does not readily communicate information such as financial
performance and financial position, information that is desired by external
decision makers. Financial statements are used for external reporting because the
formats of these communicate information desired by external users. For example,
the income statement reports financial performance while the balance sheet
reports financial position.
100
101
Cash
101
15,000 6,500 Aug. 1
9,200 1,800
5
1,100
31
14,800
Aug. 5
Office Supplies
1,800
124
Aug. 1
Prepaid Rent
6,500
131
Utilities Expense
Aug. 31 1,100
690
Acct.
No.
Credit
101
Cash .........................................................................
$ 14,800
124
Office supplies.....................................................
1,800
131
6,500
167
17,000
301
$32,000
401
9,200
690
1,100
Totals ......................................................................
$41,200
$41,200
Analysis component:
The trial balance is an internal working paper used to verify that debits and credits in the general
ledger are equal and to review account balances. The trial balance format does not readily
communicate information such as financial performance and financial position, information that is
desired by external decision makers. Financial statements are used for external reporting
because the formats of these communicate information desired by external users. For example,
101
102
the income statement reports financial performance while the balance sheet reports financial
position.
102
103
$46,000
$37,000
14,000
51,000
$ 5,000
Hogans Consulting
Statement of Owners Equity
Assets
$2,000
5,000
Hogans Consulting
Balance Sheet
December 31, 2011
$
0
50,000
$50,000
7,000
$43,000
Liabilities
Cash ......................................................
$12,000
$ 800
8,300
53,500
5,000
$54,300
Equipment .........................................
72,000
Owners Equity
43,000
$97,300
$97,300
Analysis component:
Losses cause equity to decrease. If equity decreases, either assets have to decrease and/or liabilities
must increase to keep the balance sheet in balance. Therefore, if Hogans Consulting continues to
experience losses, there are two short-term alternatives available to prevent a decrease in assets.
First, the business could borrow which would increase liabilities and temporarily increase assets until
payments had to be made. Longer term, the cash to make the payments cannot be borrowed. Second,
Copyright
2007 by
McGraw-Hill
rights reserved.
Lisa Hogan,
the
owner,Ryerson
could Limited.
investAlladditional
assets into the business which would increase equity
Solutions Manual for Chapter 5
and assets. However, for the long-term, the owner does not want to support the business through 103
continual investments; the business must be able to support itself through positive performance (net
income).
104
Income Statement
For Month Ended March 31, 2011
Revenues:
Service revenue .................................................................................................
$1,900
Operating expenses:
Salaries expense ................................................................................................
$ 800
Interest expense................................................................................................
10
810
Net income................................................................................................................
$1,090
JenCo
Statement of Owners Equity
For Month Ended March 31, 2011
$2,050
1,090
$3,140
Total .......................................................................................................................
$3,140
1,500
$1,640
JenCo
Balance Sheet
March 31, 2011
Liabilities
Assets
Cash ................................................... $1,000
950
250
104
105
Prepaid insurance........................
300
Equipment ......................................
700
800
Owners Equity
Marie Jensen, capital....................................
Total assets..................................... $2,950
1,640
105
106
Revenues:
Fees earned ...........................................................................................
$170,000
Operating expenses:
Wages expense .....................................................................................
$166,000
7,000
173,000
Net loss...........................................................................................................
$ 3,000
$112,000
*
10,000
Total ..........................................................................................................
$122,000
$ 18,000
3,000
21,000
$101,000
Liabilities
Assets
Cash ...........................
$ 30,000
$ 46,000
14,000
146,000
106
107
3,000
Building..............................
80,000
Land ....................................
116,000
Owners Equity
Machinery .........................
50,000
101,000
Total assets.......................
$293,000
$293,000
*$122,000 March 31/11 Balance - $10,000 invested in March = $112,000 March 1/11
Balance
107
108
Description
a. A $2,400 debit to Rent Expense
was posted as a $1,590 debit.
b. A $42,000 debit to Machinery
was posted as a debit to
Accounts Payable.
(1)
(2)
Difference
Column
between Debit with the
and Credit
Larger
Columns
Total
$810
$0
(3)
Identify
account(s)
incorrectly
stated
(4)
Amount that
account(s) is
overstated or
understated
Credit
Rent
Expense
Rent Expense is
understated by
$810
Machinery
Machinery is
understated by
$42,000 and
Accounts Payable
is understated by
$42,000
Accounts
Payable
c. A $4,950 credit to Services
Revenue was posted as a $495
credit.
$4,455
Debit
Services
Revenue
Services Revenue
is understated by
$4,455
$1,440
Credit
Store
Supplies
Store Supplies is
understated by
$1,440
Prepaid
Insurance
Prepaid Insurance
is understated by
$2,250 and
Insurance Expense
is overstated by
$2,250
$0
Insurance
Expense
f.
$4,050
$0
Credit
Cash
Cash is
understated by
$4,050
Owners
Capital
Owners Capital
account is
understated by
$9,900
Owners
Withdrawals
Owners
Withdrawals is
understated by
$9,900
108
109
109
110
Proof: Recalculate the trial balance replacing $910 for the incorrect $190 and the trial
balance now balances at $5,010.
110
111
Proof: Recalculate the trial balance replacing $700 for the incorrect $7,000 and the trial
balance now balances at $28,100.
Case C:
1. Subtract total debits in the trial balance from total credits
942 906 = 36
2. Divide the difference by 9
36 9 = 4
3. The quotient equals the difference between the two transposed numbers.
The difference between the correct number and the incorrect number
is 4.
4. The number of digits in the quotient tells us the location of the transposition.
Look for a difference of 4 between the first number from the right and
the second number from the right.
Through a process of elimination, the incorrect value is Cash for $59. The correct
value must be $95.
Proof: Recalculate the trial balance replacing $95 for the incorrect $59 and the trial
balance now balances at $942.
111
112
Chapter 4
EXERCISES
Exercise 4-1 (10 minutes)
1.
7.
2.
8.
3.
9.
4.
10.
5.
11.
6.
12.
112
113
2011
a) Dec.
32,000
b)
11,920
c)
5,252
d)
20,000
e)
9,200
f)
8,000
8,000
12,000
2012
g) Jan.
32,000
11,920
5,252
20,000
9,200
8,000
20,000
113
114
Dec.
16,00
0
Revenue ...........................................................................
16,000
b)
10,50
0
10,500
c)
350
350
d)
3,550
Revenue ...........................................................................
3,550
e)
1,300
1,300
2012
114
115
f)
Jan.
4 Cash ............................................................................................
3,550
3,550
g)
1,300
Cash ....................................................................................
1,300
Sept.
12,00
0
Revenue .........................................................................
12,000
b)
150
150
Sept.
5,000
5,000
d)
28,00
0
28,000
115
116
e)
7,000
7,000
f)
Oct.
3 Cash ...................................................................................
28,00
0
Accounts Receivable............................................
28,000
g)
7,000
Cash ...........................................................................
7,000
a)
Mar.
7,500
2,700
116
117
c)
Apr.
2,700
1,350
117
118
Dec.
2,000
2,000
8,000
8,000
400
400
2,800
2,800
5,000
5,000
118
119
(a)
(b)
$ 300
$1,600
$ 1,360
$1,375
2,100
5,400
10,080
6,000
$2,400
$7,000
$11,440
$7,375
(750)
$1,650
(5,700)
$1,300
(c)
(1,840)
$ 9,600
(d)
(800)
$6,575
119
120
1,000
3,000
1,000
1,000
Payday entry:
2013
Jan.
4,000
Apr.
2,080
2,080
May
20 Interest Payable...................................................................
2,080
4,160
Cash .................................................................................
6,240
201
1
b)
Apr.
3,600
120
121
3,600
May
3 Salaries Payable...................................................................
3,600
5,400
Cash .................................................................................
9,000
Apr.
2,500
2,500
May
2,500
Cash .................................................................................
2,500
Dec. 31
3,600
31
8,400
3,600
8,400
121
122
3,000
31
3,500
31
4,900
31
2,600
31
960
31
3,000
3,500
140
4,900
2,600
960
140
122
123
Ayotte Music
Partial Work Sheet
February 28, 2011
Unadjusted
Trial Balance
Account
Debit
Cash...........................................................
5,000
4,500
700
Credit
Adjustments
Debit
Credit
c) 1,400
Credit
5,900
b) 250
450
12,000
6,000
equipment ........
Debit
5,000
Adjusted Trial
Balance
a)2,400
8,400
1,200
1,200
9,000
9,000
3,000
Revenues .................................................
3,000
45,000
c) 1,400
a)2,400
2,400
7,000
46,400
29,000
b) 250
4,050
7,250
4,050
65,000 65,000
123
124
$46,400
Operating expenses:
Salaries expense ...................................................................................
$29,000
7,250
2,400
38,650
$ 7,750
Ayotte Music
Statement of Owners Equity
For Year Ended February 28, 2011
$ 9,000
7,750
Total..........................................................................................................
$16,750
3,000
$13,750
Ayotte Music
Balance Sheet
February 28, 2011
Assets
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 5
124
125
Cash................................................................................................................
$ 5,000
5,900
450
Office equipment.......................................................................................
$12,000
8,400
3,600
$14,950
Liabilities
Accounts payable ......................................................................................
$ 1,200
Owners Equity
Jane Adams, capital ..................................................................................
13,750
$14,950
125
126
The GAAP which requires the preparation of financial statements is the time period
principle. The time period principle assumes that an organizations activities can be
divided into specific time periods. Since information must reach decision makers
frequently and promptly, the accounting system needs to prepare reports regularly.
The standard reporting period is one year although many companies report
quarterly.
*Exercise 4-13
a)
Cash ............................................................................
Accounts Payable ........................................................
1,800
1,800
126
127
OR
1,800
Cash ...........................................................................
1,800
1,800
127
128
1,800
Revenue ......................................................................
Accounts Receivable ..................................................
4,500
4,500
128
129
OR
4,500
Revenue .....................................................................
4,500
Cash ....................................................................
4,500
Cash ...........................................................................
129
130
4,500
Withdrawals .................................................................
Salaries Expense..........................................................
1,500
1,500
130
131
OR
Cash ............................................................................
1,500
Salaries Expense........................................................
1,500
Withdrawals ..........................................................................
1,500
131
132
Cash ....................................................................
1,500
132
133
750
Revenue .............................................................................
750
750
Cash ....................................................................................................
750
Cash.............................................................................................
750
Revenue ............................................................................................
750
Analysis component:
If the error in (b) is not corrected, revenue and net income on the income
statement will be overstated each by $4,500. On the balance sheet, assets
(accounts receivable) and equity will be overstated each by $4,500.
6,000
2,880
24,000
3,840
6,000
2,880
24,000
3,840
2,400
133
134
f)
2,400
16,800
16,800
134
135
2,000
Cash ....................................................................
Unearned Fees .............................................
Received fees for work to be done.
8,400
12
2,000
18
Cash ....................................................................
Unearned Fees .............................................
Received fees for work to be done.
7,500
27
8,400
31
No entry.
Cash ....................................................................
Fees Earned .................................................
Received fees for work to be done.
12
No entry.
18
Cash ....................................................................
Fees Earned .................................................
Received fees for work to be done.
27
No entry.
31
2,000
8,400
7,500
7,500
2,000
8,400
2,000
7,500
8,400
2,000
8,400
7,500
7,500
135
136
Chapter 4
EXERCISES
Exercise 4-1 (10 minutes)
1.
7.
2.
8.
3.
9.
4.
10.
5.
11.
6.
12.
136
137
32,000
b)
11,920
c)
5,252
d)
20,000
e)
9,200
f)
8,000
8,000
12,000
2012
g) Jan.
32,000
11,920
5,252
20,000
9,200
8,000
20,000
137
138
Dec.
16,00
0
Revenue ...........................................................................
16,000
b)
10,50
0
10,500
c)
350
350
d)
3,550
Revenue ...........................................................................
3,550
e)
1,300
1,300
2012
138
139
f)
Jan.
4 Cash ............................................................................................
3,550
3,550
g)
1,300
Cash ....................................................................................
1,300
Sept.
12,00
0
Revenue .........................................................................
12,000
b)
150
150
Sept.
5,000
5,000
d)
28,00
0
28,000
139
140
e)
7,000
7,000
f)
Oct.
3 Cash ...................................................................................
28,00
0
Accounts Receivable............................................
28,000
g)
7,000
Cash ...........................................................................
7,000
a)
Mar.
7,500
2,700
140
141
c)
Apr.
2,700
1,350
141
142
Dec.
2,000
2,000
8,000
8,000
400
400
2,800
2,800
5,000
5,000
142
143
(a)
(b)
$ 300
$1,600
$ 1,360
$1,375
2,100
5,400
10,080
6,000
$2,400
$7,000
$11,440
$7,375
(750)
$1,650
(5,700)
$1,300
(c)
(1,840)
$ 9,600
(d)
(800)
$6,575
143
144
1,000
3,000
1,000
1,000
Payday entry:
2013
Jan.
4,000
Apr.
2,080
2,080
May
20 Interest Payable...................................................................
2,080
4,160
Cash .................................................................................
6,240
201
1
b)
Apr.
3,600
144
145
3,600
May
3 Salaries Payable...................................................................
3,600
5,400
Cash .................................................................................
9,000
Apr.
2,500
2,500
May
2,500
Cash .................................................................................
2,500
Dec. 31
3,600
31
8,400
3,600
8,400
145
146
3,000
31
3,500
31
4,900
31
2,600
31
960
31
3,000
3,500
140
4,900
2,600
960
140
146
147
Ayotte Music
Partial Work Sheet
February 28, 2011
Unadjusted
Trial Balance
Account
Debit
Cash...........................................................
5,000
4,500
700
Credit
Adjustments
Debit
Credit
c) 1,400
Credit
5,900
b) 250
450
12,000
6,000
equipment ........
Debit
5,000
Adjusted Trial
Balance
a)2,400
8,400
1,200
1,200
9,000
9,000
3,000
Revenues .................................................
3,000
45,000
c) 1,400
a)2,400
2,400
7,000
46,400
29,000
b) 250
4,050
7,250
4,050
65,000 65,000
147
148
$46,400
Operating expenses:
Salaries expense ...................................................................................
$29,000
7,250
2,400
38,650
$ 7,750
Ayotte Music
Statement of Owners Equity
For Year Ended February 28, 2011
$ 9,000
7,750
Total..........................................................................................................
$16,750
3,000
$13,750
Ayotte Music
Balance Sheet
February 28, 2011
Assets
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 5
148
149
Cash................................................................................................................
$ 5,000
5,900
450
Office equipment.......................................................................................
$12,000
8,400
3,600
$14,950
Liabilities
Accounts payable ......................................................................................
$ 1,200
Owners Equity
Jane Adams, capital ..................................................................................
13,750
$14,950
149
150
The GAAP which requires the preparation of financial statements is the time period
principle. The time period principle assumes that an organizations activities can be
divided into specific time periods. Since information must reach decision makers
frequently and promptly, the accounting system needs to prepare reports regularly.
The standard reporting period is one year although many companies report
quarterly.
*Exercise 4-13
a)
Cash ............................................................................
Accounts Payable ........................................................
1,800
1,800
150
151
OR
1,800
Cash ...........................................................................
1,800
1,800
151
152
1,800
Revenue ......................................................................
Accounts Receivable ..................................................
4,500
4,500
152
153
OR
4,500
Revenue .....................................................................
4,500
Cash ....................................................................
4,500
Cash ...........................................................................
153
154
4,500
Withdrawals .................................................................
Salaries Expense..........................................................
1,500
1,500
154
155
OR
Cash ............................................................................
1,500
Salaries Expense........................................................
1,500
Withdrawals ..........................................................................
1,500
155
156
Cash ....................................................................
1,500
156
157
750
Revenue .............................................................................
750
750
Cash ....................................................................................................
750
Cash.............................................................................................
750
Revenue ............................................................................................
750
Analysis component:
If the error in (b) is not corrected, revenue and net income on the income
statement will be overstated each by $4,500. On the balance sheet, assets
(accounts receivable) and equity will be overstated each by $4,500.
6,000
2,880
24,000
3,840
6,000
2,880
24,000
3,840
2,400
157
158
f)
2,400
16,800
16,800
158
159
2,000
Cash ....................................................................
Unearned Fees .............................................
Received fees for work to be done.
8,400
12
2,000
18
Cash ....................................................................
Unearned Fees .............................................
Received fees for work to be done.
7,500
27
8,400
31
No entry.
Cash ....................................................................
Fees Earned .................................................
Received fees for work to be done.
12
No entry.
18
Cash ....................................................................
Fees Earned .................................................
Received fees for work to be done.
27
No entry.
31
2,000
8,400
7,500
7,500
2,000
8,400
2,000
7,500
8,400
2,000
8,400
7,500
7,500
159
160
Chapter 5
Accounting
Completing the
Cycle and Classifying
Accounts
EXERCISES
Exercise 5-1 (15 minutes)
1.
5.
9. C
13.
2.
6.
10. C
14.
3.
7.
11. D
15.
4.
8.
12. D
16.
Balance Sheet
and
Income
Statement of
Statement Owners Equity
Credit Debit Credit
Debit
3,000
13,100
13,100
41,000
Credit
160
161
154
193
201
209
233
301
302
401
611
622
640
677
161
162
Musical Sensations
Work Sheet
For Year Ended December 31, 2011
Unadjusted
Trial Balance
Account
Debit
Credit
Adjusted Trial
Balance
Adjustments
Debit
Credit
Debit
Credit
Income
Statement
Debit
Credit
14,000
14,000
26,000
26,000
520
520
212,00
0
212,00
0
950
d)
430
Accum. amort.
musical equip. ......
16,200
3,350
Unearned
performance
revenue ...........................
12,400
b)
16,200
a)
10,600
272,00
0
Jim Daley,
52,000
withdrawals...................
Performance revenue
32,400
32,400
3,350
3,350
1,800
1,800
272,00
0
272,00
0
52,000
119,00
a)
Credit
52,000
129,60
129,60
162
163
0
Salaries expense .......... 76,000
10,600
c)
13,800
89,800
89,800
42,000
42,000
16,200
16,200
b)
16,200
c)
13,800
Office supplies
expense ...........................
d)
430
Totals ...........................
41,030
13,800
430
13,800
430
18,830 18,830
148,43 148,43 323,35 323,35
0
0
0
0
163
or
(With.)
52,000
(Net Loss)
18,830
272,000
(Beg. bal.)
201,170
(End. bal.)
36,800
Capital ...................................................................................
36,800
3. (a)
Capital
63,000
(Beg. bal.)
(Net income)
(End. bal.)
164
165
Capital .......................................................................................
Income Summary ..............................................................
60,000
60,000
3. (b)
Capital
114,000 (Beg. bal.)
165
166
99,000
35,300
4,400
12,000
6,220
21,500
Totals...................................................................................
79,420
Net income...............................................................................
19,580
Totals .................................................................................................
99,000
2011
Credit
99,000
99,000
Closing entries:
99,000
35,300
4,400
12,000
6,220
21,500
19,580
166
167
18,000
167
168
3
0
Closing entries:
Plumbing Fees Earned ............................................
39,500
Income Summary.................................................
39,500
3
0
31,100
5,500
15,750
Rent Expense.........................................................
6,000
3,850
3
0
8,400
8,400
3
0
7,200
7,200
168
169
Acct.
No.
Debit
Account
Credit
101
Cash
106
12,000
153
Trucks .................................................................................
20,500
154
193
Franchise ...........................................................................
201
7,000
209
1,600
233
1,300
301
33,450*
Totals ..................................................................................
4,100
8,250
15,000
$51,600
$51,600
*Calculated as:
(Adj. Bal,
7,200
169
170
Closing entries:
62,000
450
62,450
65,400
2,000
7,400
56,000
2,950
2,950
4,000
4,000
170
171
Closing entries:
Services Revenue .............................................
Income Summary ......................................
To close the revenue account to the
income summary.
31
73,400
31
1,400
31
12,000
72,000
72,000
4,000
42,000
3,000
22,000
2,400
1,400
12,000
Closing entries:
68,000
68,000
18,750
3,500
1,750
13,500
171
172
49,250
49,250
19,000
19,000
2011
(1)
Dec.
31
73,000
73,000
(2)
31
8,600
20,000
3,500
16,000
(3)
31
24,900
172
173
(4)
31
24,000
173
174
Rent Expense
80,000
Dec. 31
Balance
8,600
8,600 (2)
Liabilities
38,10
0
Dec. 31
Salaries Expense
Dec. 31
24,000 41,00
0
Balance
20,000
20,000 (2)
Dec. 31
24,90
0
(3)
41,90
0
Balance
Insurance Expense
Dec. 31
Balance
3,500
3,500 (2)
24,000 24,00
0
(4)
Amortization Expense
Dec. 31
Balance
16,000
16,000 (2)
Income Summary
(2)
48,100
73,00 (1)
0
(3)
24,900
24,90 Balance
0
0 Balance
174
175
Services Revenue
(1)
73,000
73,00 Dec. 31
0
0 Balance
Account
Assets ......................................................................
Debit
Credit
$ 80,000
Liabilities ...........................................................................
$ 38,100
41,900
Totals...................................................................................
$80,000
$80,000
175
176
Bill Duggan, Withdrawals; Interest Revenue, and Other Expenses have not been closed.
2.
2011
June 30
71,000
1,150
72,000
150
3.
71,000
145,20 (Balance)
0
176
177
Adjusted Trial
Balance
Credit
Debit
$ 11,000
$ 59,000
9,000
21,000
3,800
29,000
13,000
17,800
7,500
4,500
750
52,000
35,000
7,000
6,000
7,000
14,000
39,000
247,000
17,000
14,000
24,050
49,000
26,000
3,800
Totals ...............................................................................
$358,600 $358,600
Account Title
X
X
X
X
X
X
X
b.
Analysis component:
Amortization expense, gas and oil expense, interest expense, rent expense, repair
revenue, repair supplies expense, and withdrawals are all temporary accounts and do
not appear on the post-closing trial balance because their balances were transferred to
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 5
177
178
capital during the closing process leaving each with a zero post-closing balance. The
adjusted balance of $24,050 in capital is the balance prior to closing all temporary
accounts into it. A capital account balance does appear on the post-closing trial balance
but it is the post-closing balance of $153,250 as determined in part (b) above. Therefore,
the adjusted capital balance of $24,050 will not appear on the post-closing trial balance
Note to instructor: Reinforce to the student that the question asks which account balances
from the adjusted trial balance will not appear on the post-closing trial balance.
178
179
179
180
Assets
Current assets:
Cash .........................................................................................................................
$ 5,000
13,000
700
9,000
Supplies ....................................................................................................................
2,250
7,500
$ 37,45
0
Long-term investments:
13,000
$64,000
17,000
$ 6,500
3,600
$47,000
2,900
49,900
Intangible assets:
Copyright...............................................................................................................
1,000
$101,35
180
181
Liabilities
Current liabilities:
Accounts payable ............................................................................................
$ 11,000
900
23,000
4,000
10,000
$ 48,900
Long-term liabilities:
Long-term notes payable, less $10,000 current
portion ...................................................................................................................
Total liabilities ...........................................................................................................
10,500
$59,400
Owners Equity
Pat Dover, capital* ....................................................................................................
41,950
$101,35
0
181
182
Assets
Current assets:
Cash .................................................................................
$ 7,000
16,500
2,000
$ 25,500
$ 75,000
Trucks ............................................................................
$170,000
35,000
135,000
$210,000
$235,500
Liabilities
Current liabilities:
Accounts payable .......................................................
$ 11,000
3,000
$ 14,000
52,000
$ 66,000
Owners Equity
Stanley Hanson, capital ...............................................
169,500
$235,500
182
183
183
184
8,000
8,000
2,000
Cash .................................................................
2,000
July 7 Cash.........................................................................
9,000
9,000
3,000
3,000
184
185
2,000
9,000
2,000
3,000
Jul
07/12
Unadj
Bal
Accounts Receivable
Feb
20/12
5,000
Jan. 15/12
8,000
Unadj Bal
4,000
9,00
0
Jul
07/12
Dec
31/11
3,00
0
Dec
10/12
6,000
Office Equip.
Dec
31/11
Dec 31/11
Prepaid Rent
20,0
00
10,0
00
Dec
31/11
Rent Expense
Dec
31/11
Unearned Fees
2,90
0
Dec 31/11
-0-
Dec 10/12
3,000
8,00
0
Unadj Bal
3,000
8,00
0
Amortization Expense
Dec
31/11
-0-
Dec
31/11
Jan.
15/12
Advertising Expense
Unadj
Bal
186
Dec 31/11
-0-
Dec 31/11
-0-
Dec
31/11
Feb
20/12
Unadj
Bal
-02,00
0
2,00
0
Debit
$ 6,000
4,000
3,000
20,000
3,000
2,000
$38,000
Credit
$10,000
2,900
17,100
8,000
$38,000
d. Journalize adjustments:
2012
Dec. 31
Amortization Expense........................................
2,000
2,000
31
2,400
2,400
31
3,000
3,000
187
188
2,000
9,000
2,000
3,000
Jul 07/12
Accounts Receivable
Feb
20/12
Dec
31/11
3,000
Adj Bal
-0-
Dec
10/12
Unadj Bal
Office Equip.
Dec
31/11
Prepaid Rent
4,000
20,000
12,000
Leda Svenson,
Capital
17,100
Adj Bal
Dec
31/11
Unearned Fees
Dec
31/12
2,400
500
Adj Bal
Unadj Bal
8,000
3,000
Unadj Bal
Adj Bal
189
Rent Expense
Dec 31/11
Dec 31/12
Adj Bal
Amortization Expense
-0-
3,000
3,000
Adj Bal
2,000
Advertising Expense
Dec
31/11
Feb
20/12
-02,000
Debit
$ 6,000
4,000
20,000
3,000
3,000
2,000
2,000
$40,000
Credit
$12,000
500
17,100
10,400
$40,000
190
191
$10,400
Operating expenses:
Rent expense..........................................................................................
$3,000
2,000
2,000
7,000
Net income...................................................................................................
$ 3,400
$17,100
$
3,400
3,400
Total ..........................................................................................................
$20,500
3,000
$17,500
191
192
Assets
Current assets:
Cash ...................................................................................................................................
$ 6,000
4,000
$ 10,000
$20,000
12,000
8,000
$18,000
Liabilities
Current liabilities:
$ 500
Owners Equity
Leda Svenson, capital ............................................................................................................
17,500
$18,000
10,400
(2)
192
193
3,000
2,000
2,000
(3)
3,400
(4)
3,000
193
2,000
9,000
Accounts Receivable
2,000 Feb 20/12
6,000
Unadj Bal
Office Equip.
Dec 31/11
9,000
Prepaid Rent
Jul
07/12
4,000
Dec
31/11
Adj Bal
20,000
10,00 Dec
0 31/11
3,000 3,000
Dec
31/12
-0-
Unearned Fees
Dec
31/12
2,000 Dec
31/12
12,00 Adj Bal
0
17,500
Dec 31/11
-0-
Unadj Bal
3,000
Postclosing
3,000 (4)
8,000 Unadj
Bal
195
balance
2,400 Dec
31/12
(1) 10,400 10,40 Adj Bal
0
-0-
-0-
Rent Expense
Dec 31/11
Dec 31/12
Adj Bal
-0-
Dec 31/11
3,000
3,000
Amortization Expense
-0-
Dec
31/11
3,000 (2)
-0-
Adj Bal
2,000
Advertising Expense
Feb
20/12
2,000 (2)
Unadj
Bal
7,000
(3)
3,400
10,400 (1)
3,400 Bal.
-0-
2,000
-0-
-0-
Income Summary
(2)
-02,000
195
2,000 (2)
196
Debit
$ 6,000
4,000
20,000
$30,000
Credit
$12,000
500
17,500
$30,000
196
197
Sept. 1
5,000
2,400
3,200
750
6,400
750
750
3,200
750
197
198
Chapter 6
6,400
1,500
Accounting for
Merchandising Activities
EXERCISES
Sales .................................................
$ 240,000
$ 140,000
$ 75,000
$462,000
$85,000
86,000
42,000
268,000
46,000
$ 54,000
$33,000
$194,000
$ 39,000
82,000
41,000
146,000
53,000
(28,00 ($ 8,000) $
0)
48,000 ($ 14,000)
7,000
7,000
2,400
Cash .................................................................................
2,400
10,000
198
199
10,000
900
900
1 No entry.
0
7,000
Cash .................................................................................
6,930
Merchandise Inventory............................................
70
900
Cash .................................................................................
900
To record payment.
Mar.
10,000
10,000
To record payment.
199
200
3,600
200
600
17
3,000
18
7,500
21
2,100
28
5,400
3,600
200
600
60
2,940
7,500
2,100
108
5,292
200
201
4,000
Sales ................................................................................
4,000
3,200
Merchandise Inventory............................................
3,200
7 Cash .......................................................................................
3,600
Sales ................................................................................
3,600
3,000
Merchandise Inventory............................................
3,000
9,600
Sales ................................................................................
9,600
8,200
Merchandise Inventory............................................
