Professional Documents
Culture Documents
Chapter 7
Accounting Information Systems
QUESTIONS
1.
The five fundamental principles of accounting information systems are: (a) control
principle, (b) relevance principle, (c) compatibility principle, (d) flexibility principle,
and (e) cost-benefit principle.
2.
3.
Source documents contain data about business transactions or events that are put
into the accounting system and processed. Examples of source documents are
invoices from suppliers, checks received from customers, and payroll forms filled
out by employees.
4.
An input device is used to transfer data from source documents to the information
processor(s). Examples of input devices for computer systems include keyboards,
scanners, and bar-code readers.
5.
Data stored "off-line" are not immediately available to the information processor(s),
while "online" data are immediately available.
6.
Output devices provide the means by which information is taken from the
accounting system and made available for use.
7.
Four types of transactions usually recorded in special journals are: (a) sales on
credit, (b) purchases on credit, (c) cash receipts, and (d) cash disbursements.
8.
The (a) initial and (b) page number of the journal from which the amount is posted is
entered in the Posting Reference column of the ledger account.
9.
The double posting does not cause the trial balance to be out of balance because
only one credit is posted to the general ledgerthe subsidiary ledger posting and its
balances are not part of a trial balance (they give details of general ledger accounts).
10. When copies of the sales invoices are used as a sales journal, each invoice total is
posted to the proper customer account in the subsidiary Accounts Receivable
Ledger, after which the invoices are bound in numerical order. Then at the end of
the period the bound invoice copies are totaled and the total is debited to Accounts
Receivable and credited to Sales. This method is called direct posting of sales
invoices.
7-1
11. Both kinds of credits must 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 (the Other Accounts column total is not postedinstead, each
amount is individually posted to its general ledger account). Placing these credits in
separate columns makes it possible to post the Accounts Receivable column total to
its controlling account.
12. Immediate recording and posting of credit sales and cash receipts from customers
provides up-to-date information for use in decisions about granting credit to
customers. Also, up-to-date account balances are needed if customers inquire
about their balances.
13. In its note 18, Research In Motion discusses its single reportable segment; its
operations are substantially all related to the research, design, manufacture, and
sales of wireless communications products, services and software.
14. No. Information regarding the net income earned by business segments is not
found on Palms Consolidated Statement of Operations (Income Statement).
However, notes to its financial statements (not reproduced in Appendix A) include
the information regarding Palms single business segment.
15. Apples five reportable segments are: Americas, Europe, Japan, Retail and Other.
16. No. Information regarding any assets owned by Nokias business segments is not
reported on the balance sheet. However, certain information is detailed in the notes
to its financial statements (not reproduced in Appendix A).
QUICK STUDIES
Quick Study 7-1 (15 minutes)
1.
2.
3.
4.
5.
6.
B.
D.
A.
B.
B.
D.
7.
8.
9.
10.
11.
12.
E.
A.
C.
E.
B.
E.
4.
2.
5.
3.
7-2
2.
network
3.
scanner
4.
batch
15,000
15,000
7-3
150
150
Boerman Company
Explanation
PR
Debit
S1
3,000
R1
Date
Jan. 19
28
Lehman Brothers
Explanation
PR
Debit
S1
1,600
R1
Date
Jan. 23
31
Finger Company
Explanation
PR
Debit
S1
2,200
R1
Credit
2,000
Credit
1,600
Credit
1,300
Balance
3,000
1,000
Balance
1,600
0
Balance
2,200
900
b) General Ledger
GENERAL LEDGER
Date
Accounts Receivable
Explanation
PR
Debit
Jan. 31
31
S1
R1
Credit
6,800
4,900
Balance
6,800
1,900
Account
Date
of
Invoice Terms
PR
Accounts
Payable
Cr.
Inventory
Dr.
8,100
n/30
8,100
14 Store Supplies/
Chang Co. ......................
6/14
n/30
240
17 Monder
6/17
Company ...........................
n/30
260
7-4
Office
Supplies
Dr.
Other
Accounts
Dr.
240
260
Purchases Journal
Sales Journal
Purchases Journal
Purchases Journal
Cash Receipts Journal
Cash Disbursements Journal
Cash Disbursements Journal
Date
of
Invoice Terms
Account
PR
Accounts
Payable
Cr.
Purchases
Dr.
8,100
n/30
8,100
14 Store Supplies/
Chang Co. ......................
6/14
n/30
240
17 Monder
6/17
Company ...........................
n/30
260
Office
Supplies
Dr.
240
260
June 8
Eric Horner
6,100
June 2
29
Joe Mack
3,600
7,300
June 14
Hong Jiang
20,500
June 10
20
Tess Wilson
13,400
11,200
7-5
Other
Accounts
Dr.
Sales
June 30
62,100
Part 3
WINSLOW COMPANY
Schedule of Accounts Receivable
June 30
Eric Horner .........................................................
Hong Jiang .........................................................
Joe Mack ............................................................
Tess Wilson .......................................................
Total accounts receivable ................................
$ 6,100
20,500
10,900
24,600
$62,100
Segment
Segment
Operating
Income
Average
Segment Assets
Segment Return
on Assets
$1,882
Europe........................... 4,296
1,352
317.8
483
199.0
Japan.............................
961
352.7%
7-6
Product Sales
iPhone ............................................
$13,033
30.4%
iPod ................................................
8,091
18.9
Desktops ........................................
4,324
10.1
Portables........................................
9,535
22.2
Other ..............................................
7,922
18.5
Total ...............................................
$42,905
100.1%*
7-7
900
900
EXERCISES
Exercise 7-1 (15 minutes)
SALES JOURNAL
Date
Account Debited
Invoice
Number
PR
Accounts
Receivable Dr.
Sales Cr.
1,150
320
550
Cost of Goods
Sold Dr.
Inventory Cr.
800
200
350
7-8
PR
Cost of
Sales Accounts
Other
Goods
Cash Discount Recble. Sales Accounts Sold Dr.
Explanation PR Dr.
Dr.
Cr.
Cr.
Cr.
Inventory Cr.
2,750
4,000
230
882
2,750
4,000
230
18
130
900
Purchases Journal
Sales Journal
Cash Receipts Journal
Cash Receipts Journal
Cash Receipts Journal
Cash Disbursements Journal
Cash Receipts Journal
Cash Disbursements Journal
PR
Cash
Dr.
2,750
4,000
230
882
13 J. Emling, Capital..........Contribution
18 Sales...............................Cash sale
27 J. York............................Invoice, 11/7
7-9
Sales
Discount
Dr.
Accts.
Rec.
Cr.
Sales
Cr.
Other
Accounts
Cr.
2,750
4,000
230
18
900
Date
Jan. 9
19
Credit
7,000
Balance
7,000
1,900
Date
Jan. 18
27
Johnson Brothers
Explanation
PR
Debit
P1
D1
6,600
Credit
6,600
Balance
6,600
0
Date
Jan. 22
31
Padley Company
Explanation
PR
Debit
P1
D1
3,400
Credit
4,200
Balance
4,200
800
Credit
Balance
b) General Journal
GENERAL JOURNAL
Accounts Payable
Explanation
PR
Debit
Date
Jan. 31
31
P1
D1
17,800
15,100
17,800
2,700
Date
Payee
Apr. 9
210
Kidman Corp...................................
Store Supplies..........................................................................
450
17
211
City Bank...........................................
Notes Payable..........................................................................
1,500
1,500
28
212
LeBron...............................................
LeBron........................................................................................
3,430
70
29
213
B. Decker...........................................
Salaries Expense ....................................................................
1,700
1,700
30
214
Scott, Inc............................................
Scott, Inc.....................................................................................
2,750
PR
7-10
Cash
Cr.
Other Accounts
Inventory Accounts Payable
Cr.
Dr.
Dr.
Ck.
No.
450
3,500
2,750
Purchases Journal
Cash Disbursements Journal
Sales Journal
Cash Disbursements Journal
Purchases Journal
Cash Disbursements Journal
Cash Disbursements Journal
Cash Disbursements Journal
Date
Ck.
No.
Payee
Apr. 9
210
Kidman Corp...................................
Store Supplies .........................................................................
450
17
211
City Bank...........................................
Notes Payable..........................................................................
1,500
1,500
28
212
LeBron...............................................
LeBron
29
213
B. Decker...........................................
Salaries Expense....................................................................
1,700
1,700
30
214
Scott Inc.............................................
Scott, Inc. ...................................................................................
