HWChap 007

Chapter 07 - Accounting Information Systems
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.
The five components of an accounting system are: source documents, input

devices, information processors, information storage, and output devices.
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.

1.
4.
2.
5.
3.
7-2

1.
enterprise resource planning
2.
network
3.
scanner
4.
batch

a.
b.
c.
d.
e.
f.
g.
h.
Cash Disbursements Journal

Sales Journal
Purchases Journal
Cash Receipts Journal
Purchases Journal

General Journal
Mar. 2 [In Purchases Journal]
Mar. 12 Automobiles .........................................................
T. Lue, Capital ...............................................
15,000
15,000
Owner contributed an auto to the business.
Mar. 16 [In Sales Journal]

Mar. 19 Sales Returns and Allowances ...........................
Accounts ReceivableK. Gould .................
Customer returned (worthless) merchandise.
7-3
150
150

a) Accounts Receivable Ledger
ACCOUNTS RECEIVABLE LEDGER
Date
Jan. 10
20
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

PURCHASES JOURNAL
Date
Account
Date
of
Invoice Terms
PR
Accounts
Payable
Cr.
Inventory
Dr.
8,100
June 1 Krause, Inc.........................

6/01
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

June 1
8
14
17
24
28
29
Purchases Journal
Sales Journal
Purchases Journal
Purchases Journal
Quick Study 7-9A (20 minutes)

PURCHASES JOURNAL
Date
Date
of
Invoice Terms
Account
PR
Accounts
Payable
Cr.
Purchases
Dr.
8,100
June 1 Krause, Inc.........................

6/01
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

Part 1
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.
Quick Study 7-10 (Concluded)

Part 2
GENERAL LEDGER
Accounts Receivable
June 30 62,100
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
Americas ....................... $6,637
$1,882
Europe........................... 4,296
1,352
317.8
483
199.0
Japan.............................
961
352.7%
Interpretation: The Americas segment reports the highest return on

segment assets. However, each of its other segments has a relatively high
return on segment assets as well.
7-6
Quick Study 7-11 (Concluded)

Product
Product Sales
Percent of Total 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%*
*0.1% rounding error
Interpretation: Sales of Apples iPhone make up its largest percentage of

total individual product sales. Desktops and Other make up the smallest
percentage of total product sales.

General Journal
1. [In Purchases Journal]
2. [In Sales Journal]
3. Sales Returns and Allowances ...........................
Accounts ReceivableCustomer .............
Customer returned (worthless) merchandise.
7-7
900
900
EXERCISES
Exercise 7-1 (15 minutes)
SALES JOURNAL
Date
Account Debited
Invoice
Number
PR
Accounts
Receivable Dr.
Sales Cr.
Mar. 7 J. Dryer ......................................

5704
12 R. Land ......................................
5705
25 T. Burton ...................................
5706
1,150
320
550
Cost of Goods
Sold Dr.
Inventory Cr.
800
200
350

March 2
5
7
8
12
16
19
25

Purchases Journal
Sales Journal
Sales Journal
Sales Journal
Exercise 7-3A (15 minutes)

SALES JOURNAL
Invoice
Date Account Debited
Number
Mar. 7 J. Dryer ......................................
5704
12 R. Land ......................................
5705
25 T. Burton ...................................
5706
7-8
PR
Accounts Receivable Dr.

Sales Cr.
1,150
320
550

CASH RECEIPTS JOURNAL
Date Account Credited
Cost of
Sales Accounts
Other
Goods
Cash Discount Recble. Sales Accounts Sold Dr.
Explanation PR Dr.
Dr.
Cr.
Cr.
Cr.
Inventory Cr.
Nov. 9 Notes Payable........................

Note to bank
13 J. Emling, Capital.................
Contribution
18 Sales..........................................
Cash sale
27 J. York......................................
Invoice, 11/7
2,750
4,000
230
882
2,750
4,000
230
18
130
900

November 3
7
9
13
18
22
27
30
Purchases Journal
Sales Journal

Account
Date Credited
Explanation
Nov. 9 Notes Payable.............Note to bank
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

a) Accounts Payable Ledger
Date
Jan. 9
19
ACCOUNTS PAYABLE LEDGER

Boeder Company
Explanation
PR
Debit
P1
D1
5,100
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

CASH DISBURSEMENTS JOURNAL
Account
Debited
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

April 3
9
12
17
20
28
29
30
Purchases Journal
Sales Journal
Purchases Journal

Account
Debited
Purchases Other Accounts

Cash Discounts Accounts Payable
Cr.
Cr.
Dr.
Dr.
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

a. (i)
The June 5 purchase would be recorded in the Purchases Journal.
(ii) The June 14 payment would be recorded in the Cash

Disbursements Journal.
b. The error in journalizing the June 14 transaction should be discovered
in the process of crossfooting the Cash Disbursements Journal.
7-11

Part 1
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Anna Page
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 Returns and

Allowances
Sales
250
Inventory
May 31 4,500
May 31
6,010
May 20
Cost of Goods Sold

May 31 4,500
Part 3
CLEAR VIEW
May 31
Anna Page ........................................
$ 600
Sara Reed .........................................
2,280
Aaron Reckers .................................
2,880
Total accounts receivable ..............
$ 5,760
Accounts Receivable Controlling Account

Total debit.........................................
Credit for return ...............................
Balance as of May 31 ......................
7-12
$ 6,010
(250)
$ 5,760
250

1.
2.
3.
4.
5.
When the trial balance is prepared.

When the schedule of accounts payable is prepared.
When crossfooting the Purchases Journal.
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%
Specialty Footwear ....... 22
19
155
136
15.1%
Other Specialty .......... 11
37
24
36.1%
Subtotal ...................... 104
87
826
642
36
305
274
11.1%
Skating Group ............
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
Analysis and interpretation: This company shows solid profitability in all

segments based on segment return on assets.
For the specialty segments, the Other Specialty has the highest segment
return on assets at 36.1% in 2011, whereas the skiing segment has the
lowest return on segment assets at 12.1%.
For the geographic segments, the highest segment return on assets is
produced by the European segment with 38.5% in 2011, whereas the United
States segment has the lowest return of 11.1%.
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
Account Debited
Number
PR
Sales Cr.
Brooke Sledd ...................................................

760
3,000
Paul Kohr ..........................................................

761
8,000
Amy Nilson.......................................................
762
9,500
Brooke Sledd ...................................................

763
4,100
Paul Kohr ..........................................................

764
3,070
Amy Nilson.......................................................
765
5,700
33,370
Totals.................................................................
(106/413)
Sales
Cash
Discount
Account Credited Explanation
PR
Dr.
Dr.
Brooke Sledd ...................................................

Sale of 4/3
2,940
60
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
Brooke Sledd ...................................................

Sale of 4/13
4,018
82
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)
Problem 7-1A (Continued)

Parts 2 and 3
GENERAL LEDGER
Cash
Date
Mar. 31
Apr. 30
Date
Apr. 30
30
Date
Mar. 31
Apr. 30
30
Date
Mar. 31
Apr. 18
Date
Mar. 31
Date
Apr. 30
30
195,923
Acct. No. 101

Credit
Balance
85,000
280,923
Accounts Receivable
Explanation
PR
Debit
S3
33,370
R3
Acct. No. 106

Credit
Balance
33,370
24,600
8,770
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
Acct. No. 119

Credit
Balance
125,000
23,825
101,175
89,780
11,395
Acct. No. 251
Credit
Balance
110,000
50,000
160,000
Acct. No. 301
Credit
Balance
100,000
Acct. No. 413
Credit
Balance
33,370
33,370
121,815
155,185
Date
Apr. 30
Sales Discounts
Explanation
PR
Debit
R3
492
Acct. No. 415

Credit
Balance
492
Date
Apr. 30
30
Cost of Goods Sold

Explanation
PR
Debit
S3
23,825
R3
89,780
Acct. No. 502

Credit
Balance
23,825
113,605
7-15

Parts 2 and 3 (continued)
Date
Apr. 5
14
27

Paul Kohr
Explanation
PR
Debit
S3
8,000
R3
S3
3,070
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
Problem 7-1A (Concluded)

Part 4 (continued)
WISE COMPANY
April 30
Paul Kohr ....................................................
Amy Nilson .................................................
Total accounts receivable .........................
$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
Problem 7-2AA (70 minutes)

Parts 1 and 2
Date
SALES JOURNAL
Invoice
Number PR
Account Debited
Page 3
Sales Cr.
Apr. 3 Brooke Sledd .................................

760
5 Paul Kohr .......................................
761
3,000
8,000
11 Amy Nilson.....................................
762
13 Brooke Sledd .................................
763
9,500
4,100
27 Paul Kohr .......................................

764
27 Amy Nilson.....................................
765
3,070
30 Total ....................................................
5,700
33,370
(106/413)

Account
Date Credited
Explanation
PR
Cash
Dr.
Page 3
Sales
Accounts
Discounts Receivable
Dr.
Cr.
Sales
Cr.
Other
Accounts
Cr.
Apr. 13 Brooke Sledd ..........................................