8,200
1 Cash .......................................................................................
5
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 6
3,960
201
202
40
4,000
Feb.
4 Cash .......................................................................................
Accounts Receivable .................................................
9,600
9,600
To record collection.
202
203
2,400
Sales ................................................................................
2,400
2,000
Merchandise Inventory............................................
2,000
150
Cash .................................................................................
150
1,200
1,200
1,000
1,000
3,800
Sales ................................................................................
3,800
3,100
3,100
203
204
1 Cash .......................................................................................
1
1,176
24
1,200
2 Cash .......................................................................................
3
1,200
Sales ................................................................................
1,200
950
Merchandise Inventory............................................
950
2 Cash .......................................................................................
8
Accounts Receivable .................................................
3,800
3,800
To record collection.
204
205
11,000
11,000
11,000
7,500
11
Cash ..............................................................................
Sales Discounts .............................................................
Accounts Receivable Sundown Company.............
Collected account receivable.
10,670
330
11
b.
Mar. 1
11,000
330
10,670
11,000
7,500
11,000
Analysis component:
Amount borrowed to pay the balance owing ...........................
Annual rate of interest ............................................................
Interest per year......................................................................
$10,670.00
8%
$ 853.60
2.34
330.00
(117.00)
213.00
205
206
May 11
30,000
11
335
12
1,200
20
28,800
May 11
30,000
11
20,000
12
1,200
12
800
21
Cash ........................................................................
Sales Discounts .....................................................
27,936
864
30,000
335
1,200
864
27,936
b.
2011
30,000
20,000
1,200
800
206
207
28,800
207
208
$27,936.00
5%
$ 1,396.80
3.83
Discount taken.......................................................................
Interest paid on the 80-day* loan (80 $3.83) ......................
Net savings from borrowing to pay within
the discount period ..........................................................
864.00
(306.40)
557.60
d.
6.
e.
2.
c.
7.
j.
3.
f.
8.
i.
4.
a.
9.
b.
5.
h.
10.
g.
208
209
37,000
190,500
2,200
4,100
Transportation-in .....................
1,900
186,000
Shrinkage ..........................................
32,000
1,600
7,900
186,000
2,200
Inventory shrinkage
recorded in December 31,
2011, adjusting entry ...............
32,000
Balance .........................................
215,800
Analysis component:
The shrinkage was $32,000. The cost of merchandise actually sold to
customers was $186,000. The cost of goods sold was $215,800. Shrinkage
therefore was 17% of the actual cost of merchandise sold ($32,000/$186,000
100) or 15% of the total cost of goods sold ($32,000/$215,800 100). As
the inventory manager, I would want to know the cause of this significant
shrinkage. Is it breakage or spoilage that can be controlled? Is it theft caused
by weak internal controls? Reviewing the numbers allows the inventory
manager to ask appropriate questions for the purpose of making good
decisions.
209
210
The change in the gross profit ratio for the year ended May 31, 2010 was 2.83%
(from 23% to 25.83%). This is a favourable change because Westlawn is generating
more gross profit per sales dollar that will contribute towards the covering of
operating expenses.
210
211
Company B
2010
2011
2010
Sales ............................................................
256,000
160,000
110,000
50,000
1,600
1,100
500
16,000
5,500
2,500
142,400
103,400
47,000
88,000
55,000
25,000
54,400
48,400
22,000
16,000
24,200
9,000
24,000
29,700
11,000
40,000
53,900
20,000
14,400
(5,500)
2,000
Calculations:
1.
2.
3.
4.
Analysis component:
Company B has more favourable gross profit ratios for both 2010 and 2011.
Company A is showing a lower gross profit ratio than Company B and
decreasing gross profit as a percentage of net sales.
Note to instructor:
You may wish to engage students in a discussion of other interesting
comparisons in this information. For example:
COGS as a percentage of sales is lower for Company B than Company A.
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 6
211
212
Company B has more than doubled its sales from 2010 to 2011 in comparison to
the growth for Company A.
212
213
(a)
$ 90,000
(4,000)
(3,000)
Transportation-in..........................................
(b)
$ 160,000
(10,000)
(c)
$ 122,000
(2,600)
(6,000)
(4,400)
6,400
14,000
16,000
$ 89,400
$ 158,000
$ 131,000
7,000
$38,400
$ 36,000
89,400
158,000
131,000
(4,400)
(30,000)
(30,480)
$92,000
$ 166,400
$ 136,520
a.
b.
c.
Cost of goods purchased is calculated the usual way. Then, that amount
is transferred to the lower section and the ending inventory is
calculated as the amount needed to make cost of goods sold equal the
given amount.
213
214
2011
2010
180,000
90,000
45,000
Merchandise inventory
(beginning) .........................................18,700
22,300
9,875
9,000
104,400
49,500
26,100
Merchandise inventory
(ending) ....................................................
(16,400) (18,700)
(8,920)
(9,875)
Sales............................................................
120,000
2010
Company B
108,000
50,455
25,225
72,000
39,545
19,775
54,000
27,000
13,500
18,000
12,545
6,275
Calculations:
1.
2.
3.
4.
Analysis component:
Company B has a stable and more favourable gross profit ratio than Company
A. Company As gross profit ratio decreased from 2010 to 2011 which is
unfavourable.
214
215
(a)
(b)
(c)
$ 45,000
$ 20,000
$ 15,250
(2,000)
(1,500)
3,200
1,750
2,000
$ 44,700
$ 19,750
$ 16,375
3,500
$ 4,800
$ 4,500
44,700
19,750
16,375
(2,200)
(3,750)
(3,810)
$46,000
(1,250)
(750)
$ 20,800
(325)
(550)
$ 17,065
a.
b.
c.
Total cost of merchandise purchases is calculated the usual way. Then, that
amount is transferred to the lower section and the merchandise inventory
(ending) is calculated as the amount needed to make cost of goods sold equal
the given amount.
215
216
Statement
$26,935*
14,800
$12,135
Operating expenses:
Wages expense ..........................................................
$4,200
2,100
120
6,420
$ 5,715
850
$ 6,565
Closing entries:
3
0
Rent Revenue..................................................................
850
Sales ...................................................................................
27,700
Income Summary..................................................
28,550
216
217
3
0
21,985
720
45
14,800
120
4,200
2,100
3
0
6,565
6,565
3
0
3,500
3,500
(With.
)
3,50
0
1,635
(Beg. bal.)
6,565
(Net income)
4,700
(End. bal.)
217
218
Analysis component:
The gross profit ratio for October is 40% ($32,000 - $19,200 = $12,800 gross
profit; $12,800/$32,000 100 = 40%). The gross profit ratio for November is
45% ($12,135/$26,935 100 = 45.05%). Compu-Soft generated a higher
gross profit per sales dollar in November than in October which is favourable
because this represents a greater contribution towards the coverage of
operating expenses.
218
219
464
Perdu Sales
Work Sheet
For Year Ended December 31, 2011
Unadjusted
Account
Cash
Adjustments
Trial Balance
Debit
Credit
Debit
Credit
Income
Statement
Debit
Credit
Balance Sheet
and Statement
of Owners
Equity
Debit
26,000
26,00
0
Merchandise inventory
2,000
2,000
8,000
Store equipment
40,000
2,500
11,500
14,840
Salaries payable
Sales
6,500
40,00
0
9,000
Accounts payable
1,500
Credit
14,840
3,200
3,200
45,600
45,600
3,600
3,600
858,00
0
858,00
0
220
33,000
33,000
8,000
8,000
424,84
0
424,84
0
94,000
28,000
Sales discounts
3,200
97,200
28,000
2,500
2,500
70,000
1,500
71,500
190,00
0
Totals
927,44
0
190,00
0
927,44
0
7,200
7,200
855,04
0
Net Income
2,960
Totals
858,00
0
858,00
0
78,10
0
75,140
2,960
858,00
0
75,60
0
75,600
221
$858,000
$33,000
8,000
41,000
$817,000
424,840
$392,160
Operating expenses:
Selling expenses:
Sales salaries expense ..................................................
Other selling expenses .................................................
$97,20
0
71,500
28,000
2,500
$199,200
190,000
389,200
Net income.................................................................................
$ 2,960
c) 2011
Dec.
31
Closing entries:
Sales ...................................................................................................................
Income Summary..................................................
858,000
858,000
221
222
To close sales.
31
855,040
33,000
8,000
424,840
97,200
28,000
71,500
2,500
190,000
3
1
2,960
2,960
3
1
3,600
3,600
222
223
SABBA CO.
Income Statement
For Year Ended January 31, 2011
Revenues:
Net sales .......................................................................
$510,000
Expenses:
$301,000
117,000
109,000
750
527,750
223
224
$ 17,750
224
225
Periodic
Purchases ...............................
Perpetual
2,80
0
2,800
2,800
To record purchases on
account.
account.
2)
Nov 5
.
2,80
0
Purchases Discount .
56
Cash ...............................
2,744
2,800
Merchandise Inventory
56
Cash...............................
2,744
2,800 x 2% = 56.
2,800 x 2% = 56.
3)
Nov 7
.
Cash ........................................
196
Cash ...........................................
196
196
Merchandise Inventory
196
4)
Nov. 1
Transportation-In ....................
160
160
225
226
0
160
Cash .................................
To record payment of
freight
charges.
160
Cash .....................................
To record payment of
freight
charges.
5)
Nov 1
.
3
1
3
3,00
0
3,000
Sales ..................................
To record sale of
merchandise
on credit.
To record sale of
merchandise
on credit.
No entry.
3,000
1,500
1,500
To record cost of
merchandise
sold.
226
227
400
To record return of
merchandise bought on
account.
1
6
No entry.
400
Accounts Receivable
400
To record return of
merchandise bought on
account.
200
200
To record return of
merchandise by customer.
*Exercise 6-19
Feb.
1 Purchases.............................................................................
7,000
7,000
5 Purchases.............................................................................
2,400
Cash .................................................................................
2,400
6 Purchases.............................................................................
10,000
10,000
900
900
227
228
1 No entry.
0
7,000
Cash .................................................................................
6,930
70
900
Cash .................................................................................
900
To record payment.
Mar.
10,000
Cash .................................................................................
10,000
To record payment.
2 Purchases ...............................................................................................................
3,600
3,600
3 Transportation-in .....................................................................
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 6
200
228
229
Cash ..................................................................................
200
600
600
3,000
60
Cash ................................................................................................
2,940
18 Purchases .....................................................................................
7,500
7,500
2,100
2,100
5,400
108
Cash ................................................................................................
5,292
229
230
4,000
Sales ................................................................................
4,000
7 Cash........................................................................................
3,600
Sales ................................................................................
3,600
9,600
Sales ................................................................................
9,600
1 Cash........................................................................................
5
3,960
40
4,000
Feb.
4 Cash........................................................................................
Accounts Receivable .................................................
9,600
9,600
To record collection.
230
231
2,400
Sales ................................................................................
2,400
150
Cash .................................................................................
150
1,200
1,200
3,800
Sales ................................................................................
3,800
1 Cash........................................................................................
1
1,176
24
1,200
2 Cash........................................................................................
3
Sales ................................................................................
1,200
1,200
231
232
2 Cash........................................................................................
8
Accounts Receivable .................................................
3,800
3,800
To record collection.
232
233
11,000
11,000
11,000
330
Cash .................................................................................
10,670
b)
2011
Mar. 1 Accounts Receivable Sundown Company ......................
11,000
Sales ................................................................................
11,000
11 Cash ................................................................................................
10,670
330
11,000
233
234
2011
May 11 Purchases ...............................................................................................................
30,000
30,000
11 Transportation-In ....................................................................................................
335
Cash .....................................................................................................
335
1,200
1,200
28,800
864
Cash .................................................................................
27,936
2011
May 11 Accounts Receivable Wilson Purchasing ............................................................
Sales .....................................................................................................
30,000
30,000
234
235
1,200
1,200
21 Cash .......................................................................................................................
27,936
864
28,800
235
236
b.
c.
$145,000
Sales ......................................................................
Less: Sales discounts ..........................................
Sales returns...............................................
Net sales ................................................................
Less: Cost of goods sold .....................................
?
Gross profit from sales ........................................
Therefore:
Cost of goods sold ...............................................
$340,000
$ 65,000
$ 80,000
$ 5,500
14,000
19,500
$320,500
$145,000
$175,500
$175,000
3,600
6,000
$165,400
11,000
$ 30,000
176,400
$206,400
$175,500
$ 30,900
d. (145,000/320,500) x 100 = 45.24% Gross Profit Ratio (rounded to two decimal places)
Analysis component:
The gross profit ratio for 2011 is 45.24%. In comparison with the 2010 gross profit ratio
of 47%, this represents an unfavourable change. This is unfavourable because the gross
profit generated per net sales dollar decreased in 2011 from 2010 thereby contributing
less towards the coverage of operating expenses in 2011 than in 2010.
236
237
No.
101
106
119
125
201
209
301
302
413
414
Unadjusted
Trial
Balance
Debit
Credit
7,400
3,600
2,400
1,200
280
505
506
507
622
Account
Cash ...................................
Accounts receivable .........
Merchandise inventory .....
Store supplies ...................
Accounts payable .............
Salaries payable ................
Mi Dewer, capital ...............
Mi Dewer, withdrawals ......
Sales ..................................
Sales returns and
allowances.........................
Purchases..........................
Purchase discounts ..........
Transportation-in ..............
Salaries expense ...............
640
651
500
Totals..............................
Net income ........................
24,100
750
290
6,400
160
1,400
Adjustments
Debit
Credit
(a) 300
2,400
2,720
(b) 120
11,570
12,000
290
6,400
250
(b)
120
(a) 300
24,100
Income Statem
ent
Debit
Credit
420
160
1,520
500
30
0
420 11,570
3,400
12,000
Balance Sheet
and
Statement of
Owners Equity
Debit
Credit
7,400
3,600
2,720
900
280
120
11,570
750
250
14,970 15,370
11,970
3,400
475
238
Totals
14,970
14,970 15,370
15,370
239
Net Sales:
Sales ........................................................................................
Sales returns and allowances ....................................................
Sales discounts ......................................................................
Net sales ......................................................................................
$445,000
(25,000)
(16,000)
$404,000
b)
$286,000
(22,000)
(11,400)
8,800
$261,400
c)
$ 15,000
261,400
$276,400
(11,000)
$265,400
FOX
Income
For Year Ended March 31, 2011
FIXTURES
Net sales
..............................................................
Cost of goods sold ......................................................
265,400
Gross profit from sales ................................................
$138,600
Operating expenses:
Selling expenses ......................................................
General and administrative expenses ......................
Total operating expenses .....................................
102,500
Income from operations...............................................
36,100
Other revenues and expenses:
CO.
Statement
$404,000
$69,000
33,500
$
240
Interest revenue.......................................................
1,200
Net income ..............................................................
$ 37,300
241
b)
$6,200 + $16,676 $110 $28 + $380 $2,460 = $20,658 Cost of goods sold
JOHNS ELECTRONICS
Income Statement
For Month Ended April 30, 2011
Sales ..............................................................................
$33,700
1,740
$31,960
$ 6,200
28
110
Net purchases...........................................................
$16,538
Add: Transportation-in.........................................
380
16,918
$23,118
2,460
20,658
$ 11,302
242
$8,000
640
340
$8,980
2,800
150
2,950
11,930
$ 628
130
$ 758
243
Closing entries:
Merchandise Inventory ................................................
2,460
110
28
Sales ....................................................................................
33,700
36,298
3
0
Income Summary............................................................
37,056
6,200
1,740
Purchases ....................................................................
16,676
Transportation-In.....................................................
380
640
2,800
8,000
150
340
130
3
0
758
758
244
3
0
9,200
9,200
Part e:
(Net loss)
758
(With.)
9,200
245
June
2,000
120
1,596
1,000
2,120
112
84
1,400
1,000
June
Chapter 7
Purchases ..........................................................
GST Receivable .................................................
Accounts Payable ......................................
To record credit purchase;
$2,000 x 6% = $120 GST.
2,000
120
1,596
EXERCISES
Exercise 7-1 (45 minutes)
2,120
112
84
1,400
246
Purchases
Units
Jan.
Unit
Cost
Inventory
Balance
Unit
s
Unit
Cost
Cost of
Goods
Sold
Units
Total
Cost
1 Beginning inventory
100 @ $10. = $ 1,000
00
1
0
Mar
.
Unit
Cost
1
4
900
100
10 @ $10. = $
00
100
250 @ 15.0 =
0
10 @ $10. =
00
1
5
10 @ $10. = $
00
130 @ 15.0 =
0
3,750
10
0
1,950
Jul.
3
0
400 @ 20.0 =
0
8,000
180 @ 20.0 =
0
750
$12,750 530
3,600
$8,350
$4,400
Ending inventory
247
$21,200
8,350
$12,850
248
Purchases
Units
Unit
Cost
Total
Cost
Units
(a)
Cost of
Goods
Sold
Unit
Cost
(b)
(b) (a)
Total Average
Units Cost/Unit
Total
Cost
Inventory Balance Calculations
Beginning inventory
Jan.
100 @ $10 = $
1000
100
$10.00 $
1,000.0
0
100
10
90 @ $10.00 = $
900.00
90 @ $10.00 =
10
Mar.
14
250 @ $15 = $
400 @ $20 = $
$14.81 $
1,776.6
0
8,000
$18.80 $
9,776.6
0
30 @ $18.80 = $ 5,640.00
0
750
$12,750
100.0
0
10
100.0
0
$ 3,850.0
0
260
$ 3,850.0
0
53
0
$8,613.40
220
4,136.6
0
$ 4,136.60
2,073.40
120
$ 1,776.6
0
120
$ 1,776.6
0
8,000.00
520
$ 9,776.6
0
520
$ 9,776.6
0
300 @ $18.80 =
$18.80 $
3,750.00
260
400 @ $20.00 =
220
Total
3,850.0
0
900.00
10
140 @ $14.81 =
520
Oct.
$14.81 $
14 @ $14.81 = $ 2,073.40
0
120
30
100.0
0
250 @ $15.00 =
260
July
$10.00 $
3,750
15
$ 1,000.0
0
220
5,640.00
$ 4,136.6
0
249
$21,200.00
8,613.40
$12,586.60
Ending inventory
250
Purchases
Unit
s
Jan.
Unit
Cost
Inventory
Balance
Unit
s
Cost of
Goods
Sold
Units
Unit
Cost
Total
Cost
1 Beginning inventory
100 @ $10. = $ 1,00
00
0
1
0
Mar
.
Unit
Cost
1
4
900
10 @ $10. = $
00
100
10 @ $10. = $
00
100
250 @ 15.0 =
0
10 @ $10. = $
00
1
5
140 @ $15.
00
$ 2,100
110 @ 15.0 =
0
10 @ $10. = $
00
110 @ 15.0 =
0
Jul.
3
0
400 @ 20.0 =
0
10 @ $10. = $
00
110 @ 15.0 =
0
Oct.
100 @ 20.0 =
0
3,750
100
1,650
100
1,650
8,000
100
1,650
2,000
251
Total
750
$12,750 530
$21,200
9,000
$12,200
$9,000
+
220
$3,750
Ending inventory
252
Date
Purchases
Unit
s
Jan.
Unit
Cost
Total
Cost
Unit
s
Unit
Cost
Cost of
Goods
Sold
Units
Unit
Cost
Total
Cost
1 Beginning inventory
100 @ $10. = $
00
1,00
0
1
0
Mar
.
Inventory
Balance
1
4
250 @ $15. = $
00
900
3,75
0
100
10 @ $10. = $
00
100
250 @ 15.0 =
0
10 @ $10. =
00
1
5
10 @ $10. = $
00
130 @ 15.0 =
0
3,750
10
0
1,950
Jul.
3
0
400 @ $20. = $
00
8,00
0
400 @ 20.0 =
0
60 @ $15. =
00
Oct.
Total
240 @ 20.0 =
0
750
$12,750 530
900
4,800
$8,650
60 @ $15.
00
= $
160 @ 20.0 =
0
220
8,000
900
3,200
$4,100
Ending inventory
253
$21,200
8,650
$12,550
254
120 units
250 units
500 units
450 units
1,320 units
@
@
@
@
$6.00
5.60
5.00
4.60
available for
=
=
=
=
$720
1,400
2,500
2,070
$6,690
cost of goods
sale
2.
Units sold:
Jan.
10
Mar.
15
Oct. 5
Totals
125 units
600 units
795 units
Purchases
Unit
s
Unit
Cost
Total
Cost
Units
Unit
Cost
(a)
(b)
(a)
Tota
l
Averag
Cost of
Unit e Cost/
Goods Sold s
Unit
(b)
Total
Cost
Inventory Balance
Calculations
Beginning inventory
Jan.
120 @ $6.0 = $
0
720.0
0
120
$6.00 $
720.0
0
120
10
70 @ $6.0 = $
0
420.0
0
70 @ $6.0 =
0
50
$6.00 $
300.0
0
$ 720.0
0
420.00
50
$ 300.0
0
50
$ 300.0
255
0
Mar.
250 @ 5.60 =
1,400.00
300
125 @ $5.6 = $
7
15
708.7
5
28
991.2
5
175
$ 991.2
5
175
$ 991.2
5
$5.17 $ 3,491.
25
675
$3,491.2
5
675
$3,491.2
5
2,070.00
$6,690.00 795
$1,700.0
0
450 @ 4.60 =
600 @ $4.9 = $
4
1,320
300
2,500.00
$1,700.0
0
500 @ 5.00 =
1,12
5
Total
$5.66* $
Oct.
300
@ 5.67 = 708.75
125
175
July
$5.67 $ 1,700.
00
2,964.
00
$4,092.75
$4.94 $ 5,561.
25
1,12
5
$5,561.2
5
1,12
5
$5,561.2
5
@ 4.96 =
600
2,964.00
525
$4.95* $ 2,597.
25
525
$2,597.2
5
Ending inventory
525
$2,597.2
5
256
Purchases
Unit
s
Jan.
Unit
Cost
Units
Unit
Cost
Inventory Balance
Cost of
Goods
Sold Units
Total
Cost
1 Beginning inventory
120 @ $6.0 =
0
720
1
0
Mar. 7
70 @ $6.0 =
0
$
1
5
2
8
120 @ $6.00 = $
72
0
50 @ $6.00 = $
30
0
50 @ $6.00 = $
30
0
42
0
250 @ 5.60 =
1,400
50 @ $6.0 = $
0
Jul.
Unit
Cost
75 @ 5.60 =
30
0
420
175 @ $5.60 = $
98
0
175 @ $5.60 = $
98
0
500 @ 5.00 =
2,500
175 @ $5.60 = $
Oct.
98
0
@ 5.00 =
425
98
0
500 @ 5.00 =
2,500
450 @ 4.60 =
2,07
0
75 @ $5.00 = $
37
5
450 @ 4.60 =
2,125
2,070
257
Total
1,320
$6,690 795
$4,245
Cost of goods sold
+
525
$2,445
Ending inventory
258
Purchases
Unit
s
Jan.
Unit
Cost
Total
Cost
Unit
s
Unit
Cost
Cost of
Goods
Sold
Units
Unit
Cost
Total
Cost
1 Beginning inventory
120 @ $6.0 =
0
720
1
0
Mar
.
Inventory
Balance
70 @ $6.0 =
0
420
120 @ $6.0 = $
0
720
50 @ $6.0 = $
0
300
50 @ $6.0 = $
0
300
250 @ 5.60 =
50 @ $6.0 = $
0
1
5
125 @ $5.6 =
0
700
125 @ 5.60 =
50 @ $6.0 = $
0
Jul.
2
8
300
700
300
125 @ 5.60 =
700
500 @ 5.00 =
2,500
50 @ $6.0 = $
0
Oct.
1,400
300
125 @ 5.60 =
700
500 @ 5.00 =
2,500
450 @ 4.60 =
2,070
50 @ $6.0 = $
300
259
5
Total
1,32
0
125 @ 5.60 =
700
150 @ 5.00 =
350 @ 5.00 =
1,750
$6,690 795
750
$3,940
525
$2,750
Ending inventory
260
Purchases
Unit
s
Jan.
Unit
Cost
Total
Cost
Unit
s
Unit
Cost
Cost of
Goods
Sold
Units
Unit
Cost
Total
Cost
1 Beginning inventory
120 @
$6.0 = $
0
72
0
1
0
Mar
.
Inventory
Balance
70 @ $6.0 =
0
250 @
$ 420
$5.6 = $ 1,40
0
0
1
5
120 @ $6.0 = $
0
720
50 @ $6.0 = $
0
300
50 @ $6.0 = $
0
300
250 @ 5.60 =
25 @ $6.0 =
0
$ 150
100 @ 5.60 =
560
25 @ $6.0 = $
0
150 @ 5.60 =
25 @ $6.0 = $
0
Jul.
2
8
500 @
$5.0 = $ 2,50
0
0
450 @
$4.6 = $ 2,07
0
0
150
840
150
150 @ 5.60 =
840
500 @ 5.00 =
2,500
25 @ $6.0 = $
0
Oct.
1,400
150
150 @ 5.60 =
840
500 @ 5.00 =
2,500
450 @ 4.60 =
2,070
25 @ $6.0 = $
150
261
5
Total
1,32
0
150 @ 5.60 =
840
180 @ 5.00 =
900
280 @ 4.60 =
170 @ 4.60 =
782
$6,690 795
1,288
$4,018
525
$2,672
Ending inventory
262
Specific
Identification
Sales ....................................
(795 units $15 selling price)
Cost of goods sold ...................
Gross profit ..............................
Operating expenses .................
Net income................................
Moving
Weighted
Average
$11,925
4,018
$ 7,907
1,250
$ 6,657
FIFOLIFO
$11,925.00
$11,925
$11,925
4,092.75
$ 7,832.25
1,250.00
$ 6,582.25
4,245
$ 7,680
1,250
$ 6,430
3,940
$ 7,985
1,250
$ 6,735
1) The LIFO method results in the highest net income with $6,735.
2) The weighted average net income of $6,582.25 does fall between FIFO net
income ($6,430) and LIFO net income ($6,735).
3) If costs were rising instead of falling then the FIFO method would probably
result in the highest net income.
Exercise 7-6
Purchases/Transportatio
Cost of Goods Sold/
n-In/ (Purchase
Returns/Discounts)
(Returns to Inventory)
Cost/Un
Units it
Total $
Date
Cost/Un
Unit Avg
Units it
Total $ s Cost/Unit
Brought
Forwar
d
Mar. 1
25
Balance in Inventory
$97.00 $2,425.00
Total $
50
$4,750.0
$95.00
0
75
95.67 7,175.00
95.67 6,026.96
12
1,148.0
95.67
4 63
(2)
95.67
(191.3
4) 65
95.67 6,218.30
48
95.67
4,592.1
6 17
95.66 1,626.14
32
93.94 3,006.14
15
92.00
1,380.00
263
7
2
8
25
93.94
2,348.5
0
93.95
Analysis component:
The gross profit ratio for Product W506 for March 2011 is 35.71% calculated
as net March sales of $12,284 (83 units $148) less March cost of goods sold
of $7,897.36 = $4,386.64 gross profit $12,284 = .3571 100.
657.64
264
BB
FM
MB
SL
c.
Unit
s
on
Han
d
22
15
36
40
C
o
s
t
$100
156
190
72
N
R
V
$108
144
182
87
Tota
l
Cost
Tota
l
NRV
$2,200
2,340
6,840
2,880
$14,260
$2,376
2,160
6,552
3,480
$14,568
$14,260
$2,200
2,160
6,552
2,880
$13,792
2011
Dec. 31 Cost of Goods Sold ............................................................
468
468
2.
2011
2012
2013
265
Sales
$900,000
$900,00
0
$900,0
00
$900,0
00
Gross profit
$200,000
$200,00
0
$180,00
0
$200,0
00
500,000
500,000
500,000
500,00
0
180,000
200,000
200,00
0
200,000
500,000
$400,000
520,000
480,00
0
500,00
0
$380,00
0
$420,0
00
$400,0
00
266
.....
$ 450,000
$1,590,000
(23,100)
37,600 1,604,500
.....
$2,054,500
$2,000,000
.....
(1,400,000)
At Retail
$63,800.00
115,620.00
$179,420.00
$
$35,970.84
b.
At Cost
Estimated inventory that should have
been on hand .......................................
$65,200.00
At Retail
$35,970.84
267
30,122.82 54,600.00
$ 5,848.02
$
268
b.
c.
250
FIFO:
50 $4.40 .................................................................
$6,600 $220 ...........................................................
220
LIFO:
50 $6.00 .................................................................
$6,600 $300 ...........................................................
300
6,350
6,380
6,300
FIFO provides the lowest net income because it has the highest cost of goods sold
due to decreasing unit costs.
*Exercise 7-13 (20 minutes)
Ending Cost of
Inventory Goods Sold
a.
b.
c.
FIFO:
(50 $2.86) + (100 $2.50) .....................................
(120 $2.00) + (250 $2.30) + (400 $2.50) ...........
393
LIFO:
(120 $2.00) + (30 $2.30) .....................................
(50 $2.86) + (500 $2.50) + (220 $2.30) ............