2,750
PR
3,430
450
70
3,500
2,750
7-11
May 17
Sara Reed
850 May 20
250
May 10
25
Aaron Reckers
1,940
340
May 6 2,880
Part 2
GENERAL LEDGER
Accounts Receivable
May 31
6,010 May 20
Sales
250
Inventory
May 31 4,500
May 31
6,010
May 20
Part 3
CLEAR VIEW
Schedule of Accounts Receivable
May 31
Anna Page ........................................
$ 600
Sara Reed .........................................
2,280
Aaron Reckers .................................
2,880
Total accounts receivable ..............
$ 5,760
7-12
$ 6,010
(250)
$ 5,760
250
Segment
Segment Income
(in $ mil.)
2011
2010
Specialty
Skiing Group ..............$ 62
Segment Assets
(in $ mil.)
2011
2010
Segment Return
on Assets
2011
$ 58
$ 581
$440
12.1%
53
42
18.9%
19
155
136
15.1%
37
24
36.1%
87
826
642
36
305
274
11.1%
General Merchandise
South America ........... 32
United States .............
52
35
16.1%
Europe ........................
14
12
38.5%
Subtotal ...................... 44
47
371
321
Total ..............................$148
$134
$1,197
$963
7-13
PROBLEM SET A
Problem 7-1A (70 minutes)
Parts 1, 2 and 3
Date
Apr. 3
5
11
13
27
27
30
Date
Apr. 13
14
16
18
20
23
30
30
SALES JOURNAL
Invoice
Accounts Receivable Dr.
Account Debited
Number
PR
Sales Cr.
Amy Nilson.......................................................
762
9,500
Amy Nilson.......................................................
765
5,700
33,370
Totals.................................................................
(106/413)
CASH RECEIPTS JOURNAL
Sales
Cash
Discount
Account Credited Explanation
PR
Dr.
Dr.
Paul Kohr..........................................................
Sale of 4/5
7,840
160
Sales..................................................................
Cash Sales
50,840
L.T. Notes Payable............................................
Note to bank
251
50,000
Amy Nilson.......................................................
Sale of 4/11
9,310
190
Sales..................................................................
Cash sales
70,975
___
Totals ................................................................ 195,923
492
(101)
(415)
7-14
Accounts
Receivable
Cr.
Page 3
Cost of Goods Sold Dr.
Inventory Cr.
2,000
6,500
7,000
2,600
2,420
3,305
23,825
(502/119)
Sales
Cr.
Other
Accts.
Cr.
Page 3
Cost of Goods
Sold Dr.
Inventory Cr.
3,000
8,000
50,840
33,880
50,000
9,500
4,100
_____
24,600
(106)
70,975
121,815
(413)
_____
50,000
()
55,900
89,780
(502/119)
Date
Mar. 31
Apr. 30
30
Date
Mar. 31
Apr. 18
Date
Mar. 31
Date
Apr. 30
30
195,923
Accounts Receivable
Explanation
PR
Debit
S3
33,370
R3
Explanation
PR
R3
Explanation
Inventory
PR
Debit
Debit
S3
R3
Long-Term Notes Payable
Explanation
PR
Debit
R3
Explanation
B. Wise, Capital
PR
Debit
Sales
PR
S3
R3
Explanation
Debit
Date
Apr. 30
Sales Discounts
Explanation
PR
Debit
R3
492
Date
Apr. 30
30
7-15
Date
Apr. 5
14
27
Date
Apr. 3
13
13
23
Brooke Sledd
PR
Debit
S3
3,000
R3
S3
4,100
R3
Date
Apr. 11
20
27
Explanation
Explanation
Amy Nilson
PR
Debit
S3
9,500
R3
S3
5,700
Credit
8,000
Credit
3,000
4,100
Credit
9,500
Balance
8,000
0
3,070
Balance
3,000
0
4,100
0
Balance
9,500
0
5,700
Part 4
WISE COMPANY
Trial Balance
April 30
Cash ......................................................................
Accounts receivable ............................................
Inventory ...............................................................
Long-term notes payable ....................................
B. Wise, Capital ....................................................
Sales......................................................................
Sales discounts....................................................
Cost of goods sold ..............................................
Totals ....................................................................
7-16
Debit
$280,923
8,770
11,395
Credit
$160,000
100,000
155,185
492
113,605
$415,185
_______
$415,185
$3,070
5,700
$8,770
Part 5
Analysis component
To find the error(s), first re-add the account balances on the schedule of
accounts receivable to confirm that the addition is correct. Then, trace the
balances listed on the schedule of accounts receivable back to the
subsidiary accounts to confirm that they are listed correctly on the
schedule. Next, recalculate the balance of each subsidiary account to
confirm that the additions and subtractions are correct. Next, trace the
postings from each subsidiary account and from the controlling account
back to the appropriate journals. Since the sales and cash receipts
journals were footed and crossfooted before posting, the previous steps
should disclose the error.
7-17
Date
SALES JOURNAL
Invoice
Number PR
Account Debited
Page 3
Accounts Receivable Dr.
Sales Cr.
3,000
8,000
11 Amy Nilson.....................................
762
13 Brooke Sledd .................................
763
9,500
4,100
3,070
30 Total ....................................................
5,700
33,370
(106/413)
Explanation
PR
Cash
Dr.
Page 3
Sales
Accounts
Discounts Receivable
Dr.
Cr.
Sales
Cr.
Other
Accounts
Cr.
16 Sales.......................................................
Cash Sales ..............................................................................
50,840
50,840
18 L.T. Notes
Note to
251 50,000
Payable ...................................................
bank ........................................................................................
50,000
30 Sales.......................................................
Cash sales ...............................................................................
70,975
___
_____ 70,975
30 Totals ............................................................
195,923
(101)
7-18
492
24,600
121,815
_____
50,000
(415)
(106)
(413)
()
Date
Mar. 31
Date
Mar. 31
Apr. 18
Date
Mar. 31
Date
Apr. 30
30
Date
Apr. 30
195,923
Accounts Receivable
Explanation
PR
Debit
S3
33,370
R3
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit
B. Wise, Capital
PR
Debit
Sales
PR
S3
R3
Explanation
Debit
Sales Discounts
Explanation
PR
Debit
R3
492
7-19
Explanation
Explanation
Explanation
Paul Kohr
PR
Debit
S3
8,000
R3
S3
3,070
Brooke Sledd
PR
Debit
S3
3,000
R3
S3
4,100
R3
Amy Nilson
PR
Debit
S3
9,500
R3
S3
5,700
Credit
8,000
Credit
3,000
4,100
Credit
9,500
Balance
8,000
0
3,070
Balance
3,000
0
4,100
0
Balance
9,500
0
5,700
Part 4
WISE COMPANY
Trial Balance
April 30
Cash .......................................................................
Debit
$280,923
8,770
Inventory ................................................................
125,000
Credit
$160,000
100,000
155,185
Sales.......................................................................
Sales discounts.....................................................
492
_______
Totals .....................................................................
$415,185
$415,185
7-20
$3,070
5,700
$8,770
Part 5
Analysis component
To find the error(s), first re-add the account balances on the schedule of
accounts receivable to confirm that the addition is correct. Then, trace the
balances listed on the schedule of accounts receivable back to the
subsidiary accounts to confirm that they are listed correctly on the
schedule. Next, recalculate the balance of each subsidiary account to
confirm that the additions and subtractions are correct. Next, trace the
postings from each subsidiary account and from the controlling account
back to the appropriate journals. Since the sales and cash receipts
journals were footed and crossfooted before posting, the previous steps
should disclose the error.
7-21
Date
Account
Apr. 2
3
9
17
20
25
30
Negi Company.................................................
4/2
Office Supplies/Madison Inc............................
4/2
Store Equip./Neds Supply ............................
4/9
Price Company................................................
4/17
Store Supplies/Neds Supply ........................
4/19
Negi Company..................................... 4/24
Totals ....................................................
Terms
2/10, n/60
n/10, EOM
n/10, EOM
2/10, n/30
n/10, EOM
2/10, n/60
PR
165/
125/
Accounts
Payable
Cr.
13,300
1,380
11,125
12,750
730
10,375
49,660
(201)
Date
Apr. 4
12
16
26
30
30
Ck.
No.
587
588
589
590
591
Page 3
Office
Other
Inventory Supplies Accounts
Dr.
Dr.
Dr.
13,300
1,380
11,125
12,750
730
10,375
____
_____
36,425
1,380
11,855
(119)
(124)
()
Page 3
Other
Accounts
Cash
Inventory Accounts Payable
Payee
Account Debited
PR
Cr.
Cr.
Dr.
Dr.
U.S. View .......................................................
Advertising Expense .......................................................................
