Accounting Information Systems: Questions

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.
McGraw-Hill Companies, 2009

Solutions Manual, Chapter 7
135
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 11, Best Buy discusses its two reportable segments, Domestic and
International. Domestic is by far the larger of the two segments.
14. No. Information regarding the net income earned by business segments is not
found on Circuit Citys Consolidated Statement of Operations (Income Statement).
However, notes to its financial statements (not reproduced in Appendix A) include
the information regarding business segments, domestic and international.
15. RadioShacks two reportable segments are company-operated stores and kiosks.
16. No. Information regarding any assets owned by Apples business segments is not
reported on the balance sheet. However, the information is detailed in the notes to
its financial statements (not reproduced in Appendix A).
QUICK STUDIES
Quick Study 7-1 (10 minutes)
1.
4.
2.
5.
3.

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

136
Fundamental Accounting Principles, 19th Edition

1.
7.
2.
8.
3.
9.
4.
10.
5.
11.
6.
12.

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

Purchases Journal
Cash Disbursements Journal
Sales Journal
Purchases Journal

General Journal
Nov. 2
[In Purchases Journal]
Nov. 12
Automobiles............................................................. 17,000
R. Adrian, Capital..............................................
17,000
Owner contributed an auto to the business.
Nov. 16
[In Sales Journal]
Nov. 19
Sales Returns and Allowances...............................

Accounts ReceivableL. Norton....................
175
175
Customer returned (worthless) merchandise.

137

Segment
Segment
Income
Americas.......................$1,665
Average
Segment Assets
$800
Segment return
on Assets
208.1%
Europe...........................
607
380
159.7
Japan.............................
201
173
116.2
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.
Product
Product Sales
Percent of Total Sales
iPod.................................................
$ 7,676
45.3%
Desktops........................................
3,319
19.6
Portables........................................
4,056
23.9
Other...............................................
1,885
11.1
Total................................................
$16,936
99.9%*
*0.1% rounding error
Interpretation: Sales of Apples iPod make up its largest percentage of total

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

138
EXERCISES
Exercise 7-1 (15 minutes)
SALES JOURNAL
Date
Account Debited
Invoice
Number
PR
Accounts
Receivable Dr.
Sales Cr.
Cost of Goods
Sold Dr.
Inventory Cr.
Mar. 7 K. Anklam..................................
5704
1,700
1,215
12 B. Swanson...............................
5705
484
303
25
785
500
5706

Mar. 2
5
7
8
12
16
19
25

Purchases Journal
Sales Journal
Sales Journal
Sales Journal
Exercise 7-3A (15 minutes)
Date
SALES JOURNAL
Invoice
Accounts Receivable Dr.
Account Debited
Number PR
Sales Cr.
Mar. 7 K. Anklam..................................
5704
1,700
12 B. Swanson...............................
5705
484
25 F. Sayers....................................
5706
785
139

CASH RECEIPTS JOURNAL
Date
Account Credited
Explanation
Account
Sales
s
Other
Cash Discount Recble. Sales Accounts
PR Dr.
Dr.
Cr.
Cr.
Cr.
Nov. 9 Notes Payable.............

Note to bank
3,375
3,375
13 I. Uno, Capital..............
Contribution
4,675
4,675
1 Sales..........................
Cash sale
261
27 E. Han.........................
Invoice, 11/7
995
261
Cost of
Goods
Sold Dr.
Inventory
Cr.
147
20
1,015

Nov. 3
7
9
13
18
22
27
30
Purchases Journal
Sales Journal

Date
Account
Credited
Explanation
PR
Sales
Discoun
t
Dr.
Cash
Dr.
Accts.
Rec.
Cr.
Sales
Cr.
Other
Accounts
Cr.
Nov. 9 Notes Payable...........

Note to bank
3,375
3,375
13 I. Uno, Capital..... Contribution
4,675
4,675
18 Sales........................
Cash sale
261
27 E. Han......................
Invoice, 11/7
995
261
20
1,015

140

PURCHASES JOURNAL
Account
s
Payable
Cr.
Inventory
Dr.
n/30
5,400
5,400
14 Store Supplies/
Chang Co.................
6/14
n/30
460
17 Monder
6/17
Company....................
n/30
480
Date
June
1
Date
of
Invoice
Terms
Krause, Inc..................
6/01
Account
PR
Office
Supplies
Dr.
Other
Accounts
Dr.
460
480

June 1
8
14
17
24
28
29
Purchases Journal
Sales Journal
Purchases Journal
Purchases Journal

PURCHASES JOURNAL
Date
Account
Date
of
Invoice
June Krause, Inc..................