309
360
LIFO provides the lowest net income because it has the highest cost of goods sold
due to rising unit costs.
1,815
1,899
1,848
269
Cost/Unit
Total Cost
Beginning inventory
80 @
$2.00 =
$160.00
March 7 purchase
22 @
2.30 =
50.60
July 28 purchase
48 @
2.50 =
120.00
150
$330.60
$ 426,650
= 7.0 times
= 4.8 times
($86,750 + $91,500)/2
Days sales in inventory
2012:
2011:
$ 96,400 365
$643,825
= 54.7 days
$ 86,750 365
$426,650
= 74.2 days
270
Accounting Information
Systems
EXERCISES
Invoice
Number
Account Debited
Accounts Receivable
Dr. Sales Cr.
PR
2011
Feb. 7
J. Eason
5704
1,150
700
12
P. Lathan
5705
320
170
25
S. Summers
5706
550
300
Page 2
Invoice
Date
Account Debited
Numbe
r
A/R Dr.
PR
Sales Cr.
2011
Feb
.
7 J. Eason
5704
1,150
12 P. Lathan
5705
320
25 S. Summers
5706
550
Date
Account
Credited
PR
Explanation
Cash
Dr.
Sales
Discou
nt Dr.
Accounts
Receivabl
e Cr.
Sales
Cr.
O
Ac
271
2011
Sept. 9
Notes payable
Note to bank
5,500
13
Dale Trent,
capital
Owner
investment
7,000
18
Sales
Cash sale
27
J. Namal
Invoice, Sept. 7
460
1,764
460
36
1,800
272
Credited
Explanation
PR
Page 2
Sales
Accts.
Other
Cash
Disc.
Rec.
Sales
Accts.
Debit
Debit
Credit
Credit
Credit
2011
Sept
.
9 Notes payable
Note to bank
5,500
5,500
1 Dale Trent,
3 capital
Owner
investment
7,000
7,000
1 Sales
8
Cash sale
2 J. Namal
7
Invoice, Sept. 7
460
1,764
460
36
1,800
273
Purchases Journal
Date
Account Credited
Date of
Invoice
Terms
PR
Page 1
Accounts
Payable Cr.
Merchandi
se
Inventory
Dr.
8,100
Office
Supplies
Dr.
Other
Accounts
Dr.
2011
July
Angler, Inc.
Ju
l
n/30
8,100
Ju
l
14
2/10,
n/30
240
17
Ju
l
17
n/30
2,600
Marten Company
240
2,600
Page 2
Accounts
Date
of
Date
Account Credited
Invoic
e
Terms
PR
Office
Other
Payable
Purchases
Supplie
s
Accounts
Credit
Debit
Debit
Debit
2011
July
1 Angler, Inc.
July
1
n/30
2/10,n/30
8,100
240
8,100
240
274
14
17 Marten Company
July
17
n/30
2,600
2,600
275
Date
Payee
Account Debited
PR
Cash Cr.
Page 1
Merchandise
Inventory Cr.
Other
Accounts Dr.
Accounts
Payable Dr.
2011
Mar. 9
210
Narlin Corp.
Store Supplies
900
900
17
211
City Bank
Notes Payable
3,000
3,000
29
212
LeBaron
LeBaron
6,860
31
213
E. Brandon
Salaries
Expense
3,400
31
214
Pace, Inc.
Pace, Inc.
5,500
140
7,000
3,400
5,500
No.
Payee
Account Debited
PR
Other
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
2011
Mar.
Page 2
Purchas
e
9 21
0
Narlin Corp.
Store Supplies
900
900
1 21
City Bank
Notes Payable
3,000
3,000
Accts.
643
276
7 1
2 21
9 2
LeBaron
LeBaron
6,860
3 21
1 3
E. Brandon
Salaries Expense
3,400
3 21
1 4
Pace, Inc.
Pace, Inc.
5,500
140
7,000
3,400
5,500
277
Purchases Journal
Date
Account Credited
Date of
Invoice
Terms
PR
Page 1
Accounts
Payable Cr.
Merchandi
se
Inventory
Dr.
30,000
30,000
Office
Supplies
Dr.
Other
Accounts
Dr.
2011
May
11
Hostel Sales
May 11
3/10,
n/90
Date
Payee
Account Debited
PR
Cash Cr.
Page 1
Merchandise
Inventory Cr.
Other
Accounts Dr.
Accounts
Payable Dr.
2011
Fundamental Accounting Principles, Twelfth Canadian Edition
May
11
84
Express
Shipping
Merchandise
Inv.
20
85
Hostel Sales
Hostel Sales
335
27,9361
General Journal
Date
864
Page: 1
PR
Debit
2011
May
335
1,200
Credit
28,800
278
Calculations:
1. 30,000 1,200 = 28,800; 28,800 x 3% = 864; 28,800 864 = 27,936.
1,200
279
Invoice
Number
Account Debited
PR
Page 1
Accounts Receivable
Dr. Sales Cr.
30,000
20,000
2011
May
11
Wilson
Purchasing
1601
Date
Account
Credited
PR
Explanation
Cash
Dr.
Page 1
Sales
Discou
nt Dr.
Accounts
Receivabl
e Cr.
864
28,800
2011
May
21
Wilson
Purchasing
Wilson
Purchasing
27,93
61
General Journal
Date
Page: 1
PR
Debit
2011
May
1,200
Credit
Sales
Cr.
Other
Account
s Cr.
Cost of Goods
Sold Dr.
Merchandise
Inventory Cr.
645
280
1,200
Calculations:
1. 30,000 1,200 = 28,800; 28,800 x 3% = 864; 28,800 864 = 27,936.
800
800
281
Page 2
Accounts
Date
Date
Account Credited
Invoic
o
f
Terms
PR
Office
Other
Payable
Purchases
Supplie
s
Account
s
Credit
Debit
Debit
Debit
30,000
30,000
2011
Ma
11 Hostel Sales
y
May
3/10,n/90
1
1
Ch.
Date
No.
Payee
Account Debited
PR
Page 2
Purchas
e
Other
Accts.
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
2011
May
1 84 Express
Transportation-In
1
Shipping
2 85 Hostel Sales
0
335
27,936
335
864
28,800
282
General Journal
Date
Page: 1
PR
Debit
Credit
2011
May
1,200
1,200
283
Page 2
Invoice
Date
Account Debited
Numbe
r
A/R Dr.
PR
Sales Cr.
2011
Ma
y
11 Wilson Purchasing
30,000
1601
Credited
Explanation
PR
Accts.
Cash
Disc.
Rec.
Sales
Accts.
Debit
Debit
Credit
Credit
Credit
27,936
864
28,800
2011
May
2 Wilson
1 Purchasing
Sale of May 11
General Journal
Date
Page: 1
PR
Debit
2011
May
Page 2
Sales
1,200
Credit
Other
647
284
1,200
285
b.
c.
d.
e.
285
286
1,700 May 20
Bal.
1,200
Don Holland
500 May 10 3,880
25 680
Brad Smithers
May 6 5,760
Bal.
4,560
Part 2
GENERAL LEDGER
Accounts Receivable
May 31
12,020 May 20
Bal.
11,520
Sales Returns
and Allowances
Sales
500
May 3112,020
ay 20
M
500
Part 3
VALUE-MART GOODS
Schedule of Accounts Receivable
May 31, 2011
Sanders Farrell ...................................................
$ 1,200
4,560
5,760
$11,520
$12,020
(500)
286
287
$11,520
287
288
GENERAL LEDGER
Cash
38,878
Accounts Payable
23,044
1,500
23,200
Sales Discounts
472
18,300
Accounts Receivable
26,200
Notes Payable
600
Purchases
9,000
23,200
23,600
Prepaid Insurance
Purchase Returns
and Allowance
Sales
1,700
26,200
1,500
5,750
Sales Returns
and Allowances
Store Equipment
3,500
1,000
Purchase Discounts
600
456
Trudy Stone
600
16,800
Dave Waylon
16,800
2,000
6,800
McGrew Company
10,800
3,400
Sulter, Inc.
9,000
9,000
288
289
9,300
289
290
Lisa Mack
7,076
Jan. 14
Jay Newton
23,780
Kathy Olivias
Jan. 2
4,176
Jan. 10
15,544
29
8,468
20
12,992
Part 2
Jan. 31
72,036
62,100
3,726
6,210
Part 3
GENERAL LEDGER
Accounts Receivable
Jan. 31
Sales
72,036
62,100 Jan. 31
Part 4
SKILLERN COMPANY
Schedule of Accounts Receivable
January 31, 2011
$ 7,076
12,644
28,536
23,780
290
291
$72,036
291
292
Page X
Sales Journal
Date
Account Debited
Invoice
No.
PR
A/R Dr
PST
Payable CR
GST
Payable CR
COGS DR
Merchandise
Inventory CR
Sales Cr
2011
Aug. 5
11
Jay Smith
50
50,160
3,520
2,640
44,000
21,000
Dee Oliver
51
38,760
2,720
2,040
34,000
16,200
Date
Account
Credited
Explanatio
n
PR
Other
Account
s CR
A/R
CR
PST
Payabl
e CR
Page X
GST
Payabl
e CR
Sale
s CR
Cash DR
Sales
Disc
Dr
2011
Fundamental Accounting Principles, Twelfth Canadian Edition
Inv. 50
50,16
0
50,160
Inv. 51
38,76
0
38,420
Purchases Journal
Date
Account Credited
Terms
PR
A/P CR
340*
Page X
Merchandise
Inventory
DR
Other
Accounts DR
GST Recble
DR
COGS/DR
Merchandise
Inventory/
CR
293
2011
Aug. 1
2/10,
n/30
10,600
JayCee Equipment
n/
30
6,360
Date
Ch #
Account Debited
10,000
600
6,000
360
Page X
A/P DR
Merchandis
e Inventory
CR
Cash CR
2011
Aug. 10
28
10,600
200
10,400
294
Date
2011
Aug.
Invoice
Number
Account Debited
5 Jay Smith
11 Dee Oliver
PR
50
51
Date
Account Credited
Explanation
2011
Aug.20 A/R Jay Smith
Inv. 50
21 A/R Dee Oliver
Inv. 51
PR
Accts.
Rec.
Debit
PST
Payable
Credit
50,160
38,760
3,520
2,720
Other
Accts.
Credit
Date
2011
Date of
Invoice
Account Credited
1 Arden Sheet Metal
7 JayCee Equipment
Ch.
No.
Aug.10 28
Payee
A/P Arden
2,6
2,0
Page X
Sales
Credit
50,160
38,760
PURCHASES JOURNAL
Date
2011
Aug.
GST
Payable
Credit
Terms
Aug. 1
Aug. 7
Account Debited
2/10,n/30
n/30
PR
Page X
Accts.
Payable
Credit
10,600
6,360
Purchases
Debit
10,000
Page X
Accts.
Payable
Debit
10,600
653
Current
edition
CAMOSUN COLLEGE
73050199
BAYE
70877386
BUCKWO
LD
294
295
Chapter 9
EXERCISES
295
296
The employee should sign a receipt for the total amount of cash he or she is
given each weekend. Then, each time the employee makes a purchase, he or
she should obtain a signed sales receipt for the payment. The sales receipt
should list the items purchased and the prices paid. When the employee returns
to the business office, the total value of the signed sales receipts plus any
remaining cash should equal the amount of cash originally given to the
employee. Also, the merchandise brought back by the employee should be the
same as the items listed on the signed sales receipts.
296
297
200.00
200.00
Eanes Co.
Petty Cash Payments Report
January 1 8, 2011
Receipts:
Postage expense ..........................................................
$64.00
19.00
36.50
53.00
Fund total....................................................................
$200.0
0
27.50
$172.50
172.50
Jan.
Part 2
Jan. 8
64.00
19.00
36.50
53.00
64.00
19.00
36.50
53.00
300.00
-0-
172.50
472.50
297
298
298
299
b.
400.00
400.00
Brady Company
Petty Cash Payments Report
September 9 30, 2011
Receipts:
$ 32.4
5
113.55
Repairs expense..........................................................
87.60
$233.60)
Fund total...................................................................
$400.0
0
146.40
253.60)
($ 20.00
)
Sept. 30
32.45
113.55
87.60
20.00
100.00
153.60
Analysis component:
There are several things that could be done. The Marketing Manager should
review the prior months petty cash journal entries to determine if the
shortage is an anomaly or a recurring event. Hopefully it is an anomaly but,
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
299
300
regardless, the manager will need to question the Petty Cash Custodian about
the $20 cash shortage recorded in September. It is important to recognize
that honest errors do occur. It is also possible that the Petty Cash Custodian
requires training to help him manage the petty cash fund. If it is determined
that the error was based on dishonesty, appropriate action will have to be
taken (which normally results in the dismissal of the employee as a minimum).
* Either Office Supplies Expense (an expense) or Office Supplies (an asset) could
be debited. However, if supplies are being purchased through Petty Cash it is
likely that they are for immediate use which justifies using an expense account
over an asset.
300
301
120.00
79.00
60.00
b.
Nov. 30 Computer Repair Expense ..........................................
Entertainment Expense ...............................................
Cash Over and Short...................................................
Cash ...................................................................
To reimburse the fund.
75.00
156.00
2.00
c.
Dec. 31 Gas Expense...............................................................
Office Supplies Expense* ............................................
Entertainment Expense ...............................................
Petty Cash...................................................................
Cash ...................................................................
To reimburse and increase the fund.
80.00
140.00
62.00
100.00
4.00
255.00
233.00
382.00
* Either Office Supplies Expense (an expense) or Office Supplies (an asset) could
be debited. However, if supplies are being purchased through Petty Cash it is
likely that they are for immediate use which justifies using an expense account
over an asset.
301
302
Cash ..........................................................................
Debit Card Expense ...................................................
Service Revenue ................................................
To record sale of services less debit card
expense; 0.5% x 105,000 = 525.
104,475
525
Cash ..........................................................................
Service Revenue ................................................
To record sale of services provided for cash.
37,000
Cash ..........................................................................
Credit Card Expense..................................................
Service Revenue ................................................
To record sale of services less credit card
expense; 2% x 61,000 = 1,220.
59,780
1,220
10
84,000
25
Cash ..........................................................................
Sales Discounts .........................................................
Accounts Receivable Edson CHC ...................
To record collection of Oct. 10 credit sale;
2% x 84,000 = 3,680.
80,320
3,680
302
105,000
37,000
61,000
84,000
84,000
303
Cash ..........................................................................
Sales ..................................................................
To record sale of merchandise to cash customers.
56,000
15
36,400
17
15,800
17
12,000
20
Cash ..........................................................................
Credit Card Expense..................................................
Sales ..................................................................
To record sale of merchandise less credit card
expense; 114,000 x 2% = 2,280.
111,720
2,280
20
74,100
25
Cash ..........................................................................
Debit Card Expense ...................................................
Sales ..................................................................
To record sale of merchandise less debit card
expense; 0.5% x 72,000 = 360.
71,640
360
46,800
25
303
56,000
36,400
15,800
12,000
114,000
74,100
72,000
46,800
304
304
305
$9,848
Book balance........................
$9,740
Add:
Outstanding deposit........................
572
560
$10,98
0
Deduct:
Deduct:
Outstanding cheques:
240
#14: $ 600
#54:
140 ....................................
1,480
$9,500
2.
July 31
240
Cash ............................................................................
240
Analysis component
If the journal entry in (2) is not recorded, net income, liabilities, and owners
equity would not be affected. Assets would be increased and decreased by the
same amount causing a net change of zero.
305
306
$10,332
Add: .....................................................
Deposit of July 31 ..................
$11,352
Add:
2,724
$13,056
Deduct:...............................................
Outstanding cheques ...........
$11,361
Deduct:
1,713
18
$11,343
31
Cash ..........................................................................
Utilities Expense .................................................
To correct error.
31
18
Analysis component
If the journal entries in part (a) were not recorded, net income, assets, and
owners equity would each be overstated by a net amount of $9 ($18 - $9 = $9);
liabilities are not affected by the entries in (a).
306
18
307
Book Balance
Must
Add Deduct Add Deduct Adjust
x
Dr.
Not Shown
on the
Reconciliation
x
x
x
Cr.
Cr.
x
x
x
x
x
Dr.
x
Cr.
Cr.
307
308
Case Y
Case Z
Cash ...........................................................
$ 800
$ 910
$1,100
Short-term investments.....................
-0-
-0-
500
-0-
990
800
$ 800
$1,900
$2,400
$2,200
$1,100
$3,650
0.36
1.73
0.66
Case Y exhibits the superior ability to meet short-term obligations as they come due.
The acid-test ratio of 1.73 exceeds the common benchmark of 1.0. Cases X and Z
fall short of the 1.0 benchmark.
Chapter 9
EXERCISES
308
309
since the dollar value cannot be verified. Third, the canvas bag is not secure; it can
be opened at any time by an unauthorized individual. Fourth, after emptying several
parking meters, the contents of each canvas bag can easily exceed a thousand
dollars; there is a safety risk to a lone employee carrying a canvas bag of money.
To correct the situation, optimally, the parking meters should be mechanized such
that the contents can be reconciled. However, a major investment in new parking
meters seems unlikely, therefore, civic employees collecting coins from parking
meters should operate in pairs; there is less risk of fraud if two employees are
responsible for emptying the parking meters (unless there is collusion). The canvas
bag used to collect the coins is also problematic. It should be redesigned so that
coins can go in but cannot be removed unless done so by an authorized individual.
Finally, for safety of the individuals involved and for security over the coins, full
moneybags should not be stored in an unattended vehicle. Full moneybags should
be transferred to a secure location immediately; arrangements could be made with
an armored vehicle to rendezvous with the pair of employees regularly at specified
points along the route.
309
310
The employee should sign a receipt for the total amount of cash he or she is
given each weekend. Then, each time the employee makes a purchase, he or
she should obtain a signed sales receipt for the payment. The sales receipt
should list the items purchased and the prices paid. When the employee returns
to the business office, the total value of the signed sales receipts plus any
remaining cash should equal the amount of cash originally given to the
employee. Also, the merchandise brought back by the employee should be the
same as the items listed on the signed sales receipts.
310
311
200.00
200.00
Eanes Co.
Petty Cash Payments Report
January 1 8, 2011
Receipts:
Postage expense ..........................................................
$64.00
19.00
36.50
53.00
Fund total....................................................................
$200.0
0
27.50
$172.50
172.50
Jan.
Part 2
Jan. 8
64.00
19.00
36.50
53.00
64.00
19.00
36.50
53.00
300.00
-0-
172.50
472.50
311
312
312
313
b.
400.00
400.00
Brady Company
Petty Cash Payments Report
September 9 30, 2011
Receipts:
$ 32.4
5
113.55
Repairs expense..........................................................
87.60
$233.60)
Fund total...................................................................
$400.0
0
146.40
253.60)
($ 20.00
)
Sept. 30
32.45
113.55
87.60
20.00
100.00
153.60
Analysis component:
There are several things that could be done. The Marketing Manager should
review the prior months petty cash journal entries to determine if the
shortage is an anomaly or a recurring event. Hopefully it is an anomaly but,
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
313
314
regardless, the manager will need to question the Petty Cash Custodian about
the $20 cash shortage recorded in September. It is important to recognize
that honest errors do occur. It is also possible that the Petty Cash Custodian
requires training to help him manage the petty cash fund. If it is determined
that the error was based on dishonesty, appropriate action will have to be
taken (which normally results in the dismissal of the employee as a minimum).
* Either Office Supplies Expense (an expense) or Office Supplies (an asset) could
be debited. However, if supplies are being purchased through Petty Cash it is
likely that they are for immediate use which justifies using an expense account
over an asset.
314
315
120.00
79.00
60.00
b.
Nov. 30 Computer Repair Expense ..........................................
Entertainment Expense ...............................................
Cash Over and Short...................................................
Cash ...................................................................
To reimburse the fund.
75.00
156.00
2.00
c.
Dec. 31 Gas Expense...............................................................
Office Supplies Expense* ............................................
Entertainment Expense ...............................................
Petty Cash...................................................................
Cash ...................................................................
To reimburse and increase the fund.
80.00
140.00
62.00
100.00
4.00
255.00
233.00
382.00
* Either Office Supplies Expense (an expense) or Office Supplies (an asset) could
be debited. However, if supplies are being purchased through Petty Cash it is
likely that they are for immediate use which justifies using an expense account
over an asset.
315
316
Cash ..........................................................................
Debit Card Expense ...................................................
Service Revenue ................................................
To record sale of services less debit card
expense; 0.5% x 105,000 = 525.
104,475
525
Cash ..........................................................................
Service Revenue ................................................
To record sale of services provided for cash.
37,000
Cash ..........................................................................
Credit Card Expense..................................................
Service Revenue ................................................
To record sale of services less credit card
expense; 2% x 61,000 = 1,220.
59,780
1,220
10
84,000
25
Cash ..........................................................................
Sales Discounts .........................................................
Accounts Receivable Edson CHC ...................
To record collection of Oct. 10 credit sale;
2% x 84,000 = 3,680.
80,320
3,680
316
105,000
37,000
61,000
84,000
84,000
317
Cash ..........................................................................
Sales ..................................................................
To record sale of merchandise to cash customers.
56,000
15
36,400
17
15,800
17
12,000
20
Cash ..........................................................................
Credit Card Expense..................................................
Sales ..................................................................
To record sale of merchandise less credit card
expense; 114,000 x 2% = 2,280.
111,720
2,280
20
74,100
25
Cash ..........................................................................
Debit Card Expense ...................................................
Sales ..................................................................
To record sale of merchandise less debit card
expense; 0.5% x 72,000 = 360.
71,640
360
46,800
25
317
56,000
36,400
15,800
12,000
114,000
74,100
72,000
46,800
318
318
319
$9,848
Book balance........................
$9,740
Add:
Outstanding deposit........................
572
560
$10,98
0
Deduct:
Deduct:
Outstanding cheques:
240
#14: $ 600
#54:
140 ....................................
1,480
$9,500
2.
July 31
240
Cash ............................................................................
240
Analysis component
If the journal entry in (2) is not recorded, net income, liabilities, and owners
equity would not be affected. Assets would be increased and decreased by the
same amount causing a net change of zero.
319
320
$10,332
Add: .....................................................
Deposit of July 31 ..................
$11,352
Add:
2,724
$13,056
Deduct:...............................................
Outstanding cheques ...........
$11,361
Deduct:
1,713
18
$11,343
31
Cash ..........................................................................
Utilities Expense .................................................
To correct error.
31
18
Analysis component
If the journal entries in part (a) were not recorded, net income, assets, and
owners equity would each be overstated by a net amount of $9 ($18 - $9 = $9);
liabilities are not affected by the entries in (a).
320
18
321
Book Balance
Must
Add Deduct Add Deduct Adjust
x
Dr.
Not Shown
on the
Reconciliation
x
x
x
Cr.
Cr.
x
x
x
x
x
Dr.
x
Cr.
Cr.
321
322
Case Y
Case Z
Cash ...........................................................
$ 800
$ 910
$1,100
Short-term investments.....................
-0-
-0-
500
-0-
990
800
$ 800
$1,900
$2,400
$2,200
$1,100
$3,650
0.36
1.73
0.66
Case Y exhibits the superior ability to meet short-term obligations as they come due.
The acid-test ratio of 1.73 exceeds the common benchmark of 1.0. Cases X and Z
fall short of the 1.0 benchmark.
Chapter 10
aaExercises
Receivables
Cash ....................................................................
Credit Card Expense ($9,200 .04) ..................
Sales ............................................................
8,832.00
368.00
COGS ..................................................................
Merchandise Inventory...............................
5,300.00
10
310.00
10
COGS ..................................................................
Merchandise Inventory...............................
160.00
17
No entry required.
28
Cash ....................................................................
9,200.00
5,300.00
310.00
160.00
5,370.40
322
323
109.60
5,480.00
323
324
Accounts Receivable
Nov. 3 8,834 Nov. 19
Bal.
Sales Returns
and Allowances
Sales
378
Nov. 3 8,834
8 2,500
8 2,500
11 1,466
11 1,466
28 5,212
28 5,212
17,634
18,012
Nov. 19
378
ABC Shop
Nov. 3 8,834
Colt Enterprises
Nov. 8
2,500
28 5,212
Bal.
Red McKenzie
Nov. 11 1,466
Bal.
Nov.
19
1,088
14,046
2. Subledger proof:
ABC Shop ...................................................................
Colt Enterprises .........................................................
Red McKenzie ............................................................
Balance of the Accounts Receivable account .........
$14,046
2,500
1,088
$17,634
1,000
b. Dec. 9
200
1,000
200
324
378
325
Cash ....................................................................
Accounts ReceivableGwen Rowe ..........
200
200
325
326
8,750
Feb. 1
1,800
June 5
1,800
Cash ....................................................................
Accounts ReceivableCatherine Hicks ...
1,800
8,750
1,800
1,800
1,800
3,615
Allowance for
Doubtful Accounts
2,745
?
Bal. 159,000
4%
$ 6,360
b.Dec. 31
6,360
= 3,615 Adjustment
Required
Adjusted
Balance
10,356
10,356
3,996
?
Unadjusted
balance
Allowance for
Doubtful Accounts
Unadjusted
balance
Bal. 159,000
4%
$ 6,360
3,615
6,360
= 10,356 Adjustment
Required
Balance
326
327
$356,000
$2,900
$170
$2,550
$ 29,000
Accounts receivable...........................................................
$102,000
2,100
99,900
17,000
65,000
Supplies ..................................................................................
4,500
$215,400
Note: Bad Debt Expense is an income statement account and is therefore not listed on
the balance sheet. Notes Receivable due May 1, 2013, Building and Accumulated
Amortization, Building are asset accounts shown on the balance sheet but they
are not current assets.
327
328
7,314
7,314
b.
2012
620,000
Sales ..............................................................................................
620,000
406,500
406,500
Cash ......................................................................................................
491,300
6,200
497,500
12,450
12,450
328
329
c.
2012
9,207
9,207
329
330
Assets
Current assets:
Accounts receivable1 ...................................................................................
$180,050
4,971
$175,079
OR
$175,079
Calculations:
1.
2.
Accounts Receivable
Bal. Dec
31/11
70,000
620,000
497,50
0
2012 sales
900
2012
write-offs
Unadj.Bal. Dec
31/11
Adjustment
7,314
Dec 31/11
12,450
Bal. Dec
31/12
180,050
2012
writeoffs 12,45
0
Adjustment
9,207 Dec 31/12
4,971 Adj. Bal. Dec
31/12
Analysis component:
330
331
331
332
500
500
b.
2012
620,000
Sales .........................................................................................
620,000
406,500
406,500
Cash ..........................................................................
491,300
6,200
497,500
12,450
12,450
332
333
c.
2012
Dec. 31 Bad Debt Expense ...................................................
14,651
14,651
333
334
$180,050
3,601
$176,449
OR
$176,449
Calculations:
Accounts Receivable
Bal. Dec
31/11
70,000
620,000
2012
collection
497,50 s
0
900
2012 sales
500
2012
write-offs
Adjustment
Dec 31/11
12,450
Bal. Dec
31/12
Unadj. Bal.
Dec 31/11
180,050
1,400
2012
writeoffs 12,45
0
14,651
Adjustment
Dec 31/12
3,601
Analysis component
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
334
335
The main advantage of the balance sheet approach is that it adjusts the
allowance for doubtful accounts to the estimated amount of
uncollectibles. Like the income statement approach, it satisfies the
generally accepted accounting principles of matching and conservatism.
The main disadvantage is that it does require more effort in terms of
calculations.
335
336
2011
Dec. 31 Bad Debt Expense ...........................................................
2,250
2,250
b.
2012
Dec. 31 Bad Debt Expense ...........................................................
39,010
39,010
18,460
$341,640
OR
336
337
$341,640
Calculations:
Accounts Receivable
Bal. Dec
31/11
2012 sales
140,000
1,240,0
00
995,0
00
2,100
2012
write-offs
2,250
Unadj.Bal. Dec
31/11
Adjustment
Dec 31/11
24,90
0
Bal. Dec
31/12
360,100
39,010
Adjustment
Dec 31/12
18,460 Adj. Bal. Dec
31/12
337
338
1,100
1,100
Analysis component:
Using 2% of credit sales, bad debt expense would be $5,600 (280,000 2% =
5,600) for 2011 thereby decreasing net income by $4,500 more than the direct
write-off method. Using 4% of outstanding accounts receivable would result
in a bad debt expense of $2,940 (46,000 4% = 1,840 + 1,100 = 2,940) thereby
decreasing net income by $1,840 more than the direct write-off method.
6,200.00
Sept. 21
6,510.00
Dec. 31
6,510.00
6,200.00
310.00
6,200.00
6,510.00
338
339
5,000.00
Dec. 31
66.67
Apr. 30
Cash ....................................................................
Receivable
66.67
To record collection of note and interest;
$5,000 .08 4/12 = $133.33.
5,200.00
5,000.00
66.67
339
340
17,200.00
31
49.48
31
49.48
Cash ....................................................................
Interest Revenue.........................................