655
999
999
Negi Company ................................................
Negi Company ..................................................................................
13,034
266
13,300
Payroll ............................................................
Sales Salaries Expense...................................................................
621
9,750
9,750
Price Company.............................................
Price Company .................................................................................
12,103
247
12,350
Payroll ............................................................
Sales Salaries Expense...................................................................
621
9,750
___
9,750
_____
Totals .............................................................
513
20,499
25,650
45,636
(101)
(119)
()
(201)
7-22
Page 3
85
85
400
400
Parts 2 and 3
GENERAL LEDGER
Date
Explanation
Mar. 31 Balance
Apr. 30
Date
Mar. 31
Apr. 23
30
30
Explanation
Cash
PR
Debit
D3
Inventory
PR
G3
P3
D3
Debit
36,425
Date
Apr. 3
6
Office Supplies
Explanation
PR
Debit
P3
1,380
G3
Date
Apr. 20
Store Supplies
PR
Debit
P3
730
Store Equipment
Explanation
PR
Debit
P3
11,125
Date
Apr. 9
Explanation
7-23
Accounts Payable
Explanation
PR
Debit
G3
85
G3
400
P3
D3
25,650
B. Wise, Capital
Explanation
PR
Debit
Date
Apr. 16
30
Date
Apr. 4
Advertising Expense
Explanation
PR
Debit
D3
999
Date
Mar. 31
Date
Apr. 2
12
25
Explanation
Neds Supply
PR
Debit
P3
P3
Negi Company
Explanation
PR
Debit
P3
D3
13,300
P3
7-24
Credit
11,125
730
Balance
11,125
11,855
Credit
13,300
Balance
13,300
0
10,375
10,375
Date
Apr. 3
6
Explanation
Explanation
Price Company
PR
Debit
P3
G3
400
D3
12,350
Madison, Inc.
PR
Debit
P3
G3
85
Credit
12,750
Balance
12,750
12,350
0
Credit
1,380
Balance
1,380
1,295
Part 4
WISE COMPANY
Trial Balance
April 30
Debit
$ 39,364
160,512
1,295
730
11,125
Cash.............................................................
Inventory .....................................................
Office supplies............................................
Store supplies.............................................
Store equipment .........................................
Accounts payable.......................................
Long-term notes payable ..........................
B. Wise, Capital ..........................................
19,500
Sales salaries expense ..............................
999
Advertising expense ..................................
Totals ........................................................... $233,525
WISE COMPANY
Schedule of Accounts Payable
April 30
Neds Supply................................................
Negi Company .............................................
Madison Inc................................................. .
Total accounts payable ..............................
7-25
Credit
$ 23,525
110,000
100,000
$233,525
$11,855
10,375
1,295
$23,525
Date
Account
Apr. 2
3
9
17
20
25
30
Negi Company.................................................
4/2
Office Supplies/Madison Inc............................
4/2
Store Equip./Neds Supply ............................
4/9
Price Company................................................
4/17
Store Supplies/Neds Supply ........................
4/19
Negi Company..................................... 4/24
Totals ....................................................
Terms
2/10, n/60
n/10, EOM
n/10, EOM
2/10, n/30
n/10, EOM
2/10, n/60
Page 3
Accounts
Office
Other
Payable Purchases Supplies Accounts
PR
Cr.
Dr.
Dr.
Dr.
13,300
13,300
1,380
1,380
165/
11,125
11,125
12,750
12,750
125/
730
730
10,375
10,375
____
_____
49,660
36,425
1,380
11,855
(201)
Date
Apr. 4
12
16
26
30
30
Ck.
No.
587
588
589
590
591
(505)
(124)
()
Page 3
Purchases
Other
Accounts
Cash
Discount Accounts Payable
Payee
Account Debited
PR
Cr.
Cr.
Dr.
Dr.
U.S. View .......................................................
Advertising Expense .......................................................................
655
999
999
Negi Company ................................................
Negi Company ..................................................................................
13,034
266
13,300
Payroll ............................................................
Sales Salaries Expense...................................................................
621
9,750
9,750
Price Company.............................................
Price Company .................................................................................
12,103
247
12,350
Payroll ............................................................
Sales Salaries Expense...................................................................
621
9,750
___
9,750
_____
Totals .............................................................
513
20,499
25,650
45,636
(101)
(507)
()
(201)
7-26
Page 3
85
85
400
400
Parts 2 and 3
GENERAL LEDGER
Date
Explanation
Mar. 31 Balance
Apr. 30
Date
Mar. 31
Explanation
Cash
PR
Debit
D3
Inventory
PR
Debit
Date
Apr. 3
6
Office Supplies
Explanation
PR
Debit
P3
1,380
G3
Date
Apr. 20
Store Supplies
PR
Debit
P3
730
Store Equipment
Explanation
PR
Debit
P3
11,125
Date
Apr. 9
Explanation
7-27
Accounts Payable
Explanation
PR
Debit
G3
85
G3
400
P3
D3
25,650
Date
Mar. 31
B. Wise, Capital
Explanation
PR
Debit
Purchases
PR
Debit
P3
36,425
Date
Apr. 23
Date
Apr. 30
Purchases Discounts
Explanation
PR
Debit
D3
Date
Apr. 16
30
Date
Apr. 4
Advertising Expense
Explanation
PR
Debit
D3
999
Date
Apr. 30
Explanation
7-28
Explanation
Neds Supply
PR
Debit
P3
P3
Date
Apr. 2
12
25
Negi Company
Explanation
PR
Debit
P3
D3
13,300
P3
Date
Apr. 17
23
26
Price Company
Explanation
PR
Debit
P3
G3
400
D3
12,350
Date
Apr. 3
6
Madison, Inc.
Explanation
PR
Debit
P3
G3
85
7-29
Credit
11,125
730
Balance
11,125
11,855
Credit
13,300
Balance
13,300
0
10,375
10,375
Credit
12,750
Balance
12,750
12,350
0
Credit
1,380
Balance
1,380
1,295
Credit
1,295
Store supplies................................................
730
$ 23,525
110,000
100,000
400
513
999
_______
Totals ..............................................................$234,438
$234,438
WISE COMPANY
Schedule of Accounts Payable
April 30
Neds Supply................................................
Negi Company .............................................
Madison, Inc................................................ .
Total accounts payable ..............................
7-30
$11,855
10,375
1,295
$23,525
Date
Mar. 2
3
10
27
28
31
Account Debited
SALES JOURNAL
Invoice
Accounts Receivable Dr.
Number
PR
Sales Cr.
Page 2
Cost of Goods Sold Dr.
Inventory Cr.
15,800
9,200
4,600
13,910
5,315
48,825
7,900
4,600
2,300
6,220
2,280
23,300
(106/413)
(502/119)
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
2/15, n/30
3 Stacy Company...............................................
3/3 n/10, EOM
163/
2/10, n/30
125/
7-31
Accounts
Payable
Cr.
Inventory
Dr.
Office
Supplies
Dr.
Page 2
Other
Accounts
Dr.
42,600
1,120
20,850
31,625
1,670
97,865
42,600
31,625
_____
74,225
____
1,120
1,670
22,520
(201)
(119)
(124)
()
1,120
20,850
Explanation
PR
Cash
Dr.
Sales
Discount
Dr.
Page 2
Accounts
Receivable
Cr.
Other
Accts.
Cr.
Sales
Cr.
Cost of Goods
Sold Dr.
Inventory Cr.
72,000
15 Sales..................................................................
Cash sales ..............................................................................................
164,680
164,680
138,000
20 Taylor Few........................................................
Invoice, 3/10............................................................................................
4,508
92
4,600
31 Sales..................................................................
Cash sales ..............................................................................................
174,590
___
_____
174,590
31 Totals ................................................................
440,278
592
29,600
339,270
_____
72,000
(101)
(415)
(106)
(413)
()
Ck.
No. Payee
Account Debited
PR
Cash
Cr.
143,000
281,000
(502/119)
Page 2
Inventory
Cr.
Other
Accounts
Dr.
Accounts
Payable
Dr.
42,600
23 418
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
15,900
15,900
The JW Co........................................................
The JW Company .................................................................................
28,616
584
29,200
31 419
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
15,900
____
15,900
______
31
Totals ................................................................
Mar.13 416
15 417
7-32
102,164
1,436
31,800
71,800
(101)
(119)
()
(201)
Page 2
2,425
630
630
GENERAL LEDGER
Date
Mar. 31
31
Date
Mar. 31
31
Debit
440,278
Accounts Receivable
Explanation
PR
Debit
S2
48,825
R2
Explanation
Date
Explanation
Mar. 1 Beg. bal.