6/01
1
14 Store Supplies/
Chang Co.................
6/14
17 Monder
6/17
Account
s
Payable
Cr.
Purchases
Dr.
n/30
5,400
5,400
n/30
n/30
460
480
Terms
PR
Office
Supplies
Dr.
Other
Accounts
Dr.
460
480
141
Company....................

142

CASH DISBURSEMENTS JOURNAL
Payee
210
Major Corp.........................
Store Supplies..............................................
436
17
211
City Bank...........................
Notes Payable..............................................
1,500
1,500
28
212
Factow..............................
Factow........................................................
3,267
33
29
213
M. Robbins........................
Salaries Expense...........................................
1,675
1,675
30
214
Acco, Inc............................
Acco, Inc......................................................
2,700
Date
Apr.
9
Account
Debited
PR
Cash
Cr.
Other Accounts
Inventory Accounts Payable
Cr.
Dr.
Dr.
Ck.
No.
436
3,300
2,700

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

143

Date
Ck.
No.
Apr. 210
9
Payee
Account
Debited
PR
Purchases Other Accounts

Cash Discounts Accounts Payable
Cr.
Cr.
Dr.
Dr.
Major Corp.........................
Store Supplies..............................................
436
436
17
211
City Bank...........................
Notes Payable..............................................
1,500
1,500
28
212
Factow..............................
Factow........................................................
3,267
33
29
213
M. Robbins........................
Salaries Expense...........................................
1,675
1,675
30
214
Acco, Inc............................
Acco, Inc......................................................
2,700
3,300
2,700

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.

144

Part 1
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Anna Page
May 1,161 May 20
17
500
Sara Reed
May 2,610
10
25
464
Aaron Reckers
May 6 3,550
Part 2
GENERAL LEDGER
Accounts Receivable
May 7,785
May 500
31
20
Inventory
May 5,805
31
Sales
May
31
7,785
Sales Returns and

Allowances
May 20 500
Cost of Goods Sold

May 31 5,805
Part 3
RIVER VIEW
Schedule of Accounts Receivable
May 31
Anna Page..............................................
Sara Reed...............................................
Aaron Reckers.......................................
Total accounts receivable....................
$ 661
3,074
3,550
$7,285
Accounts Receivable Controlling Account

Total debit...................................................
$7,785
Credit for return.......................................... (500)
Balance as of May 31.................................
$7,285
145

Part 1
ACCOUNTS RECEIVABLE LEDGER
June 8
Eric Horner
6,929
June 2
29
Joe Mack
4,100
7,432
June 14
Hong Jiang
23,329
June 10
20
Tess Wilson
15,252
11,400
Part 2
GENERAL LEDGER
Accounts Receivable
June 30 68,442
Sales
June 30
68,442
Part 3
BOYAR COMPANY
June 30
Eric Horner...............................................
$ 6,929
Hong Jiang...............................................23,329
Joe Mack..................................................11,532
Tess Wilson..............................................26,652
Total accounts receivable.......................
$68,442

146

1.
2.
3.
4.
5.
When the schedule of accounts payable is prepared.

When crossfooting the Purchases Journal.
When the trial balance is prepared.
Segment
Segment Income
(in $ mil.)
2009
2008
Segment Assets
(in $ mil.)
2009
2008
Segment Return
on Assets
2009
Specialty
Skiing Group.............. $ 53
$ 47
$ 539
$ 398
11.3%
Skating Group............
48
35
16.9%
Specialty Footwear.......
18
15
143
106
14.5%
Other Specialty...........
32
23
32.7%
Subtotal.......................
87
69
762
562
South America............
26
29
281
207
10.7%
United States..............
45
33
15.4%
Europe.........................
15
11
30.8%
Subtotal.......................
36
37
341
251
Total............................... $123
$106
$1,103
$ 813
General Merchandise
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 32.7% in 2009, whereas the skiing segment has the
lowest return on segment assets at 11.3%.
For the geographic segments, the highest segment return on assets is
produced by the European segment with 30.8% in 2009, whereas the South
American segment has the lowest return of 10.7%.
147
PROBLEM SET A
Problem 7-1A (70 minutes)
Parts 1, 2 and 3
SALES JOURNAL
Invoice
Date
Account Debited
Number
PR
Sales Cr.
760
Apr. 3 Ty Afton...............................................
5,200
761
5 Debra Kohn.........................................
9,300
762
11 Pat Orlof..............................................
12,300
763
13 Ty Afton...............................................
6,900
764
27 Debra Kohn.........................................
3,460
765
27 Pat Orlof..............................................
7,100
30 Totals...................................................
Date
Apr.13
14
16
18
20
23
30
30