Interest Receivable .....................................
Notes Receivable ........................................
To record collection of note plus interest;
$17,200 x 0 .07 x 60/365 = 197.92;
197.92 49.48 = 148.44.
17,397.92
2012
Feb. 14
Mar. 2
49.48
49.48
148.44
49.48
17,200.00
8,000.00
17
3,200.00
May 31
Cash ....................................................................
Interest Revenue.........................................
Notes Receivable ........................................
To record collection of note plus interest;
$8,000 0.08 90/365 = $157.81.
8,157.81
17,200.00
8,000.00
3,200.00
157.81
8,000.00
340
341
6,295.00
3,150.00
Cash ....................................................................
Factoring Fee Expense ......................................
Accounts Receivable ....................................
To record sale of accounts receivable;
$18,770 .015.
18,488.45
281.55
15
Cash ....................................................................
Accounts Receivable ....................................
To record collection from credit customers.
3,436.00
25
Cash ....................................................................
Notes Payable .............................................
To record note; pledged $14,000 of accounts
receivable as security for the loan.
10,000.00
6,295.00
3,150.00
18,770.00
3,436.00
10,000.00
Note:
Accounts receivable in the amount of $14,000 are pledged as security for a
$10,000 note payable to Fidelity Bank.
341
342
170,000.00
Feb. 19
Cash ....................................................................
Interest Revenue.........................................
Notes Receivable ........................................
Discounted a note receivable.
170,487.58
170,000.00
487.58
170,000.00
3,772.60
3,285.02
$7,280
= 13.43 times
($598 + $486)/2
Part 2
WestCon is not collecting its receivables as quickly as the industry average
which is generally unfavourable. WestCon has more days of uncollected sales
(or receivables) than the industry average, also unfavourable.
342
343
Chapter 11
EXERCISES
Payroll Liabilities
$ 41.61
95.70
352.30
$2,150.00
75.00
$2,225.00
489.61
$1,735.39
Employee
Gross
EI
Pay
Premium
Income
Taxes
Health
CPP*
Total
Insurance Deductions
Net Pay
Hellena Chea
720.00
13.461
133.55
32.315
24.00
203.32
516.68
Joseph Lim
610.00
11.412
104.65
26.866
24.00
166.92
443.08
Dino Patelli
830.00
15.523
169.70
37.757
36.00
258.97
571.03
Sharl Qulnata
1,700.00
31.794
486.90
80.828
24.00
623.51
1,076.49
Totals
3,860.00
72.18
894.80
177.74
108.00
1,252.72
2,607.28
343
344
May
3,860.00
894.80
177.74
108.00
72.18
2,607.28
344
345
Gross
Pay
EI
Pay
Income United
Premium Taxes
Total
Way
CPP
Distribution
Net Pay
Deductions
Office
Salaries
Sales
Salaries
Akerley, D.
1,900.00
35.53
421.65
80.00
87.39
Nesbitt, M.
1,260.00
23.56
218.60
50.00
55.71
347.87
912.13
1,260.00
Trent, F.
1,680.00
31.42
348.35
40.00
76.50
496.27 1,183.73
1,680.00
Vacon, M.
3,000.00
56.10
1,312.94 1,687.06
3,000.00
Totals
7,840.00
EI
Distribution
Canada
Income
United
Total
Pay
Premiu
Savings
Office
Sales
m
Taxes Bonds CPP Way Deductions Net Pay Salaries Salaries
Employee
Pay
Crimson, L.
1,995.0
0
Long, M.
2,040.0
0
38.15 306.95
102.0
-0- 86.54
0
1,506.3
533.64
6
2,040.00
Morris, P.
2,000.0
0
37.40 295.70
100.0
-0- 84.56
0
1,482.3
517.66
4
2,000.00
Peterson,
B.
2,280.0
0
1,519.1
9
2,280.00
Totals
8,315.0
1,184.7
353.8 415.7
0 155.50
0 350.00
4
5
114.0
0
647.68
760.81
1,347.3
2 1,995.00
5,855.2
2,459.79
1 1,995.00 6,320.00
345
346
Deductions
Employee
Gross
Pay
EI
Premiu Income
m
Taxes
Payment
Distribution
United
Total
Office
CPP* Way Deductions Net Pay Salaries
Salaries
Crimson, L. 1,995.00
37.31
295.70 84.32
Long, M.
2,040.00
38.15
533.64 1,506.36
2,040.00
Morris, P.
2,000.00
37.40
517.66 1,482.34
2,000.00
Peterson, B. 2,350.00
43.95
843.84 1,506.16
2,350.00
Totals
99.75
Sales
346
6,390.00
347
$2,050.00
$ 87.04
38.34
308.80
0.02
434.18
$1,615.82
32.32
38.34
CPP Payable....................................................................................................
87.04
308.80
32.32
1,233.27
3,097.93
28,439.95
1,150.00
1,319.00
30,709.85
1,726.58
3,097.93
347
348
37,595.66
348
349
2.
EI Expense............................................................
CPP Expense ........................................................
EI Payable ($81.06 1.4) ..............................
CPP Payable .................................................
101.05
177.74
101.05
177.74
108.00
386.00
EI Contribution
Contributions Insurance
Fane ......
1,910.70
729.30
6,100.00
1,440.00
Kahan...
1,910.70
729.30
5,900.00
1,440.00
1,910.70
Totals ...
$8,999.10
691.90
729.30
4,800.00
3,700.00 1,44
1,440.00
$3,553.00$24,100.00 $7,200.00
24,960.00
466.80
1,062.24
3,788.40
19,642.56
349
350
30
653.52
1,062.24
1,996.80
600.00
EI Payable .......................................................................................
653.52
1,062.24
1,996.80
600.00
350
351
22,507
22,507
Chapter 8
Accounting Information
Systems
Questions
1. As a purchasing agent, Greg Timko will make daily use of the purchases
journal and the inventory and accounts payable subledgers. He might
discuss with personnel from other areas of the store the other journals and
subledgers as his area impacts them or vice versa: sales journal, cash
disbursements journal, and cash receipts journal along with the accounts
receivable subledger.
2. Four types of transactions recorded in separate special journals are: (a) sales
on credit, (b) purchases on credit, (c) cash receipts, and (d) cash
disbursements.
3. Daily recording and posting of credit sales and cash receipts from customers
provides up-to-date information used in decisions about granting credit to
customers. Also, up-to-date account balances are needed if customers
inquire about the amount of their balances.
4. Both kinds of credits should not be placed in the same column because the
sum of the credits to the customer accounts must be posted to the Accounts
Receivable controlling account. Placing these credits in a separate column
makes it possible to post the column total to the controlling account.
5. The double posting does not cause the trial balance to be out of balance
because only one credit is posted to the General Ledger.
6. The initial and page number of the journal from which the amount was posted
is entered in the Posting Reference column of the ledger account.
QUICK STUDY
351
352
P
AR
AR
AP
2.
3.
4.
5.
6.
7.
8.
Sales Journal
b.
Purchases Journal
c.
d.
e.
Purchases Journal
f.
g.
352
353
Automobiles ...............................................
Capital, Jesse Cooke ..........................
The owner contributed an automobile
to the business.
15,000
19
150
19
95
28
15,000
150
95
170
DR
NE
NE
CR
NE
CR
NE
Credit (CR), or
No Effect (NE)
1.
2.
3.
4.
5.
6.
7.
CR
NE
CR
NE
DR
DR
NE
353
354
Sales Journal
Page 1
Accounts Receivable
Dr. Sales Cr.
1103
3,000
2,040
10 Willis Company
1104
10,800
7,344
25 Ellton Kingston
1105
7,400
5,032
Date
Account Debited
Invoice
Number
PR
2011
Mar. 3 T. Edson
Date
Account
Credited
PR
Explanation
Sales
Discount
Cash Dr.
Dr.
Page 1
Accounts
Receivable
Cr.
2011
Mar. 18
T. Edson
Invoice #1103
2,940
60
3,000
Sales
Cr.
Other
Accounts
Cr.
Cost of Goods
Sold Dr.
Merchandise
Inventory Cr.
639
355
30
Willis
Company
Invoice #1104
31
ABC Company
Cash sale
10,800
6,200
10,800
6,200
4,216
356
Date
Account Credited
Date of
Invoice
Terms
PR
Page 1
Accounts
Payable Cr.
Merchandise
Inventory Dr.
Office
Supplies
Dr.
Other
Accounts
Dr.
2011
Mar. 2 Tex Company
Mar
3/10,
n20
4,800
4,800
12 Littleton
12
2/15,
n30
14,000
14,000
13 Worsley
13
2/15,
n45
9,400
9,400
Ch.
No.
Payee
Account Debited
PR
Cash Cr.
Page 1
Merchandise
Inventory Cr.
Other
Accounts Dr.
Accounts
Payable Dr.
2011
Mar. 14
101
Tex Company
Tex Company
27
102
Littleton
Littleton
4,800
13,720
4,800
280
14,000
357
31
103
Rent Expense
6,500
6,500
358
EXERCISES
Exercise 8-1 (15 minutes)
Sales Journal
Date
Account Debited
Invoice
Number
PR
Page 1
Accounts Receivable
Dr. Sales Cr.
2011
Feb. 7
J. Eason
5704
1,150
700
12
P. Lathan
5705
320
170
25
S. Summers
5706
550
300
Page 2
Invoice
Date
Account Debited
Numbe
r
A/R Dr.
PR
Sales Cr.
2011
Feb
.
7 J. Eason
5704
1,150
12 P. Lathan
5705
320
25 S. Summers
5706
550
359
Date
Account
Credited
PR
Explanation
Cash
Dr.
Sales
Discou
nt Dr.
Page 1
Accounts
Receivabl
e Cr.
Sales
Cr.
Other
Account
s Cr.
Cost of Goods
Sold Dr.
Merchandise
Inventory Cr.
2011
Sept. 9
Notes payable
Note to bank
5,500
5,500
13
Dale Trent,
capital
Owner
investment
7,000
7,000
18
Sales
Cash sale
27
J. Namal
Invoice, Sept. 7
460
1,764
460
36
1,800
280
360
Credited
Explanation
PR
Page 2
Sales
Accts.
Other
Cash
Disc.
Rec.
Sales
Accts.
Debit
Debit
Credit
Credit
Credit
2011
Sept
.
9 Notes payable
Note to bank
5,500
5,500
1 Dale Trent,
3 capital
Owner
investment
7,000
7,000
1 Sales
8
Cash sale
2 J. Namal
7
Invoice, Sept. 7
460
1,764
460
36
1,800
361
Purchases Journal
Date
Account Credited
Date of
Invoice
Terms
PR
Page 1
Accounts
Payable Cr.
Merchandi
se
Inventory
Dr.
8,100
Office
Supplies
Dr.
Other
Accounts
Dr.
2011
July
Angler, Inc.
Ju
l
n/30
8,100
Ju
l
14
2/10,
n/30
240
17
Ju
l
17
n/30
2,600
Marten Company
240
2,600
Page 2
Accounts
Date
of
Date
Account Credited
Invoic
e
Terms
PR
Office
Other
Payable
Purchases
Supplie
s
Accounts
Credit
Debit
Debit
Debit
2011
July
1 Angler, Inc.
July
1
n/30
2/10,n/30
8,100
240
8,100
240
362
14
17 Marten Company
July
17
n/30
2,600
2,600
363
Date
Payee
Account Debited
PR
Cash Cr.
Page 1
Merchandise
Inventory Cr.
Other
Accounts Dr.
Accounts
Payable Dr.
2011
Mar. 9
210
Narlin Corp.
Store Supplies
900
900
17
211
City Bank
Notes Payable
3,000
3,000
29
212
LeBaron
LeBaron
6,860
31
213
E. Brandon
Salaries
Expense
3,400
31
214
Pace, Inc.
Pace, Inc.
5,500
140
7,000
3,400
5,500
No.
Payee
Account Debited
PR
Other
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
2011
Mar.
Page 2
Purchas
e
9 21
0
Narlin Corp.
Store Supplies
900
900
1 21
City Bank
Notes Payable
3,000
3,000
Accts.
643
364
7 1
2 21
9 2
LeBaron
LeBaron
6,860
3 21
1 3
E. Brandon
Salaries Expense
3,400
3 21
1 4
Pace, Inc.
Pace, Inc.
5,500
140
7,000
3,400
5,500
365
Purchases Journal
Date
Account Credited
Date of
Invoice
Terms
PR
Page 1
Accounts
Payable Cr.
Merchandi
se
Inventory
Dr.
30,000
30,000
Office
Supplies
Dr.
Other
Accounts
Dr.
2011
May
11
Hostel Sales
May 11
3/10,
n/90
Date
Payee
Account Debited
PR
Cash Cr.
Page 1
Merchandise
Inventory Cr.
Other
Accounts Dr.
Accounts
Payable Dr.
2011
Fundamental Accounting Principles, Twelfth Canadian Edition
May
11
84
Express
Shipping
Merchandise
Inv.
20
85
Hostel Sales
Hostel Sales
335
27,9361
General Journal
Date
864
Page: 1
PR
Debit
2011
May
335
1,200
Credit
28,800
366
Calculations:
1. 30,000 1,200 = 28,800; 28,800 x 3% = 864; 28,800 864 = 27,936.
1,200
367
Invoice
Number
Account Debited
PR
Page 1
Accounts Receivable
Dr. Sales Cr.
30,000
20,000
2011
May
11
Wilson
Purchasing
1601
Date
Account
Credited
PR
Explanation
Cash
Dr.
Page 1
Sales
Discou
nt Dr.
Accounts
Receivabl
e Cr.
864
28,800
2011
May
21
Wilson
Purchasing
Wilson
Purchasing
27,93
61
General Journal
Date
Page: 1
PR
Debit
2011
May
1,200
Credit
Sales
Cr.
Other
Account
s Cr.
Cost of Goods
Sold Dr.
Merchandise
Inventory Cr.
645
368
1,200
Calculations:
1. 30,000 1,200 = 28,800; 28,800 x 3% = 864; 28,800 864 = 27,936.
800
800
369
Page 2
Accounts
Date
Date
Account Credited
Invoic
o
f
Terms
PR
Office
Other
Payable
Purchases
Supplie
s
Account
s
Credit
Debit
Debit
Debit
30,000
30,000
2011
Ma
11 Hostel Sales
y
May
3/10,n/90
1
1
Ch.
Date
No.
Payee
Account Debited
PR
Page 2
Purchas
e
Other
Accts.
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
2011
May
1 84 Express
Transportation-In
1
Shipping
2 85 Hostel Sales
0
335
27,936
335
864
28,800
370
General Journal
Date
Page: 1
PR
Debit
Credit
2011
May
1,200
1,200
371
Page 2
Invoice
Date
Account Debited
Numbe
r
A/R Dr.
PR
Sales Cr.
2011
Ma
y
11 Wilson Purchasing
30,000
1601
Credited
Explanation
PR
Accts.
Cash
Disc.
Rec.
Sales
Accts.
Debit
Debit
Credit
Credit
Credit
27,936
864
28,800
2011
May
2 Wilson
1 Purchasing
Sale of May 11
General Journal
Date
Page: 1
PR
Debit
2011
May
Page 2
Sales
1,200
Credit
Other
647
372
1,200
373
b.
c.
d.
e.
373
374
1,700 May 20
Bal.
1,200
Don Holland
500 May 10 3,880
25 680
Brad Smithers
May 6 5,760
Bal.
4,560
Part 2
GENERAL LEDGER
Accounts Receivable
May 31
12,020 May 20
Bal.
11,520
Sales Returns
and Allowances
Sales
500
May 3112,020
ay 20
M
500
Part 3
VALUE-MART GOODS
Schedule of Accounts Receivable
May 31, 2011
Sanders Farrell ...................................................
$ 1,200
4,560
5,760
$11,520
$12,020
(500)
374
375
$11,520
375
376
GENERAL LEDGER
Cash
38,878
Accounts Payable
23,044
1,500
23,200
Sales Discounts
472
18,300
Accounts Receivable
26,200
Notes Payable
600
Purchases
9,000
23,200
23,600
Prepaid Insurance
Purchase Returns
and Allowance
Sales
1,700
26,200
1,500
5,750
Sales Returns
and Allowances
Store Equipment
3,500
1,000
Purchase Discounts
600
456
Trudy Stone
600
16,800
Dave Waylon
16,800
2,000
6,800
McGrew Company
10,800
3,400
Sulter, Inc.
9,000
9,000
376
377
9,300
377
378
Lisa Mack
7,076
Jan. 14
Jay Newton
23,780
Kathy Olivias
Jan. 2
4,176
Jan. 10
15,544
29
8,468
20
12,992
Part 2
Jan. 31
72,036
62,100
3,726
6,210
Part 3
GENERAL LEDGER
Accounts Receivable
Jan. 31
Sales
72,036
62,100 Jan. 31
Part 4
SKILLERN COMPANY
Schedule of Accounts Receivable
January 31, 2011
$ 7,076
12,644
28,536
23,780
378
379
$72,036
379
380
Page X
Sales Journal
Date
Account Debited
Invoice
No.
PR
A/R Dr
PST
Payable CR
GST
Payable CR
COGS DR
Merchandise
Inventory CR
Sales Cr
2011
Aug. 5
11
Jay Smith
50
50,160
3,520
2,640
44,000
21,000
Dee Oliver
51
38,760
2,720
2,040
34,000
16,200
Date
Account
Credited
Explanatio
n
PR
Other
Account
s CR
A/R
CR
PST
Payabl
e CR
Page X
GST
Payabl
e CR
Sale
s CR
Cash DR
Sales
Disc
Dr
2011
Fundamental Accounting Principles, Twelfth Canadian Edition
Inv. 50
50,16
0
50,160
Inv. 51
38,76
0
38,420
Purchases Journal
Date
Account Credited
Terms
PR
A/P CR
340*
Page X
Merchandise
Inventory
DR
Other
Accounts DR
GST Recble
DR
COGS/DR
Merchandise
Inventory/
CR
381
2011
Aug. 1
2/10,
n/30
10,600
JayCee Equipment
n/
30
6,360
Date
Ch #
Account Debited
10,000
600
6,000
360
Page X
A/P DR
Merchandis
e Inventory
CR
Cash CR
2011
Aug. 10
28
10,600
200
10,400
382
Date
2011
Aug.
Invoice
Number
Account Debited
5 Jay Smith
11 Dee Oliver
PR
50
51
Date
Account Credited
Explanation
2011
Aug.20 A/R Jay Smith
Inv. 50
21 A/R Dee Oliver
Inv. 51
PR
Other
Accts.
Credit
Page X
Accts.
Rec.
Debit
PST
Payable
Credit
50,160
38,760
3,520
2,720
Date
2011
Account Credited
1 Arden Sheet Metal
7 JayCee Equipment
Ch.
No.
Aug.10 28
Payee
A/P Arden
Date of
Invoice
Aug. 1
Aug. 7
Account Debited
Arden Sheet Metal
Terms
2/10,n/30
n/30
Sales
Credit
2,640
2,040
44,000
34,000
Page X
Sales
Credit
50,160
38,760
Cash
Debit
Sales
Discount
Debit
50,160
38,420
PURCHASES JOURNAL
Date
2011
Aug.
GST
Payable
Credit
PR
340
Page X
Accts.
Payable
Credit
10,600
6,360
Purchases
Debit
Other
Accounts
Debit
GST
Recble
Debit
10,000
600
360
6,000
Page X
Accts.
Payable
Debit
10,600
Pur.
Disc.
Credit
200
Cash
Credit
10,400
653
383
PROBLEMS
Problem 8-1A (20 minutes)
Date
Special
Journal
Subledger
AR/MI
AR
AP
CR
AR
AP
CR
MI
AP/MI
CD
AP
CD
MI
CD
AP/MI
CR
NE
CD
NE
A/P
NE
Transaction
383
384
Date
Account Debited
Invoice
No.
Page 1
COGS Dr.
PR
A/R Dr.
Sales Cr.
Merchandise
Inventory Cr.
2011
Apr. 2 Tim Bennett
306
35,000
22,750
311
42,000
27,300
16 Wynne Walsh
312
14,000
9,100
24 Brian Kennedy
313
18,000
11,700
5 Brian Kennedy
Explanatio
n
Cash
Dr.
Inv. 307310
15,000
Inv. 306
34,300
20 A/R
Kennedy
Brian
Inv. 311
42,000
42,000
Inv. 312
11,000
11,000
Date
Account Credited
PR
Sales
Disc Dr.
Page: 1
2011
Apr. 3 Sales (cash sales)
A/R Cr.
Sales Cr.
15,000
700
35,000
Other
Accounts
Cr.
COGS/Dr.
Merchandi
se
Inventory/
Cr.
9,750
655
385
Purchases Journal
Date
Account Credited
Date of
Invoice
Terms
PR
Page 1
A/P Cr.
Merchandise
Inventory
Dr.
Office
Supplies Dr.
Other
Accounts Dr.
2011
Apr. 4
Wallace Brothers
Apr. 4
1/10,
n/30
48,000
48,000
11
Apr. 11
n/30
56,000
56,000
Zardon Co.
Apr. 23
1/15,
n/30
3,800
23
Equip.
3,800
386
Date
Ch #
Account Debited
PR
Cash Cr.
Page 1
Merchandi
se
Inventory
Cr.
Other
Accounts
Dr.
A/P Dr.
2011
Apr. 9
620
Office Supplies
230
13
621
Wallace Brothers
43,3621
26
622
56,000
30
623
Salaries
36,000
230
438
43,800
56,000
36,000
Calculation:
1. 48,000 4,200 = 43,800 Dr to A/P; 43,800 x 1% = 438; 43,800 438 = 43,362 Cr to Cash
Fundamental Accounting Principles, Twelfth Canadian Edition
General Journal
Date
Page: 1
PR
Debit
Credit
2011
Apr.
4,200
4,200
387
3,000
3,000
388
Note: Since posting to the General Ledger was not a requirement in this problem, posting references are shown for
values posted to the subledgers only.
Part 3
Sales Journal
Date
Account Debited
Page 3
Invoice
No.
PR
A/R Dr.
Sales Cr.
Merchandise
Inventory Cr.
2011
Apr. 3 Linda Hobart
760
5 Paul Abrams
761
11 Kelly Schaefer
762
13 Linda Hobart
763
3,000
1,800
8,000
4,500
9,500
5,000
4,100
2,400
Date
Account Credited
PR
Sales
Disc
Dr.
Explanation
Cash Dr.
Sale of Apr. 3
2,940
60
3,000
Sale of Apr. 5
7,840
160
8,000
2011
Apr. 13 Linda Hobart
14 Paul Abrams
Page: 3
A/R Cr.
Sales Cr.
Other
Account
s Cr.
COGS Dr.
Merchandi
se
Inventory
Cr.
657
16 Sales
Cash sales
389
50,840
50,840
28,000
390
Account Credited
Date of
Invoice
Terms
Baskin Company
Eau Claire Inc.
Store Equip./Franks Supply
Apr 2
Apr 2
Apr 9
2/10,n/60
n/10 EOM
n/10 EOM
Page 3
Accts.
Payable
Credit
PR
Merchandise
Inventory
Debit
13,300
1,380
11,125
Office
Supplies
Debit
13,300
1,380
Date
2011
Apr.
4 587
12 588
16 589
The Record
Baskin Company
Payroll
Account Debited
PR
Advertising Expense
Baskin Company
Sales Salaries Expense
GENERAL JOURNAL
Account Titles and Explanations
Date
2011
Apr.
Payee
999
13,034
9,750
PR
Debit
85
266
Page 3
Credit
85
11,125
Page 3
Merchandise
Inventory
Credit
Cash
Credit
Other
Accts.
Debit
Other
Accts.
Debit
999
9,750
Accts.
Payable
Debit
13,300
391
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
4
CR3
8,000
8,000
8,000
Linda Hobart
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
3
CR3
1
3
S3
3,000
3,000
3,000
4,100
0
4,100
Kelly Schaefer
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
1
1
S3
9,500
9,500
Parts 2, 3
ACCOUNTS PAYABLE SUBLEDGER
Franks Supply
Date
Explanation
PR
Debit
Credit
Balance
2011
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
391
392
Apr.
P3
11,125
11,125
Baskin Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
P3
1
2
CD3
13,300
13,300
13,300
0
Sprocket Company
Explanation
Date
PR
Debit
Credit
Balance
Debit
Credit
Balance
2011
Date
PR
2011
Apr.
P3
G3
1,380
85
1,380
1,295
392
393
Page 3
Invoice
No.
PR
760
3,000
1,800
5 Paul Abrams
761
8,000
4,500
11 Kelly Schaefer
762
9,500
5,000
13 Linda Hobart
763
4,100
2,400
27 Paul Abrams
764
3,070
1,600
27 Kelly Schaefer
765
5,700
3,000
33,370
18,300
(106/413)
(502/119)
Date
Account Debited
A/R Dr.
Sales Cr.
Merchandise
Inventory Cr.
2011
30 Totals
Date
2011
Account Credited
PR
Explanation
Cash Dr.
Sales
Disc
Dr.
Page: 3
A/R Cr.
Sales Cr.
Other
Account
s Cr.
COGS Dr.
Merchandi
se
Inventory
Cr.
394
Sale of Apr. 3
2,940
60
3,000
14 Paul Abrams
Sale of Apr. 5
7,840
160
8,000
16 Sales
18
20 Kelly Schaefer
23 Linda Hobart
30 Sales
30 Totals
25
1
Cash sales
50,840
Note to bank
50,000
50,840
50,000
Sale of Apr.
11
9,310
190
9,500
Sale of Apr.
13
4,018
82
4,100
Cash sales
70,975
195,923
(101)
28,000
70,975
492
(415)
24,600
(106)
121,815
(413)
37,000
50,000
(X)
65,000
(502/119)
395
PURCHASES JOURNAL
Date
2011
Apr.
2
3
9
17
20
25
Account Credited
Date of
Invoice
Terms
Baskin Company
Eau Claire Inc.
Store Equip./Franks Supply
Sprocket Company
Store Supplies/Franks Supply
Baskin Company
Apr 2
Apr 2
Apr 9
Apr 16
Apr 19
Apr 24
2/10,n/60
n/10 EOM
n/10 EOM
2/10,n/30
n/10 EOM
2/10,n/60
Page 3
Accts.
Payable
Credit
PR
165/
125/
30 Totals
Merchandise
Inventory
Debit
13,300
1,380
11,125
12,750
730
10,375
13,300
49,660
(201)
36,425
(119)
Office
Supplies
Debit
1,380
12,750
Date
2011
Apr.
4
12
16
26
30
30
587
588
589
590
591
Payee
The Record
Baskin Company
Payroll
Sprocket Company
Payroll
Totals
Account Debited
Advertising Expense
Baskin Company
Sales Salaries Expense
Sprocket Company
Sales Salaries Expense
PR
655
621
621
Cash
Credit
999
13,034
9,750
12,1031
9,750
45,636
(101)
11,125
730
10,375
1,380
(124)
Other
Accts.
Debit
11,855
(X)
Page 3
Merchandise
Inventory
Credit
266
247
513
(119)
Other
Accts.
Debit
999
9,750
9,750
20,499
(X)
Calculation:
1. $12,750 $400 credit memorandum = $12,350; $12,350 x 2% = $247; $12,350 - $247 = $12,103
Accts.
Payable
Debit
13,300
12,350*
25,650
(201)
661
396
Date
2011
Apr.
PR
Page 3
Credit
Debit
201/
124
85
23
201/
119
400
85
400
Parts 1, 2, 3, 4
GENERAL LEDGER
Cash
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
3 Balance Forward
1
167,000
Apr.
3
0
CR3
3
0
CD3
195,923
45,636
Accounts Receivable
Date
Explanation
362,923
317,287
PR
Debit
3
0
S3
33,370
3
0
CR3
Credit
Balance
2011
Apr.
24,600
Merchandise Inventory
Date
Explanation
33,370
8,770
PR
Debit
Credit
Balance
396
397
2011
Mar.
3 Balance Forward
1
95,000
Apr.
2
3
G3
400
94,600
3
0
S3
18,300
76,300
3
0
CR3
65,000
11,300
3
0
P3
3
0
CD3
36,425
47,725
513
Office Supplies
Date
Explanation
47,212
Debit
Credit
Balance
2011
Apr.
P3
G3
1,380
1,380
85
1,295
Date
PR
Debit
Credit
Balance
2011
Apr.
2
0
P3
730
730
Store Equipment
Date
Explanation
PR
Debit
Credit
Balance
2011
397
398
Apr.
P3
11,125
11,125
Accounts Payable
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
G3
85
(85)
2
3
G3
400
(485)
3
0
P3
3
0
CD3
49,660
25,650
Date
49,175
23,525
Debit
Credit
Balance
2011
Mar.
31
Apr.
18
Balance Forward
167,000
CR3
50,000
Explanation
217,000
Debit
Credit
Balance
2011
Mar.
3 Balance forward
1
95,000
Sales
Date
Explanation
PR
Debit
Credit
Balance
2011
398
399
Apr.