Sale of 4/3 ................................................................................
2,940
60
3,000
14 Paul Kohr ................................................

Sale of 4/5 ................................................................................
7,840
160
8,000
16 Sales.......................................................
Cash Sales ..............................................................................
50,840
50,840
18 L.T. Notes
Note to
251 50,000
Payable ...................................................
bank ........................................................................................
20 Amy Nilson .............................................

Sale of 4/11 ..............................................................................
9,310
190
9,500
50,000
23 Brooke Sledd ..........................................

Sale of 4/13 ..............................................................................
4,018
82
4,100
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)
()
Problem 7- 2AA (Continued)

Parts 2 and 3
GENERAL LEDGER
Date
Mar. 31
Apr. 30
Date
Apr. 30
30
Date
Mar. 31
Date
Mar. 31
Apr. 18
Date
Mar. 31
Date
Apr. 30
30
Date
Apr. 30
195,923
Acct. No. 101

Credit
Balance
85,000
280,923
Accounts Receivable
Explanation
PR
Debit
S3
33,370
R3
Acct. No. 106

Credit
Balance
33,370
24,600
8,770
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit

Explanation
PR
Debit
R3
Explanation
B. Wise, Capital
PR
Debit
Sales
PR
S3
R3
Explanation
Debit
Sales Discounts
Explanation
PR
Debit
R3
492
7-19
Acct. No. 119

Credit
Balance
125,000
Acct. No. 251
Credit
Balance
110,000
50,000
160,000
Acct. No. 301
Credit
Balance
100,000
Acct. No. 413
Credit
Balance
33,370
33,370
121,815
155,185
Acct. No. 415
Credit
Balance
492
Problem 7- 2AA (Continued)

Parts 2 and 3continued
Date
Apr. 5
14
27
Date
Apr. 3
13
13
23
Date
Apr. 11
20
27
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
Accounts receivable .............................................
8,770
Inventory ................................................................
125,000
Credit
Long-term notes payable .....................................
$160,000
B. Wise, Capital .....................................................
100,000
155,185
Sales.......................................................................
Sales discounts.....................................................
492
_______
Totals .....................................................................
$415,185
$415,185
7-20
Problem 7- 2AA (Concluded)

Part 4continued
WISE COMPANY
April 30
Paul Kohr ....................................................
$3,070
Amy Nilson .................................................
5,700
Total accounts receivable .........................
$8,770
Part 5
Analysis component
7-21

Parts 1 and 3
PURCHASES JOURNAL
Date of
Invoice
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
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 ............................................................
621
9,750
___
9,750
_____
Totals .............................................................
513
20,499
25,650
45,636
(101)
(119)
()
(201)
7-22

GENERAL JOURNAL
Page 3
Apr. 6 Accounts Payable--Madison Inc. ............................

201/
Office Supplies..................................................
124
85
85
Received a credit memorandum.
23 Accounts Payable--Price Co. ................................

201/
Inventory. ...........................................................
119
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
Acct. No. 101

Credit
Balance
85,000
45,636
39,364
Acct. No. 119
Credit
Balance
125,000
400
124,600
161,025
513
160,512
Date
Apr. 3
6
Office Supplies
Explanation
PR
Debit
P3
1,380
G3
Acct. No. 124

Credit
Balance
1,380
85
1,295
Date
Apr. 20
Store Supplies
PR
Debit
P3
730
Acct. No. 125

Credit
Balance
730
Store Equipment
Explanation
PR
Debit
P3
11,125
Acct. No. 165

Credit
Balance
11,125
Date
Apr. 9
Explanation
7-23

General Ledgercontinued
Date
Apr. 6
23
30
30
Accounts Payable
Explanation
PR
Debit
G3
85
G3
400
P3
D3
25,650

Date
Explanation
PR
Debit
Mar. 31 Balance
Acct. No. 201

Credit
Balance
(85)
(485)
49,660
49,175
23,525
Acct. No. 251
Credit
Balance
110,000
B. Wise, Capital
Explanation
PR
Debit
Acct. No. 301

Credit
Balance
100,000
Date
Apr. 16
30
Sales Salaries Expense

Explanation
PR
Debit
D3
9,750
D3
9,750
Acct. No. 621

Credit
Balance
9,750
19,500
Date
Apr. 4
Advertising Expense
Explanation
PR
Debit
D3
999
Acct. No. 655

Credit
Balance
999
Date
Mar. 31

Date
Apr. 9
20
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

Accounts Payable Ledgercontinued
Date
Apr. 17
23
26
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

Parts 1 and 3
PURCHASES JOURNAL
Date of
Invoice
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 ............................................................
621
9,750
9,750
Price Company.............................................
Price Company .................................................................................
12,103
247
12,350
Payroll ............................................................
621
9,750
___
9,750
_____
Totals .............................................................
513
20,499
25,650
45,636
(101)
(507)
()
(201)
7-26
Problem 7-4AA (Continued)

GENERAL JOURNAL
Page 3
Apr. 6 Accounts PayableMadison, Inc ...............................

201/
Office Supplies..................................................
124
85
85
23 Accounts PayablePrice Co. ..............................

201/
Purchases Returns and Allowances .................
506
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
Acct. No. 101

Credit
Balance
85,000
45,636
39,364
Acct. No. 119
Credit
Balance
125,000
Date
Apr. 3
6
Office Supplies
Explanation
PR
Debit
P3
1,380
G3
Acct. No. 124

Credit
Balance
1,380
85
1,295
Date
Apr. 20
Store Supplies
PR
Debit
P3
730
Acct. No. 125

Credit
Balance
730
Store Equipment
Explanation
PR
Debit
P3
11,125
Acct. No. 165

Credit
Balance
11,125
Date
Apr. 9
Explanation
7-27

Date
Apr. 6
23
30
30
Accounts Payable
Explanation
PR
Debit
G3
85
G3
400
P3
D3
25,650

Date
Explanation
PR
Debit
Mar. 31 Balance
Date
Mar. 31
B. Wise, Capital
Explanation
PR
Debit
Acct. No. 201

Credit
Balance
(85)
(485)
49,660
49,175
23,525
Acct. No. 251
Credit
Balance
110,000
Acct. No. 301
Credit
Balance
100,000
Purchases
PR
Debit
P3
36,425
Acct. No. 505

Credit
Balance
36,425
Date
Apr. 23
Purchases Returns and Allowances

Explanation
PR
Debit
G3
Acct. No. 506

Credit
Balance
400
400
Date
Apr. 30
Purchases Discounts
Explanation
PR
Debit
D3
Acct. No. 507

Credit
Balance
513
513
Date
Apr. 16
30

Explanation
PR
Debit
D3
9,750
D3
9,750
Acct. No. 621

Credit
Balance
9,750
19,500
Date
Apr. 4
Advertising Expense
Explanation
PR
Debit
D3
999
Acct. No. 655

Credit
Balance
999
Date
Apr. 30
Explanation
7-28


Date
Apr. 9
20
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
Problem 7-4AA (Concluded)

Part 4
WISE COMPANY
Trial Balance
April 30
Debit
Cash................................................................$ 39,364
Credit
Inventory ........................................................ 125,000

Office supplies...............................................
1,295
Store supplies................................................
730
Store equipment ............................................ 11,125

Accounts payable..........................................
$ 23,525
Long-term notes payable .............................
110,000
B. Wise, Capital .............................................
100,000
Purchases ...................................................... 36,425

Purchases returns and allowances .............
400
Purchases discounts ....................................
513
Sales salaries expense ................................. 19,500

Advertising expense .....................................
999
_______
Totals ..............................................................$234,438
$234,438
WISE COMPANY
April 30
Neds Supply................................................
Negi Company .............................................
Madison, Inc................................................ .
7-30
$11,855
10,375
1,295
$23,525

Parts 1 and 2
Date
Mar. 2
3
10
27
28
31
Account Debited
SALES JOURNAL
Invoice
Number
PR
Sales Cr.
Min Cho .....................................................

854
Lance Snow ..............................................
855
Taylor Few.................................................
856
Taylor Few.................................................
857
Lance Snow ..............................................
858
Totals .........................................................
Page 2
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
9 Office Equip./Tells Supply .............................

3/9 n/10, EOM
163/
Mar. 1 Soy Industries..................................................

3/1
2/10, n/30
16 Store Supplies/Stacy Company ...................

3/16 n/10, EOM
125/
14 The JW Company ...........................................

3/13
31 Totals ................................................................
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

Account Credited
Date
Explanation
PR
Cash
Dr.
Sales
Discount
Dr.
Page 2
Accounts
Receivable
Cr.
Other
Accts.
Cr.
Sales
Cr.
Mar. 6 L.T. Notes Pay. .......................................................