Sales
Cash
Discoun
Account Credited Explanation
PR
Dr.
t
Dr.
Ty Afton...............................................
Sale of 4/3
5,096
104
Debra Kohn.........................................
Sale of 4/5
9,114
Sales....................................................
Cash Sales
54,240
L.T. Notes Payable.................................
Note to bank 251
55,000
Pat Orlof..............................................
Sale of 4/11
12,054
Ty Afton...............................................
Sale of 4/13
6,762
Sales....................................................
Cash sales
72,100
Totals................................................... 214,366
186
Page 3
Cost of Goods Sold Dr.
Inventory Cr.
44,260
2,100
7,600
7,300
3,600
2,470
4,895
27,965
(106/413)
(502/119)
Accounts
Receivable
Cr.
Sales
Cr.
Other
Accts.
Cr.
Page 3
Cost of Goods
Sold Dr.
Inventory Cr.
5,200
9,300
54,240
42,400
55,000
246
138
___
674
12,300
6,900
_____
33,700
72,100
126,340
_____
55,000
61,500
103,900

148
(101)
(415)
(106)
(413)
()
(502/119)

149
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
PR
Debit
R3
214,366
Acct. No. 101

Credit
Balance
85,000
299,366
Accounts Receivable
Explanation
PR
Debit
S3
44,260
R3
Acct. No. 106

Credit
Balance
44,260
33,700
10,560
Explanation
Explanation
Inventory
PR
Debit
S3
R3
Long-Term Notes Payable
Explanation
PR
Debit
R3
B. Moore, Capital
Explanation
PR
Debit
Explanation
Sales
PR
S3
R3
Debit
Acct. No. 119

Credit
Balance
152,000
27,965
124,035
103,900
20,135
Acct. No. 251
Credit
Balance
137,000
55,000
192,000
Acct. No. 301
Credit
Balance
100,000
Acct. No. 413
Credit
Balance
44,260
44,260
126,340
170,600
Date
Apr. 30
Sales Discounts
Explanation
PR
Debit
R3
674
Acct. No. 415

Credit
Balance
674
Date
Apr. 30
30
Cost of Goods Sold

Explanation
PR
Debit
S3
27,965
R3 103,900
Acct. No. 502

Credit
Balance
27,965
131,865

150

Parts 2 and 3 (continued)
Date
Apr. 3
13
13
23
Date
Apr. 5
14
27
Date
Apr. 11
20
27
Explanation
Explanation
Explanation
Ty Afton
PR
Debit
S3
5,200
R3
S3
6,900
R3
Credit
5,200
6,900
Debra Kohn
PR
Debit
S3
9,300
R3
S3
3,460
Pat Orlof
PR
Debit
S3
12,300
R3
S3
7,100
Credit
9,300
Credit
12,300
Balance
5,200
0
6,900
0
Balance
9,300
0
3,460
Balance
12,300
0
7,100
Part 4
MOORE COMPANY
Trial Balance
April 30
Cash......................................................................
Accounts receivable............................................
Inventory...............................................................
Long-term notes payable....................................
B. Moore, Capital..................................................
Sales......................................................................
Sales discounts....................................................
Cost of goods sold..............................................
Totals.....................................................................
Debit
$299,366
10,560
20,135
Credit
$192,000
100,000
170,600
674
131,865
$462,600
_______
$462,600

151
Problem 7-1A (Concluded)

Part 4 (continued)
MOORE COMPANY
April 30
Debra Kohn................................................. $ 3,460

Pat Orlof......................................................
7,100
Total accounts receivable.......................... $10,560
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.