3
0
S3
3
0
CR3
Sales Discounts
Explanation
Date
33,370
33,370
121,815
155,185
PR
Debit
Credit
Balance
2011
Apr.
3
0
CR3
492
492
399
400
Date
PR
Debit
Credit
Balance
3
0
S3
18,300
18,300
3
0
CR3
65,000
83,300
2011
Apr.
Date
PR
Debit
Credit
Balance
2011
Apr.
1
6
CD3
9,750
9,750
3
0
CD3
9,750
19,500
Advertising Expense
Date
Explanation
Debit
Credit
Balance
2011
Apr.
CD3
999
999
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
CR3
8,000
8,000
8,000
400
401
4
2
7
S3
3,070
3,070
Linda Hobart
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
3
CR3
1
3
S3
2
3
CR3
3,000
3,000
3,000
4,100
0
4,100
4,100
Kelly Schaefer
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
1
1
S3
2
0
CR3
2
7
S3
9,500
9,500
9,500
5,700
0
5,700
Explanation
PR
Debit
Credit
Balance
2011
401
402
Apr.
P3
11,125
11,125
20
P3
730
11,855
Baskin Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
P3
1
2
CD3
2
5
P3
13,300
13,300
13,300
0
10,375
10,375
Sprocket Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
1
7
P3
2
3
G3
2
6
CD3
12,750
12,750
400
12,350
12,350
Date
PR
Debit
Credit
Balance
2011
Apr.
P3
G3
1,380
85
1,380
1,295
402
403
$3,070
Kelly Schaefer...........................................
5,700
$8,770
NEWTON COMPANY
Schedule of Accounts Payable
April 30, 2011
$11,855
10,375
1,295
$23,525
NEWTON COMPANY
Trial Balance
April 30, 2011
$ 23,525
217,000
95,000
155,185
$490,710
403
404
404
405
Date
Invoice
Number
Account Debited
Page 3
PR
A/R. Dr.
Sales Cr.
2011
Oct.
Marge Craig
913
3,300
1,600
12
Vickie Foresman
914
3,650
1,900
15
Amy Ihrig
915
3,100
1,700
16
Vickie Foresman
916
7,700
3,900
24
Bill Grigsby
917
1,200
700
31
Totals
18,950
9,800
(106/413
)
(502/119)
Account
Credited
Bill Grigsby
Explanation
Invoice Nov
23
PR
Cash
Debit
4,116
Sales
Discoun
t
Debit
Acct.
Rec.
Credit
84
4,200
Sales
Credit
Page 3
Other Cost of Goods Sold Dr.
Accts Merchandise Inventory
.
Cr.
Credit
406
15 Sales
15 Marge Craig
22 Vickie
Foresman
25 Amy Ihrig
Cash sales
Invoice Dec 6
Invoice Dec
12
Invoice Dec
15
29 Office Supplies Sold supplies
31 Sales
Cash sales
31 Totals
38,830
2,401
3,577
49
73
2,548
52
124
50
29,600
81,122
)
(101
2,450*
3,650
2,600**
258 12,900
(415)
38,830
(106)
29,600
68,430
(413)
21,400
50
50
16,300
37,700
(X)
(502/119)
407
PURCHASES JOURNAL
Date
Account Credited
2011
Oct.
2 Shore Company
5 Brown Supply Co.
Date of
Invoice
Oct 2
Oct 3
15 Shore Company
Oct 15
15 Sunshine Company
Oct 15
Oct 16
Oct 21
31 Totals
Oct 25
Terms
2/10,
n/60
n/10
EOM
2/10,
n/60
2/10,
n/60
n/10
EOM
n/10
EOM
2/10,
n/60
PR
Merchandis
Accounts
e
Payable
Inventory
Credit
Debit
3,200
3,200
1,300
1,300
3,990
3,990
2,650
2,650
615
165/
6,700
8,100
8,100
26,555
19,240
(119
)
(201)
Page 2
Office
Supplies
Debit
Other
Accts.
Debit
615
6,700
4)
615
(12
6,700
(X)
669
408
Ch. Payee
No.
2011
Oct.
2 619 Omni Realty Co.
6 620 Fireside
Company
12 621 Shore Company
15 622 Jamie Green
23 623 Sunshine
Company
24 624 Shore Company
30 625 Ken Shaw
31 626 Jamie Green
31 627 Countrywide
Elec.
31
Totals
Merchandis
e
Inventory.
Credit
Other
Accts.
Debit
Page 4
Accts.
Payable
Debit.
Account Debited
PR
Cash
Credit
Rent Expense
Fireside Company
640
2,250
3,724
Shore Company
Sales Salaries
Expense
Sunshine Company
621
3,136
2,020
64
2,597
53
2,650
Shore Company
Ken Shaw,
Withdrawals
Sales Salaries
Expense
Utilities Expense
302
2,891
2,500
59
2,950*
621
2,020
2,020
690
710
710
21,848
(101)
* $3,990 $1,040 return = $2,950
76
252
(119)
2,250
2,020
2,500
9,500
(X)
3,800
3,200
12,600
(201
)
409
GENERAL JOURNAL
Account Titles and Explanations
PR
Debit
201/
119
460
414
106/
119
502
850
201/
119
1,040
201/
124
40
414
106/
500
430
Page 2
Credit
460
850
430
1,040
40
500
409
410
Explanation
Date
2011
Oct. 12
16
22
Explanation
Date
2011
Sept 23
Oct.
2
24
Date
2011
Oct. 15
20
25
Marge Craig
PR
S3
G2
CR3
Vickie Foresman
PR
S3
S3
CR3
Explanation
Bill Grigsby
PR
S2
CR3
S3
Explanation
Amy Ihrig
PR
Debit
3,300
Debit
3,650
7,700
Debit
4,200
1,200
Debit
S3
G2
CR3
3,100
Credit
850
2,450
Balance
3,300
2,450
0
Credit
Balance
3,650
3,650
11,350
7,700
Credit
Balance
4,200
Credit
500
2,600
4,200
0
1,200
Balance
3,100
2,600
0
Part 2
ACCOUNTS PAYABLE SUBLEDGER
Date
2011
Sept 28
Oct.
4
6
Fireside Company
Explanation
PR
P1
G2
CD4
Debit
460
3, 800
Credit
4,260
Balance
4,260
3,800
0
410
411
Date
2011
Oct.
2
12
15
17
24
Date
2011
Sept 30 Balance
Oct.
9
20
31
31
40
Sunshine Company
Explanation
PR
Debit
P2
CD4
P2
Explanation
Shore Company
PR
P2
CD4
P2
G2
CD4
Parts 2, 3
Date
2011
Sept 30 Balance
Oct.
31
31
Credit
2,650
Debit
3,200
1,040
2,950
1,300
615
6,700
Credit
2,650
8,100
Credit
3,200
3,990
Balance
1,300
1,915
1,875
8,575
Balance
2,650
0
8,100
Balance
3,200
0
3,990
2,950
0
GENERAL LEDGER
Explanation
Cash
PR
CR3
CD4
Accounts Receivable
Explanation
PR
G2
G2
S3
CR3
Debit
81,122
Debit
18,950
21,848
5,361
86,483
64,635
4,200
3,350
2,850
21,800
8,900
411
412
412
413
Merchandise Inventory
Explanation
PR
G2
G2
G2
S3
P2
CR3
CD4
Office Supplies
Explanation
PR
G2
CR3
P2
Store Supplies
Explanation
PR
Debit
430
19,240
Debit
615
Debit
66,970
66,510
66,940
65,900
56,100
75,340
37,640
37,388
607
567
517
1,132
Store Equipment
Explanation
PR
P2
Debit
6,700
Date
2011
Oct. 30 Balance
413
414
Accounts Payable
Explanation
PR
G2
G2
G2
P2
CD4
Ken Shaw, Capital
Explanation
PR
Debit
460
1,040
40
12,600
Debit
26,555
4,260
3,800
2,760
2,720
29,275
16,675
Sales
PR
Debit
2,500
Debit
S3
CR3
Sales Discounts
Explanation
PR
CR3
2,500
Acct. No. 413
Credit
Balance
18,950
68,430
850
500
Debit
258
18,950
87,380
414
415
CD4
Debit
9,800
37,700
Debit
2,020
2,020
Debit
2,250
Debit
710
(430)
9,370
47,070
415
416
Debit
$ 64,635
8,900
37,388
1,132
346
48,829
2,500
Credit
$ 9,153
16,675
106,200
87,380
1,350
258
47,070
4,040
2,250
710
$219,408 $219,408
SASKAN ENTERPRISES
Schedule of Accounts Receivable
October 31, 2011
Vickie Foresman .............................................
Bill Grigsby .....................................................
Total accounts receivable ...............................
$7,700
1,200
$8,900
SASKAN ENTERPRISES
Schedule of Accounts Payable
October 31, 2011
Brown Supply Company .................................
Sunshine Company ........................................
Total accounts payable ...................................
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
$ 8,575
8,100
$16,675
416
417
Sales Journal
Date
Account Debited
Invoice
No.
A/R Dr.
COGS Dr.
Sales Cr.
PR
PR
Merchandise Inventory
Cr.
2011
Jan. 7 G. Little
103
500
160
19 B. Moore
104
375
130
24 C. Woudstra
105
375
135
29 D. Isla
106
800
302
Purchases Journal
Date
Page 1
Merchandise
Inventory
Account Credited
Date of
Invoice
Terms
Jan. 3
n/30
450
450
Jan. 20
n/30
330
330
PR
A/P Cr.
PR
Dr.
Office
Supplies Dr.
2011
Jan. 3
20
NOTE:
Norton
Industries
An additional PR column has been added to facilitate the referencing of inventory entries into the
Other
Accounts
Dr.
418
inventory subledger.
419
Date
PR
Purchases
Units
Jan. 1
Unit
Cost
Unit
Cost
Inventory Balance
Total
Cost
Units
Unit
Cost
Total
Cost
Beginning inventory
25 @ $8.0 = $200
0
25 @ $ 8.0 = $ 20
0
0
25 @ $ 8.0 = $ 20
0
0
3 P1
7 S1
50 @ $9.0 = $450
0
50 @
20 @ $ 8.00 =
$ 160
9.00 =
450
5 @ $ 8.0 = $ 4
0
0
50 @
9.00 =
450
19 S1
5 @ $ 8.00 =
10 @
9.00 =
$ 40
90
40 @ $ 9.0 = $ 36
0
0
40 @ $ 9.0 = $ 36
0
0
679
420
20 P1
30 @ $11. = $330
00
24 S1
30 @ 11.00 =
15 @ $ 9.00 =
$ 135
25 @ $ 9.0 = $ 22
0
5
30 @ 11.00 =
29 S1
25 @
$ 225
7 @ 11.00 =
77
330
330
$ 9.00
Total
105
$980
82
Cost of goods sold
$727
+
23 @ $11.0 = $ 25
0
3
23
$253
Ending inventory
Note: An additional PR column has been added to the Inventory Subledger Record to facilitate referencing of
inventory entries.
421
Note: Since posting to the General Ledger was not a requirement in this problem, posting references are shown for
values posted to the subledgers only.
SALES JOURNAL
Page 3
Invoice
Date
Account Debited
A/R Dr.
Numbe
r
PR
Sales Cr.
3 Linda Hobart
760
3,000
5 Paul Abrams
761
8,000
11 Kelly Schaefer
762
9,500
13 Linda Hobart
763
4,100
2011
Apr
.
Credited
Accts.
Cash
Disc.
Rec.
Sales
Accts.
Credit
Credit
Explanation
PR
Debit
Debit
Credit
Sale of Apr. 3
2,940
60
3,000
2011
Apr.
1 Linda Hobart
Page 3
Sales
Other
422
3
1 Paul Abrams
4
Sale of Apr. 5
1 Sales
6
Cash sales
7,840
160
8,000
50,840
50,840
PURCHASES JOURNAL
Page 3
Accounts
Date
of
Date
Account Credited
Invoic
e
Terms
Office
Other
Payable
Purchases
Supplie
s
Accounts
PR
Credit
Debit
Debit
Debit
13,300
2011
Apr.
2 Baskin Company
Apr.
2
2/10,n/60
13,300
Apr.
2
n/10
EOM
1,380
Apr.
9
n/10
EOM
11,125
1,380
11,125
423
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
No.
Payee
Account Debited
PR
Page 3
Purchas
e
Other
Accts.
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
2011
Apr.
4 587
The Record
Advertising Expense
1 588
2
Baskin
Company
Baskin Company
1 589
6
Payroll
999
13,034
9,750
999
266
13,300
9,750
681
424
Date
2011
Apr.
GENERAL JOURNAL
Account Titles and Explanations
6
PR
Debit
85
Page 3
Credit
85
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
4
CR3
8,000
8,000
8,000
Linda Hobart
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
3
CR3
1
3
S3
3,000
3,000
3,000
4,100
0
4,100
Kelly Schaefer
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
1
1
S3
9,500
9,500
424
425
425
426
Explanation
PR
Debit
Credit
Balance
2011
Apr.
P3
11,125
11,125
Baskin Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
P3
1
2
CD3
13,300
13,300
13,300
0
Sprocket Company
Explanation
Date
PR
Debit
Credit
Balance
Debit
Credit
Balance
2011
Date
PR
2011
Apr.
P3
G3
1,380
85
1,380
1,295
426
427
Page 3
Invoice
Date
Account Debited
A/R Dr.
Numbe
r
PR
Sales Cr.
3 Linda Hobart
760
3,000
5 Paul Abrams
761
8,000
11 Kelly Schaefer
762
9,500
13 Linda Hobart
763
4,100
27 Paul Abrams
764
3,070
27 Kelly Schaefer
765
5,700
2011
Apr
.
33,370
30 Totals
(106/413)
Credited
Explanation
PR
Page 3
Sales
Accts.
Other
Cash
Disc.
Rec.
Sales
Accts.
Debit
Debit
Credit
Credit
Credit
428
Apr.
1 Linda Hobart
3
Sale of Apr. 3
2,940
60
3,000
1 Paul Abrams
4
Sale of Apr. 5
7,840
160
8,000
1 Sales
6
Cash sales
1 L.T. Notes
8 Payable
Note to bank
2 Kelly Schaefer
0
50,840
50,840
25
1
50,000
Sale of Apr. 11
9,310
190
9,500
2 Linda Hobart
3
Sale of Apr. 13
4,018
82
4,100
3 Sales
0
Cash sales
3 Totals
0
50,000
70,975
70,975
195,92
3
492
24,600
121,81
5
50,000
(101)
(415)
(106)
(413)
(X)
429
Page 3
Accounts
Date
of
Date
Account Credited
Invoic
e
Terms
Office
Other
Payable
Purchases
Supplie
s
Accounts
PR
Credit
Debit
Debit
Debit
13,300
2011
Apr.
2 Baskin Company
Apr.
2
2/10,n/60
13,300
Apr.
2
n/10
EOM
1,380
Apr.
9
n/10
EOM
165/
11,125
17 Sprocket Company
Apr.
16
2/10,n30
12,750
Apr.
19
n/10
EOM
25 Baskin Company
Apr.
24
2/10,n/6
0
30 Totals
125/
1,380
11,125
12,750
730
730
10,375
10,375
49,660
36,425
1,380
11,855
(201)
(505)
(124)
(X)
685
CASH DISBURSEMENTS
430
JOURNAL
Ch.
Date
No.
Payee
Account Debited
Purchas
e
Page 3
Other
Accts.
Cash
Discoun
t
Accts.
Payable
PR
Credit
Credit
Debit
Debit
655
999
2011
Apr.
4 587
The Record
Advertising Expense
1 588
2
Baskin
Company
Baskin Company
1 589
6
Payroll
2 590
6
Sprocket
Company
Sprocket Company
3 591
0
Payroll
3
0
Totals
13,034
621
9,750
12,103
621
9,750
45,636
(101)
999
266
13,300
9,750
247
12,350*
9,750
513
(506)
20,499
25,650
(X)
(201)
431
Date
2011
Apr.
PR
Page 3
Credit
Debit
201/
124
85
23
201/
507
400
85
400
Parts 1, 2, 3, 4
GENERAL LEDGER
Cash
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
3 Balance Forward
1
167,000
Apr.
3
0
CR3
3
0
CD3
195,923
45,636
Accounts Receivable
Date
Explanation
362,923
317,287
PR
Debit
3
0
S3
33,370
3
0
CR3
Credit
Balance
2011
Apr.
24,600
Merchandise Inventory
Date
Explanation
33,370
8,770
PR
Debit
Credit
Balance
431
432
2011
Mar.
3 Balance Forward
1
95,000
Office Supplies
Date
Explanation
Debit
Credit
Balance
2011
Apr.
P3
G3
1,380
1,380
85
1,295
432
433
Date
PR
Debit
Credit
Balance
2011
Apr.
2
0
P3
730
730
Store Equipment
Explanation
Date
PR
Debit
P3
11,125
Credit
Balance
2011
9
Apr.
11,125
Accounts Payable
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
G3
85
(85)
2
3
G3
400
(485)
3
0
P3
3
0
CD3
49,660
25,650
Date
49,175
23,525
Debit
Credit
Balance
2011
Mar.
31
Apr.
18
Balance Forward
167,000
CR3
50,000
217,000
433
434
Date
Debit
Credit
Balance
2011
Mar.
3 Balance forward
1
95,000
Sales
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
3
0
S3
3
0
CR3
Sales Discounts
Explanation
Date
33,370
33,370
121,815
155,185
PR
Debit
Credit
Balance
2011
Apr.
3
0
CR3
492
492
434
435
Purchases
Explanation
Date
PR
Debit
P3
36,425
Credit
Balance
2011
Apr.
3
0
Purchase Discounts
Explanation
Date
36,425
PR
Debit
Credit
Balance
2011
Apr.
3
0
CD3
513
Date
PR
513
Debit
Credit
Balance
2011
Apr.
3
0
G3
Date
400
400
PR
Debit
Credit
Balance
2011
Apr.
1
6
CD3
9,750
9,750
3
0
CD3
9,750
19,500
Advertising Expense
Date
Explanation
Debit
Credit
Balance
435
436
2011
Apr.
CD3
999
999
436
437
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
4
CR3
2
7
S3
8,000
8,000
8,000
3,070
0
3,070
Linda Hobart
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
S3
1
3
CR3
1
3
S3
2
3
CR3
3,000
3,000
3,000
4,100
0
4,100
4,100
Kelly Schaefer
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
1
1
S3
2
0
CR3
9,500
9,500
9,500
437
438
2
7
S3
5,700
5,700
438
439
Explanation
PR
Debit
Credit
Balance
2011
Apr.
P3
11,125
11,125
20
P3
730
11,855
Baskin Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
P3
1
2
CD3
2
5
P3
13,300
13,300
13,300
0
10,375
10,375
Sprocket Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
1
7
P3
2
3
G3
2
6
CD3
12,750
12,750
400
12,350
12,350
Explanation
PR
Debit
Credit
Balance
439
440
2011
Apr.
P3
G3
1,380
85
1,380
1,295
440
441
$3,070
5,700
$8,770
NEWTON COMPANY
Schedule of Accounts Payable
April 30, 2011
$11,855
10,375
1,295
$23,525
NEWTON COMPANY
Trial Balance
April 30, 2011
$ 23,525
217,000
95,000
155,185
513
400
$491,623
441
442
442
443
Date
201
1
Mar.
Account Debited
2
3
10
27
28
31
Leroy Hackett
Sam Snickers
Marjorie Coble
Marjorie Coble
Sam Snickers
Totals
Invoice
Number
PR
854
855
856
857
858
Accts.
Rec.
Debit
PST
Payable
Credit
18,328.00
10,672.00
5,336.00
16,135.60
6,165.40
56,637.00
(106)
Page 2
GST
Payable
Credit
1,580.00
920.00
460.00
1,391.00
531.50
4,882.50
(224)
948.00
552.00
276.00
834.60
318.90
2,929.50
(225)
Sales
Credit
15,800.00
1,027
9,200.00
5,980
4,600.00
2,990
13,910.00
9,040
5,315.00
3,455
48,825.00
22,492
(413)
(502/119)
Date
2011
Mar 6
12
13
15
20
31
31
Account Credited
L.T. Notes Pay.
Leroy Hackett
Sam Snickers
Sales
Marjorie Coble
Sales
Totals
Explanation
Note to bank
Invoice, Mar 2
Invoice, Mar 3
Cash sales
Invoice, Mar 10
Cash sales
PR
Cash
Debit
251 72,000.00
18,012.00
10,488.00
191,028.80
5,244.00
202,524.40
499,297.20
(101)
Sales
Discount
Debit
Accts.
Rec.
Credit
COGS
Dr./
MI Cr.
Page 2
Sales
Credit
Other
Accts.
Credit
PST
Payable
Credit
GST
Payable
Credit
COGS
Dr./
MI Cr.
72,000.00
316.00 18,328.00
184.00 10,672.00
164,680.00
92.00
16,468.00
9,880.80
107,042
5,336.00
174,590.00
17,459.00 10,475.40
113,480
592.00 34,336.00 339,270.00 72,000.00 33,927.00 20,356.20
220,522
(415)
(106)
(413)
()
(224)
(225) (502/119)
444
PURCHASES JOURNAL
Date
2011
Mar.
Date of
Invoice
Account Credited
3
5
9
14
16
31
Mar 3
Mar 3
Mar 9
Mar 13
Mar 16
Terms
PR
Accts.
Payable
Credit
Merch.
Inventory
Debit
42,600.00
31,625.00
74,225.00
(119)
Page 2
Other
GST
Accounts Recble
Debit
Debit
1,120.00
20,850.00
1,670.00
23,640.00
(X)
Ch.
No.
Cash
Credit
Account Debited
PR
Defore
Industries1
Defore Industries
44,304.0
0
15 41
7
Payroll
Sales Salaries
Expense
621
15,900.0
0
23 41
8
30,368.0
0
31 41
9
Payroll
Sales Salaries
Expense
Mar. 41
13 6
Payee
621
15,900.0
0
67.20
2,556.00
1,251.00
1,897.50
100.20
5,871.90
(108)
Page 2
Merch.
Inv.
Credit
Other
Accts.
Debit
852.00
GST
Recble
Debit
Accts.
Payable
Debit
45,156.0
0
15,900.0
0
584.00
30,952.0
0
15,900.0
0
693
445
31
Totals
106,472.
00
(101)
1,436.00 31,800.0
0
(119)
(X)
76,108.0
0
(201)
446
Date
PR
Debit
201/
225
119
2,570.50
201/
225
163
667.80
2011
Page 2
Credit
145.50
2,425.00
37.80
630.00
Parts 2 and 4
ACCOUNTS RECEIVABLE SUBLEDGER
Marjorie Coble
Date
Explanation
PR
Debit
10
S2
5,336.00
20
CR2
27
S2
Credit
Balance
2011
Mar.
5,336.00
5,336.00
16,135.60
0.00
16,135.6
0
Leroy Hackett
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
S2
12
CR2
18,328.00
18,328.0
0
18,328.00
0.00
Sam Snickers
446
447
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
S2
13
CR2
28
S2
10,672.00
10,672.0
0
10,672.00
6,165.40
0.00
6,165.40
Parts 3 and 4
ACCOUNTS PAYABLE SUBLEDGER
Arndt Company
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
P2
1,187.20
1,187.20
16
P2
1,770.20
2,957.40
Explanation
PR
Debit
Credit
Balance
45,156.00
45,156.00
2011
Mar.
P2
13
CD3
45,156.00
0.00
Jett Supply
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
P2
19
G2
22,101.00
667.80
22,101.00
21,433.20
447
448
Explanation
PR
Debit
Credit
Balance
2011
Mar.
14
P2
17
G2
23
CD3
33,522.50
33,522.50
2,570.50
30,952.00
30,952.00
0.00
Parts 1 and 4
GENERAL LEDGER
Cash
Explanation
Date
Debit
31
CR2
499,297.20
31
CD3
Credit
Balance
2011
Mar.
499,297.2
0
106,472.0
0
Accounts Receivable
Explanation
Date
PR
392,825.2
0
Credit
Balance
2011
Mar.
31
S2
31
CR2
56,637.00
56,637.00
34,336.00
GST Receivable
Explanation
Date
22,301.00
PR
Debit
P2
5,871.90
Credit
Balance
2011
Mar.
31
5,871.90
448
449
449
450
Date
PR
Credit
Balance
2011
Mar.
1 Beginning balance
250,000.0
0
17
G2
2,425.00
247,575.0
0
31
S2
22,492.00
225,083.0
0
31
CR2
220,522.0
0
4,561.00
31
P2
31
CD3
74,225.00
78,786.00
1,436.00
Office Supplies
Date
Explanation
77,350.00
PR
Debit
P2
1,120.00
Credit
Balance
2011
Mar.
31
1,120.00
Store Supplies
Date
Explanation
PR
Debit
P2
1,670.00
Credit
Balance
2011
Mar.
16
Office Equipment
Date
Explanation
1,670.00
PR
Debit
Credit
Balance
2011
450
451
Mar.
P2
19
G2
20,850.00
20,850.00
630.00
20,220.00
451
452
Date
Explanation
Debit
Credit
Balance
2011
Mar.
17
G2
2,570.50
(2,570.50)
19
G2
667.80
(3,238.30)
31
P2
31
CD3
103,736.9
0
76,108.00
Explanation
24,390.60
PST Payable
Date
100,498.6
0
PR
Debit
Credit
Balance
2011
Mar.
31
S2
31
CR2
Explanation
4,882.50
33,927.00
38,809.50
GST Payable
Date
4,882.50
PR
Debit
Credit
Balance
2011
Mar.
17
G2
145.50
145.50
19
G2
37.80
183.30
31
S2
2,929.50
3,112.80
31
CR2
20,356.20
23,469.00
Explanation
PR
Debit
Credit
Balance
2011
452
453
Mar.
CR2
72,000.00
Explanation
PR
72,000.00
Debit
Credit
Balance
2011
Mar.
1 Beginning balance
250,000.0
0
Sales
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
31
S2
48,825.00
48,825.00
31
CR2
339,270.0
0
388,095.0
0
Sales Discounts
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
31
CR2
592.00
592.00
Explanation
PR
Debit
Credit
Balance
31
S2
22,492.00
22,492.00
31
CR2
220,522.0
0
243,014.0
0
2011
Mar.
453
454
Date
Explanation
PR
Debit
Credit
Balance
15
CD3
15,900.00
15,900.00
31
CD3
15,900.00
31,800.00
2011
Mar.
Part 5
Account
Debit
Cash .............................................................
$392,825.20
22,301.00
5,871.90
Merchandise inventory.........................
77,350.00
Office supplies..........................................
1,120.00
1,670.00
20,220.00
Credit
$ 24,390.60
38,809.50
23,469.00
72,000.00
250,000.00
Sales ............................................................
388,095.00
592.00
243,014.00
31,800.00
Totals ..........................................................
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
$796,764.10 $796,764.10
454
455
455
456
$16,135.60
6,165.40
$22,301.00
$ 2,957.40
Jett Supply...............................................
21,433.20
$24,390.60
456
457
Date
2011
Mar.
Account Debited
2
3
10
27
28
31
Leroy Hackett
Sam Snickers
Marjorie Coble
Marjorie Coble
Sam Snickers
Totals
Invoice
Number
PR
854
855
856
857
858
Accts.
Rec.
Debit
18,328.00
10,672.00
5,336.00
16,135.60
6,165.40
56,637.00
(106)
PST
Payable
Credit
1,580.00
920.00
460.00
1,391.00
531.50
4,882.50
(224)
GST
Payable
Credit
948.00
552.00
276.00
834.60
318.90
2,929.50
(225)
Page 2
Sales
Credit
15,800.00
9,200.00
4,600.00
13,910.00
5,315.00
48,825.00
(413)
Date
2011
Mar. 6
12
13
15
20
31
31
Account Credited
L.T. Notes Pay.
Leroy Hackett
Sam Snickers
Sales
Marjorie Coble
Sales
Totals
Explanation
PR
Cash
Debit
Note to bank
251 72,000.00
Invoice, Mar 2
18,012.00
Invoice, Mar 3
10,488.00
Cash sales
191,028.80
Invoice, Mar 10
5,244.00
Cash sales
202,524.40
499,297.20
(101)
Sales
Discount
Debit
Accts.
Rec.
Credit
Page 2
Sales
Credit
Other
Accts.
Credit
PST
Payable
Credit
GST
Payable
Credit
72,000.00
316.00
184.00
18,328.00
10,672.00
92.00
5,336.00
592.00
(415)
164,680.00
16,468.00
9,880.80
174,590.00
34,336.00 339,270.00
(106)
(413)
17,459.00
33,927.00
(224)
10,475.40
20,356.20
(225)
72,000.00
()
458
PURCHASES JOURNAL
Date
2011
Mar.
Date of
Invoice
Account
3
5
9
14
16
31
Mar 3
Mar 3
Mar 9
Mar 13
Mar 16
Terms
PR
Accts.