Note to bank ...........................................................................................
251
72,000
Cost of Goods
Sold Dr.
Inventory Cr.
72,000
12 Min Cho ............................................................

Invoice, 3/2 ..............................................................................................
15,484
316
15,800
13 Lance Snow .....................................................

Invoice 3/3...............................................................................................
9,016
184
9,200
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)
()

Date
Ck.
No. Payee
Account Debited
PR
Cash
Cr.
143,000
281,000
(502/119)
Page 2
Inventory
Cr.
Other
Accounts
Dr.
Accounts
Payable
Dr.
Soy Industries .................................................

Soy Industries .......................................................................................
41,748
852
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 ...............................................................
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)

GENERAL JOURNAL
Page 2
Mar. 17 Accounts PayableJW Co........................................

201/
2,425
Inventory ................................................................
119
2,425
Received a credit memo for returns.
19 Accounts PayableTells Supply..............................

201/
Office Equipment ...................................................
163
630
630
GENERAL LEDGER
Date
Mar. 31
31
Date
Mar. 31
31
Debit
440,278
Acct. No. 101

Credit
Balance
440,278
102,164
338,114
Accounts Receivable
Explanation
PR
Debit
S2
48,825
R2
Acct. No. 106

Credit
Balance
48,825
29,600
19,225
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
Acct. No. 119

Credit
Balance
300,000
2,425
297,575
371,800
1,436
370,364
23,300
347,064
281,000
66,064
Date
Mar. 31
Office Supplies
Explanation
PR
Debit
P2
1,120
Acct. No. 124

Credit
Balance
1,120
Date
Mar. 16
Store Supplies
Explanation
PR
Debit
P2
1,670
Acct. No. 125

Credit
Balance
1,670
7-33

Date
Mar. 9
19
Office Equipment
Explanation
PR
Debit
P2
20,850
G2
Acct. No. 163

Credit
Balance
20,850
630
20,220
Date
Mar. 17
19
31
31
Accounts Payable
Explanation
PR
Debit
G2
2,425
G2
630
P2
D2
71,800
Acct. No. 201

Credit
Balance
(2,425)
(3,055)
97,865
94,810
23,010
Date
Mar. 6

Explanation
PR
Debit
R2
Acct. No. 251

Credit
Balance
72,000
72,000
M. Bishop, Capital
Date
Explanation
PR
Debit
Mar. 1 Beg. Bal.
Acct. No. 308

Credit
Balance
300,000
Date
Mar. 31
31
Explanation
Sales
PR
S2
R2
Debit
Acct. No. 413

Credit
Balance
48,825
48,825
339,270
388,095
Date
Mar. 31
Sales Discounts
Explanation
PR
Debit
R2
592
Acct. No. 415

Credit
Balance
592
Date
Mar. 31
Mar. 31
Cost of Goods Sold

Explanation
PR
Debit
R2 281,000
S2
23,300
Acct. No. 502

Credit
Balance
281,000
304,300
Date
Mar. 15
31

Explanation
PR
Debit
D2
15,900
D2
15,900
Acct. No. 621

Credit
Balance
15,900
31,800
7-34


Date
Mar. 10
20
27
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. 3
16
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

Part 3
BISHOP COMPANY
Trial Balance (Unadjusted)
March 31
Debit
Cash ............................................................. $338,114
Accounts receivable ...................................
19,225
Inventory ......................................................
66,064
Office supplies ............................................
1,120
Store supplies .............................................
1,670
Office equipment.........................................
20,220
Accounts payable .......................................
Long-term notes payable ...........................
M. Bishop, Capital .......................................
Sales.............................................................
Sales discounts...........................................
592
Cost of goods sold ..................................... 304,300
Sales salaries expense ...............................
31,800
Totals ........................................................... $783,105
Credit
$ 23,010
72,000
300,000
388,095
_______
$783,105
BISHOP COMPANY
March 31
Taylor Few ..............................................................
$13,910
Lance Snow ............................................................
5,315
Total accounts receivable .....................................
$19,225
BISHOP COMPANY
March 31
Stacy Company ......................................................
$ 2,790
Tells Supply ............................................................
20,220
Total accounts payable .........................................
$23,010
7-36

Parts 1 and 2
Date
Mar. 2
3
10
27
28
31
Account Debited
SALES JOURNAL
Invoice
Number
PR
Min Cho .....................................................

854
Lance Snow ..............................................
855
Taylor Few.................................................
856
Taylor Few.................................................
857
Lance Snow ..............................................
858
Totals .........................................................
Page 2
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
9 Office Equip./Tells Supply .............................

3/9 n/10, EOM
163/
Mar. 1 Soy Industries..................................................

3/1
2/10, n/30
16 Store Supplies/Stacy Company ...................

3/16 n/10, EOM
125/
14 The JW Company ...........................................

3/13
31 Totals ................................................................
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

Date
Account
Credited
Explanation
PR
Page 2
Sales
Discount
Dr.
Cash
Dr.
Accounts
Receivable
Cr.
Sales
Cr.
Mar. 6 L.T. Notes Pay...................................................

Note to bank ...........................................................................................
251
72,000
Other
Accounts
Cr.
72,000
12 Min Cho ............................................................

Invoice, 3/2 ..............................................................................................
15,484
316
15,800
13 Lance Snow .....................................................

Invoice 3/3...............................................................................................
9,016
184
9,200
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)

Date
Ck.
No. Payee
Mar.13 416
Account Debited
PR
Cash
Cr.
()
Page 2
Purchases
Discounts
Cr.
Other
Accounts
Dr.
Soy Industries .................................................

Soy Industries .......................................................................................
41,748
852
Accounts
Payable
Dr.
42,600
15 417
Payroll ...............................................................
621
15,900
15,900
23 418
The JW Co........................................................
The JW Company .................................................................................
28,616
584
31 419
Payroll ...............................................................
621
15,900
____
15,900
31
Totals ................................................................
7-38
_____
72,000
102,164
1,436
31,800
29,200
_____
71,800
(101)
(507)
()
(201)

GENERAL JOURNAL
Page 2
Mar. 17 Accounts PayableJW Co........................................

201/
2,425
Purchases Returns and Allowances. ...................
506
2,425
19 Accounts PayableTells Supply..............................

201/
Office Equipment ...................................................
163
630
630
GENERAL LEDGER
Date
Mar. 31
31
Date
Mar. 31
31
Debit
440,278
Acct. No. 101

Credit
Balance
440,278
102,164
338,114
Accounts Receivable
Explanation
PR
Debit
S2
48,825
R2
Acct. No. 106

Credit
Balance
48,825
29,600
19,225
Explanation
Date
Explanation
Mar. 1 Beg. bal.
Cash
PR
R2
D2
Inventory
PR
Debit
Acct. No. 119

Credit
Balance
300,000
Date
Mar. 31
Office Supplies
Explanation
PR
Debit
P2
1,120
Acct. No. 124

Credit
Balance
1,120
Date
Mar. 16
Store Supplies
Explanation
PR
Debit
P2
1,670
Acct. No. 125

Credit
Balance
1,670
Date
Mar. 9
19
Office Equipment
Explanation
PR
Debit
P2
20,850
G2
Acct. No. 163

Credit
Balance
20,850
630
20,220
7-39

Date
Mar. 17
19
31
31
Accounts Payable
Explanation
PR
Debit
G2
2,425
G2
630
P2
D2
71,800
Acct. No. 201

Credit
Balance
(2,425)
(3,055)
97,865
94,810
23,010
Date
Mar. 6

Explanation
PR
Debit
R2
Acct. No. 251

Credit
Balance
72,000
72,000
M. Bishop, Capital
Date
Explanation
PR
Debit
Mar. 1 Beg. bal.
Acct. No. 308

Credit
Balance
300,000
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
Acct. No. 413

Credit
Balance
48,825
48,825
339,270
388,095
Acct. No. 415
Credit
Balance
592
Acct. No. 505
Credit
Balance
74,225
Date
Mar. 17

Acct. No. 506
Explanation
PR
Debit
Credit
Balance
G2
2,425
2,425
Date
Mar. 31
Purchases Discounts
Explanation
PR
Debit
D2
Acct. No. 507

Credit
Balance
1,436
1,436
Date
Mar. 15
31

Explanation
PR
Debit
D2
15,900
D2
15,900
Acct. No. 621

Credit
Balance
15,900
31,800
7-40

Date
Mar. 10
20
27
Date
Mar. 2
12
Date
Mar. 3
13
28
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

Date
Mar. 3
16
Date
Mar. 1
13
Date
Mar. 9
19
Date
Mar. 14
17
23
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
Problem 7-6AA (Concluded)

Part 3
BISHOP COMPANY
Trial Balance*
March 31
Debit
Cash .............................................................................$338,114
Accounts receivable ................................................... 19,225
Inventory ...................................................................... 300,000
Office supplies ............................................................ 1,120
Store supplies ............................................................. 1,670
Office equipment......................................................... 20,220
Accounts payable .......................................................
Long-term notes payable ...........................................
M. Bishop, Capital .......................................................
Sales.............................................................................
Sales discounts...........................................................
592
Purchases .................................................................... 74,225
Purchases returns and allowances ...........................
Purchases discounts ..................................................
Sales salaries expense ............................................... 31,800
Totals ...........................................................................$786,966
Credit
$ 23,010
72,000
300,000
388,095
2,425
1,436
_______
$786,966
* Unadjusted trial balance.
BISHOP COMPANY
March 31
Taylor Few .............................................................. $13,910
Lance Snow ............................................................
5,315
Total accounts receivable ..................................... $19,225
BISHOP COMPANY
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
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
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
Accounts
Cash
Discount Receivable
Sales
Account Credited Explanation
PR
Dr.
Dr.
Cr.
Cr.
Kim Newsom ...................................................