17
31
31
31
31
Cash
PR
R2
D2
Inventory
PR
G2
P2
D2
S2
R2
Debit
74,225
Date
Mar. 31
Office Supplies
Explanation
PR
Debit
P2
1,120
Date
Mar. 16
Store Supplies
Explanation
PR
Debit
P2
1,670
7-33
Office Equipment
Explanation
PR
Debit
P2
20,850
G2
Date
Mar. 17
19
31
31
Accounts Payable
Explanation
PR
Debit
G2
2,425
G2
630
P2
D2
71,800
Date
Mar. 6
M. Bishop, Capital
Date
Explanation
PR
Debit
Mar. 1 Beg. Bal.
Date
Mar. 31
31
Explanation
Sales
PR
S2
R2
Debit
Date
Mar. 31
Sales Discounts
Explanation
PR
Debit
R2
592
Date
Mar. 31
Mar. 31
Date
Mar. 15
31
7-34
Date
Mar. 2
12
Date
Mar. 3
13
28
Explanation
Explanation
Explanation
Taylor Few
PR
Debit
S2
4,600
R2
S2
13,910
Min Cho
PR
S2
R2
Debit
15,800
Lance Snow
PR
Debit
S2
9,200
R2
S2
5,315
Credit
4,600
Credit
15,800
Credit
9,200
Balance
4,600
0
13,910
Balance
15,800
0
Balance
9,200
0
5,315
Date
Mar. 1
13
Date
Mar. 9
19
Date
Mar. 14
17
23
Explanation
Explanation
Explanation
Explanation
Stacy Company
PR
Debit
P2
P2
Credit
1,120
1,670
Balance
1,120
2,790
Soy Industries
PR
Debit
P2
D2
42,600
Credit
42,600
Balance
42,600
0
Tells Supply
PR
Debit
P2
G2
630
Credit
20,850
Balance
20,850
20,220
Credit
31,625
Balance
31,625
29,200
0
JW Company
PR
Debit
P2
G2
2,425
D2
29,200
7-35
Credit
$ 23,010
72,000
300,000
388,095
_______
$783,105
BISHOP COMPANY
Schedule of Accounts Receivable
March 31
Taylor Few ..............................................................
$13,910
Lance Snow ............................................................
5,315
Total accounts receivable .....................................
$19,225
BISHOP COMPANY
Schedule of Accounts Payable
March 31
Stacy Company ......................................................
$ 2,790
Tells Supply ............................................................
20,220
Total accounts payable .........................................
$23,010
7-36
Date
Mar. 2
3
10
27
28
31
Account Debited
SALES JOURNAL
Invoice
Number
PR
Page 2
Accounts Receivable Dr.
Sales Cr.
15,800
9,200
4,600
13,910
5,315
48,825
(106/413)
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
2/15, n/30
3 Stacy Company...............................................
3/3 n/10, EOM
163/
2/10, n/30
125/
7-37
Accounts
Payable
Cr.
Office
Purchases Supplies
Dr.
Dr.
Page 2
Other
Accounts
Dr.
42,600
1,120
20,850
31,625
1,670
97,865
42,600
31,625
_____
74,225
____
1,120
1,670
22,520
(201)
(505)
(124)
()
1,120
20,850
Account
Credited
Explanation
PR
Page 2
Sales
Discount
Dr.
Cash
Dr.
Accounts
Receivable
Cr.
Sales
Cr.
Other
Accounts
Cr.
72,000
15 Sales..................................................................
Cash sales ..............................................................................................
164,680
164,680
20 Taylor Few........................................................
Invoice, 3/10............................................................................................
4,508
92
4,600
31 Sales..................................................................
Cash sales ..............................................................................................
174,590
___
_____
31 Totals ................................................................
440,278
592
29,600
174,590
339,270
(101)
(415)
(106)
(413)
Ck.
No. Payee
Mar.13 416
Account Debited
PR
Cash
Cr.
()
Page 2
Purchases
Discounts
Cr.
Other
Accounts
Dr.
Accounts
Payable
Dr.
42,600
15 417
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
15,900
15,900
23 418
The JW Co........................................................
The JW Company .................................................................................
28,616
584
31 419
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
15,900
____
15,900
31
Totals ................................................................
7-38
_____
72,000
102,164
1,436
31,800
29,200
_____
71,800
(101)
(507)
()
(201)
Page 2
2,425
630
630
GENERAL LEDGER
Date
Mar. 31
31
Date
Mar. 31
31
Debit
440,278
Accounts Receivable
Explanation
PR
Debit
S2
48,825
R2
Explanation
Date
Explanation
Mar. 1 Beg. bal.
Cash
PR
R2
D2
Inventory
PR
Debit
Date
Mar. 31
Office Supplies
Explanation
PR
Debit
P2
1,120
Date
Mar. 16
Store Supplies
Explanation
PR
Debit
P2
1,670
Date
Mar. 9
19
Office Equipment
Explanation
PR
Debit
P2
20,850
G2
7-39
Accounts Payable
Explanation
PR
Debit
G2
2,425
G2
630
P2
D2
71,800
Date
Mar. 6
M. Bishop, Capital
Date
Explanation
PR
Debit
Mar. 1 Beg. bal.
Date
Mar. 31
31
Date
Mar. 31
Date
Mar. 31
Explanation
Sales
PR
S2
R2
Debit
Sales Discounts
Explanation
PR
Debit
R2
592
Explanation
Purchases
PR
P2
Debit
74,225
Date
Mar. 17
Date
Mar. 31
Purchases Discounts
Explanation
PR
Debit
D2
Date
Mar. 15
31
7-40
Explanation
Explanation
Taylor Few
PR
S2
R2
S2
Min Cho
PR
S2
R2
Lance Snow
Explanation
PR
S2
R2
S2
Debit
4,600
Credit
4,600
13,910
Debit
15,800
Credit
15,800
Debit
9,200
Credit
9,200
5,315
Balance
4,600
0
13,910
Balance
15,800
0
Balance
9,200
0
5,315
Stacy Company
Explanation
PR
Debit
P2
P2
Explanation
Explanation
Explanation
Credit
1,120
1,670
Balance
1,120
2,790
Soy Industries
PR
Debit
P2
D2
42,600
Credit
42,600
Balance
42,600
0
Tells Supply
PR
Debit
P2
G2
630
Credit
20,850
Balance
20,850
20,220
Credit
31,625
Balance
31,625
29,200
0
JW Company
PR
Debit
P2
G2
2,425
D2
29,200
7-41
Credit
$ 23,010
72,000
300,000
388,095
2,425
1,436
_______
$786,966
BISHOP COMPANY
Schedule of Accounts Receivable
March 31
Taylor Few .............................................................. $13,910
Lance Snow ............................................................
5,315
Total accounts receivable ..................................... $19,225
BISHOP COMPANY
Schedule of Accounts Payable
March 31
Stacy Company ...................................................... $ 2,790
Tells Supply............................................................ 20,220
Total accounts payable ......................................... $23,010
7-42
PROBLEM SET B
Problem 7-1B (70 minutes)
Parts 1 and 2
Date
July 5
6
13
14
29
30
31
SALES JOURNAL
Invoice
Accounts Receivable Dr.
Account Debited
Number
PR
Sales Cr.
Kim Newsom....................................................
918
18,400
Ruth Baker........................................................
919
7,500
Stephanie Meyer..............................................
920
8,350
Kim Newsom....................................................
921
4,100
Ruth Baker........................................................
922
28,090
Stephanie Meyer..............................................
923
15,750
Totals.................................................................
82,190
Page 3
Cost of Goods Sold Dr.
Inventory Cr.
9,700
4,300
5,030
2,800
22,850
9,840
54,520
(106/413)
Date
July 15
15
16
21
23
24
31
31
(502/119)
Sales..................................................................
Cash sales ..............................................................................................
121,370
121,370
Sales..................................................................
Cash sales ..............................................................................................
79,020
___
_____
79,020
Totals ................................................................ 257,973
767
38,350
200,390
(101)
(415)
7-43
(106)
(413)
Other
Accts.
Cr.
Page 3
Cost of Goods
Sold Dr.
Inventory Cr.