152
Problem 7-2AA (70 minutes)

Parts 1 and 2
Date
SALES JOURNAL
Invoice
Number PR
Account Debited
Page 3
Sales Cr.
Apr. 3 Ty Afton.................................................
760
5,200
5 Debra Kohn..........................................
761
9,300
11 Pat Orlof................................................
762
12,300
13 Ty Afton.................................................
763
6,900
27 Debra Kohn..........................................
764
3,460
27 Pat Orlof................................................
765
7,100
30 Total.....................................................
44,260
(106/413)

Date
Account
Credited
Explanation
PR
Cash
Dr.
Apr. Ty Afton.................................................
Sale of 4/3
5,096
13
Page 3
Sales
Accounts
Discounts Receivable
Dr.
Cr.
104
5,200
186
9,300
Sales
Cr.
Other
Accounts
Cr.
14
Debra Kohn............................................
Sale of 4/5
9,114
16
Sales......................................................
Cash Sales
54,240
18
251
L.T. Notes
Note to
55,000
Payable..................................................
bank
20
Pat Orlof.................................................
Sale of 4/11
12,054
246
12,300
23
Ty Afton.................................................
Sale of 4/13
6,762
138
6,900
30
Sales......................................................
Cash sales
72,100
___
_____
72,100
_____
30
Totals.............
214,366
674
33,700
126,340
55,000
(101)
(415)
(106)
(413)
()
54,240
55,000

153
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
214,366
Acct. No. 101

Credit
Balance
85,000
299,366
Accounts Receivable
Explanation
PR
Debit
S3
44,260
R3
Acct. No. 106

Credit
Balance
44,260
33,700
10,560
Explanation
Cash
PR
R3
Explanation
Inventory
PR
Debit
Debit

Explanation
PR
Debit
R3
B. Moore, Capital
Explanation
PR
Debit
Explanation
Sales
PR
S3
R3
Debit
Sales Discounts
Explanation
PR
Debit
R3
674
Acct. No. 119

Credit
Balance
152,000
Acct. No. 251
Credit
Balance
137,000
55,000
192,000
Acct. No. 301
Credit
Balance
100,000
Acct. No. 413
Credit
Balance
44,260
44,260
126,340
170,600
Acct. No. 415
Credit
Balance
674

154
Problem 7- 2AA (Continued)

Parts 2 and 3continued
Date
Apr. 3
13
13
23
Date
Apr. 5
14
27
Date
Apr. 11
20
27
Explanation
Explanation
Explanation
Ty Afton
PR
S3
R3
S3
R3
Debit
5,200
5,200
6,900
Debra Kohn
PR
Debit
S3
9,300
R3
S3
3,460
Pat Orlof
PR
S3
R3
S3
Credit
Debit
12,300
7,100
6,900
Credit
9,300
Credit
12,300
Balance
5,200
0
6,900
0
Balance
9,300
0
3,460
Balance
12,300
0
7,100
Part 4
MOORE COMPANY
Trial Balance
April 30
Debit
Cash........................................................................
$299,366
Accounts receivable.............................................
10,560
Inventory................................................................
152,000
Credit
Long-term notes payable.....................................
$192,000
B. Moore, Capital...................................................
100,000
Sales.......................................................................
170,600
Sales discounts.....................................................
674
_______
Totals......................................................................
$462,600
$462,600

155
Problem 7- 2AA (Concluded)

Part 4continued
MOORE COMPANY
April 30
Debra Kohn................................................. $ 3,460

Pat Orlof......................................................
7,100
Total accounts receivable.......................... $10,560
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.

156

Parts 1 and 3
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
Accounts
Payable
Cr.
4/2
2/10, n/60
Apr. 2 Newt Company......................................
14,200
4/2 n/10, EOM

3 Office Supplies/Cray Inc.........................
1,530
4/9 n/10, EOM 165/

9 Store Equip./Hafman Supply..................
11,435
4/17
2/10, n/30
17 Dann Company......................................
12,850
4/19 n/10, EOM 125/

20 Store Supp./Hafman Supply...................
1,000
25 Newt Company............................ 4/24
2/10, n/60
30 Totals...........................................
Page 3
Office
Other
Inventory Supplies Accounts
Dr.
Dr.
Dr.
14,200
1,530
11,435
12,850
1,000
11,465
11,465
____
_____
52,480
38,515
1,530
12,435
(201)
(119)
(124)
()

Date
Ck.
No.
Payee
Account Debited
PR
Cash
Cr.
Inventory
Cr.
Page 3
Other
Accounts
Accounts
Dr.
Payable
Dr.
Apr. 4 587 World View.............................................