Sale of 7/5................................................................................................
18,032
368
18,400
Sales..................................................................
Cash sales ..............................................................................................
121,370
121,370
Ruth Baker .......................................................

Sale of 7/6................................................................................................
7,350
150
7,500
L.T. Notes Pay..................................................
Note to bank ...........................................................................................
251
20,000
Stephanie Meyer .............................................

Sale of 7/13 .............................................................................................
8,183
167
8,350
Kim Newsom ...................................................

Sale of 7/14 .............................................................................................
4,018
82
4,100
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)
Problem 7-1B (Continued)

Parts 2 and 3
GENERAL LEDGER
Date
June 30
July 31
Date
July 31
31
Date
June 30
July 31
31
Date
June 30
July 21
Date
June 30
Date
July 31
31
257,973
Acct. No. 101

Credit
Balance
100,000
357,973
Accounts Receivable
Explanation
PR
Debit
S3
82,190
R3
Acct. No. 106

Credit
Balance
82,190
38,350
43,840
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit
S3
R3
Explanation
PR
Debit
R3
R. Alcorn, Capital
Explanation
PR
Debit
Explanation
Sales
PR
S3
R3
Debit
Acct. No. 119

Credit
Balance
200,000
54,520
145,480
118,185
27,295
Acct. No. 251
Credit
Balance
200,000
20,000
220,000
Acct. No. 301
Credit
Balance
100,000
Acct. No. 413
Credit
Balance
82,190
82,190
200,390
282,580
Date
July 31
Sales Discounts
Explanation
PR
Debit
R3
767
Acct. No. 415

Credit
Balance
767
Date
July 31
31
Cost of Goods Sold

Explanation
PR
Debit
S3
54,520
R3
118,185
Acct. No. 502

Credit
Balance
54,520
172,705
7-44

Parts 2 and 3 (continued)
Date
July 13
23
30
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
27,295
Inventory ...............................................................
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
Problem 7-1B (Concluded)

Part 4
ALCORN INDUSTRIES
July 31
Ruth Baker ..............................................................
$28,090
Stephanie Meyer.....................................................
15,750
$43,840
Part 5
Analysis component
7-46
Problem 7-2BA (70 minutes)

Parts 1 and 2
Date
July 5
6
13
14
29
30
31
SALES JOURNAL
Invoice
Number PR
Account Debited
Kim Newsom .......................................

918
Ruth Baker...........................................
919
Stephanie Meyer.................................
920
Kim Newsom .......................................
921
Ruth Baker...........................................
922
Stephanie Meyer.................................
923
Totals ....................................................
Page 3
Sales Cr.
18,400
7,500
8,350
4,100
28,090
15,750
82,190
(106/413)

Account
Date Credited
Explanation
PR
Cash
Dr.
Page 3
Sales
Accounts
Discounts Receivable
Dr.
Cr.
Sales
Cr.
Other
Accounts
Cr.
July 15 Kim Newsom ...................................................
Sale of 7/5 ...............................................................................................

18,032
368
18,400
121,370
15 Sales .................................................................
Cash sales..............................................................................................
121,370
16 Ruth Baker .......................................................

Sale of 7/6 ...............................................................................................
7,350
150
7,500
21 L.T. Notes
Note to
251
20,000
Payable .............................................................
bank.........................................................................................................
23 Stephanie
Sale of 7/13 .............................................................................................
8,183
167
8,350
Meyer ................................................................
24 Kim Newsom ...................................................

Sale of 7/14 .............................................................................................
4,018
82
4,100
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
Problem 7-2BA (Continued)

Parts 2 and 3
GENERAL LEDGER
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
Acct. No. 101

Credit
Balance
100,000
357,973
Accounts Receivable
Explanation
PR
Debit
S3
82,190
R3
Acct. No. 106

Credit
Balance
82,190
38,350
43,840
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit

Explanation
PR
Debit
R3
R. Alcorn, Capital
Explanation
PR
Debit
Explanation
Sales
PR
S3
R3
Debit
Sales Discounts
Explanation
PR
Debit
R3
767
7-48
Acct. No. 119

Credit
Balance
200,000
Acct. No. 251
Credit
Balance
200,000
20,000
220,000
Acct. No. 301
Credit
Balance
100,000
Acct. No. 413
Credit
Balance
82,190
82,190
200,390
282,580
Acct. No. 415
Credit
Balance
767

Date
July 13
23
30
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
200,000
Inventory ...............................................................
R. Alcorn, Capital .................................................
Sales......................................................................
Sales discounts.................................................... 767
Totals ....................................................................
$602,580
7-50
$220,000
100,000
282,580
_______
$602,580
Problem 7-2BA (Concluded)

Part 4continued
ALCORN INDUSTRIES
July 31
Ruth Baker ..............................................................
$28,090
Stephanie Meyer.....................................................
15,750
$43,840
Part 5
Analysis component
7-51

Parts 1 and 3
PURCHASES JOURNAL
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
Tahoe Company .........................................

6/30 2/10, n/30
Store Supp./Pryor Inc..................................
7/7 n/10, EOM 125/
Store Equip./Caros Supply...........................
7/8 n/10, EOM 165/
Dixon Company ...........................................

7/17 2/10, n/30
Office Supp./Caros Supply...........................
7/19 n/10, EOM
Tahoe Company ..........................................

7/26 2/10, n/30
Totals
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
The Weekly ......................................................

Advertising Expense ............................................................................
655
575
575
Tahoe Company .............................................
Tahoe Company....................................................................................
6,174
126
15 302
Payroll...............................................................
Sales Salaries Expense........................................................................
621 30,620
30,620
27 303
Dixon Company ..............................................

Dixon Company ....................................................................................
5,684
116
31 304
Payroll...............................................................
621 30,620
___
30,620
31
Totals ................................................................
7-52
()
6,300
73,673
242
61,815
5,800
_____
12,100
(101)
(119)
()
(201)

GENERAL JOURNAL
July 8 Accounts PayablePryor .....................
Store Supplies ...................................
Page 3
201/
125
150
201/
119
2,400
150
24 Accounts PayableDixon ....................

Inventory. .........................................
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
Acct. No. 101

Credit
Balance
100,000
73,673
26,327
Acct. No. 119
Credit
Balance
200,000
2,400
197,600
221,870
242
221,628
Date
July 31
Office Supplies
Explanation
PR
Debit
P3
750
Acct. No. 124

Credit
Balance
750
Date
July 7
8
Store Supplies
Explanation
PR
Debit
P3
1,050
G3
Acct. No. 125

Credit
Balance
1,050
150
900
Date
July 9
Store Equipment
Explanation
PR
Debit
P3
37,710
Acct. No. 165

Credit
Balance
37,710
7-53

Date
July 8
24
31
31
Accounts Payable
Explanation
PR
Debit
G3
150
G3
2,400
P3
D3
12,100
Acct. No. 201

Credit
Balance
(150)
(2,550)
63,780
61,230
49,130

Date
Explanation
PR
Debit
June 30 Balance
Acct. No. 251

Credit
Balance
200,000
R. Alcorn, Capital
Explanation
PR
Debit
Acct. No. 301

Credit
Balance
100,000
Date
July 15
31

Explanation
PR
Debit
D3
30,620
D3
30,620
Acct. No. 621

Credit
Balance
30,620
61,240
Date
July 3
Advertising Expense
Explanation
PR
Debit
D3
575
Acct. No. 655

Credit
Balance
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

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
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 ................................................
R. Alcorn, Capital .................................................
61,240
Sales salaries expense ........................................
Advertising expense ............................................ 575
$349,130
Totals ....................................................................
ALCORN INDUSTRIES
July 31
Pryor, Inc. ....................................................
Tahoe Company ..........................................
Caros Supply ..............................................
7-55
900
9,770
38,460
$49,130
Credit
$ 49,130
200,000
100,000
_______
$349,130
Balance
8,200
5,800
0

Parts 1 and 3
PURCHASES JOURNAL
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
Tahoe Company .........................................