Payable
Credit
Purchases
Debit
Page 2
Other
GST
Accounts Recble
Debit
Debit
42,600.00
31,625.00
74,225.00
(505)
1,120.00
20,850.00
1,670.00
23,640.00
(X)
Payee
Mar. 41
13 6
Defore
Industries
Defore Industries
15 41
7
Payroll
Sales Salaries
Expense
23 41
8
The Welch
Company
31 41
9
Payroll
Sales Salaries
Expense
31
Totals
Date
2011
Account Debited
PR
Cash
Credit
44,304.00
621
15,900.00
30,368.00
621
Page 3
Pur.
Disc.
Credit
Other
Accts.
Debit
852.00
GST
Recble
Debit
Accts.
Payable
Debit
45,156.
00
15,900.00
584.00
30,952.
00
15,900.00
15,900.00
106,472.0
67.20
2,556.00
1,251.00
1,897.50
100.20
5,871.90
(108)
1,436.00
31,800.00
76,108.
701
459
0
(101)
00
(507)
(X)
(201)
460
Date
PR
Debit
201/
225
506
2,570.50
201/
225
163
667.80
2011
Page 2
Credit
145.50
2,425.00
37.80
630.00
Parts 2 and 4
ACCOUNTS RECEIVABLE SUBLEDGER
Marjorie Coble
Date
Explanation
PR
Debit
10
S2
5,336.00
20
CR2
27
S2
Credit
Balance
2011
Mar.
5,336.00
5,336.00
16,135.60
0.00
16,135.6
0
Leroy Hackett
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
S2
12
CR2
18,328.00
18,328.0
0
18,328.00
0.00
Sam Snickers
460
461
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
S2
13
CR2
28
S2
10,672.00
10,672.0
0
10,672.00
6,165.40
0.00
6,165.40
461
462
Arndt Company
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
P2
1,187.20
1,187.20
16
P2
1,770.20
2,957.40
Defore Industries
Date
Explanation
PR
Debit
Credit
Balance
45,156.00
45,156.00
2011
Mar.
P2
13
CD3
45,156.00
0.00
Jett Supply
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
P2
19
G2
22,101.00
667.80
22,101.00
21,433.20
Explanation
PR
Debit
Credit
Balance
2011
Mar.
14
P2
17
G2
33,522.50
2,570.50
33,522.50
30,952.00
462
463
23
CD3
30,952.00
0.00
463
464
Cash
Explanation
Date
Debit
31
CR2
499,297.20
31
CD3
Credit
Balance
2011
Mar.
499,297.2
0
106,472.0
0
Accounts Receivable
Explanation
Date
PR
392,825.2
0
Credit
Balance
2011
Mar.
31
S2
31
CR2
56,637.00
56,637.00
34,336.00
GST Receivable
Explanation
Date
22,301.00
PR
Debit
P2
5,871.90
Credit
Balance
2011
Mar.
31
5,871.90
Merchandise Inventory
Date
Explanation
PR
Credit
Balance
2011
Mar.
1 Beginning balance
Office Supplies
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
250,000.0
0
464
465
Date
Explanation
PR
Debit
P2
1,120.00
Credit
Balance
2011
Mar.
31
1,120.00
Store Supplies
Date
Explanation
PR
Debit
P2
1,670.00
Credit
Balance
2011
Mar.
16
1,670.00
465
466
Office Equipment
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
P2
19
G2
20,850.00
630.00
Accounts Payable
Date
Explanation
20,850.00
20,220.00
Debit
Credit
Balance
2011
Mar.
17
G2
2,570.50
(2,570.50)
19
G2
667.80
(3,238.30)
31
P2
31
CD3
103,736.9
0
76,108.00
Explanation
24,390.60
PST Payable
Date
100,498.6
0
PR
Debit
Credit
Balance
2011
Mar.
31
S2
31
CR2
Explanation
4,882.50
33,927.00
38,809.50
GST Payable
Date
4,882.50
PR
Debit
Credit
Balance
2011
Mar.
17
G2
145.50
145.50
19
G2
37.80
183.30
466
467
31
S2
31
CR2
Explanation
PR
3,112.80
20,356.20
23,469.00
2,929.50
Debit
Credit
Balance
72,000.00
72,000.00
2011
Mar.
CR2
Explanation
PR
Debit
Credit
Balance
2011
Mar.
1 Beginning balance
250,000.0
0
Sales
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
31
S2
48,825.00
48,825.00
31
CR2
339,270.0
0
388,095.0
0
Sales Discounts
Date
Explanation
PR
Debit
Credit
Balance
2011
Mar.
31
CR2
592.00
592.00
467
468
Purchases
Date
Explanation
PR
Debit
P2
74,225.00
Credit
Balance
2011
Mar.
31
74,225.00
Explanation
PR
Debit
Credit
Balance
2011
Mar.
17
G2
2,425.00
Purchases Discounts
Date
Explanation
PR
2,425.00
Debit
Credit
Balance
2011
Mar.
31
CD2
1,436.00
Explanation
1,436.00
PR
Debit
Credit
Balance
15
CD2
15,900.00
15,900.00
31
CD2
15,900.00
31,800.00
2011
Mar.
468
469
Account
Debit
Cash .............................................................
$392,825.20
22,301.00
5,871.90
250,000.00
Office supplies..........................................
1,120.00
1,670.00
20,220.00
Credit
$ 24,390.60
38,809.50
23,469.00
72,000.00
250,000.00
Sales ............................................................
388,095.00
592.00
Purchases .................................................
74,225.00
2,425.00
1,436.00
31,800.00
$800,625.10 $800,625.10
469
470
$16,135.60
6,165.40
$22,301.00
$ 2,957.40
Jett Supply...............................................
21,433.20
$24,390.60
470
471
Sales Journal
Date
Account Debited
Invoice
No.
PR
A/R Dr.
PST
Payable
Cr.
GST
Payable
Cr.
COGS Dr.
Sales
Cr
Merchandise Inventory
Cr.
2011
Oct K-Company
12
106
6,840
480
360
6,000
4,200
17 CanCor
107
7,980
560
420
7,000
4,600
30 Delton Hardware
108
4,560
320
240
4,000
2,900
Page X
Date
Account
Credited
Explanatio
n
PR
Cash
Dr.
Sales
Disc
Dr
A/R Cr.
COGS/Dr.
Merchandis
Other
PST
GST
e
Accounts Payable Payabl Inventory/
Sales Cr.
Cr.
Cr.
e Cr.
Cr.
2011
Oct 9 Sales
Inv #105
1,368
24 CanCor
7,910
26 K-Company
6,840
1,200
70
7,980
6,840
96
72
740
472
Purchases Journal
Date
Account Credited
Terms
PR
Merchandi
Other
se
Accounts Dr.
Inventory
Dr.
A/P Cr.
Page X
GST Recble
Dr.
2011
Oct 1
Lexor Suppliers
2/10,n
/30
4,240
4,000
240
27
Milton Suppliers
n/30
8,480
8,000
480
Page X
Ch #
Account Debited
PR
Cash Cr.
Merchandise
Inventory Cr.
Other
Accounts Dr.
GST
Recble Dr.
A/P Dr.
2011
Oct 5
13
Merchandise
inventory
2,120
10
14
Lexor Suppliers
4,160
2,000
80
120
4,240
473
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
SALES JOURNAL
Date
2011
Oct.
Date
PR
PST
Payable
Credit
GST
Payable
Credit
Sales
Credit
12 K-Company
106
6,840
480
360
6,000
17 CanCor
107
7,980
560
420
7,000
30 Delton Hardware
108
4,560
320
240
4,000
Date
Account Credited
2011
Oct. 9 Sales
24 CanCor
26 K-Company
Date
2011
Oct.
Invoice
Number
Account Debited
Page X
Accts.
Rec.
Debit
Explanation
Inv #105
Page X
GST
Payable
Credit
96
Sales
Credit
72
1,200
7,980
6,840
Account Credited
1 Lexor Suppliers
27 Milton Suppliers
Ch.
No.
PR
Other
Accts.
Credit
Payee
Date of
Invoice
Oct. 1
Oct. 27
PURCHASES JOURNAL
Accts.
Payable
Terms
PR
Credit
2/10,n/30
n/30
4,240
8,480
Cash
Debit
Sales
Discount
Debit
1,368
7,910
6,840
70
Page X
Purchases
Debit
Other
Accounts
Debit
4,000
8,000
Page X
Other
Accts.
Debit
GST
Recble
Debit
240
480
GST
Recble
Debit
Accts.
Payable
Debit
709
474
2011
Oct. 5 13
10 14
Cash purchase
Purchases
2,120
Lexor Suppliers
Lexor Suppliers
4,160
2,000
80
120
4,240
475
ALTERNATE PROBLEMS
Problem 8-1B (20 minutes)
Date
Transaction
Special
Journal
Subledger
NE
CR
MI
AP/MI
AR/MI
AR
6 Regarding the May 3 purchase, received a credit memorandum from the supplier
AP/MI
CD
NE
AP
CD
AP
CR
AR
CR
NE
CD
MI
NE
NE
granting an allowance.
475
476
Account Debited
Invoice
No.
Page: S1
PR
A/R Dr.
COGS Dr.
Sales Cr.
Merchandise Inventory
Cr.
2011
347
102,000
51,000
348
8,200
5,700
18 Lars Wilson
349
6,000
4,900
25 Nathan Blythe
350
28,000
14,500
Date
Account Credited
PR
Explanatio
n
Cash Dr.
Sales
Disc
Dr
Page: CR1
A/R Cr.
2011
June A/R
12 Larson
24 A/R
Stohart
Carol
Inv. 348
8,036
Martha
Inv. 347
102,000
164
8,200
102,000
Sales Cr.
Other
Accounts
Cr.
COGS/Dr.
Merchandi
se
Inventory/
Cr.
711
477
Inv. 349
120
5,880
6,000
Purchases Journal
Date
Account Credited
Date of
Invoice
Terms
P
R
Page: P1
A/P Cr.
Merchandise
Inventory Dr.
Office
Supplies
Dr.
Other
Accounts Dr.
2011
Exeter
Equip./Equipment
Whitby Co.
4
June 1
Suppliers
Unlimited
June 1
n30
45,000
June 4
1/5, n15
85,000
June 8
2/10,
n30
1,800
45,000
85,000
1,800
478
Cash Disbursements
Date
Ch #
Account Debited
PR
Page: CD1
Cash Cr.
Merchandis
e
Inventory
Cr.
Other
Accounts Dr.
A/P Dr.
2011
June 11
101
Whitby Co.*
80,200
14
102
Salaries Expense
15,000
28
103
Exeter Equipment
45,000
29
104
Salaries Expense
15,000
80,200
15,000
45,000
15,000
General Journal
Fundamental Accounting Principles, Twelfth Canadian Edition
Date
Page: G1
PR
Debit
Credit
2011
June
4,800
4,800
2,800
479
2,800
2,200
2,200
480
Part 3
Date
2011
July
5
6
13
14
Date
Account Debited
SALES JOURNAL
Invoice
Number
PR
Karen Harden
Paul Kane
Kelly Grody
Karen Harden
Account
Credited
2011
Jul 15 Karen
y
Harden
15 Sales
918
919
920
921
A/R Dr.
Sales. Cr.
18,400
7,500
8,350
4,100
Cash sales
Date
Account Credited
2011
July
1 Beech Company
18,032
Page 3
Cost of Goods Sold Dr.
Merchandise Inventory Cr.
368
10,200
4,100
4,600
2,300
Accts.
Rec.
Credit
Other
Accts.
Credit
Sales
Credit
121,370
PURCHASES JOURNAL
Accounts Merchandis
Date of
Payable e Inventory
Invoice Terms
PR
Credit
Debit
2/10,
n/60
18,400
121,370
Jun 30
Page 3
6,300
6,300
66,700
Office
Supplie
s Debit
Page 3
Other
Accts.
Debit
713
481
Jul 7
Jul 8
n/10
EOM
n/10
EOM
1,050
1,050
37,710
37,710
482
Date
201
1
Jul
y
Date
2011
July
Account Debited
Cash
Credit
Advertising Expense
Beech Company
Sales Salaries Expens
GENERAL JOURNAL
Account Titles and Explanations
8
PR
Merchandis
e Inventory
Credit
575
201/
125
Page 3
Accts.
Payable
Debit
575
6,174
30,620
PR
Other
Accts.
Debit
126
Debit
150
30,620
Page 3
Credit
150
6,300
483
Date
2011
July
5
14
15
Date
2011
July
13
Date
2011
July
6
Explanation
Karen Harden
PR
S3
S3
CR3
Explanation
Kelly Grody
PR
S3
Explanation
Paul Kane
PR
S3
Debit
18,400
4,100
Debit
Credit
18,400
Credit
8,350
Debit
7,500
Balance
18,400
22,500
4,100
Balance
8,350
Credit
Balance
7,500
483
484
Date
Explanation
Beech Company
PR
Debit
Credit
Balance
2011
July
1
10
Date
P3
CD3
Explanation
Blackwater Inc.
PR
6,300
Debit
6,300
Credit
6,300
0
Balance
2011
July
7
8
Date
2011
July
9
Date
2011
P3
G3
Poppes Supply
Explanation
PR
150
Debit
P3
Sprague Company
Explanation
PR
1,050
Credit
37,710
Debit
Credit
1,050
900
Balance
37,710
Balance
484
485
Date
2011
July
5
6
13
14
29
30
31
Date
Account Debited
SALES JOURNAL
Invoice
P
Number
R
Karen Harden
Paul Kane
Kelly Grody
Karen Harden
Paul Kane
Kelly Grody
Totals
Account
Credited
2011
Jul 15
y
15
16
21
Karen
Harden
Sales
Paul Kane
L.T. Notes
Pay
23 Kelly Grody
24 Karen
Harden
31 Sales
918
919
920
921
922
923
A/R Dr.
Sales. Cr.
18,400
7,500
8,350
4,100
28,090
15,750
82,190
(106/413)
Cash sales
Sale of Jul 6
Note to bank 251
Sale of Jul
13
Sale of Jul
14
Cash sales
18,032
Page 3
Cost of Goods Sold Dr.
Merchandise Inventory Cr.
368
10,200
4,100
4,600
2,300
15,500
8,700
45,400
(502/119)
Accts.
Rec.
Credit
Page 3
Cost of Goods Sold Dr.
Merchandise Inventory
Cr.
18,400
121,370
7,350
20,000
150
7,500
8,183
167
8,350
4,018
82
4,100
79,020
Sales
Credit
Other
Accts.
Credit
121,370
66,700
20,000
79,020
43,500
717
486
31 Totals
257,973
(101)
767
(415)
38,350
(106)
200,390 20,000
(413)
(X)
110,200
(502/119)
487
Date
2011
July
Account Credited
1 Beech Company
PURCHASES JOURNAL
Accounts Merchandis
Date of
Payable e Inventory
Invoice Terms
PR
Credit
Debit
Jun 30
Jul 7
20 Poppes Supply
Jul 19
26 Beech Company
Jul 26
31 Totals
Jul 8
Jul 17
2/10,
n/60
n/10
EOM
n/10
EOM
2/10,
n/60
n/10
EOM
2/10,
n/30
6,300
125/
1,050
1,050
165/
37,710
37,710
8,200
750
9,770
9,770
63,780
24,270
201
1
Jul
y
Ch.
No. Payee
Page 3
Other
Accts.
Debit
(201)
Date
Office
Supplie
s Debit
Cash
Credit
Account Debited
PR
Advertising Expense
655
575
Beech Company
6,174
30,620
6,300
8,200
750
(119)
Merchandis
e Inventory
Credit
750
(124)
Other
Accts.
Debit
38,760
(X)
Page 3
Accts.
Payable
Debit
575
126
30,620
6,300
27 303 Sprague
Company
31 304 Payroll
31
Totals
Sprague Company
Sales Salaries
Expense
488
5,684
621
30,620
73,673
(101)
116
5,800*
30,620
242
(119)
61,815
(X)
12,100
(201)
489
GENERAL JOURNAL
Account Titles and Explanations
8
PR
Debit
201/
125
150
201/
119
2,400
Page 3
Credit
150
2,400
Parts 1, 2, 3, 4
GENERAL LEDGER
Cash
Explanation
Date
Debit
Credit
Balance
2011
Balance Forward
June
3
0
95,000
July
3
1
CR3
3
1
CD3
257,973
352,973
73,673
Accounts Receivable
Date
Explanation
PR
279,300
Credit
Balance
2011
July
3
1
S3
3
1
CR3
82,190
82,190
38,350
43,840
489
490
Merchandise Inventory
Date
Explanation
PR
Credit
Balance
2011
Jun.
3
0
Balance Forward
167,000
Jul.
2
4
G3
2,400
164,600
3
1
S3
45,400
119,200
3
1
CR3
110,200
9,000
3
1
P3
3
1
CD3
24,270
33,270
242
Office Supplies
Explanation
Date
PR
33,028
Debit
Credit
Balance
2011
July
3
1
P3
750
750
Store Supplies
Explanation
Date
PR
Debit
Credit
Balance
2011
July
P3
G3
1,050
1,050
150
900
490
491
Store Equipment
Explanation
Date
PR
Debit
Credit
Balance
2011
July
P3
37,710
37,710
Accounts Payable
Date
Explanation
PR
Credit
Balance
2011
July
G3
24
G3
31
P3
31
CD3
150
(150)
2,400
(2,550)
63,780
12,100
49,130
Date
PR
61,230
Debit
Credit
Balance
2011
June
3
0
July
2
1
Balance Forward
167,000
CR3
20,000
Date
PR
187,000
Debit
Credit
Balance
2011
Jun.
3
0
Balance Forward
95,000
Sales
491
492
Explanation
Date
PR
Debit
Credit
Balance
2011
July
3
1
S3
3
1
CR3
82,190
82,190
200,390
282,580
Sales Discounts
Date
Explanation
PR
Debit
Credit
Balance
2011
July
3
1
CR3
767
767
492
493
Date
PR
Debit
Credit
Balance
2011
July
3
1
S3
3
1
CR3
Date
45,400
45,400
110,200
155,600
Debit
2011
July
15
31
CD3
CD3
Advertising Expense
Explanation
PR
Date
30,620
30,620
Debit
30,620
61,240
Acct. No. 655
Credit
Balance
2011
July
CD3
575
575
Date
2011
July
5
14
15
24
Explanation
Karen Harden
PR
S3
S3
CR3
CR3
Date
2011
July
13
23
30
Explanation
Date
2011
Explanation
Kelly Grody
PR
S3
CR3
S3
Paul Kane
PR
Debit
18,400
4,100
Debit
8,350
15,750
Debit
Credit
18,400
4,100
Credit
8,350
Credit
Balance
18,400
22,500
4,100
0
Balance
8,350
0
15,750
Balance
493
494
July
6
16
29
S3
CR3
S3
7,500
28,090
7,500
7,500
0
28,090
Date
Explanation
Beech Company
PR
Debit
Credit
Balance
2011
July
1
10
26
P3
CD3
P3
Blackwater Inc.
Explanation
PR
Date
6,300
Debit
6,300
9,770
Credit
6,300
0
9,770
Balance
2011
July
7
8
Date
2011
July
9
20
Date
2011
July
17
24
27
P3
G3
Poppes Supply
Explanation
PR
150
Debit
P3
P3
Sprague Company
Explanation
PR
P3
G3
CD3
1,050
Credit
37,710
750
Debit
2,400
5,800
Credit
8,200
1,050
900
Balance
37,710
38,460
Balance
8,200
5,800
0
494
495
Debit
Credit
43,840
33,028
750
900
37,710
$ 49,130
187,000
95,000
Sales ......................................................................................................
282,580
767
155,600
61,240
575
$15,750
28,090
$43,840
495
496
ELDRIDGE INDUSTRIES
Schedule of Accounts Payable
July 31, 2011
$ 9,770
900
38,460
$49,130
496
497
re-add the account balances on the schedule of accounts payable to confirm that
the addition was correct.
trace the balances listed on the schedule of accounts payable back to the
subsidiary accounts to confirm that they were listed correctly on the schedule.
recalculate the balance of each subsidiary account to confirm that the additions
and subtractions were correct.
trace the postings from each subsidiary account and from the controlling account
back to the appropriate journals.
Since the purchases and cash disbursements journals were footed and crossfooted before
posting, the previous steps should disclose the error.
497
498
Account Debited
2011
Oct.
6
12
15
16
21
31
Marge Craig
Heather Flatt
Amy Izon
Heather Flatt
Jan Wildman
Totals
Account
Credited
Date
2011
Oct. 2 Jan Wildman
15 Sales
15 Marge Craig
22 Heather Flatt
25 Amy Izon
28 Store
Supplies
31 Sales
Explanation
SALES JOURNAL
Invoice
P
Number R
913
914
915
916
917
Page 3
Cost of Goods Sold Dr.
Merchandise Inventory
Cr.
3,300
3,650
3,100
4,290
5,520
19,860
(106/413)
1,800
2,000
1,700
2,460
3,000
10,960
(502/119)
Invoice Nov
23
Cash sales
Invoice, Dec 6
Invoice, Dec
12
Invoice, Dec
15
Sold supplies 125
Cash sales
A/R Dr.
Sales. Cr.
4,116
84
Page 3
Sales
Credit
4,200*
38,830
2,401
3,577
49
73
2,450*
3,650**
2,842
58
2,900**
38,830
58
66,128
21,400
58
66,128
36,400
725
499
31 Totals
117,952
(101)
264 13,200*
*
(415) (106)
104,958
58
57,800
(413)
(X)
(502/119)
500
Date
Account Credited
2011
Oct.
2 Walters Company
PURCHASES JOURNAL
Accounts Merchandis
Date of
Payable
e
Invoice Terms
PR
Credit
Inventory
Debit
Oct 2
Oct 3
15 Walters Company
Oct 15
15 Sunshine Company
Oct 15
Oct 16
Oct 19
31 Totals
Oct 28
2/10,
n/60
n/10
EOM
2/10,
n/60
2/10,
n/60
n/10
EOM
n/10
EOM
2/10,
n/60
3,200
3,200
1,300
1,300
3,990
3,990
2,650
2,650
765
Page 2
Other
Accts.
Debit
765
165/
7,475
6,030
6,030
25,410
17,170
(201)
Office
Supplie
s Debit
7,475
(119)
765
(124)
7,475
(X)
501
Ch.
No. Payee
Merchandis
e
Inventory
Credit
Other
Accts.
Debit
Page 4
Accts.
Payable
Debit
Account Debited
PR
Cash
Credit
Rent Expense
Fireside Company
640
2,250
3,724
76
Walters Company
3,136
64
Sales Salaries
Expense
Walters Company
621
2,620
3,283
67
3,350
2,597
53
2,650
302
4,000
4,000
690
990
990
Sunshine Company
Marlee Levin,
Withdrawals
Utilities Expense
2,250
3,800
3,200
2,620
2,620
12,480
(X)
13,000
(201)
727
502
Date
201
1
Oct.
PR
Page 2
Credit
Debit
201/
119
460
414
106/
850
414
106/
200
201/
119
640
201/
124
143
460
850
200
640
143
Date
Explanation
PR
Debit
Credit
Balance
2011
Oct.
S3
G2
1
5
CR3
3,300
3,300
850
2,450
2,450
Heather Flatt
Date
Explanation
PR
Debit
Credit
Balance
2011
502
503
Oct.
1
2
S3
3,650
3,650
1
6
S3
4,290
7,940
2
2
CR3
3,650
4,290
503
504
Date
Explanation
PR
Debit
Credit
Balance
2011
Oct.
1
5
S3
1
8
G2
2
5
CR3
Date
2011
Sept 23
Oct.
2
21
Part 2
Date
2011
Sept 28
Oct.
4
6
Date
2011
Oct.
5
16
20
20
Date
2011
Oct. 15
25
Explanation
Jan Wildman
PR
S2
CR3
S3
3,100
Debit
4,200
5,520
3,100
200
2,900
2,900
Credit
4,200
Balance
4,200
0
5,520
Fireside Company
PR
P1
G2
CD4
Debit
460
3,800
Sunshine Company
PR
P2
CD4
143
Debit
2,650
Credit
4,260
Credit
1,300
765
7,475
Credit
2,650
Balance
4,260
3,800
0
Balance
1,300
2,065
9,540
9,397
Balance
2,650
0
504
505
28
P2
6,030
6,030
505
506
Explanation
P2
CD4
P2
G2
CD4
Parts 2, 3
Date
2011
Sept 30 Balance
Oct. 31
31
Date
2011
Sept 30 Balance
Oct.
9
18
31
31
Date
2011
Sept 30 Balance
Oct.
4
19
31
31
31
31
Date
2011
Sept 30 Balance
Oct. 20
Walters Company
PR
Debit
3,200
640
3,350
Credit
3,200
3,990
Balance
3,200
0
3,990
3,350
0
GENERAL LEDGER
Explanation
Cash
PR
CR3
CD4
Accounts Receivable
Explanation
PR
G2
G2
S3
CR3
Merchandise Inventory
Explanation
PR
G2
G2
S3
P2
CD4
CR3
Office Supplies
Explanation
PR
G2
Debit
117,952
Debit
19,860
Debit
17,170
Debit
25,220
5,361
123,313
98,093
4,200
3,350
3,150
23,010
9,810
66,970
66,510
65,870
54,910
72,080
71,820
14,020
607
464
506
507
31
Problem 8-5B (continued)
Date
2011
Sept 30 Balance
Oct. 28
Date
2011
Sept 30 Balance
Oct. 20
Date
2011
Sept 30 Balance
Date
2011
Sept 30 Balance
Oct.
4
19
20
31
31
Date
2011
Sept 30 Balance
Date
2011
Oct. 29
Date
2011
Oct. 31
31
P2
Store Supplies
Explanation
PR
765
Debit
CR3
Store Equipment
Explanation
PR
P2
1,229
Acct. No. 125
Credit
Balance
58
Debit
7,475
346
288
Accounts Payable
Explanation
PR
G2
G2
G2
P2
CD4
Marlee Levin, Capital
Explanation
PR
Debit
460
640
143
13,000
Debit
25,410
4,260
3,800
3,160
3,017
28,427
15,427
Sales
PR
S3
CR3
Debit
4,000
Debit
4,000
Acct. No. 413
Credit
Balance
19,860
104,958
19,860
124,818
507
508
CD4
850
200
Debit
264
Debit
10,960
57,800
Debit
2,620
2,620
Debit
2,250
Debit
990
508
509
Debit
$ 98,093
9,810
14,020
1,229
288
49,604
4,000
Credit
$ 9,153
15,427
106,200
124,818
1,050
264
68,760
5,240
2,250
990
$255,598 $255,598
STARSHINE PRODUCTS
$4,290
5,520
$9,810
STARSHINE PRODUCTS
Schedule of Accounts Payable
October 31, 2011
509
510
$ 9,397
6,030
$15,427
510
511
Page 1
Sales Journal
Date
Account Debited
Invoice
No.
PR
A/R Dr.
Sales Cr.
COGS Dr.
PR Merchandise Inventory
Cr.
2011
213
300.00
108.00
15 J. Samuelson
214
750.00
270.00
22 V. Nels
215
600.00
200.60
30 M. Bains
216
810.00
270.81
July 9 W. Tilden
Purchases Journal
Fundamental Accounting Principles, Twelfth Canadian Edition
Date
Page 1
Merchandis
e
Inventory
Date of
Invoice
Terms
Tulsco Supply
July 4
n/30
450.00
450.00
Gentry Holdings
July 18
n/30
270.00
270.00
Account Credited
PR
A/P Cr.
PR
Dr.
2011
July 4
18
NOTE: An additional PR column has been added to facilitate the referencing of inventory entries into the
Office
Supplies
Dr.
Other
Accounts
Dr.
512
513
PR
Purchases
Units
Unit
Cost
Total Cost
Unit
s
Unit
Cost
Total
Cost
(a)
(b)
(a)
Tota
l
Average
Unit Cost/Un
s
it
(b)
Total
Cost
Inventory Balance Calculations
July 31
Beginning inventory
30
@ $12.0 = $
0
360.0
0
30 $12.00 $ 360.0
0
30
4 P1
45
@ $10.0 = $
0
450.0
0
45 @ 10.0 =
0
450.00
75 $10.80 $ 810.0
0
10 @ $10.8 = $ 108.00
0
9 S1
25 @ $10.8 = $ 270.00
0
30
@ $9.00 = $
270.0
0
75
$ 810.0
0
65
$ 702.0
0
65
$ 702.0
0
40
$ 432.0
0
40
$ 432.0
0
30 @ 9.00 =
270.00
70 $10.03 $ 702.0
0
22 S1
$ 810.0
0
@ 10.8 =
25
0
270.00
40 $10.80 $ 432.0
0
18 P1
75
@ 10.8 =
10
0
108.00
65 $10.80 $ 702.0
0
15 S1
$ 360.0
0
20 @ $10.0 = $ 200.60
3
70
$ 702.0
0
70
$ 702.0
0
@ 10.0 =
20
3
200.60
513
514
50 $10.03 $ 501.4
0
27 @ $10.0 = $ 270.81
3
30 S1
105
$1,080.00 82
$849.41
$ 501.4
0
50
$ 501.4
0
@ 10.0 =
27
3
270.81
23 $10.03 $ 230.5
9
Total
50
23
23
$ 230.5
9
$230.59
Ending inventory
Note: An additional PR column has been added to the Inventory Subledger Record to facilitate referencing of inventory
entries.