Advertising Expense.............................................................
655
879
879
12 588 Newt Company.........................................

Newt Company......................................................................
13,916
284
14,200
16 589 Payroll...................................................
Sales Salaries Expense.........................................................
621 11,300
11,300
26 590 Dann Company......................................
Dann Company.....................................................................
11,711
239
11,950
30 591 Payroll...................................................
621 11,000
___
11,000
_____
157
30
Totals.....................................................
48,
806
(101)
523
23,179
26,150
(119)
()
(201)

158

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

201/
Office Supplies..................................................
124
70
70
Received a credit memorandum.
23 Accounts Payable--Dann Co.................................

201/
Inventory............................................................
119
900
900
Parts 2 and 3
GENERAL LEDGER
Date
Mar. 31
Apr. 30
Date
Mar. 31
Apr. 23
30
30
Explanation
Cash
PR
Acct. No. 101

Credit
Balance
85,000
48,806
36,194
Debit
D3
Explanation
Inventory
PR
G3
P3
D3
Debit
38,515
Acct. No. 119

Credit
Balance
152,000
900
151,100
189,615
523
189,092
Date
Apr. 3
6
Office Supplies
Explanation
PR
Debit
P3
1,530
G3
Acct. No. 124

Credit
Balance
1,530
70
1,460
Date
Apr. 20
Store Supplies
PR
Debit
P3
1,000
Acct. No. 125

Credit
Balance
1,000
Store Equipment
Explanation
PR
Debit
P3
11,435
Acct. No. 165

Credit
Balance
11,435
Date
Apr. 9
Explanation

159

General Ledgercontinued
Accounts Payable
Explanation
PR
Debit
G3
70
G3
900
P3
D3
26,150
Acct. No. 201

Credit
Balance
(70)
(970)
52,480
51,510
25,360

Explanation
PR
Debit
Acct. No. 251

Credit
Balance
137,000
B. Moore, Capital
Explanation
PR
Debit
Acct. No. 301

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

Explanation
PR
Debit
D3
11,300
D3
11,000
Acct. No. 621

Credit
Balance
11,300
22,300
Date
Apr. 4
Advertising Expense
Explanation
PR
Debit
D3
879
Acct. No. 655

Credit
Balance
879
Date
Apr. 6
23
30
30
Date
Mar. 31
Date
Mar. 31
ACCOUNTS PAYABLE LEDGER

Date
Apr. 3
6
Date
Apr. 17
23
26
Explanation
Explanation
Cray, Inc.
PR
Debit
P3
G3
70
Dann Company
PR
Debit
P3
G3
900
D3
11,950
Credit
1,530
Balance
1,530
1,460
Credit
12,850
Balance
12,850
11,950
0

160

Accounts Payable Ledgercontinued
Date
Apr. 9
20
Hafman Supply
Explanation
PR
Debit
P3
P3
Date
Apr. 2
12
25
Newt Company
Explanation
PR
Debit
P3
D3
14,200
P3
Credit
11,435
1,000
Balance
11,435
12,435
Credit
14,200
Balance
14,200
0
11,465
11,465
Part 4
MOORE COMPANY
Trial Balance
April 30
Debit
Cash............................................................. $ 36,194
Inventory..................................................... 189,092
Office supplies............................................
1,460
Store supplies.............................................
1,000
Store equipment.......................................... 11,435
Accounts payable.......................................
Long-term notes payable...........................
B. Moore, Capital.........................................
Sales salaries expense............................... 22,300
Advertising expense...................................
879
Totals............................................................ $262,360
Credit
$ 25,360
137,000
100,000
$262,360
MOORE COMPANY
Schedule of Accounts Payable
April 30
Cray Inc.........................................................
$ 1,460
Hafman Supply.............................................
12,435
Newt Company............................................
11,465
Total accounts payable...............................
$25,360
161

Parts 1 and 3
PURCHASES JOURNAL
Date
Account
Date of
Invoice
4/2
Apr. 2 Newt Company......................................
Terms
PR
Page 3
Accounts
Office
Other
Payable Purchases Supplies Accounts
Cr.
Dr.
Dr.
Dr.
2/10, n/60
14,200
4/2 n/10, EOM

3 Office Supplies/Cray Inc.........................
1,530
4/9 n/10, EOM 165/

9 Store Equip./Hafman Supply..................
11,435
4/17
17 Dann Company......................................
12,850
4/19 n/10, EOM 125/