6/30 2/10, n/30
Store Supp./Pryor Inc..................................
7/7 n/10, EOM 125/
Store Equip./Caros Supply...........................
7/8 n/10, EOM 165/
Dixon Company ...........................................

7/17 2/10, n/30
Office Supp./Caros Supply...........................
7/19 n/10, EOM
Tahoe Company ..........................................

7/26 2/10, n/30
Totals
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
The Weekly ......................................................

Advertising Expense ............................................................................
655
575
575
Tahoe Company .............................................
Tahoe Company....................................................................................
6,174
126
15 302
Payroll...............................................................
621 30,620
30,620
27 303
Dixon Company ..............................................

Dixon Company ....................................................................................
5,684
116
31 304
Payroll...............................................................
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)

GENERAL JOURNAL
July 8 Accounts PayablePryor .............................
201/
Store Supplies ..........................................
125
Page 3
150
150
24 Accounts PayableDixon ............................

201/
Purchases Returns and Allowances ........
506
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
Acct. No. 101

Credit
Balance
100,000
73,673
26,327
Acct. No. 119
Credit
Balance
200,000
Date
July 31
Office Supplies
Explanation
PR
Debit
P3
750
Acct. No. 124

Credit
Balance
750
Date
July 7
8
Store Supplies
Explanation
PR
Debit
P3
1,050
G3
Acct. No. 125

Credit
Balance
1,050
150
900
Date
July 9
Store Equipment
Explanation
PR
Debit
P3
37,710
Acct. No. 165

Credit
Balance
37,710
7-57

Date
July 8
24
31
31
Accounts Payable
Explanation
PR
Debit
G3
150
G3
2,400
P3
D3
12,100
Acct. No. 201

Credit
Balance
(150)
(2,550)
63,780
61,230
49,130

Date
Explanation
PR
Debit
June 30 Balance
Acct. No. 251

Credit
Balance
200,000
R. Alcorn, Capital
Explanation
PR
Debit
Acct. No. 301

Credit
Balance
100,000
Date
June 30
Date
July 31
Explanation
Purchases
PR
P3
Debit
24,270
Acct. No. 505

Credit
Balance
24,270
Date
July 24

Explanation
PR
Debit
G3
Acct. No. 506

Credit
Balance
2,400
2,400
Date
July 31
Purchases Discounts
Explanation
PR
Debit
D3
Acct. No. 507

Credit
Balance
242
242
Date
July 15
31

Explanation
PR
Debit
D3
30,620
D3
30,620
Acct. No. 621

Credit
Balance
30,620
61,240
Date
July 3
Advertising Expense
Explanation
PR
Debit
D3
575
Acct. No. 655

Credit
Balance
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

Part 4
ALCORN INDUSTRIES
Trial Balance
July 31
Debit
Credit
Cash ......................................................................
$ 26,327
200,000
Inventory ...............................................................
Office supplies ..................................................... 750
Store supplies ...................................................... 900
37,710
Store equipment...................................................
$ 49,130
200,000
R. Alcorn, Capital .................................................

24,270
Purchases .............................................................
100,000
2,400
Purchases returns and allowances ....................

Purchases discounts ...........................................
61,240
Sales salaries expense ........................................
242
Advertising expense ............................................ 575

$351,772
Totals ....................................................................
_______
ALCORN INDUSTRIES
July 31
Pryor, Inc. ...............................................
Tahoe Company .....................................
900
9,770
Caros Supply .........................................
38,460
Total accounts payable .........................
$49,130
7-60
$351,772

Parts 1 and 2
Date
Account Debited
SALES JOURNAL
Invoice
Number PR
Sales Cr.
Nov. 8 Sid Ragan..................................................

439
10
15
22
24
30
Carlos Mane..............................................
440
Tony Timmons .........................................
441
Carlos Mane..............................................
442
Tony Timmons .........................................
443
Totals .........................................................
Page 2
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
Nov. 1 Office Equip./Blix Supply...............................

11/1 n/10, EOM 163/
4 ATM Industries ...............................................
11/3
2/10, n/30
5 Store Supplies/Globe Company .....................

11/5 n/10, EOM 125/
11 Xu Company ....................................................
11/10
2/10, n/30
16 Globe Company ..............................................

11/16 n/10, EOM
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)
()

Date
Account
Credited
Explanation
PR
Cash
Dr.
Sales
Discount
Dr.
Page 2
Accounts
Receivable
Cr.
Other
Accts.
Cr.
Sales
Cr.
Nov. 2 L.T. Notes Pay..................................................

Note to bank...........................................................................................
251/
86,250
Cost of Goods
Sold Dr.
Inventory Cr.
86,250
15 Sales..................................................................
Cash sales..............................................................................................
27,170
27,170
17,000
18 Sid Ragan .........................................................

Invoice, 11/8 ...........................................................................................
6,223
127
6,350
19 Carlos Mane .....................................................

Invoice, 11/10 .........................................................................................
12,250
250
12,500
25 Tony Timmons ................................................

Invoice, 11/15 .........................................................................................
4,165
85
4,250
30 Sales..................................................................
Cash sales..............................................................................................
______
35,703
___
35,703
30 Totals ................................................................ 171,761
462
23,100
62,873
_____
86,250
(101)
(415)
(106)
(413)
()

Date
Ck.
No. Payee
Nov.12 633
Account Debited
PR
Cash
Cr.
(502/119)
Page 2
Inventory
Cr.
Other
Accounts
Dr.
ATM Industries ................................................

ATM Industries......................................................................................
11,172
228
Accounts
Payable
Dr.
11,400
15 634
Payroll ...............................................................
621
8,435
8,435
19 635
Xu Co. ...............................................................
Xu Company..........................................................................................
2,352
48
30 636
Payroll ...............................................................
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)

GENERAL JOURNAL
Nov. 17 Accounts PayableXu Co. .................
Inventory ..........................................
Page 2
201/
119
487
201/
163
922
487
26 Accounts PayableBlix Supply .........

Office Equipment ............................
922
GENERAL LEDGER
Date
Nov. 30
30
Date
Nov. 30
30
Debit
171,761
Acct. No. 101

Credit
Balance
171,761
30,394
141,367
Accounts Receivable
Explanation
PR
Debit
S2
28,935
R2
Acct. No. 106

Credit
Balance
28,935
23,100
5,835
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
Acct. No. 119

Credit
Balance
40,000
487
39,513
53,800
276
53,524
14,810
38,714
37,400
1,314
Explanation
Office Supplies
PR
Debit
P2
559
Acct. No. 124

Credit
Balance
559
Explanation
Store Supplies
PR
Debit
P2
1,020
Acct. No. 125

Credit
Balance
1,020
7-63

Date
Nov. 1
26
Date
Nov. 17
26
30
30
Date
Nov. 2
Explanation
Explanation
Acct. No. 163

Credit
Balance
5,062
922
4,140
Accounts Payable
PR
Debit
G2
487
G2
922
P2
D2
13,800
Acct. No. 201

Credit
Balance
(487)
(1,409)
20,928
19,519
5,719

Explanation
PR
Debit
R2
Acct. No. 251

Credit
Balance
86,250
86,250
J. Suppan, Capital
PR
Debit
Acct. No. 308

Credit
Balance
40,000
Sales
PR
Debit
S2
R2
Acct. No. 413

Credit
Balance
28,935
28,935
62,873
91,808
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
Acct. No. 415

Credit
Balance
462
Date
Nov. 30
30
Costs of Goods Sold

Explanation
PR
Debit
S2
14,810
R2
37,400
Acct. No. 502

Credit
Balance
14,810
52,210
Date
Nov. 15
30

Explanation
PR
Debit
D2
8,435
D2
8,435
Acct. No. 621

Credit
Balance
8,435
16,870
Date
Nov. 30
Explanation
7-64

Tony Timmons
Date
Nov. 15
24
25
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

Date
Nov. 5
16
Date
Nov. 4
12
Date
Nov. 1
26
Date
Nov. 11
17
19
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

Part 3
SUPPAN COMPANY
Trial Balance
November 30
Debit
Cash .............................................................. $141,367
Accounts receivable ....................................
5,835
Inventory .......................................................
1,314
Office supplies .............................................
559
Store supplies ..............................................
1,020
Office equipment..........................................
4,140
Accounts payable ........................................
Long-term notes payable ............................
J. Suppan, Capital ........................................
Sales..............................................................
Sales discounts............................................
462
Costs of goods sold ....................................
52,210
Sales salaries expense ................................
16,870
Totals ............................................................ $223,777
SUPPAN COMPANY
November 30
Tony Timmons. ............................................
Carlos Mane..................................................
Total accounts receivable ...........................
$3,240
2,595
$5,835
SUPPAN COMPANY
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

Parts 1 and 2
Date
Account Debited
SALES JOURNAL
Invoice
Number
Nov. 8 Sid Ragan................................................... 439
10
15
22
24
30
Carlos Mane...............................................
Tony Timmons ..........................................
Carlos Mane...............................................
Tony Timmons ..........................................
Totals ..........................................................
440
441
442
443
Page 2
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
Nov. 1 Office Equip./Blix Supply...............................