514
515
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
726
Note: Since posting to the General Ledger was not a requirement in this problem, posting references are shown for
values posted to the subledgers only.
SALES JOURNAL
Page 3
A/R Dr.
Invoice
Date
Account Debited
Numbe
r
PR
Sales Cr.
5 Karen Harden
918
18,400
6 Paul Kane
919
7,500
13 Kelly Grody
920
8,350
14 Karen Harden
921
4,100
2011
July
Credited
Accts.
Cash
Disc.
Rec.
Sales
Accts.
Credit
Credit
Explanation
PR
Debit
Debit
Credit
Sale of July 5
18,032
368
18,400
2011
July
1 Karen Harden
5
Page 3
Other
Sales
1 Sales
5
516
Cash sales
121,370
121,370
PURCHASES JOURNAL
Accounts
Date
of
Date
Account Credited
Invoic
e
Terms
Office
Page 3
Other
Payable
Purchases
Supplies
Accounts
PR
Credit
Debit
Debit
Debit
2011
July
1 Beech Company
Jun.
30
2/10,n/60
6,300
July 7
n/10 EOM
1,050
1,050
July 8
n/10 EOM
37,710
37,710
6,300
517
Ch.
Date
No.
Payee
Account Debited
PR
Purchas
e
Other
Page 3
Accts.
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
2011
July
Date
2011
July
3 300
The Weekly
Journal
Advertising Expense
1 301
0
Beech Company
Beech Company
1 302
5
Payroll
Sales Salaries
Expense
GENERAL JOURNAL
Account Titles and Explanations
8
575
6,174
575
126
30,620
PR
201/
125
Debit
150
6,300
30,620
Page 3
Credit
150
737
518
Date
2011
July
5
14
15
Explanation
Karen Harden
PR
S3
S3
CR3
Date
2011
July
13
Explanation
Date
2011
July
6
Explanation
Kelly Grody
PR
S3
Paul Kane
PR
S3
Debit
Credit
18,400
4,100
Debit
18,400
Credit
8,350
Debit
Balance
18,400
22,500
4,100
Balance
8,350
Credit
7,500
Balance
7,500
Beech Company
Explanation
PR
Date
Debit
Credit
Balance
2011
July
1
10
Date
P3
CD3
Explanation
Blackwater Inc.
PR
6,300
Debit
6,300
Credit
6,300
0
Balance
2011
July
7
8
Date
2011
July
9
Date
2011
P3
G3
Explanation
Poppes Supply
PR
150
Debit
P3
Sprague Company
Explanation
PR
1,050
Credit
37,710
Debit
Credit
1,050
900
Balance
37,710
Balance
518
519
519
520
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
Page 3
Invoice
Date
Account Debited
A/R Dr.
Numbe
r
PR
Sales Cr.
5 Karen Harden
918
18,400
6 Paul Kane
919
7,500
13 Kelly Grody
920
8,350
14 Karen Harden
921
4,100
29 Paul Kane
922
28,090
30 Kelly Grody
923
15,750
2011
July
82,190
Totals
(106/413)
Credited
Explanation
PR
Page 3
Sales
Accts.
Other
Cash
Disc.
Rec.
Sales
Accts.
Debit
Debit
Credit
Credit
Credit
739
July
521
1 Karen
5 Harden
Sale of July 5
1 Sales
5
Cash sales
1 Paul Kane
6
Sale of July 6
7,350
2 L.T. Notes P.
1
Note to bank
25
1
20,000
2 Kelly Grody
3
Sale of July 13
8,183
167
8,350
2 Karen
4 Harden
Sale of July 14
4,018
82
4,100
3 Sales
1
Cash sales
Totals
18,032
368
18,400
121,37
0
121,37
0
150
7,500
20,000
79,020
79,020
257,97
3
767
38,350
200,39
0
20,000
(101)
(415)
(106)
(413)
(X)
522
PURCHASES JOURNAL
Page 3
Accounts
Date
of
Date
Account Credited
Invoic
e
Terms
Office
Other
Payable
Purchase
s
Supplie
s
Account
s
Credit
Debit
Debit
Debit
6,300
6,300
PR
2011
July
1 Beech Company
Jun.
30
2/10,n/60
7 Blackwater Inc./Store
Supplies
July 7
n/10
EOM
125/
1,050
1,050
9 Poppes Supply/Store
Equipment
July 8
n/10
EOM
165/
37,710
37,710
17 Sprague Company
July
17
2/10,n/6
0
8,200
20 Poppes Supply
July
19
n/10
EOM
750
26 Beech Company
July
26
2/10,n/3
0
9,770
9,770
63,780
24,270
750
38,760
(201)
(505)
(124)
(X)
Totals
8,200
750
523
Purchas
e
Other
Cash
Discoun
t
Accts.
Payable
PR
Credit
Credit
Debit
Debit
655
575
Ch.
Date
No.
Payee
Account Debited
Page 3
Accts.
2011
July
3 300
The Weekly
Journal
Advertising Expense
1 301
0
Beech Company
Beech Company
1 302
5
Payroll
Sales Salaries
Expense
2 303
7
Sprague
Company
Sprague Company
3 304
1
Payroll
Sales Salaries
Expense
Totals
6,174
621
30,620
5,684
621
30,620
73,673
(101)
575
126
6,300
30,620
116
5,800*
30,620
242
(506)
61,815
12,100
(X)
(201)
524
GENERAL JOURNAL
Account Titles and Explanations
8
PR
Debit
201/
125
150
201/
507
2,400
Page 3
Credit
150
2,400
Parts 1, 2, 3, 4
GENERAL LEDGER
Cash
Explanation
Date
Debit
Credit
Balance
2011
Balance Forward
June
3
0
95,000
July
3
1
CR3
3
1
CD3
257,973
352,973
73,673
Accounts Receivable
Date
Explanation
PR
279,300
Credit
Balance
2011
July
3
1
S3
3
1
CR3
82,190
82,190
38,350
43,840
524
525
Merchandise Inventory
Date
Explanation
PR
Credit
Balance
2011
Jun.
3
0
Balance Forward
167,000
Office Supplies
Explanation
Date
PR
Debit
Credit
Balance
2011
July
3
1
P3
750
750
525
526
Store Supplies
Explanation
Date
PR
Debit
Credit
Balance
2011
July
P3
G3
1,050
1,050
150
Store Equipment
Explanation
Date
900
PR
Debit
Credit
Balance
2011
July
P3
37,710
37,710
Accounts Payable
Date
Explanation
PR
Credit
Balance
2011
July
G3
24
G3
31
P3
31
CD3
150
(150)
2,400
(2,550)
63,780
12,100
49,130
Date
PR
61,230
Debit
Credit
Balance
2011
June
3
0
July
2
1
Balance Forward
167,000
CR3
20,000
187,000
526
527
Date
PR
Debit
Credit
Balance
2011
Jun.
3
0
Balance Forward
95,000
Sales
Explanation
Date
Debit
Credit
Balance
2011
July
3
1
S3
3
1
CR3
82,190
82,190
200,390
282,580
Sales Discounts
Date
Explanation
PR
Debit
Credit
Balance
2011
July
3
1
CR3
767
767
527
528
Date
Debit
Credit
Balance
2011
July
3
1
P3
24,270
24,270
Purchase Discounts
Explanation
Date
PR
Credit
Balance
2011
July
3
1
CD3
242
Date
PR
242
Credit
Balance
2011
July
2
4
G3
Date
2,400
Debit
2,400
2011
July
15
31
CD3
CD3
Advertising Expense
Explanation
PR
Date
30,620
30,620
Debit
30,620
61,240
Acct. No. 655
Credit
Balance
2011
July
CD3
575
575
Date
2011
Explanation
Karen Harden
PR
Debit
Credit
Balance
528
529
July
5
14
15
24
Date
2011
July
13
23
30
S3
S3
CR3
CR3
Explanation
Kelly Grody
PR
S3
CR3
S3
18,400
4,100
Debit
8,350
15,750
18,400
4,100
Credit
8,350
18,400
22,500
4,100
0
Balance
8,350
0
15,750
529
530
Explanation
Paul Kane
PR
S3
CR3
S3
Debit
Credit
7,500
28,090
7,500
Balance
7,500
0
28,090
Date
Explanation
Beech Company
PR
Debit
Credit
Balance
2011
July
1
10
26
Date
P3
CD3
P3
Explanation
Blackwater Inc.
PR
6,300
Debit
6,300
9,770
Credit
6,300
0
9,770
Balance
2011
July
7
8
Date
2011
July
9
20
Date
2011
July
17
24
27
P3
G3
Explanation
Poppes Supply
PR
150
Debit
P3
P3
Sprague Company
Explanation
PR
P3
G3
CD3
1,050
Credit
37,710
750
Debit
2,400
5,800
Credit
8,200
1,050
900
Balance
37,710
38,460
Balance
8,200
5,800
0
530
531
Debit
Cash .................................................................................
$279,300
43,840
167,000
750
900
37,710
Credit
$ 49,130
187,000
95,000
Sales ................................................................................................
282,580
Sales discounts............................................................................
767
Purchases......................................................................................
24,270
242
2,400
61,240
575
Totals..............................................................................................
$616,352
$616,352
531
532
ELDRIDGE INDUSTRIES
Schedule of Accounts Receivable
July 31, 2011
Kelly Grody........................................................................
Paul Kane .........................................................................
Total accounts receivable ..................................................
$15,750
28,090
$43,840
ELDRIDGE INDUSTRIES
Schedule of Accounts Payable
July 31, 2011
$ 9,770
900
38,460
$49,130
532
Account Debited
Page 2
COGS
Accts.
PST
GST
Rec.
Payable
Payable
Sales
Dr./
Debit
Credit
Credit
Credit
MI Cr.
7,366.00
635.00
381.00
6,350.00
4,445.00
14,500.00 1,250.00
750.00
12,500.0
0
8,750.00
Number
PR
8 Leroy Holmes
439
10 Sam Spear
440
15 Marjorie Cook
441
4,930.00
425.00
255.00
4,250.00
2,975.00
22 Sam Spear
442
3,010.20
259.50
155.70
2,595.00
1,800.00
24 Marjorie Cook
443
3,758.40
324.00
194.40
3,240.00
2,260.00
28,935.0
0
20,230.0
0
(413)
(502/119)
2011
Nov.
31 Totals
(106)
(224)
(225)
Credited
Explanation
PR
Page 3
Other
PST
GST
Sales
Accts.
Cash
Disc.
Rec.
Sales
Accts
Payabl Payabl
e
e
Debit
Debit
Credit
Credit
Credit
Credit
Credit
COGS
Dr./
MI Cr.
534
2011
Nov 2 L.T. Notes
.
Pay
Note to bank
25
1
86,250.0
0
86,250.0
0
1 Sales
5
Cash sales
31,517.2
0
1 Leroy
8 Holmes
Invoice, Nov 8
1 Sam Spear
9
Invoice, Nov
10
2 Marjorie
5 Cook
Invoice, Nov
15
3 Sales
0
Cash sales
3 Totals
0
41,415.4
8
27,170.0
0
35,703.0
0
(415)
(106)
(413)
(X)
(224)
(225)
(502/11
9)
PURCHASES JOURNAL
Date
2011
Nov.
1
4
5
11
16
30
Date of
Invoice
Account Credited
Jett Supply/Office Equip.
Defore Industries
Atlas Company/Store Supplies
The Welch Company
Atlas Company/Office Supplies
Totals
Nov 1
Nov 3
Nov 5
Nov 10
Nov 16
Terms
PR
Page 2
Accts. Merchandise Other
GST
Payable
Inventory Accounts Recble
Credit
Debit
Debit
Debit
11,400.00
2,887.00
14,287.00
(119)
5,062.00
303.72
684.00
1,020.00
61.20
173.22
559.00
33.54
6,641.00 1,255.68
(X)
(108)
Page 3
Merch.
Other
GST
Accts.
Cash
Inventor
y
Accts.
Recble
Payable
Credit
Debit
Debit
Debit
No.
Payee
Account Debited
PR
Credit
1
2
633
Defore
Industries
Defore Industries
11,856.0
0
1
5
634
Payroll
Sales Salaries
Expense
621
8,435.00
635
2011
Nov.
2,496.00
228.00
12,084.0
0
8,435.00
48.00
2,544.00
747
536
9
3
0
3
0
636
Payroll
Sales Salaries
Expense
Totals
621
8,435.0
0
8,435.0
0
31,222.0
0
276.00 16,870.0
0
(101)
(119)
(X)
14,628.0
0
(201)
536
537
Date
2011
Nov. 17
26
PR
Page 2
Credit
Debit
201/
225
119
516.22
201/
163
225
977.32
29.22
487.00
922.00
55.32
Marjorie Cook
Explanation
Date
PR
Debit
Credit
Balance
15
S2
4,930.50
4,930.50
24
S2
3,758.40
8,688.40
25
CR2
2011
Nov.
4,930.00
3,758.40
Credit
Balance
Leroy Holmes
Date
Explanation
PR
Debit
S2
7,366.00
2011
Nov.
8
18
CR2
7,366.00
7,366.00
0.00
Sam Spear
Date
Explanation
PR
Debit
Credit
Balance
2011
537
538
Nov.
10
S2
19
CR2
22
S2
Parts 3 and 4
14,500.00
14,500.0
0
14,500.0
0
3,010.20
0.00
3,010.20
Atlas Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Nov.
P2
1,081.20
1,081.20
16
P2
592.54
1,673.74
538
539
Date
PR
Debit
Credit
Balance
12,084.0
0
12,084.00
2011
Nov.
P2
12
CD2
12,084.00
PR
Debit
0.00
Jett Supply
Explanation
Date
Credit
Balance
2011
Nov.
P2
26
G2
5,365.72
977.32
5,365.72
4,388.40
Date
PR
Debit
Credit
Balance
2011
Nov.
11
P2
3,060.22
3,060.22
17
G2
516.22
2,544.00
19
CD2
2,544.00
0.00
Parts 1 and 4
GENERAL LEDGER
Acct. No. 101
Cash
Date
Explanation
PR
Debit
CR2
185,516.6
Credit
Balance
2011
Nov.
30
185,516.6
539
540
8
30
CD2
8
31,222.0
0
Accounts Receivable
Date
Explanation
154,294.6
8
PR
Debit
30
S2
33,564.60
30
CR2
Credit
Balance
2011
Nov.
GST Receivable
Date
Explanation
33,564.60
26,796.0
0
6,768.60
PR
Debit
P2
1,255.68
Credit
Balance
2011
Nov.
30
1,255.68
540
541
Merchandise Inventory
Date
Explanation
PR
Debit
Credit
Balance
2011
Oct.
31
210,000.0
0
Nov.
17
G2
487.00
209,513.0
0
30
S2
20,230.0
0
189,283.0
0
30
CR3
44,000.0
0
145,283.0
0
30
P2
30
CD3
14,287.00
159,570.0
0
276.00
Office Supplies
Date
Explanation
159,294.0
0
PR
Debit
Credit
Balance
2011
Nov.
30
P2
559.00
559.00
Store Supplies
Date
Explanation
PR
Debit
P2
1,020.00
Credit
Balance
2011
Nov.
1,020.00
Office Equipment
Date
Explanation
PR
Debit
Credit
Balance
541
542
2011
Nov.
P2
26
G2
5,062.00
5,062.00
922.00
Accounts Payable
Date
Explanation
PR
4,140.00
Debit
Credit
Balance
2011
Nov.
17
G2
516.22
(516.22)
26
G2
977.32
(1,493.54)
30
P2
30
CD2
22,183.6
8
14,628.00
6,062.14
PST Payable
Date
Explanation
20,690.14
Debit
Credit
Balance
2011
Nov.
30
S2
2,893.50
2,893.50
30
CR2
6,287.30
9,180.80
542
543
GST Payable
Date
Explanation
PR
Debit
Credit
Balance
2011
Nov.
17
G2
29.22
29.22
26
G2
55.32
84.54
30
S2
1,736.10
1,820.64
30
CR2
3,772.38
5,593.02
Explanation
PR
Debit
Credit
Balance
86,250.0
0
86,250.00
2011
Nov.
CR2
Explanation
PR
Debit
Credit
Balance
2011
Oct.
31
210,000.0
0
Sales
Date
Explanation
PR
Debit
Credit
Balance
28,935.0
0
28,935.00
2011
Nov.
30
S2
543
544
30
CR2
62,873.0
0
Sales Discounts
Date
Explanation
91,808.00
PR
Debit
Credit
Balance
2011
Nov.
30
CR2
462.00
462.00
Explanation
PR
Debit
Credit
Balance
30
S2
20,230.00
20,230.00
30
CR3
44,000.00
64,230.00
PR
Debit
15
CD2
8,435.00
8,435.00
30
CD2
8,435.00
16,870.00
2011
Nov.
Date
Explanation
Credit
Balance
2011
Nov.
544
545
$ 6,062.14
9,180.80
5,593.02
86,250.00
210,000.00
91,808.00
$408,893.96
CRYSTAL COMPANY
Schedule of Accounts Receivable
November 30, 2011
$3,758.40
3,010.20
$6,768.60
CRYSTAL COMPANY
Schedule of Accounts Payable
November 30, 2011
$1,673.74
4,388.40
$6,062.14
545
546
Part 4
SALES JOURNAL
Invoice
Date
Account Debited
Page 2
Accts.
PST
GST
Rec.
Payable
Payable
Sales
Credit
Credit
Credit
Number
PR
Debit
8 Leroy Holmes
439
7,366.00
635.00
381.00
6,350.00
10 Sam Spear
440
14,500.0 1,250.00
0
750.00
12,500.0
0
15 Marjorie Cook
441
4,930.00
425.00
255.00
4,250.00
22 Sam Spear
442
3,010.20
259.50
155.70
2,595.00
24 Marjorie Cook
443
3,758.40
324.00
194.40
3,240.00
28,935.0
0
2011
Nov.
31 Totals
(106)
(224)
(225)
(413)
Credited
Explanation
PR
Page 3
Sales
Accts.
Cash
Discoun
t
Rec.
Debit
Debit
Credit
Other
PST
GST
Sales
Accts
Payable
Payabl
e
Credit
Credit
Credit
Credit
753
547
2011
Nov.
2 L.T. Notes
Pay
Note to bank
1 Sales
5
Cash sales
1 Leroy
8 Holmes
Invoice, Nov
8
7,239.00
127.00
7,366.0
0
1 Sam Spear
9
Invoice, Nov
10
14,250.0
0
250.00
14,500.
00
2 Marjorie
5 Cook
Invoice, Nov
15
4,845.00
85.00
4,930.0
0
3 Sales
0
Cash sales
3 Totals
0
25
1
86,250.0
0
86,250.
00
31,517.2
0
41,415.4
8
27,170.
00
2,717.0
0
1,630.
20
35,703.
00
3,570.3
0
2,142.
18
185,516.
68
462.00
26,796.
00
62,873.
00
86,250.
00
6,287.3
0
3,772.
38
(101)
(415)
(106)
(413)
(X)
(224)
(225)
548
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
754
PURCHASES JOURNAL
Date
2011
Nov.
1
4
5
11
16
30
Date of
Invoice
Account Credited
Jett Supply/Office Equip.
Defore Industries
Atlas Company/Store Supplies
The Welch Company
Atlas Company/Office Supplies
Totals
Nov 1
Nov 3
Nov 5
Nov 10
Nov 16
Terms
PR
Accts.
Payable
Credit
Page 2
Other
GST
Purchases Accounts Recble
Debit
Debit
Debit
11,400.00
2,887.00
14,287.00
(505)
5,062.00
303.72
684.00
1,020.00
61.20
173.22
559.00
33.54
6,641.00 1,255.68
(X)
(108)
Ch.
Date
Page 3
Pur.
Other
GST
Accts.
Cash
Disc.
Accts.
Recble
Payable
Debit
Debit
Debit
No.
Payee
Account Debited
PR
Credit
Credit
1
2
633
Defore
Industries
Defore Industries
11,856.0
0
228.0
0
1
5
634
Payroll
Sales Salaries
Expense
621
8,435.00
635
2011
Nov.
2,496.00
12,084.0
0
8,435.00
48.00
2,544.00
549
9
3
0
3
0
636
Payroll
Totals
Sales Salaries
Expense
621
8,435.0
0
8,435.0
0
31,222.0
0
276.0
0
16,870.0
0
14,628.0
0
(101)
(507)
(X)
(201)
550
Date
2011
Nov. 17
26
PR
Page 2
Credit
Debit
201/
225
506
516.22
201/
163
225
977.32
29.22
487.00
922.00
55.32
Parts 2 and 4
ACCOUNTS RECEIVABLE SUBLEDGER
Marjorie Cook
Explanation
Date
PR
Debit
Credit
Balance
15
S2
4,930.00
4,930.00
24
S2
3,758.40
8,688.40
25
CR3
2011
Nov.
4,930.00
3,758.40
Credit
Balance
Leroy Holmes
Date
Explanation
PR
Debit
S2
7,366.00
2011
Nov.
8
18
CR3
7,366.00
7,366.00
0.00
550
551
Sam Spear
Explanation
Date
PR
Debit
10
S2
14,500.00
19
CR3
22
S2
Credit
Balance
2011
Nov.
14,500.0
0
14,500.0
0
3,010.20
0.00
3,010.20
551
552
Atlas Company
Explanation
Date
PR
Debit
Credit
Balance
2011
Nov.
P2
1,081.20
1,081.20
16
P2
592.54
1,673.74
Defore Industries
Explanation
Date
PR
Debit
Credit
Balance
12,084.0
0
12,084.0
0
2011
Nov.
P2
12
CD3
12,084.00
0.00
Jett Supply
Explanation
Date
PR
Debit
Credit
Balance
5,365.72
5,365.72
2011
Nov.
P2
26
G2
977.32
4,388.40
Date
PR
Debit
Credit
Balance
3,060.22
3,060.22
2011
Nov.
11
P2
552
553
17
G2
516.22
2,544.00
19
CD3
2,544.00
0.00
553
554
Cash
Date
Explanation
PR
Debit
30
CR3
185,516.6
8
30
CD3
Credit
Balance
2011
Nov.
185,516.6
8
31,222.0
0
Accounts Receivable
Date
Explanation
154,294.6
8
PR
Debit
30
S2
33,564.60
30
CR3
Credit
Balance
2011
Nov.
33,564.60
26,796.0
0
GST Receivable
Date
Explanation
6,768.60
PR
Debit
P2
1,255.68
Credit
Balance
2011
Nov.
30
1,255.68
Merchandise Inventory
Date
Explanation
PR
Debit
Credit
Balance
2011
Oct.
31 Beginning balance
210,000.0
554
555
Office Supplies
Date
Explanation
PR
Debit
Credit
Balance
2011
Nov.
30
P2
559.00
559.00
Store Supplies
Date
Explanation
PR
Debit
P2
1,020.00
Credit
Balance
2011
Nov.
1,020.00
555
556
Office Equipment
Date
Explanation
PR
Debit
P2
5,062.00
26
G2
Credit
Balance
2011
Nov.
5,062.00
922.00
Accounts Payable
Date
Explanation
PR
4,140.00
Debit
Credit
Balance
2011
Nov.
17
G2
516.22
(516.22)
26
G2
977.32
(1,493.54)
30
P2
30
CD3
22,183.6
8
14,628.00
6,062.14
PST Payable
Date
Explanation
20,690.14
Debit
Credit
Balance
2011
Nov.
30
S2
2,893.50
2,893.50
30
CR3
6,287.30
9,180.80
GST Payable
Date
Explanation
PR
Debit
Credit
Balance
2011
Nov.
17
G2
29.22
29.22
26
G2
55.32
84.54
556
557
30
S2
1,736.10
1,820.64
30
CR3
3,772.38
5,593.02
Explanation
PR
Debit
Credit
Balance
86,250.0
0
86,250.00
2011
Nov.
CR3
Explanation
PR
Debit
Credit
Balance
2011
Oct.
31 Beginning balance
210,000.0
0
557
558
Sales
Date
Explanation
PR
Debit
Credit
Balance
2011
Nov.
30
S2
28,935.0
0
28,935.00
30
CR3
62,873.0
0
91,808.00
Sales Discounts
Date
Explanation
PR
Debit
Credit
Balance
2011
Nov.
30
CR3
462.00
462.00
Purchases
Date
Explanation
PR
Debit
P2
14,287.00
Credit
Balance
2011
Nov.
30
14,287.00
Explanation
PR
Debit
Credit
Balance
2011
Nov.
17
G2
487.00
Purchases Discounts
Date
Explanation
PR
487.00
Debit
Credit
Balance
2011
558
559
Nov.
30
CD3
276.00
Date
Explanation
276.00
PR
Debit
Credit
Balance
15
CD3
8,435.00
8,435.00
30
CD3
8,435.00
16,870.00
2011
Nov.
559
560
$ 6,062.14
9,180.80
5,593.02
86,250.00
210,000.00
91,808.00
487.00
276.00
$409,656.96
CRYSTAL COMPANY
Schedule of Accounts Receivable
November 30, 2011
$3,758.40
3,010.20
$6,768.60
CRYSTAL COMPANY
Schedule of Accounts Payable
November 30, 2011
$1,673.74
4,388.40
$6,062.14
560
561
Sales Journal
Date
Account Debited
Invoic
e No.
PR
A/R
Dr
PST
Payable
CR
GST
Payable
COGS DR
Sales Cr
CR
Merchandise Inventory
CR
2011
May 3 Ajax Holdings
30 Allendale Arena
361
6,840
480
360
6,000
3,200
363
4,218
296
222
3,700
1,900
Cash
DR
Sales
Disc
Dr
Page X
Other
A/R CR
Account
Sales
s CR
CR
PST
GST
COGS/DR
Payable Payabl Merchandise
CR
e CR Inventory/CR
2011
May John
1 Capital
Trenton,
9,000
12 A/R Ajax
6,780
13 Sales
15 Bank
Payable
Inv #362
Loan
2,052
5,000
9,000
60 6,840
1,800
144
5,000
108
1,100
761
562
Purchases Journal
Date
Account Credited
Terms
PR
Page X
Merchandise
Inventory
DR
A/P CR
Other
Accounts
DR
GST
Recble DR
2011
Moore Corporation/Off.
Supplies
London Company
16
May 7
n/30
3,392
1/15,n
/30
7,632
3,200
7,200
192
432
Ch #
Account Debited
PR
Cash CR
May 5
83
Merchandise Inventory
1,696
30
84
A/P
Corporation
3,392
Merchandis
e
Inventory
CR
Page X
Other
Accounts DR
GST
Recble DR
1,600
96
A/P DR
2011
Moore
3,392
563
SALES JOURNAL
Date
2011
May
Date
2011
May 1
12
13
15
Date
2011
May
3 Ajax Holdings
30 Allendale Arena
Account Credited
John Trenton, Capital
A/R Ajax
Sales
Bank Loan Payable
Explanation
Inv #362
Ch.
No.
Payee
PR
361
363
Account Credited
16 London Company
Date
Invoice
Number
Account Debited
PR
Cash
Debit
9,000
6,780
2,052
5,000
Date of
Invoice
Page X
Accts.
Rec.
Debit
PST
Payable
Credit
6,840
4,218
GST
Payable
Credit
480
296
Sales
Credit
360
222
6,000
3,700
Page X
Other
PST
Accts.
Payable
Credit
Credit
GST
Payable
Credit
9,000
60
6,840
1,800
144
108
5,000
PURCHASES JOURNAL
Accts.
Payable
Terms
PR
Credit
Page X
Purchases
Debit
May 7
N/30
3,392
May 16
1/15,n/30
7,632
7,200
PageX
Other Accts.
Debit
Other
Accounts
Debit
3,200
GST
Recble
Debit
192
432
GST Recble
Debit
Accts. Payable
Debit
564
2011
May 5 83
30 84
Merchandise Inventory
Purchases
1,696
A/P Moore
Corporation
Lexor Suppliers
3,424
1,600
96
3,424
565
Page 1
COGS Dr.
Date
Account Debited
Invoice
No.
A/R Dr.
PR
Sales Cr.
PR
Merchandise Inventory
Cr.
2011
210
1,125.00
465.75
18 Thorhild Co-op
211
2,250.00
1,090.50
24 Boyle Grocery
212
750.00
353.00
Purchases Journal
Date
Account
Credited
Date of
Invoice
Page 1
Merchandise
Inventory
Terms
PR
A/P CR
PR
DR
2011
Oct. 3 Arnold Brothers Oct. 3
2/10,
n/30
750.00
750.00
2/10,
n/30
1,550.00
1,550.00
Office
Supplies
Dr.
Other
Accounts
DR
763
566
2/10,
n/30
600.00
600.00
Ch #
Payee
Account Debited
PR
Cash Cr.
Page 1
Merchandise
Other
Inventory Accounts Dr.
PR
A/P Dr.
Cr.