66,330
20,000
_____
20,000
51,855
118,185
()
(502/119)
Date
June 30
Date
July 31
31
257,973
Accounts Receivable
Explanation
PR
Debit
S3
82,190
R3
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit
S3
R3
Long-Term Notes Payable
Explanation
PR
Debit
R3
R. Alcorn, Capital
Explanation
PR
Debit
Explanation
Sales
PR
S3
R3
Debit
Date
July 31
Sales Discounts
Explanation
PR
Debit
R3
767
Date
July 31
31
7-44
Stephanie Meyer
Explanation
PR
Debit
S3
8,350
R3
S3
15,750
Date
July 5
14
15
24
Kim Newsom
Explanation
PR
Debit
S3
18,400
S3
4,100
R3
R3
Date
July 6
16
29
Explanation
Ruth Baker
PR
S3
R3
S3
Debit
7,500
Credit
8,350
Credit
18,400
4,100
Credit
7,500
28,090
Part 4
ALCORN INDUSTRIES
Trial Balance
July 31
Debit
$357,973
Cash ......................................................................
43,840
Accounts receivable ............................................
27,295
Inventory ...............................................................
Long-term notes payable ....................................
R. Alcorn, Capital .................................................
Sales......................................................................
Sales discounts.................................................... 767
172,705
Cost of goods sold ..............................................
$602,580
Totals ....................................................................
7-45
Credit
$220,000
100,000
282,580
_______
$602,580
Balance
8,350
0
15,750
Balance
18,400
22,500
4,100
0
Balance
7,500
0
28,090
Part 5
Analysis component
To find the error(s), first re-add the account balances on the schedule of
accounts receivable to confirm that the addition is correct. Then, trace the
balances listed on the schedule of accounts receivable back to the
subsidiary accounts to confirm that they are listed correctly on the
schedule. Next, recalculate the balance of each subsidiary account to
confirm that the additions and subtractions are correct. Next, trace the
postings from each subsidiary account and from the controlling account
back to the appropriate journals. Since the sales and cash receipts
journals were footed and crossfooted before posting, the previous steps
should disclose the error.
7-46
Date
July 5
6
13
14
29
30
31
SALES JOURNAL
Invoice
Number PR
Account Debited
Page 3
Accounts Receivable Dr.
Sales Cr.
18,400
7,500
8,350
4,100
28,090
15,750
82,190
(106/413)
Explanation
PR
Cash
Dr.
Page 3
Sales
Accounts
Discounts Receivable
Dr.
Cr.
Sales
Cr.
Other
Accounts
Cr.
121,370
15 Sales .................................................................
Cash sales..............................................................................................
121,370
23 Stephanie
Sale of 7/13 .............................................................................................
8,183
167
8,350
Meyer ................................................................
20,000
31 Sales .................................................................
Cash sales..............................................................................................
79,020
___
_____
79,020
31 Totals ................................................................
257,973
767
38,350
200,390
_____
20,000
(101)
(415)
(106)
(413)
()
7-47
Date
June 30
July 31
Date
July 31
31
Date
June 30
Date
June 30
July 21
Date
June 30
Date
July 31
31
Date
July 31
257,973
Accounts Receivable
Explanation
PR
Debit
S3
82,190
R3
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit
Explanation
Sales
PR
S3
R3
Debit
Sales Discounts
Explanation
PR
Debit
R3
767
7-48
Stephanie Meyer
Explanation
PR
Debit
S3
8,350
R3
S3
15,750
Date
July 5
14
15
24
Kim Newsom
Explanation
PR
Debit
S3
18,400
S3
4,100
R3
R3
Date
July 6
16
29
Explanation
Ruth Baker
PR
S3
R3
S3
7-49
Debit
7,500
Credit
8,350
Credit
18,400
4,100
Credit
7,500
28,090
Balance
8,350
0
15,750
Balance
18,400
22,500
4,100
0
Balance
7,500
0
28,090
Part 4
ALCORN INDUSTRIES
Trial Balance
July 31
Debit
Credit
Cash ......................................................................
$357,973
43,840
Accounts receivable ............................................
200,000
Inventory ...............................................................
Long-term notes payable ....................................
R. Alcorn, Capital .................................................
Sales......................................................................
Sales discounts.................................................... 767
Totals ....................................................................
$602,580
7-50
$220,000
100,000
282,580
_______
$602,580
Part 5
Analysis component
To find the error(s), first re-add the account balances on the schedule of
accounts receivable to confirm that the addition is correct. Then, trace the
balances listed on the schedule of accounts receivable back to the
subsidiary accounts to confirm that they are listed correctly on the
schedule. Next, recalculate the balance of each subsidiary account to
confirm that the additions and subtractions are correct. Next, trace the
postings from each subsidiary account and from the controlling account
back to the appropriate journals. Since the sales and cash receipts
journals were footed and crossfooted before posting, the previous steps
should disclose the error.
7-51
Date
July 1
7
9
17
20
26
31
Accounts
Payable
Cr.
6,300
1,050
37,710
8,200
750
9,770
63,780
Date of
Account
Invoice Terms
PR
Page 3
Office
Other
Inventory Supplies Accounts
Dr.
Dr.
Dr.
6,300
1,050
37,710
8,200
750
______
9,770
___
24,270
750
38,760
(201)
(119)
Date
Ck.
No. Payee
Account Debited
PR
Cash
Cr.
Inventory
Cr.
(124)
Page 3
Other
Accounts
Accounts Payable
Dr.
Dr.
July 3 300
10 301
6,174
126
15 302
Payroll...............................................................
Sales Salaries Expense........................................................................
621 30,620
30,620
27 303
5,684
116
31 304
Payroll...............................................................
Sales Salaries Expense........................................................................
621 30,620
___
30,620
31
Totals ................................................................
7-52
()
6,300
73,673
242
61,815
5,800
_____
12,100
(101)
(119)
()
(201)
Page 3
201/
125
150
201/
119
2,400
150
2,400
Parts 2 and 3
GENERAL LEDGER
Date
Explanation
June 30 Balance
July 31
Date
Explanation
June 30 Balance
July 24
31
31
Cash
PR
Debit
D3
Inventory
PR
G3
P3
D3
Debit
24,270
Date
July 31
Office Supplies
Explanation
PR
Debit
P3
750
Date
July 7
8
Store Supplies
Explanation
PR
Debit
P3
1,050
G3
Date
July 9
Store Equipment
Explanation
PR
Debit
P3
37,710
7-53
Accounts Payable
Explanation
PR
Debit
G3
150
G3
2,400
P3
D3
12,100
R. Alcorn, Capital
Explanation
PR
Debit
Date
July 15
31
Date
July 3
Advertising Expense
Explanation
PR
Debit
D3
575
Date
June 30
Date
July 1
10
26
Date
July 7
8
Tahoe Company
Explanation
PR
Debit
P3
D3
6,300
P3
Explanation
Pryor, Inc.
PR
P3
G3
7-54
Debit
150
Credit
6,300
9,770
Credit
1,050
Balance
6,300
0
9,770
Balance
1,050
900
Caros Supply
Explanation
PR
Debit
P3
P3
Date
July 17
24
27
Dixon Company
Explanation
PR
Debit
P3
G3
2,400
D3
5,800
Credit
Balance
37,710
37,710
750
38,460
Credit
8,200
Part 4
ALCORN INDUSTRIES
Trial Balance
July 31
Debit
$ 26,327
Cash ......................................................................
221,628
Inventory ...............................................................
Office supplies ..................................................... 750
Store supplies ...................................................... 900
37,710
Store equipment...................................................
Accounts payable ................................................
Long-term notes payable ....................................
R. Alcorn, Capital .................................................
61,240
Sales salaries expense ........................................
Advertising expense ............................................ 575
$349,130
Totals ....................................................................
ALCORN INDUSTRIES
Schedule of Accounts Payable
July 31
Pryor, Inc. ....................................................
Tahoe Company ..........................................
Caros Supply ..............................................
Total accounts payable ..............................
7-55
900
9,770
38,460
$49,130
Credit
$ 49,130
200,000
100,000
_______
$349,130
Balance
8,200
5,800
0
Date
July 1
7
9
17
20
26
31
Accounts
Payable
Cr.
6,300
1,050
37,710
8,200
750
9,770
63,780
Date of
Account
Invoice Terms
PR
Page 3
Office
Other
Purchases Supplies Accounts
Dr.
Dr.
Dr.
6,300
1,050
37,710
8,200
750
9,770
___
_____
24,270
750
38,760
(201)
Date
Ck.
No. Payee
Account Debited
PR
Cash
Cr.
(505)
(124)
Page 3
Purchases
Other
Accounts
Discounts Accounts Payable
Cr.
Dr.
Dr.
10 301
6,174
126
15 302
Payroll...............................................................
Sales Salaries Expense........................................................................
621 30,620
30,620
27 303
5,684
116
31 304
Payroll...............................................................