20 Store Supp./Hafman Supply...................
1,000
25 Newt Company............................ 4/24
2/10, n/30
2/10, n/60
30 Totals...........................................
Ck.
No.
Payee
Account Debited
PR
1,530
11,435
12,850
1,000
11,465
11,465
____
_____
52,480
38,515
1,530
12,435
(201)
(505)
(124)
()

Date
14,200
Cash
Cr.
Page 3
Purchases
Other
Accounts
Discount Accounts
Cr.
Dr.
Payable
Dr.
Apr. 4 587 World View.............................................

Advertising Expense.............................................................
655
879
879
12 588 Newt Company.........................................

Newt Company......................................................................
13,916
284
14,200
16 589 Payroll...................................................
621 11,300
11,300
26 590 Dann Company......................................
Dann Company.....................................................................
11,711
239
11,950
30 591 Payroll...................................................
621 11,000
___
11,000
_____

162
30
Totals.....................................................
48,806
(101)
523
(507)
23,179
()
26,150
(201)

163
Problem 7-4AA (Continued)

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

201/
Office Supplies..................................................
124
70
70
23 Accounts PayableDann Co................................

201/
Purchase Returns and Allowances....................
506
900
900
Parts 2 and 3
GENERAL LEDGER
Date
Mar. 31
Apr. 30
Date
Mar. 31
Explanation
Cash
PR
Debit
D3
Explanation
Inventory
PR
Debit
Acct. No. 101

Credit
Balance
85,000
48,806
36,194
Acct. No. 119
Credit
Balance
152,000
Date
Apr. 3
6
Office Supplies
Explanation
PR
Debit
P3
1,530
G3
Acct. No. 124

Credit
Balance
1,530
70
1,460
Date
Apr. 20
Store Supplies
PR
Debit
P3
1,000
Acct. No. 125

Credit
Balance
1,000
Store Equipment
Explanation
PR
Debit
P3
11,435
Acct. No. 165

Credit
Balance
11,435
Date
Apr. 9
Explanation

164

General Ledgercontinued
Date
Apr. 6
23
30
30
Date
Mar. 31
Date
Mar. 31
Accounts Payable
Explanation
PR
Debit
G3
70
G3
900
P3
D3
26,150
Acct. No. 201

Credit
Balance
(70)
(970)
52,480
51,510
25,360

Explanation
PR
Debit
Acct. No. 251

Credit
Balance
137,000
B. Moore, Capital
Explanation
PR
Debit
Acct. No. 301

Credit
Balance
100,000
Purchases
PR
Debit
P3
38,515
Acct. No. 505

Credit
Balance
38,515
Date
Apr. 23
Purchase Returns and Allowances

Explanation
PR
Debit
G3
Acct. No. 506

Credit
Balance
900
900
Date
Apr. 30
Purchases Discounts
Explanation
PR
Debit
D3
Acct. No. 507

Credit
Balance
523
523
Date
Apr. 16
30

Explanation
PR
Debit
D3
11,300
D3
11,000
Acct. No. 621

Credit
Balance
11,300
22,300
Date
Apr. 4
Advertising Expense
Explanation
PR
Debit
D3
879
Acct. No. 655

Credit
Balance
879
Date
Apr. 30
Explanation

165

Date
Apr. 3
6
Explanation
Cray, Inc.
PR
P3
G3
Debit
Credit
1,530
Balance
1,530
1,460
Credit
12,850
Balance
12,850
11,950
0
Credit
11,435
1,000
Balance
11,435
12,435
Credit
14,200
Balance
14,200
0
11,465
70
Date
Apr. 17
23
26
Dann Company
Explanation
PR
Debit
P3
G3
900
D3
11,950
Date
Apr. 9
20
Hafman Supply
Explanation
PR
Debit
P3
P3
Date
Apr. 2
12
25
Newt Company
Explanation
PR
Debit
P3
D3
14,200
P3
11,465

166
Problem 7-4AA (Concluded)

Part 3continued
MOORE COMPANY
Trial Balance
April 30
Debit
Credit
Cash................................................................$ 36,194
Inventory........................................................ 152,000
Office supplies...............................................
1,460
Store supplies................................................
1,000
Store equipment............................................ 11,435