11/1 n/10, EOM 163/
4 ATM Industries ...............................................
11/3
2/10, n/30
5 Store Supplies/Globe Company........................

11/5 n/10, EOM 125/
11 Xu Company ....................................................
11/10
2/10, n/30
16 Globe Company ..............................................

11/16 n/10, EOM
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)
()

Parts 1 and 2--Continued
Account Credited
Date
Explanation
PR
Cash
Dr.
Page 2
Sales
Discount
Dr.
Accounts
Receivable
Cr.
Sales
Cr.
Nov. 2 L.T. Notes Pay..................................................

Note to bank...........................................................................................
251/
86,250
Other
Accts.
Cr.
86,250
15 Sales..................................................................
Cash sales..............................................................................................
27,170
27,170
18 Sid Ragan .........................................................

Invoice, 11/8 ...........................................................................................
6,223
127
6,350
19 Carlos Mane .....................................................

Invoice, 11/10 .........................................................................................
12,250
250
12,500
25 Tony Timmons ................................................

Invoice, 11/15 .........................................................................................
4,165
85
4,250
30 Sales..................................................................
Cash sales..............................................................................................
35,703
___
_____
30 Totals ................................................................
171,761
462
23,100
35,703
62,873
(101)
(415)
(106)
(413)

Date
Ck.
No. Payee
Nov.12 633
Account Debited
PR
Cash
Cr.
()
86,250
Page 2
Purchases
Discounts
Cr.
Other
Accounts
Dr.
ATM Industries ................................................

ATM Industries......................................................................................
11,172
228
Accounts
Payable
Dr.
11,400
15 634
Payroll ...............................................................
621
8,435
8,435
19 635
Xu Co. ...............................................................
Xu Company..........................................................................................
2,352
48
30 636
Payroll ...............................................................
621
8,435
___
8,435
30
Totals ................................................................
7-68
______
30,394
276
16,870
2,400
_____
13,800
(101)
(507)
()
(201)

GENERAL JOURNAL
Nov. 17 Accounts PayableXu Co. .................
Purchases Returns and Allow.. .....
Page 2
201/
506
487
201/
163
922
487
26 Accounts PayableBlix Supply .........

Office Equipment ............................
922
GENERAL LEDGER
Date
Nov. 30
30
Date
Nov. 30
30
Cash
PR
Debit
R2 171,761
D2
Acct. No. 101

Credit
Balance
171,761
30,394
141,367
Accounts Receivable
Explanation
PR
Debit
S2
28,935
R2
Acct. No. 106

Credit
Balance
28,935
23,100
5,835
Explanation
Inventory
PR
Debit
Acct. No. 119

Credit
Balance
40,000
Explanation
Office Supplies
PR
Debit
P2
559
Acct. No. 124

Credit
Balance
559
Explanation
Store Supplies
PR
Debit
P2
1,020
Acct. No. 125

Credit
Balance
1,020
Office Equipment
PR
Debit
P2
5,062
G2
Acct. No. 163

Credit
Balance
5,062
922
4,140
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
Acct. No. 201

Credit
Balance
(487)
(1,409)
20,928
19,519
5,719

Explanation
PR
Debit
R2
Acct. No. 251

Credit
Balance
86,250
86,250
Explanation
J. Suppan, Capital
Date
Explanation
PR
Debit
Nov. 1 Beg. bal.
Acct. No. 308

Credit
Balance
40,000
Sales
PR
Debit
S2
R2
Acct. No. 413

Credit
Balance
28,935
28,935
62,873
91,808
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
Acct. No. 415

Credit
Balance
462
Acct. No. 505
Credit
Balance
14,287
Date
Nov. 17

Acct. No. 506
Explanation
PR
Debit
Credit
Balance
G2
487
487
Date
Nov. 30
Purchases Discounts
Explanation
PR
Debit
D2
7-70
Acct. No. 507

Credit
Balance
276
276

Date
Nov. 15
30

Explanation
PR
Debit
D2
8,435
D2
8,435
Acct. No. 621

Credit
Balance
8,435
16,870

Date
Nov. 15
24
25
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

Date
Nov. 5
16
Date
Nov. 4
12
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

Date
Nov. 1
26
Date
Nov. 11
17
19
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

Part 3continued
SUPPAN COMPANY
November 30
Tony Timmons. ...........................................
$3,240
Carlos Mane.................................................
2,595
Total accounts receivable ..........................
$5,835
SUPPAN COMPANY
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
Account Debited
Number PR
Sales Cr.
Liu Corp......................................................
n/a
5,200
KC, Inc. .......................................................

n/a
5,800
Delta Co. .....................................................

n/a
3,220
Wildcat Services .......................................

n/a
2,800
IFM Company ............................................

n/a
2,220
Totals ..........................................................
19,240
Page 2
Inventory Cr.
3,560
4,640
2,660
2,002
1,048
13,910
(106/413)
(502/119)

Account Credited
Date
PR
Jan. 9 Gomez Co .....................................................

Invoice, n/a
16 Services Revenue .........................................

Cash Sales
22
Feb.11
Mar. 9
16
31
Explanation
Liu Corp.........................................................
Invoice, 1/13
Alexs Eng. Co..............................................

Invoice, 1/11
Delta Co .........................................................
Invoice, 2/23
Services Revenue .........................................

Cash Sales
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
Serial Problem, Business Solutions (Continued)

PURCHASES JOURNAL
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
17 n/a Kansas Corp .............................................

Kansas Corp...............................
5,742
623
31 n/a Lyn Addie...................................................
Wages Expense .........................
1,250
131
Feb. 1 n/a Hillside Mall ...............................................
Prepaid Rent...............................
2,475
3 n/a Kansas Corp .............................................

Kansas Corp...............................
8,414
655
5 n/a Not specified .............................................
Advertising Expense ................
600
302
15 n/a S. Rey .........................................................
S. Rey, Withdrawals ..................
4,800
623
26 n/a Lyn Addie...................................................
Wages Expense .........................
1,000
676
27 n/a S. Rey .........................................................
Mileage Expense .......................
192
684
Mar. 11 n/a Not Specified.............................................
Repairs Expense .......................
960
19 n/a Harris Off. Prod .........................................

Harris Office Products ..............
3,830
676
31 n/a S. Rey .........................................................
Mileage Expense .......................
128
31
Totals ..........................................................
30,616
(101)
7-75
Page 2
Other
Accounts
Dr.
Other
Accounts
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)
Serial Problem, Business Solutions (Concluded)

Part 3
GENERAL JOURNAL
Page 2
2012
Jan. 5 Cash ................................................................... 101

S. Rey, Capital .......................................... 301
25,000
25,000
Additional investment by owner.
11 Accounts ReceivableAlexs Eng. Co .......... 106.1

Unearned Computer Services Revenue ......... 236
Computer Services Revenue .................. 403
5,500
1,500
7,000
Completed work on project.
20* Sales Returns and Allowances ....................... 414

Accounts ReceivableLiu Corp ............ 106.5
500
500
Customer returned defective goods.

* An optional additional entry for Jan. 20 is to debit Loss from
Defective Merchandise and credit Cost of Goods Sold for $320.
24 Accounts PayableKansas Corp................... 201

Merchandise Inventory ........................... 119
496
496
Returned merchandise for credit.
29 No entry recorded in the journal (but memorandum noted).

Mar. 24 Accounts ReceivableEasy Leasing ............ 106.3
Computer Services Revenue .................. 403
Billed customer for services.
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
Accounts Receivable Dr. Cost of Goods Sold Dr.

Sales Cr.
Inventory Cr.
May 2 Hensel Company ....................................

8785
6,100
4,100
16 Hensel Company ....................................

8786
3,990
1,890
22 Lee Services ...........................................

8787
6,850
4,990
26 Crane Corp. .............................................

8788
14,210
8,230
31 Totals..........................................................
31,150
19,210
(106/413)
(502/119)
7-77
Comprehensive Problem, Colo Company (Part 1Continued)

PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
May 4 Store Supp./Gear Supp ..................................

5/04
n/10, EOM
10
11
17
24
25
31
Office Equip./Gear Supp ................................

5/10
n/10, EOM
Garcia, Inc ........................................................
5/10
2/10, n/30
Fink Corp..........................................................
5/14
2/10, n/60
Store Supp./Gear Supp ..................................
5/24
n/10, EOM
Peyton Products .............................................
5/23
2/10, n/30
Totals ................................................................
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..................................................................................................
May 5 Knox, Inc...........................................................

4,459
91
4,550
9 Store Supplies .................................................
Sold store
125
supplies ..................................................................................................
350
11 Hensel Company ............................................

Sale of May 2 ..........................................................................................
Account Credited
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..................................................................................................
30 Lee Services ....................................................