Sales Salaries Expense........................................................................
621 30,620
___
30,620
31
Totals ................................................................
July 3 300
7-56
()
6,300
73,673
242
61,815
5,800
_____
12,100
(101)
(507)
()
(201)
Page 3
150
150
2,400
2,400
Parts 2 and 3
GENERAL LEDGER
Date
Explanation
June 30 Balance
July 31
Date
Explanation
June 30 Balance
Cash
PR
Debit
D3
Inventory
PR
Debit
Date
July 31
Office Supplies
Explanation
PR
Debit
P3
750
Date
July 7
8
Store Supplies
Explanation
PR
Debit
P3
1,050
G3
Date
July 9
Store Equipment
Explanation
PR
Debit
P3
37,710
7-57
Date
July 8
24
31
31
Accounts Payable
Explanation
PR
Debit
G3
150
G3
2,400
P3
D3
12,100
R. Alcorn, Capital
Explanation
PR
Debit
Date
June 30
Date
July 31
Explanation
Purchases
PR
P3
Debit
24,270
Date
July 24
Date
July 31
Purchases Discounts
Explanation
PR
Debit
D3
Date
July 15
31
Date
July 3
Advertising Expense
Explanation
PR
Debit
D3
575
7-58
Date
July 1
10
26
Date
July 7
8
Tahoe Company
Explanation
PR
Debit
P3
D3
6,300
P3
Explanation
Pryor, Inc.
PR
P3
G3
Debit
9,770
Credit
1,050
150
Date
July 9
20
Caros Supply
Explanation
PR
Debit
P3
P3
Date
July 17
24
27
Dixon Company
Explanation
PR
Debit
P3
G3
2,400
D3
5,800
7-59
Credit
6,300
Balance
6,300
0
9,770
Balance
1,050
900
Credit
Balance
37,710
37,710
750
38,460
Credit
8,200
Balance
8,200
5,800
0
Credit
Cash ......................................................................
$ 26,327
200,000
Inventory ...............................................................
Office supplies ..................................................... 750
Store supplies ...................................................... 900
37,710
Store equipment...................................................
Accounts payable ................................................
$ 49,130
200,000
100,000
2,400
242
_______
ALCORN INDUSTRIES
Schedule of Accounts Payable
July 31
Pryor, Inc. ...............................................
Tahoe Company .....................................
900
9,770
38,460
$49,130
7-60
$351,772
Date
Account Debited
SALES JOURNAL
Invoice
Accounts Receivable Dr.
Number PR
Sales Cr.
10
15
22
24
30
Carlos Mane..............................................
440
Tony Timmons .........................................
441
Carlos Mane..............................................
442
Tony Timmons .........................................
443
Totals .........................................................
Page 2
Cost of Goods Sold Dr.
Inventory Cr.
6,350
12,500
4,250
2,595
3,240
28,935
3,710
7,500
1,450
1,060
1,090
14,810
(106/413)
(502/119)
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
2/10, n/30
2/10, n/30
30 Totals ................................................................
Accounts
Payable
Cr.
5,062
11,400
1,020
2,887
559
20,928
(201)
7-61
Inventory
Dr.
Office
Supplies
Dr.
Page 2
Other
Accounts
Dr.
5,062
11,400
1,020
2,887
_____
14,287
559
559
____
6,082
(119)
(124)
()
Account
Credited
Explanation
PR
Cash
Dr.
Sales
Discount
Dr.
Page 2
Accounts
Receivable
Cr.
Other
Accts.
Cr.
Sales
Cr.
Cost of Goods
Sold Dr.
Inventory Cr.
86,250
15 Sales..................................................................
Cash sales..............................................................................................
27,170
27,170
17,000
30 Sales..................................................................
Cash sales..............................................................................................
______
35,703
___
35,703
30 Totals ................................................................ 171,761
462
23,100
62,873
_____
86,250
(101)
(415)
(106)
(413)
()
Ck.
No. Payee
Nov.12 633
Account Debited
PR
Cash
Cr.
(502/119)
Page 2
Inventory
Cr.
Other
Accounts
Dr.
Accounts
Payable
Dr.
11,400
15 634
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
8,435
8,435
19 635
Xu Co. ...............................................................
Xu Company..........................................................................................
2,352
48
30 636
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
8,435
___
8,435
30
Totals ................................................................
7-62
20,400
37,400
30,394
276
16,870
2,400
_____
13,800
(101)
(119)
()
(201)
Page 2
201/
119
487
201/
163
922
487
922
GENERAL LEDGER
Date
Nov. 30
30
Date
Nov. 30
30
Debit
171,761
Accounts Receivable
Explanation
PR
Debit
S2
28,935
R2
Explanation
Date
Explanation
Nov. 1 Beg. bal.
17
30
30
30
30
Date
Nov. 30
Date
Nov. 5
Cash
PR
R2
D2
Inventory
PR
Debit
G2
P2
D2
S2
R2
14,287
Explanation
Office Supplies
PR
Debit
P2
559
Explanation
Store Supplies
PR
Debit
P2
1,020
7-63
Date
Nov. 17
26
30
30
Date
Nov. 2
Explanation
Explanation
Accounts Payable
PR
Debit
G2
487
G2
922
P2
D2
13,800
J. Suppan, Capital
PR
Debit
Sales
PR
Debit
S2
R2
Date
Explanation
Nov. 1 Beg. Bal.
Date
Nov. 30
30
Office Equipment
PR
Debit
P2
5,062
G2
Explanation
Sales Discounts
PR
Debit
R2
462
Date
Nov. 30
30
Date
Nov. 15
30
Date
Nov. 30
Explanation
7-64
Date
Nov. 8
18
Date
Nov. 10
19
22
Explanation
Explanation
Explanation
PR
S2
S2
R2
Debit
4,250
3,240
Sid Ragan
PR
Debit
S2
6,350
R2
Carlos Mane
PR
Debit
S2
12,500
R2
S2
2,595
Credit
4,250
Credit
6,350
Credit
12,500
Balance
4,250
7,490
3,240
Balance
6,350
0
Balance
12,500
0
2,595
Explanation
Globe Company
PR
Debit
P2
P2
Credit
1,020
559
Balance
1,020
1,579
Explanation
ATM Industries
PR
Debit
P2
D2
11,400
Credit
11,400
Balance
11,400
0
Explanation
Blix Supply
PR
Debit
P2
G2
922
Credit
5,062
Balance
5,062
4,140
Xu Company
PR
Debit
P2
G2
487
D2
2,400
Credit
2,887
Balance
2,887
2,400
0
Explanation
7-65
SUPPAN COMPANY
Schedule of Accounts Receivable
November 30
Tony Timmons. ............................................
Carlos Mane..................................................
Total accounts receivable ...........................
$3,240
2,595
$5,835
SUPPAN COMPANY
Schedule of Accounts Payable
November 30
Globe Company. ..........................................
Blix Supply ...................................................
Total accounts payable ...............................
7-66
$1,579
4,140
$5,719
Credit
$ 5,719
86,250
40,000
91,808
_______
$223,777
Date
Account Debited
SALES JOURNAL
Invoice
Number
10
15
22
24
30
Carlos Mane...............................................
Tony Timmons ..........................................
Carlos Mane...............................................
Tony Timmons ..........................................
Totals ..........................................................
440
441
442
443
Page 2
Accounts Receivable Dr.
Sales Cr.
PR
6,350
12,500
4,250
2,595
3,240
28,935
(106/413)
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
2/10, n/30
2/10, n/30
30 Totals ................................................................
Accounts
Payable
Cr.
5,062
11,400
1,020
2,887
559
20,928
(201)
7-67
Office
Purchases Supplies
Dr.
Dr.
Page 2
Other
Accounts
Dr.
5,062
11,400
1,020
2,887
_____
14,287
559
559
____
6,082
(505)
(124)
()
Explanation
PR
Cash
Dr.
Page 2
Sales
Discount
Dr.
Accounts
Receivable
Cr.
Sales
Cr.
Other
Accts.
Cr.
86,250
15 Sales..................................................................
Cash sales..............................................................................................
27,170
27,170
30 Sales..................................................................
Cash sales..............................................................................................
35,703
___
_____
30 Totals ................................................................
171,761
462
23,100
35,703
62,873
(101)
(415)
(106)
(413)
Ck.
No. Payee
Nov.12 633
Account Debited
PR
Cash
Cr.
()
86,250
Page 2
Purchases
Discounts
Cr.
Other
Accounts
Dr.
Accounts
Payable
Dr.