2011
600.00
1,519.00
NOTE: An additional PR column has been added to the Sales and Purchases Journals
to facilitate the referencing of inventory entries into the inventory subledger.
600.00
31.00
1,550.0
0
567
Date
Page: G1
PR
Debit
Credit
2011
Oct.
150.00
150.00
Inventory Balance
Date
PR
Purchases
Units
Unit
Cost
Unit
Total Cost
s
Unit
Cost
(a)
Total
Cost
(b)
(a)
Averag
Total e Cost/
Units Unit
(b)
Total
Cost
Inventory Balance Calculations
Oct.
1
Beginning inventory
85 @ $5.0 = $
0
85 $5.00 $
25.00
425.0
0
85
3 P1 100 @ $7.5 = $
0
100 @ 7.5 =
0
50.00
185 $6.35 $ 1,175.0
0
4 G1
20 @ $7.5 =
0
$
150.00
9 S1
75 @ $6.21 = $
465.7
5
425.
00
750.00
185
$ 1,175.
00
185
$ 1,175.
00
20 @ 7.5 =
0
165 $6.21 $ 1,025.0
0
150.00
165
$ 1,025.
00
165
$ 1,025.
00
75 @ 6.2 =
1
465.75
567
568
90 $6.21 $
559.2
5
15 @ $7.27 = $ 1,090.5
0
0
31.00
140 $7.06 $
50 @ $7.06 = $
24 S1
75 @ $8.0 = $
0
987.7
5
353.0
0
634.7
5
600.0
0
440
559.
25
$3,144.00 27
5
@ 7.7 =
5
1,550.00
290
$ 2,109.
25
290
$ 2,109.
25
140
$ 1,018.
75
140
$ 1,018.
75
31.00
140
987.
75
140
987.
75
$1,909.25 165
+
353.00
90
634.
75
90
634.
75
75 @ 8.0 =
0
165 $7.48 $ 1,234.7
5
Total
90
50 @ 7.0 =
6
90 $7.06 $
31 P1
559.
25
@ 7.2 =
150
7
1,090.50
140 $7.28 $ 1,018.7
5
23 G1
200
290 $7.27 $ 2,109.2
5
18 S1
90
165
600.00
$ 1,234.
75
$1,234.75
Ending inventory
Note: An additional PR column has been added to the Inventory Subledger Record to facilitate referencing of inventory
entries.
568
569
569
570
Ethics Challenge
EC 81
1. Independence in fact means that the auditor maintains an objective point of view
of the client. Independence in appearance means that a third party viewing the
relationship between the auditor/client would have no reason to believe that the
auditor is not independent of the client.
2. While auditors are hired by their clients to perform audits, auditors also have a
responsibility to the public. In our society auditors provide credibility to financial
reporting situations by offering professional audit opinions about companies
financial statements. While it is sometimes difficult to be responsible to clients as
well as the public, auditors must maintain their independence to keep the public
trust.
3. Since John Harris is a sole practitioner it is questionable whether he can consult on
the clients accounting system and then remain objective in subsequent years
when he performs the audit of the company. Large firms often separate consulting
and auditing engagements for the same client by having staff stationed in two
different geographic branches of the firm do the work. Or a large local firm might
be able to perform consulting and auditing for the same client by assigning
different personnel to the two jobs. In this scenario John would need to do both
jobs himself, making it difficult to maintain independence in fact and appearance.
570
571
Revenues:
$211,404
$134,750
42,000
13,400
600
500
200
191,450
$ 19,954
571
572
-0-
75,000
19,954
$94,954
MANGO DESIGNS
Balance Sheet
June 30, 2011
Assets
Current assets:
Cash .............................................................................
Accounts receivable....................................................
Merchandise inventory ...............................................
Office supplies ............................................................
Total current assets ...................................................
Property, plant and equipment:
Store equipment ..........................................................
Less: Accumulated amortization .........................
Total assets .......................................................................
$156,304
64,000
36,750
4,600
$32,000
500
$261,654
31,500
$293,154
Liabilities
Current liabilities:
Accounts payable .......................................................
Interest payable ...........................................................
Total current liabilities ................................................
Long-term liabilities:
Notes payable ..............................................................
Total liabilities ................................................................
Owners Equity
$148,000
200
$148,200
50,000
$198,200
94,954
$293,154
Analysis Component
Mango Designs operates under a perpetual inventory system because the special
journals include the Cost of Goods Sold account.
572
573
FFS 8-2
Danier Leathers June 25, 2005, balance sheet includes Accounts receivable of $594
(thousand), about 0.7% of total assets (calculated as $594/$83,365 x 100). Although
these accounts receivable are not significant in total, they represent amounts owed by
various customers to Danier so it would help decision makers better monitor collection if
the details of individual balances owed, by whom, and dates due were maintained in an
accounts receivable subledger.
The same logic would apply regarding the June 25, 2005, Accounts payable and accrued
liabilities balance of $8,170 (thousand), about 10% of total assets (calculated as
$8,170/$83,365 x 100). Since these accounts payable are significant in total and
represent amounts owed to various creditors, it would help decision makers better
manage payments if the details of individual balances owed, by whom, credit terms, and
dates due were maintained in an accounts payable subledger.
The June 25, 2005, balance sheet shows inventories of $29,031 (thousand), about 34.82%
of total assets (calculated as $29,031/$83,365 x 100). Because Danier sells clothing and
accessories, the inventory balance is significant and represents a large variety of items. It
would help decision makers better manage inventory if the details of unit costs, units
sold, units purchased, and units on hand along with any returns and/or allowances were
detailed in an inventory subledger.
573
574
Problem(s):
Detailed information regarding mining assets is required but is not readily available
given the current accounting information system
Goal(s)*:
That the computer system in place at Northern Outposts can accommodate special
purpose reports
The disclosure principle requires that anything of significance be reported
Facts:
as presented
Conclusion(s)/Consequence(s):
574
575
COMPREHENSIVE PROBLEMS
Comprehensive Problem 8.1Alpine Company (150 minutes)
SALES JOURNAL
Page 2
Invoice
Date
Account Debited
A/R Dr.
COGS Dr.
Sales Cr.
Merch. Inv.
Cr
Numbe
r
PR
2 Essex Company
8785
6,100
3,660
16 Essex Company
8786
3,990
2,394
22 Oscar Services
8787
6,850
4,110
26 Deaver Corp.
8788
2011
Ma
y
31 Totals
14,210
31,150
(106/4
13)
Credited
Explanation
PR
8,526
18,690
(502/119)
Other
Page 2
Sales
Accts.
COGS Dr.
Cash
Disc.
Rec.
Sales
Accts.
Merch.
Inv.
Debit
Debit
Credit
Credit
Credit
Credit
576
2011
May
5 Nabors, Inc.*
Sale of Apr. 28
9 Store
Supplies
1 Essex
1 Company
Sale of May 2
1 Sales
5
3 Oscar
0 Services
Sale of May 22
3 Sales
1
3 Totals
1
12
5
4,459
91
4,550
350
5,978
350
122
6,100
59,220
6,713
137
59,220
35,532
66,052
39,630
6,850
66,05
2
142,77
2
350
17,500
125,272
350
75,162
(101)
(414)
(106)
(413)
(X)
(502/11
9)
577
Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.
Solutions Manual for Chapter 8
(continued)
PURCHASES JOURNAL
Page 2
Date of
Date
Account Credited
Invoic
e
Accounts
Merchandi
se
Payable
Terms
PR
Credit
Debit
May
04
n/10
EOM
125/
37,729
37,072
May
10
n/10
EOM
163/
4,074
11 Gale, Inc.
May
10
2/10,
n/30
8,800
8,800
17 Chandler Corp.
May
14
2/10,
n/60
13,650
13,650
May
24
n/10
EOM
125/
9,030
8,120
25 Parkay Products
May
23
2/10,
n/30
3,080
3,080
76,363
(201)
Office
Other
Debit
Debit
83
574
2011
May
31 Totals
4,074
280
630
70,722
363
5,278
(119)
(124)
(X)
771
CASH DISBURSEMENTS
578
JOURNAL
Ch.
Date
No.
Payee
Account Debited
PR
Page 2
Merchandis Other
e
Accts.
Cash
Inventory
Accts.
Payable
Credit
Credit
Debit
Debit
2011
May
8 3411 Parkay
Products
15 3412 Payroll
642
641
3,710
6,174
Parkay Products
2,968
621
620
8,470
742
126
6,300
5,320
3,150
Gale, Inc.
8,624
176
8,800
Chandler Corp.
13,37
7
273
13,650
Utilities Expense
690
1,283
1,283
C. Barry, Withdrawal
302
7,000
7,000
30 3417 Payroll
621
620
31
Totals
5,320
3,150
8,470
57,10
8
575
28,933
(119)
(X)
28,750
579
(101)
(201)
580
GENERAL JOURNAL
Account Titles and Explanations
PR
Debit
175
798
12
854
Page 3
Credit
175
798
854
Adjusting entries:
May 31
637
128
553
31
651
125
669
31
650
124
289
31
613
166
567
31
612
164
329
31
502
119
4,577
553
669
289
567
329
4,577
580
581
Page 4
2011
May 31
Sales ................................................................
Income Summary ................................
413
901
156,422
31
901
414
415
502
612
613
620
621
637
641
642
650
651
690
123,294
31
901
301
33,128
31
301
302
7,000
156,422
350
175
98,429
329
567
6,300
10,640
553
742
2,968
289
669
1,283
33,128
7,000
581
582
Cash
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
50,247
May
31
R2
31
CD2
142,772
193,019
57,108
Accounts Receivable
Explanation
Date
135,911
Debit
Credit
Balance
2011
Apr.
May
30 Balance
4,725
G3
31
S2
31
CR2
Merchandise Inventory
Explanation
Date
175
31,150
4,550
35,700
17,500
18,200
PR
Debit
Credit
Balance
2011
Apr.
May
30 Balance
220,080
G3
798
219,282
31
S2
18,690
200,592
31
P2
31
CR2
75,162
196,152
31
CD2
575
195,577
70,722
271,314
582
583
31
G3
4,577
Office Supplies
Explanation
Date
191,000
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
430
May
31
P2
31
G3
363
793
289
Store Supplies
Date
Explanation
504
PR
Debit
Credit
Balance
2011
Apr.
May
30 Balance
2,447
P2
CR2
24
P2
31
G3
574
3,021
350
630
2,671
3,301
669
2,632
Date
Explanation
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
May
31
Date
3,318
G3
Office Equipment
Explanation
553
2,765
PR
Debit
Credit
Balance
583
584
2011
Apr.
30 Balance
22,470
May
10
P2
12
G3
Date
4,074
26,544
854
25,690
Debit
Credit
Balance
2011
Apr.
30 Balance
May
31
9,898
G3
Store Equipment
Explanation
Date
329
10,227
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
38,920
Date
PR
Credit
Balance
2011
Apr.
30 Balance
May
31
17,556
G3
567
Accounts Payable
Explanation
Date
18,123
PR
Debit
Credit
Balance
2011
Apr.
May
30 Balance
3
7,098
G3
798
6,300
584
585
12
G3
31
P2
31
CD2
854
5,446
76,363
28,750
81,809
53,059
585
586
Date
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
308,085
May
31
G4
31
G4
Date
33,128
7,000
341,213
334,213
PR
Debit
Credit
Balance
2011
May
29
CD2
31
G4
7,000
7,000
7,000
Sales
Explanation
Date
PR
Debit
Credit
Balance
2011
May
31
S2
31
CR2
31
G4
156,422
PR
Debit
Sales Discounts
Explanation
Date
31,150
31,150
125,272
156,422
0
Credit
Balance
2011
May
Date
31
CR2
31
G4
350
350
350
PR
Debit
Credit
Balance
586
587
2011
May
G3
31
G4
Date
175
175
175
PR
Debit
Credit
Balance
2011
May
31
S2
18,690
18,690
31
CR2
75,162
93,852
31
G3
4,577
98,429
31
G4
98,429
587
588
Date
Debit
Credit
Balance
2011
May
31
G3
31
G4
329
329
329
Date
Explanation
PR
0
Acct. No. 613
Debit
Credit
Balance
2011
May
31
G3
31
G4
Date
567
567
567
PR
Debit
Credit
Balance
2011
May
15
CD2
3,150
3,150
30
CD2
3,150
6,300
31
G4
Date
6,300
PR
Debit
Credit
Balance
2011
May
Date
15
CD2
5,320
5,320
30
CD2
5,320
10,640
31
G4
Insurance Expense
Explanation
10,640
PR
Debit
Credit
Balance
588
589
2011
May
31
G3
31
G4
553
553
553
Date
Explanation
PR
Debit
Credit
Balance
2011
May
CD2
31
742
G4
742
742
Date
Explanation
PR
Debit
CD2
2,968
Credit
Balance
2011
May
1
31
G4
2,968
2,968
Date
Explanation
PR
Debit
31
G3
289
31
G4
Credit
Balance
2011
May
289
289
Date
PR
Debit
Credit
Balance
2011
May
31
G3
31
G4
669
669
669
589
590
Utilities Expense
Explanation
Date
PR
Debit
Credit
Balance
2011
May
26
CD2
31
G4
1,283
1,283
1,283
Income Summary
Explanation
Date
PR
Debit
Credit
Balance
2011
May
31
G4
156,422
156,422
31
G4
123,294
33,128
31
G4
33,128
Deaver Corp.
Explanation
Date
PR
Debit
S2
14,210
PR
Debit
Credit
Balance
2011
May
26
14,210
Essex Company
Explanation
Date
Credit
Balance
2011
May
S2
11
CR2
16
S2
6,100
6,100
6,100
3,990
0
3,990
590
591
591
592
Date
PR
Debit
Credit
Balance
2011
Apr.
28
S1
May
G3
CR2
4,725
4,725
175
4,550
4,550
Oscar Services
Explanation
Date
PR
Debit
Credit
Balance
2011
May
22
S2
30
CR2
6,850
6,850
6,850
Chandler Corp.
Date
Explanation
PR
Debit
Credit
Balance
2011
May
17
P2
13,650
23
CD2
13,650
PR
Debit
13,650
0
Gale, Inc.
Date
Explanation
Credit
Balance
2011
May
11
P2
8,800
8,800
592
593
19
CD2
8,800
Parkay Products
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
29
P2
May
G3
CD2
25
7,098
7,098
798
6,300
6,300
P2
3,080
3,080
Date
Explanation
PR
Debit
Credit
Balance
2011
May
P2
37,729
37,729
10
P2
4,074
41,803
12
G3
24
P2
854
40,949
9,030
49,979
593
594
Income
Statement of
Statement
Owners Equity
135,91
1
18,200
(f)
4,577
191,00
0
793
(c)
289
504
3,301
(b)
669
2,632
3,318
(a)
553
2,765
Office equipment
25,690
25,690
9,898
(e)
329
10,227
38,920
17,556
53,059
53,059
308,08
5
308,08
5
(d)
567
18,123
594
595
7,000
Sales .............................................
7,000
156,42
2
156,42
2
Sales discounts.........................
350
350
175
175
(f)
4,577
(e)
(d)
98,429
329
329
567
567
6,300
6,300
10,640
(a)
553
553
742
742
2,968
2,968
(c)
(b)
289
669
1,283
289
669
1,283
6,984 123,29 156,42 422,62 389,49
4
2
2
4
33,12
8
33,128
595
596
ALPINE COMPANY
Income Statement
For Month Ended May 31, 2011
Revenue:
Sales ...................................................................
Less: Sales discounts .................................
Sales returns and allowances ...........
Net sales ............................................................
Cost of goods sold...................................................
Gross profit on sales ..............................................
Operating expenses:
Selling expenses:
Sales salaries expense ................................
Rent expense, selling space .......................
Store supplies expense ...............................
Amortization expense, store equipment .....
Total selling expenses .................................
General and administrative expenses:
Office salaries expense ................................
Utilities expense ...........................................
Rent expense, office space .........................
Insurance expense .......................................
Amortization expense, office equipment ....
Office supplies expense ..............................
Total general and administrative expenses
Total operating expenses ..................................
Net income ...............................................................
$10,640
2,968
669
567
$6,300
1,283
742
553
329
289
350
175
$156,422
525
$155,897
98,429
$ 57,468
$ 14,844
9,496
24,340
$ 33,128
596
597
$308,085
33,128
Total ...........................................................
$341,213
Less: Withdrawals..................................
7,000
$334,213
ALPINE COMPANY
Balance Sheet
May 31, 2011
Assets
Current assets:
Cash .............................................................................
Accounts receivable....................................................
Merchandise inventory ...............................................
Office supplies ............................................................
Store supplies .............................................................
Prepaid insurance ......................................................
Total current assets ...................................................
Property, plant and equipment:
Office equipment....................................................
Less: Accumulated amortization .....................
Store equipment.....................................................
Less: Accumulated amortization .....................
Total property, plant and equipment .........................
Total assets .......................................................................
$135,911
18,200
191,000
504
2,632
2,765
$25,690
10,227
$38,920
18,123
$351,012
$15,463
20,797
36,260
$387,272
Liabilities
Current liabilities:
Accounts payable .......................................................
Owners Equity
$ 53,059
334,213
$387,272
597
$ 10,227
53,059
334,213
$415,622
18,123
ALPINE COMPANY
Schedule of Accounts Receivable
May 31, 2011
$14,210
3,990
$18,200
ALPINE COMPANY
Schedule of Accounts Payable
May 31, 2011
$ 3,080
49,979
598
$53,059
599
Page 2
Invoice
Date
Account Debited
A/R Dr.
Numbe
r
PR
Sales Cr.
2 Essex Company
8785
6,100
16 Essex Company
8786
3,990
22 Oscar Services
8787
6,850
26 Deaver Corp.
8788
14,210
2011
Ma
y
31
31,150
Fundamental Accounting Principles, Twelfth Canadian Edition
(106/41
3)
Accts.
Cash
Disc.
Rec.
Sales
Accts.
PR
Debit
Debit
Credit
Credit
Credit
4,459
91
4,550
Account
Date
Credited
Explanation
2011
May
5 Nabors, Inc.
Sale of Apr. 28
Page 2
Sales
Other
9 Store
Supplies
1 Essex
1 Company
Sale of May 2
5,978
1 Sales
5
59,220
3 Oscar
0 Services
Sale of May 22
6,713
3 Sales
1
66,05
2
3 Totals
1
12
5
350
142,77
2
(101)
350
122
6,100
59,220
137
6,850
66,052
350
17,500
125,27
2
350
(414)
(106)
(413)
(X)
PURCHASES JOURNAL
Page 2
Accounts
Date
of
Date
Account Credited
Invoic
e
Office
Other
Payable
Purchases
Supplie
s
Accounts
Debit
Debit
83
574
Terms
PR
Credit
Debit
May
04
n/10 eom
125/
37,729
37,072
May
10
n/10
eom
163/
4,074
11 Gale, Inc.
May
10
2/10,
n/30
8,800
8,800
17 Chandler Corp.
May
14
2/10,
n/60
13,650
13,650
May
24
n/10
eom
125/
9,030
8,120
25 Parkay Products
May
23
2/10,
n/30
3,080
3,080
76,363
70,722
(201)
(505)
2011
May
31 Totals
4,074
280
630
363
5,278
(X)
(124)
785
No.
Payee
Page 2
Purchas
e
Other
Cash
Discoun
t
Accts.
Payable
Credit
Credit
Debit
Debit
Account Debited
PR
642
641
3,710
6,174
Accts.
2011
May
1 341
0
S&M Mgmt.
Co.
2,968
8 341
1
Parkay
Products
Parkay Products
1 341
5 2
Payroll
621
620
8,470
742
126
6,300
5,320
3,150
1 341
9 3
Gale, Inc.
Gale, Inc.
8,624
176
8,800
2 341
3 4
Chandler
Corp.
Chandler Corp.
13,377
273
13,650
2 341
6 5
Trinity Power
Utilities Expense
690
1,283
1,283
2 341
9 6
Clint Barry
C. Barry, Withdrawal
302
7,000
7,000
3 341
0 7
Payroll
621
5,320
Totals
620
8,470
57,108
(101)
3,150
575
28,933
28,750
(119)
(X)
(201)
GENERAL JOURNAL
Account Titles and Explanations
PR
Debit
175
798
12
854
Page 3
Credit
175
798
854
Adjusting entries:
May 31
637
128
553
31
651
125
669
31
650
124
289
31
613
166
567
31
612
164
329
553
669
289
567
329
605
2011
May 31
Page 4
119
413
506
507
901
191,000
156,422
575
798
31
901
119
414
415
505
612
613
620
621
637
641
642
650
651
690
315,667
31
901
301
33,128
31
301
302
7,000
348,795
220,080
350
175
70,722
329
567
6,300
10,640
553
742
2,968
289
669
1,283
33,128
7,000
606
Cash
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
50,247
May
31
R2
31
CD2
142,772
193,019
57,108
Accounts Receivable
Explanation
Date
135,911
Debit
Credit
Balance
2011
Apr.
May
30 Balance
4,725
G3
31
S2
31
CR2
Merchandise Inventory
Explanation
Date
175
31,150
4,550
35,700
17,500
18,200
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
220,080
May
31
G4
31
G4
220,080
191,000
191,000
Office Supplies
Date
Explanation
PR
Debit
Credit
Balance
607
2011
Apr.
30 Balance
430
May
31
P2
31
G3
363
793
289
Store Supplies
Date
Explanation
504
PR
Debit
Credit
Balance
2011
Apr.
May
30 Balance
2,447
P2
CR2
24
P2
31
G3
574
3,021
350
630
2,671
3,301
669
2,632
608
Date
Explanation
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
May
31
3,318
G3
Office Equipment
Explanation
Date
553
2,765
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
22,470
May
10
P2
12
G3
Date
4,074
26,544
854
25,690
Debit
Credit
Balance
2011
Apr.
30 Balance
May
31
9,898
G3
Store Equipment
Explanation
Date
329
10,227
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
38,920
Date
Explanation
PR
Credit
Balance
2011
609
Apr.
30 Balance
May
31
17,556
G3
567
Accounts Payable
Explanation
Date
18,123
PR
Debit
Credit
Balance
2011
Apr.
May
30 Balance
7,098
G3
798
6,300
12
G3
854
5,446
31
P2
31
CD2
76,363
28,750
81,809
53,059
610
Date
PR
Debit
Credit
Balance
2011
Apr.
30 Balance
308,085
May
31
G4
31
G4
Date
33,128
7,000
341,213
334,213
PR
Debit
Credit
Balance
2011
May
29
CD2
31
G4
Sales
Explanation
Date
7,000
7,000
7,000
Debit
Credit
Balance
2011
May
31
S2
31
CR2
31
G4
156,422
PR
Debit
Sales Discounts
Explanation
Date
31,150
31,150
125,272
156,422
0
Credit
Balance
2011
May
Date
31
CR2
31
G4
350
350
350
PR
Debit
Credit
Balance
611
2011
May
G3
31
G4
Date
Purchases
Explanation
175
175
175
PR
Debit
Credit
Balance
2011
May
31
P2
31
G4
70,722
70,722
70,722
612
Date
PR
Debit
Credit
Balance
2011
May
31
CD2
31
G4
Date
575
575
575
Debit
Credit
Balance
2011
May
CD2
31
G4
Date
798
798
798
Debit
Credit
Balance
2011
May
31
G3
31
G4
329
329
329
Date
Explanation
PR
0
Acct. No. 613
Debit
Credit
Balance
2011
May
31
G3
31
G4
Date
567
567
567
PR
Debit
Credit
Balance
2011
May
15
CD2
3,150
3,150
613
30
CD2
31
G4
Date
3,150
6,300
6,300
PR
Debit
Credit
Balance
2011
May
15
CD2
5,320
5,320
30
CD2
5,320
10,640
31
G4
Insurance Expense
Explanation
Date
10,640
PR
Debit
31
G3
553
31
G4
Credit
Balance
2011
May
553
553
Date
Explanation
PR
Debit
Credit
Balance
2011
May
CD2
31
742
G4
742
742
Date
Explanation
PR
Debit
CD2
2,968
Credit
Balance
2011
May
1
31
G4
2,968
2,968
614
Date
Explanation
PR
Debit
31
G3
289
31
G4
Credit
Balance
2011
May
289
289
Date
PR
Debit
Credit
Balance
2011
May
31
G3
31
G4
Utilities Expense
Explanation
Date
669
669
669
PR
Debit
Credit
Balance
2011
May
26
CD2
31
G4
1,283
1,283
1,283
Income Summary
Explanation
Date
PR
Debit
Credit
Balance
2011
May
31
G4
31
G4
315,667
33,128
31
G4
33,128
348,795
348,795
615
Deaver Corp.
Explanation
Date
PR
Debit
S2
14,210
PR
Debit
Credit
Balance
2011
May
26
14,210
Essex Company
Explanation
Date
Credit
Balance
2011
May
S2
11
CR2
16
S2
6,100
6,100
6,100
3,990
0
3,990
Nabors, Inc.
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
28
S2
May
G3
CR2
4,725
4,725
175
4,550
4,550
Oscar Services
Explanation
Date
PR
Debit
Credit
Balance
2011
May
22
S2
6,850
6,850
616
30
CR2
6,850
617
Chandler Corp.
Date
Explanation
PR
Debit
Credit
Balance
2011
May
17
P2
13,650
23
CD2
13,650
PR
Debit
13,650
0
Gale, Inc.
Date
Explanation
Credit
Balance
2011
May
11
P2
19
CD2
8,800
8,800
8,800
0
Parkay Products
Explanation
Date
PR
Debit
Credit
Balance
2011
Apr.
29
P2
May
G3
CD2
25
7,098
7,098
798
6,300
6,300
P2
3,080
3,080
Date
Explanation
PR
Debit
Credit
Balance
2011
618
May
P2
37,729
37,729
10
P2
4,074
41,803
12
G3
24
P2
854
40,949
9,030
49,979
619
Income
Statement of
Statement
Owners Equity
135,91
1
18,200
Office supplies.............................
793
(c)
289
504
Store supplies..............................
3,301
(b)
669
2,632
3,318
(a)
553
2,765
25,690
9,898
(e)
329
10,227
38,920
17,556
53,059
53,059
308,08
5
308,08
5
7,000
(d)
567
18,123
7,000
620
Sales ................................................
156,42
2
156,42
2
350
350
175
175
70,722
575
575
798
798
(e)
329
329
(d)
567
567
6,300
6,300
10,640
(a)
553
553
742
742
2,968
2,968
(c)
289
289
(b)
669
669
1,283
1,283
Totals ......................................... 546,39 546,39 2,407 2,407 315,66 348,79 422,62 389,49
3
3
7
5
2
4
Net income ...................................
Totals .........................................
33,12
8
33,128
621
ALPINE COMPANY
Income Statement
For Month Ended May 31, 2011
Revenue:
Sales ...................................................................
Less: Sales discounts .................................
Sales returns and allowances ...........
Net sales .............................................................
Cost of goods sold:
Merchandise inventory, April 30........................
Purchases ...........................................................
Less: Purchase discounts ...........................
Purchase returns and allowances ....
Cost of goods purchased ..................................
Goods available for sale ....................................
Merchandise inventory, May 31 .........................
Cost of goods sold .............................................
Gross profit on sales ..............................................
Operating expenses:
Selling expenses:
Sales salaries expense ................................
Rent expense, selling space .......................
Store supplies expense ...............................
Amortization expense, store equipment .....
Total selling expenses .................................
General and administrative expenses:
Office salaries expense ................................
Utilities expense ...........................................
Rent expense, office space .........................
Insurance expense .......................................
Amortization expense, office equipment ....
Office supplies expense ..............................
Total general and administrative expenses
Total operating expenses ..................................
Net income................................................................
$575
798
$70,722
1,373
$10,640
2,968
669
567
$6,300
1,283
742
553
329
289
350
175
$156,422
525
$155,897
220,080
69,349
$289,429
191,000
98,429
$ 57,468
$ 14,844
9,496
24,340
$ 33,128
622
$308,085
33,128
Total ............................................................
$341,213
7,000
$334,213
ALPINE COMPANY
Balance Sheet
May 31, 2011
Assets
Current assets:
Cash..............................................................................
Accounts receivable ....................................................
Merchandise inventory................................................
Office supplies ............................................................
Store supplies .............................................................
Prepaid insurance ......................................................
Total current assets ....................................................
Property, plant and equipment:
Office equipment .........................................................
Less: Accumulated amortization .........................
Store equipment ..........................................................
Less: Accumulated amortization .........................
Total property, plant and equipment .........................
Total assets .....................................................................
$135,911
18,200
191,000
504
2,632
2,765
$25,690
10,227 $ 15,463
$38,920
18,123
20,797
$351,012
36,260
$387,272
Liabilities
Current liabilities:
Accounts payable .................................................
Owners Equity
$ 53,059
334,213
$387,272
623
$ 10,227
53,059
334,213
$415,622
18,123
ALPINE COMPANY
Schedule of Accounts Receivable
May 31, 2011
$14,210
3,990
$18,200
ALPINE COMPANY
Schedule of Accounts Payable
May 31, 2011
$ 3,080
624
49,979
$53,059
625