6,713
137
6,850
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)
Comprehensive Problem, Colo Company (Part 1Continued)

Date
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
Peyton Products. ............................................

Peyton Products....................................................................................
6,174
126
Payroll ...............................................................
621
5,320
Office Salaries Expense .......................................................................
620
8,470
3,150
Garcia, Inc. .......................................................

Garcia, Inc...............................................................................................
8,624
176
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 ...............................................................
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
2 Sales Returns and Allow. .................................................

414
Accounts ReceivableKnox, Inc. ..............................
106/
Issued a credit memo for returns.
175
3 Accounts PayablePeyton Products .............................

201/
Inventory .......................................................................
119
798
12 Accts. PayableGear Supply Co. ...................................

201/
Office Equipment .........................................................
163
854
7-79
175
798
854
Accounts
Payable
Dr.
6,300
8,800
13,650
_____
28,750
(201)
Comprehensive Problem, Colo Company (Continued)
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
Balance Sheet or Statement of Owners Equity

Debit
Credit
135,911
18,200
189,519
504
2,632
2,765
25,690
10,227
38,920
18,123
53,059
308,085
7,000
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

Part 2continued
Adjusting entries (Part 2)
May 31 Insurance Expense .....................................................
637
Prepaid Insurance .................................................
128
553
553
To adjust for expired insurance.
31 Store Supplies Expense ............................................

651
Store Supplies .......................................................
125
669
669
To adjust for store supplies used.
31 Office Supplies Expense ...........................................

650
`
Office Supplies ......................................................
124
289
289
To adjust for office supplies used.
31 Depreciation ExpenseStore Equip..........................

613
Accumulated Depr.Store Equip. ........................
166
567
567
To record depreciation of store eq.
31 Depreciation ExpenseOffice Equip.........................

612
Accumulated Depr.Office Equip. .......................
164
To record depreciation of office eq.
7-81
329
329

Part 2continued
Closing entries (Part 2)
May 31 Sales ............................................................................
413
156,422
Income Summary ..................................................
901
156,422
To close temporary accounts with

credit balances.
May 31 Income Summary .......................................................

901
124,775
Sales Returns and Allowances ............................
414
Sales Discounts ....................................................
415
Cost of Goods Sold...............................................
502
Depr. Expense, Office Equipment .......................
612
Depr. Expense, Store Equipment ........................
613
Office Salaries Expense .......................................
620
Sales Salaries Expense ........................................
621
Insurance Expense ...............................................
637
Rent Expense, Office Space.................................
641
Rent Expense, Selling Space ...............................
642
Office Supplies Expense ......................................
650
Store Supplies Expense .......................................
651
Utilities Expense ...................................................
690
175
350
99,910
329
567
6,300
10,640
553
742
2,968
289
669
1,283
To close temporary accounts with

debit balances.
May 31 Income Summary ..................................... 901

J. Colo, Capital .................................... 301
31,647
31,647
To close income summary to

owners capital.
May 31 J. Colo, Capital ......................................... 301

J. Colo, Withdrawals ........................... 302
To close withdrawals to owners capital.
7-82
7,000
7,000

Part 2continued
GENERAL LEDGER
Cash
PR
Date
Explanation
Apr. 30 Balance
May 31
31
R2
D2
Debit
142,772
Acct. No. 101

Credit
Balance
50,247
193,019
57,108
135,911
Date
Apr. 30
May 2
31
31
Accounts Receivable
Explanation
PR
Debit
Balance
G2
S2
31,150
R2
Acct. No. 106

Credit
Balance
4,725
175
4,550
35,700
17,500
18,200
Date
Apr. 30
May 3
31
31
31
31
Merchandise Inventory
Explanation
PR
Debit
Balance
G2
D2
P2
70,722
R2
S2
Acct. No. 119

Credit
Balance
220,080
798
219,282
575
218,707
289,429
80,700
208,729
19,210
189,519
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
Acct. No. 124

Credit
Balance
430
793
289
504
Acct. No. 125
Credit
Balance
2,447
3,021
350
2,671
3,301
669
2,632

Part 2continued
Prepaid Insurance
Date
Explanation
PR
Debit
Apr. 30 Balance
May 31
G2
Acct. No. 128

Credit
Balance
3,318
553
2,765
Office Equipment
Date
Explanation
PR
Debit
Apr. 30 Balance
May 10
P2
4,074
12
G2
Acct. No. 163

Credit
Balance
22,470
26,544
854
25,690
Accumulated DepreciationOffice Equipment

Acct. No. 164
Date
Explanation
PR
Debit
Credit
Balance
Apr. 30 Balance
9,898
May 31
G2
329
10,227
Date
Explanation
Apr. 30 Balance
Store Equipment
PR
Debit
Acct. No. 165

Credit
Balance
38,920
Accumulated DepreciationStore Equipment

Acct. No. 166
Date
Explanation
PR
Debit
Credit
Balance
Apr. 30 Balance
17,556
May 31
G2
567
18,123
28,750
Acct. No. 201

Credit
Balance
7,098
6,300
5,446
76,363
81,809
53,059
Jenny Colo, Capital

Date
Explanation
PR
Debit
Apr. 30 Balance
May 31
G2
31
G2
7,000
Acct. No. 301

Credit
Balance
308,085
31,647
339,732
332,732
Date
Explanation
Apr. 30 Balance
May 3
12
31
31
Accounts Payable
PR
Debit
G2
G2
P2
D2
7-84
798
854

Part 2continued
Date
May 29
31
Jenny Colo, Withdrawals

Explanation
PR
Debit
D2
7,000
G2
156,422
Acct. No. 413

Credit
Balance
31,150
31,150
125,272
156,422
0
Date
May 2
31
Sales Returns and Allowances

Explanation
PR
Debit
G2
175
G2
Acct. No. 414

Credit
Balance
175
175
0
Date
May 31
31
Sales Discounts
Explanation
PR
Debit
R2
350
G2
Acct. No. 415

Credit
Balance
350
350
0
Date
May 31
31
31
Cost of Goods Sold

Explanation
PR
Debit
S2
19,210
R2
80,700
G2
Acct. No. 502

Credit
Balance
19,210
99,910
99,910
0
Date
May 31
31
31
Explanation
Sales
PR
S2
R2
G2
Acct. No. 302

Credit
Balance
7,000
7,000
0
Debit
Date
May 31
31
Depreciation ExpenseOffice Equipment

Acct. No. 612
Explanation
PR
Debit
Credit
Balance
G2
329
329
G2
329
0
Date
May 31
31
Depreciation ExpenseStore Equipment

Acct. No. 613
Explanation
PR
Debit
Credit
Balance
G2
567
567
G2
567
0
7-85

Part 2continued
Date
May 15
30
31
Office Salaries Expense

Explanation
PR
Debit
D2
3,150
D2
3,150
G2
Acct. No. 620

Credit
Balance
3,150
6,300
6,300
0
Date
May 15
30
31

Explanation
PR
Debit
D2
5,320
D2
5,320
G2
Acct. No. 621

Credit
Balance
5,320
10,640
10,640
0
Date
May 31
31
Insurance Expense
Explanation
PR
Debit
G2
553
G2
Acct. No. 637

Credit
Balance
553
553
0
Date
May 1
31
Rent Expense, Office Space

Explanation
PR
Debit
D2
742
G2
Acct. No. 641

Credit
Balance
742
742
0
Date
May 1
31
Rent Expense, Selling Space

Explanation
PR
Debit
D2
2,968
G2
Acct. No. 642

Credit
Balance
2,968
2,968
0
Date
May 31
31
Office Supplies Expense

Explanation
PR
Debit
G2
289
G2
Acct. No. 650

Credit
Balance
289
289
0
Date
May 31
31
Store Supplies Expense

Explanation
PR
Debit
G2
669
G2
Acct. No. 651

Credit
Balance
669
669
0
7-86

Part 2continued
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
Acct. No. 690

Credit
Balance
1,283
1,283
0
Acct. No. 901
Credit
Balance
124,775
156,422
31,647
0
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

Part 2continued
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
Gear Supply Co.