11,400
15 634
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
8,435
8,435
19 635
Xu Co. ...............................................................
Xu Company..........................................................................................
2,352
48
30 636
Payroll ...............................................................
Sales Salaries Expense .......................................................................
621
8,435
___
8,435
30
Totals ................................................................
7-68
______
30,394
276
16,870
2,400
_____
13,800
(101)
(507)
()
(201)
Page 2
201/
506
487
201/
163
922
487
922
GENERAL LEDGER
Date
Nov. 30
30
Date
Nov. 30
30
Cash
PR
Debit
R2 171,761
D2
Accounts Receivable
Explanation
PR
Debit
S2
28,935
R2
Explanation
Inventory
PR
Debit
Explanation
Office Supplies
PR
Debit
P2
559
Explanation
Store Supplies
PR
Debit
P2
1,020
Office Equipment
PR
Debit
P2
5,062
G2
Date
Explanation
Nov. 1 Beg. bal.
Date
Nov. 30
Date
Nov. 5
Date
Nov. 1
26
Explanation
7-69
GENERAL LEDGER
Date
Nov. 17
26
30
30
Date
Nov. 2
Accounts Payable
PR
Debit
G2
487
G2
922
P2
D2
13,800
Explanation
J. Suppan, Capital
Date
Explanation
PR
Debit
Nov. 1 Beg. bal.
Sales
PR
Debit
S2
R2
Date
Nov. 30
30
Date
Nov. 30
Date
Nov. 30
Explanation
Explanation
Explanation
Sales Discounts
PR
Debit
R2
462
Purchases
PR
Debit
P2
14,287
Date
Nov. 17
Date
Nov. 30
Purchases Discounts
Explanation
PR
Debit
D2
7-70
Date
Nov. 15
30
Date
Nov. 8
18
Date
Nov. 10
19
22
Explanation
Explanation
Explanation
Tony Timmons
PR
Debit
S2
4,250
S2
3,240
R2
Sid Ragan
PR
Debit
S2
6,350
R2
Carlos Mane
PR
Debit
S2
12,500
R2
S2
2,595
Credit
4,250
Credit
6,350
Credit
12,500
Balance
4,250
7,490
3,240
Balance
6,350
0
Balance
12,500
0
2,595
Explanation
Globe Company
PR
Debit
P2
P2
Explanation
ATM Industries
PR
Debit
P2
D2
11,400
7-71
Credit
1,020
559
Balance
1,020
1,579
Credit
11,400
Balance
11,400
0
Explanation
Explanation
Blix Supply
PR
Debit
P2
G2
922
Credit
5,062
Balance
5,062
4,140
Xu Company
PR
Debit
P2
G2
487
D2
2,400
Credit
2,887
Balance
2,887
2,400
0
Part 3
SUPPAN COMPANY
Trial Balance
November 30
Debit
Cash ............................................................. $141,367
Accounts receivable ...................................
5,835
Inventory ......................................................
40,000
Office supplies ............................................
559
Store supplies .............................................
1,020
Office equipment.........................................
4,140
Accounts payable .......................................
Long-term notes payable ...........................
J. Suppan, Capital .......................................
Sales.............................................................
Sales discounts...........................................
462
Purchases ....................................................
14,287
Purchases returns and allowances ...........
Purchases discounts ..................................
Sales salaries expense ...............................
16,870
Totals ........................................................... $224,540
7-72
Credit
5,719
86,250
40,000
91,808
487
276
_______
$224,540
SUPPAN COMPANY
Schedule of Accounts Payable
November 30
Globe Company. ..........................................
$1,579
Blix Supply ...................................................
4,140
Total accounts payable ...............................
$5,719
7-73
SERIAL PROBLEM SP 7
Serial Problem, Business Solutions (100 minutes) Parts 1 and 2
Date
Jan. 13
26
Feb. 23
Mar. 25
30
31
SALES JOURNAL
Invoice
Accounts Receivable Dr.
Account Debited
Number PR
Sales Cr.
Liu Corp......................................................
n/a
5,200
Page 2
Cost of Goods Sold Dr.
Inventory Cr.
3,560
4,640
2,660
2,002
1,048
13,910
(106/413)
(502/119)
PR
22
Feb.11
Mar. 9
16
31
Explanation
Liu Corp.........................................................
Invoice, 1/13
Delta Co .........................................................
Invoice, 2/23
Totals .............................................................
Cash
Dr.
Sales
Discount
Dr.
2,668
4,000
4,653
5,500
3,220
5,260
25,301
(101)
Page 2
Accounts
Receivable
Cr.
Services
Revenue
Cr.
Other
Accts.
Cr.
Cost of Goods
Sold Dr.
Inventory Cr.
2,668
4,000
47
__
47
4,700
5,500
3,220
_____
16,088
5,260
9,260
_
0
_
0
(415)
(106)
(403)
()
(502/119)
7-74
Date
Jan. 7
26
Mar. 8
31
Date of
Account
Invoice
Terms
Kansas Corp.............................................
1/7 1/10, n/30
Kansas Corp.............................................
1/26 1/10, n/30
Harris Office Products ............................
3/8
Totals .........................................................
PR
Accounts
Payable
Cr.
5,800
9,000
2,730
17,530
(201)
Inventory
Dr.
5,800
9,000
_____
14,800
(119)
Computer
Supplies
Dr.
2,730
2,730
(126)
()
Page 2
Ck.
Cash
Date No. Payee
Account Debited
PR
Cr.
Jan. 4 n/a Lyn Addie...................................................
Wages Expense ......................... 623/210
625
Wages Payable ..........................
119
15 n/a Not specified .............................................
Merchandise Inventory.............
600
7-75
Page 2
Other
Accounts
Dr.
Other
Accounts
Inventory Accounts Payable
Cr.
Dr.
Dr.
125
500
600
58
5,800
1,250
2,475
90
8,504
600
4,800
1,000
192
960
3,830
___
128
_____
148
12,630
18,134
(119)
()
(201)
Page 2
2012
25,000
25,000
5,500
1,500
7,000
500
500
496
496
7-76
9,047
9,047
Comprehensive Problem
Comprehensive Problem, Colo Company (150 minutes)
Part 1
SALES JOURNAL
Date
Account Debited
Invoice
Number
PR
Page 2
6,100
4,100
3,990
1,890
6,850
4,990
14,210
8,230
31 Totals..........................................................
31,150
19,210
(106/413)
(502/119)
7-77
Date
Account
Date of
Invoice
Terms
10
11
17
24
25
31
PR
125/
163/
125/
Accounts
Payable
Cr.
37,729
4,074
8,800
13,650
9,030
3,080
76,363
(201)
Inventory
Dr.
37,072
Office
Supplies
Dr.
83
Page 2
Other
Accounts
Dr.
574
4,074
8,800
13,650
8,120
3,080
70,722
(119)
280
___
363
(124)
630
____
5,278
()
Page 2
Sales
Accounts
Cash
Discount Receivable
Sales
Date
Explanation
PR
Dr.
Dr.
Cr.
Cr.
Sale of Apr. 28..................................................................................................
5,978
122
(415)
7-78
Cost of Goods
Sold Dr.
Inventory Cr.
350
6,100
15 Sales..................................................................
Cash sales
May 1-15..................................................................................................
59,220
59,220
Sale of May 22..................................................................................................
31 Sales..................................................................
Cash sales,
May 16-31................................................................................................
66,052
___
_____
66,052
31 Totals ................................................................ 142,772
125,272
350
17,500
(101)
Other
Accts.
Cr.
(106)
(413)
38,200
___
350
()
42,500
80,700
(502/119)
8 3411
15 3412
19
23
26
29
30
31
Other
Accounts
Account Debited
PR
Dr.
S&P Mgmt. Co. ................................................
Rent Exp.Selling Space......................................................................
642
2,968
Rent Exp.Office Space .......................................................................
641
3,710
742
Fink Corp..........................................................
Fink Corp. ...............................................................................................
13,377
273
Perennial Power ..............................................
Utilities Expense....................................................................................
690
1,283
1,283
Jenny Colo .......................................................
J. Colo, Withdrawals .............................................................................
302
7,000
7,000
Payroll ...............................................................
Sales Salaries Expense........................................................................
621
5,320
Office Salaries Expense .......................................................................
620
8,470
___
3,150
Totals ................................................................
57,108
575
28,933
(101)
(119)
()
Ck.
No. Payee
May 1 3410
3413
3414
3415
3416
3417
Page 2
Cash
Cr.
Inventory
Cr.
GENERAL JOURNAL
May
Page 2
175
798
854
7-79
175
798
854
Accounts
Payable
Dr.
6,300
8,800
13,650
_____
28,750
(201)
Part 2
COLO COMPANY
Work Sheet for Month Ended May 31, 2011
Unadjusted Trial
Balance
Account
Debit
Credit
Cash ....................................................... 135,911
Accounts receivable ............................. 18,200
Merchandise inventory ......................... 189,519
Office supplies ......................................
793
Store supplies .......................................
3,301
Prepaid insurance .................................
3,318
Office equipment ................................... 25,690
Accum. depr. Office equipment. ........
9,898
Store equipment .................................... 38,920
Accumulated depr. Store equip .........
17,556
Accounts payable .................................
53,059
Jenny Colo, Capital ...............................
308,085
Jenny Colo, Withdrawals ......................
7,000
Sales .......................................................
156,422
Sales discounts .....................................
350
Sales returns and allowances ..............
175
Cost of goods sold ................................ 99,910
Depr. ExpenseOffice equipment ........
Depr. ExpenseStore equipment .........
Office salaries expense ........................
6,300
Sales salaries expense ......................... 10,640
Insurance expense ................................
Rent expense, office space ..................
742
Rent expense, selling space ................
2,968
Office supplies expense .......................
Store supplies expense ........................
Utilities expense ....................................
1,283
______
Totals ...................................................... 545,020 545,020
Net income ............................................
Totals ......................................................
Adjustments
Debit
Credit
Income
Statement
Debit
Credit
(c) 289
(b) 669
(a) 553
(e) 329
(d) 567
156,422
(e) 329
(d) 567
(a) 553
(c) 289
(b) 669
_____
2,407
_____
2,407
7-80
350
175
99,910
329
567
6,300
10,640
553
742
2,968
289
669
1,283
124,775
31,647
156,422
______
156,422
______
156,422
______
421,141
______
421,141
______
389,494
31,647
421,141
553
553
669
669
289
289
567
567
7-81
329
329
156,422
175
350
99,910
329
567
6,300
10,640
553
742
2,968
289
669
1,283
31,647
31,647
7-82
7,000
7,000
Date
Explanation
Apr. 30 Balance
May 31
31
R2
D2
Debit
142,772
Date
Apr. 30
May 2
31
31
Accounts Receivable
Explanation
PR
Debit
Balance
G2
S2
31,150
R2
Date
Apr. 30
May 3
31
31
31
31
Merchandise Inventory
Explanation
PR
Debit
Balance
G2
D2
P2
70,722
R2
S2
Date
Explanation
Apr. 30 Balance
May 31
31
Date
Explanation
Apr. 30 Balance
May 4
9
24
31
Office Supplies
PR
Debit
P2
G2
363
Store Supplies
PR
Debit
P2
R2
P2
G2
7-83
574
630
Office Equipment
Date
Explanation
PR
Debit
Apr. 30 Balance
May 10
P2
4,074
12
G2
Date
Explanation
Apr. 30 Balance
Store Equipment
PR
Debit
28,750
Date
Explanation
Apr. 30 Balance
May 3
12
31
31
Accounts Payable
PR
Debit
G2
G2
P2
D2
7-84
798
854
Date
May 29
31
156,422
Date
May 2
31
Date
May 31
31
Sales Discounts
Explanation
PR
Debit
R2
350
G2
Date
May 31
31
31
Date
May 31
31
31
Explanation
Sales
PR
S2
R2
G2
Debit
Date
May 31
31
Date
May 31
31
7-85
Date
May 15
30
31
Date
May 15
30
31
Date
May 31
31
Insurance Expense
Explanation
PR
Debit
G2
553
G2
Date
May 1
31
Date
May 1
31
Date
May 31
31
Date
May 31
31
7-86
Date
May 26
31
Date
May 31
31
31
Explanation
Utilities Expense
PR
Debit
D2
1,283
G2
Income Summary
Explanation
PR
Debit
G2 124,775
G2
G2
31,647
Date
May 26
Date
May 2
11
16
Date
Apr. 28
May 2
5
Date
May 22
30
Explanation
Explanation
Explanation
Explanation
Crane Corp.
PR
Debit
S2
14,210
Hensel Company
PR
Debit
S2
6,100
R2
S2
3,990
Knox, Inc.
PR
Debit
S2
4,725
G2
R2
Lee Services
PR
Debit
S2
6,850
R2
7-87
Credit
Balance
14,210
Credit
Balance
6,100
0
3,990
6,100
Credit
175
4,550
Credit
6,850
Balance
4,725
4,550
0
Balance
6,850
0
Date
May 17
23
Date
May 11
19
Date
May 4
10
12
24
Date
Apr. 29
May 3
8
25
Explanation
Explanation
Explanation
Explanation
Fink Corp.
PR
Debit
P2
D2
13,650
Credit
13,650
Balance
13,650
0
Garcia, Inc.
PR
Debit
P2
D2
8,800
Credit
8,800
Balance
8,800
0
Credit
37,729
4,074
Balance
37,729
41,803
40,949
49,979
Peyton Products
PR
Debit
P2
G2
798
D2
6,300
P2
7-88
9,030
Credit
7,098
3,080
Balance
7,098
6,300
0
3,080
7-89
$156,422
$
350
175
525
155,897
99,910
55,987
567
10,640
2,968
669
14,844
329
6,300
553
742
289
1,283
9,496
24,340
$ 31,647
$308,085
31,647
339,732
(7,000)
$332,732
COLO COMPANY
Balance Sheet
May 31, 2011
Assets
Current assets
Cash ..............................................................
Accounts receivable ....................................
Merchandise inventory ................................
Office supplies .............................................
Store supplies ..............................................
Prepaid insurance ........................................
Total current assets .....................................
Plant assets
Office equipment..........................................
Less accumulated depreciation .................
Store equipment...........................................
Less accumulated depreciation .................
Total plant assets.........................................
Total assets ....................................................
$135,911
18,200
189,519
504
2,632
2,765
$349,531
25,690
10,227
38,920
18,123
15,463
20,797
36,260
$385,791
Liabilities
Current liabilities
Accounts payable ........................................
$ 53,059
Equity
Jenny Colo, Capital........................................
Total liabilities and equity .............................
332,732
$385,791
7-90
COLO COMPANY
Schedule of Accounts Receivable
May 31, 2011
Crane Corp. .................................................. $14,210
Hensel Company .........................................
3,990
Total accounts receivable ........................... $18,200
COLO COMPANY
Schedule of Accounts Payable
May 31, 2011
Peyton Products .......................................... $ 3,080
Gear Supply Co. ...........................................
49,979
Total accounts payable ............................... $53,059
7-91
$ 10,227
18,123
53,059
332,732
$414,141
Reporting in Action
BTN 7-1
Comparative Analysis
1.
BTN 7-2
+ $410)/2]
898.9%
= 4,548.1%
= 4,954.6%
7-92
Ethics Challenge
BTN 7-3
Communicating in Practice
BTN 7-4
The memo should recommend the use of special journals and subsidiary
ledgers. It should explain the time-saving aspect of journalizing in labeled
columns and also the posting of column totals representing the impact of
groups of like transactions.
The memo should discuss the timely
information provided by subsidiary ledgers regarding customer and
creditor balances. A discussion of the uses of a schedule for verifying the
accuracy of subsidiary ledgers should also be included.
7-93
BTN 7-5
Operating
Income 2010
Segment Return
on Assets
$2,604 : $2,335
33.2%
$2,464 : $1,997
61.0%
$1,051 : $1,123
95.7%
$1,293 : $ 699
10.7%
The Small and Medium Business had the highest segment return on
assets for the fiscal year ended 2010 with a 95.7% return. The other
three showed returns on assets ranging from 10% to 61%.
4. The six product groups reported by Dell include: Desktop PCs, Mobility,
Software and peripherals, Servers and networking, Enhanced services,
and Storage.
($ millions)
31.4%
24.5
18.0
11.4
10.6
4.1
100.0%
Dell earned morein both dollars and returnsfrom its Mobility group;
its Desktop PCs was second in both categories.
7-94
Teamwork in Action
BTN 7-6
For check figures in the implementation of this activity see the solution
to Problem 7-5A or 7-5B.
Entrepreneurial Decision
BTN 7-7
One Year
Hence
Sales..............................
$100.0 mil
Computations
Five Years
Hence
120.0 mil
$207.0 mil
$138.0 mil
$172.5 mil
If sales follow the growth projected, the company will have more than
doubled the current $100 mil in annual sales to $207 mil annually.
7-95
Global Decision
BTN 7-8
7-96