PR
Debit
P2
P2
G2
854
P2
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

Part 3
COLO COMPANY
Income Statement
For Month Ended May 31, 2011
Revenue
Sales...........................................................................
Less: Sales discounts ............................................
Sales returns and allowances .....................
Net sales ....................................................................
Less: Cost of goods sold .........................................
Gross profit on sales ..................................................
Operating expenses
Selling expenses
Depreciation expenseStore equipment .............
Sales salaries expense ...........................................
Rent expenseSelling space ................................
Store supplies expense ..........................................
Total selling expenses ...........................................
General and administrative expenses
Depreciation expenseOffice equipment ............
Office salaries expense ..........................................
Insurance expense .................................................
Rent expenseOffice space .................................
Office supplies expense .........................................
Utilities expense......................................................
Total general and administrative expenses .........
Total operating expenses ........................................
Net income ..................................................................
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

Part 3continued
COLO COMPANY
Statement of Owners Equity
For Month Ended May 31, 2011
Jenny Colo, Capital, April 30, 2011 ................
Plus: Net income .............................................
Less: Withdrawals by owner ..........................
Jenny Colo, Capital, May 31, 2011 .................
$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
Comprehensive Problem, Colo Company (Concluded)

Part 4
COLO COMPANY
Post-Closing Trial Balance
May 31, 2011
Cash ......................................................................$135,911
Accounts receivable ............................................ 18,200
Merchandise inventory ........................................ 189,519
Office supplies .....................................................
504
Store supplies ......................................................
2,632
Prepaid insurance ................................................
2,765
Office equipment.................................................. 25,690
Accumulated depreciationOffice equip. ........
Store equipment................................................... 38,920
Accumulated depreciationStore equip. .........
Jenny Colo, Capital.............................................. _______
Totals ....................................................................$414,141
COLO COMPANY
May 31, 2011
Crane Corp. .................................................. $14,210
Hensel Company .........................................
3,990
Total accounts receivable ........................... $18,200
COLO COMPANY
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
1. Research In Motions Note 18 identifies its single reported business

segment.
2. Research In Motion identifies and describes its single reportable
segment; its operations are substantially all related to the research,
design, manufacture, and sales of wireless communications products,
services and software.
3. Solution depends on the most recent information obtained.
Comparative Analysis
1.
BTN 7-2
Research In Motion - Current Year Revenue/Segment Assets

Domestic segment:
$8,620 / [($4,059 + $2,647)/2] = 257.1%
International segment: $6,333 / [($6,145 + $5,454)/2] = 109.2%

Research In Motion One Year Prior Revenue/Segment Assets
Domestic Segment:
$6,968 / [($2,647 + $1,739)/2] = 317.7%
International Segment: $4,097 / [($5,454 + $3,772)/2] = 88.8%

Apple Current Year Revenue/Segment Assets
Domestic Segment:
$22,325 / [($2,698 + $ 2,269)/2] =
International Segment: $20,580 / [($495
+ $410)/2]
898.9%
= 4,548.1%
Apple One Year Prior Revenue/Segment Assets

Domestic Segment:
$20,893/ [($2,269 + $1,752)/2] = 1,039.2%
International Segment: $16,598 / [($410 + $260)/2]

2.
= 4,954.6%
Apples revenue earned as a percentage of its segment assets is

markedly higher than Research In Motions for both years and for both
domestic and international segments. Apple earns higher revenue for
assets employed in international segments versus domestic segments
for both years and Research In Motion has the opposite result with a
higher return for domestic segments.
7-92
Ethics Challenge
BTN 7-3
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 and 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
have a responsibility to the companys stakeholders and the public.
In our society, auditors provide credibility to financial reporting by
offering professional audit opinions about companies financial
statements. While it is sometimes difficult to be responsible to clients,
as well as to the stakeholders and the public, auditors must maintain
their independence to keep the publics trust.
3. Since Erica Gray is a sole practitioner it is questionable whether she
can consult on the clients accounting system and then remain
objective in subsequent years when she 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,
Erica Gray would need to do both jobs herself, making it difficult to
maintain independence in fact and appearance.
(Note to instructors: The Sarbanes-Oxley Act specifically prohibits auditors
from providing financial information and system designs for their SEC audit
clients. This was codified by the SEC [Final Ruling 68].)
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
Taking It to the Net
BTN 7-5
(See Dells Note 14 Segment Information)
1. Large Enterprise; Public; Small and Medium Business; and Consumer.

2. The Public segment reports $1,361 million of operating income and the
Large Enterprise segment reports $2,604 million of assets. These totals
are slightly larger than its next largest segments, which is Small and
Medium Business segment with $1,040 million in operating income and
the Public segment with $2,464 million in assets.
3. Dells Operating Income and Total Assets by Segment
($ millions)
Operating
Income 2010
Total Assets 2010 :

Total Assets 2009
Segment Return
on Assets
Large Enterprise........... $ 819
$2,604 : $2,335
33.2%
Public ............................ $1,361
$2,464 : $1,997
61.0%
Small & Medium

$1,040
Business .....................
$1,051 : $1,123
95.7%
Consumer ..................... $ 107
$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)
2010 Fiscal Year
Mobility ................................................................ $16,610

Desktop PCs ....................................................... 12,947
Software and peripherals ...................................
9,499
Servers and networking .....................................
6,032
Services ...............................................................
5,622
Storage.................................................................
2,192
31.4%
24.5
18.0
11.4
10.6
4.1
Totals ................................................................... $52,902
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
1. The following special journals are likely to be used:

Sales journal to record credit sales
Cash receipts journal to record all cash receipts
Purchases journal to record credit purchases
Cash disbursements journal to record all cash payments
General journal to record all transactions not in special journals
The company also is likely to use the following subsidiary ledgers:
Accounts receivable subsidiary ledger to track amounts owed by
individual customers
Accounts payable ledger to track amounts owed to individual vendors
Inventory ledger to keep track of all different inventory items
(including inventory ready to sell, inventory in the process of being
completed, and materials to be used in the production of inventory)
2.
Year
One Year
Hence
Sales..............................
$100.0 mil
Computations
Two Years Three Years Four Years

Hence
Hence
Hence
Five Years
Hence
120.0 mil
$207.0 mil
$138.0 mil
$172.5 mil
Year 2: $100.0 mil x 120% = $120.0 mil

Year 3: $120.0 mil x 115% = $138.0 mil
Year 4: $138.0 mil x 125% = $172.5 mil
Year 5: $172.5 mil x 120% = $207.0 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
1. Nokia has the following reported segments:

Devices and services
NAVTEQ
Nokia Siemens Networks
2. Nokia discloses dollar amounts for the following line items:
Profit and Loss Information
i. Net sales to external customers
ii. Net sales to other segments
iii. Depreciation and amortization
iv. Impairment
v. Operating profit/(loss)
vi. Share of results of associated companies
Balance sheet information
i. Capital expenditures
ii. Segment assets
iii. Investments in associated companies
iv. Segment liabilities
3. Yes. On all financial measures reported except for segment assets, the
Devices and Services segment dominates Nokias other segments. The
Nokia Siemens Networks segment dominates other segments on the
basis of segment assets.
7-96

HWChap 007

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

HWChap 007

Uploaded by

Copyright:

Available Formats

Chapter 07 - Accounting Information Systems

The five components of an accounting system are: source documents, input

Chapter 07 - Accounting Information Systems

Quick Study 7-2 (10 minutes)

Chapter 07 - Accounting Information Systems

Quick Study 7-3 (5 minutes)

enterprise resource planning

Quick Study 7-4 (10 minutes)

Cash Disbursements Journal

Quick Study 7-5 (15 minutes)

Owner contributed an auto to the business.

Mar. 16 [In Sales Journal]

Chapter 07 - Accounting Information Systems

Quick Study 7-6 (15 minutes)

Quick Study 7-7 (20 minutes)

June 1 Krause, Inc.........................

Chapter 07 - Accounting Information Systems

Quick Study 7-8 (10 minutes)

Quick Study 7-9A (20 minutes)

June 1 Krause, Inc.........................

Quick Study 7-10 (30 minutes)

Chapter 07 - Accounting Information Systems

Quick Study 7-10 (Concluded)

Quick Study 7-11 (15 minutes)

Americas ....................... $6,637

Interpretation: The Americas segment reports the highest return on

Chapter 07 - Accounting Information Systems

Quick Study 7-11 (Concluded)

Percent of Total Sales

*0.1% rounding error

Interpretation: Sales of Apples iPhone make up its largest percentage of

Quick Study 7-12 (15 minutes)

Chapter 07 - Accounting Information Systems

Mar. 7 J. Dryer ......................................

Exercise 7-2 (10 minutes)

Cash Receipts Journal

Exercise 7-3A (15 minutes)

Accounts Receivable Dr.

Chapter 07 - Accounting Information Systems

Exercise 7-4 (20 minutes)

Date Account Credited

Nov. 9 Notes Payable........................

Exercise 7-5 (10 minutes)

Exercise 7-6A (25 minutes)

Chapter 07 - Accounting Information Systems

Exercise 7-7 (15 minutes)

ACCOUNTS PAYABLE LEDGER

Exercise 7-8 (25 minutes)

Chapter 07 - Accounting Information Systems

Exercise 7-9 (10 minutes)

Exercise 7-10A (25 minutes)

Purchases Other Accounts

Exercise 7-11 (10 minutes)

The June 5 purchase would be recorded in the Purchases Journal.

(ii) The June 14 payment would be recorded in the Cash

Chapter 07 - Accounting Information Systems

Exercise 7-12 (30 minutes)

Sales Returns and

Cost of Goods Sold

Accounts Receivable Controlling Account

Chapter 07 - Accounting Information Systems

Exercise 7-13 (10 minutes)