Accounts payable..........................................
$ 25,360
Long-term notes payable..............................
137,000
B. Moore, Capital...........................................
100,000
Purchases...................................................... 38,515
Purchases returns and allowances.............
900
Purchases discounts....................................
523
Sales salaries expense................................. 22,300

Advertising expense.....................................
879
_______
Totals..............................................................$263,783
$263,783
MOORE COMPANY
April 30
Cray, Inc........................................................
Hafman Supply.............................................
Newt Company............................................
Total accounts payable..............................
$ 1,460
12,435
11,465
$25,360

167

Parts 1 and 2
Date
Account Debited
SALES JOURNAL
Invoice
Number
PR
Sales Cr.
Page 2
Cost of Goods Sold Dr.
Inventory Cr.
Mar. 2 Chao Chu............................................

854
16,000
8,050
3 Lance Wern.........................................
855
9,500
4,760
10 Jovita Altern.........................................
856
4,700
2,380
27 Jovita Altern.........................................
857
14,300
6,285
28 Lance Wern.........................................
858
5,400
2,300
49,900
23,775
(106/413)
(502/119)
31 Totals...................................................
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
Accounts
Payable
Cr.
Inventory
Dr.
43,300
Office
Supplies
Dr.
Page 2
Other
Accounts
Dr.
3/1
Mar. 1 Value Industries.....................................
2/15, n/30
43,300
3/3
3 Glen Company.......................................
n/10, EOM
1,300
3/9
9 Office Equip./Simon Supply...................
n/10, EOM
163/
21,000
3/13
14 The AJ Company...................................
2/10, n/30
32,200
32,200
3/16
16 Store Supplies/Glen Company.................
n/10, EOM
125/
1,820
_____
____
1,820
99,620
75,500
1,300
22,820
(201)
(119)
(124)
()
31 Totals.....................................................
1,300
21,000

168

169

Account Credited
Date
Explanation
PR
Cash
Dr.
Sales
Discoun
t
Dr.
Page 2
Accounts
Receivable
Cr.
Other
Accts.
Cr.
Sales
Cr.
251
Mar. 6 L.T. Notes Pay.........................................
Note to bank..........................................................................
72,000
Cost of Goods
Sold Dr.
Inventory Cr.
72,000
12 Chao Chu...............................................
Invoice, 3/2............................................................................
15,680
320
16,000
13 Lance Wern............................................
Invoice 3/3.............................................................................
9,310
190
9,500
15 Sales......................................................
Cash sales.............................................................................
67,570
67,570
39,080
20 Jovita Altern...........................................
Invoice, 3/10...........................................................................
4,606
94
4,700
31 Sales......................................................
Cash sales.............................................................................
77,625
___
_____
77,625
_____
40,510
31 Totals..................................................... 246,791
604
30,200
145,195
72,000
79,590
(101)
(415)
(106)
(413)
()
(502/119)

Date
Ck.
No.
Mar. 13 416
Payee
Account Debited
PR
Cash
Cr.
Page 2
Inventory
Cr.
Other
Accounts
Dr.
Value Industries.....................................
Value Industries.....................................................................
42,434
866
Accounts
Payable
Dr.
43,300
15 417
621
Payroll...................................................
Sales Salaries Expense...........................................................
17,700
17,700
23 418
The AJ Co..............................................
The AJ Company...................................................................
29,106
594
29,700
31 419
621
Payroll...................................................
Sales Salaries Expense...........................................................
17,700
____
17,700
_____
31
Totals.....................................................
73,000
106,940
1,460
35,400

170
(101)
(119)
()
(201)

171

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

201/
2,500
Inventory................................................................
119
2,500
Received a credit memo for returns.
19 Accounts PayableSimon Supply...........................

201/
Office Equipment...................................................
163
630
630
GENERAL LEDGER
Date
Mar. 31
31
Date
Mar. 31
31
Date
Mar. 1
17
31
31
31
31
Date
Mar. 31
Date
Debit
246,791
Acct. No. 101

Credit
Balance
246,791
106,940
139,851
Accounts Receivable
Explanation
PR
Debit
S2
49,900
R2
Acct. No. 106

Credit
Balance
49,900
30,200
19,700
Explanation
Explanation
Cash
PR
R2
D2
Inventory
PR
G2
P2
D2
S2
R2
Debit
75,500
Acct. No. 119

Credit
Balance
50,000
2,500
47,500
123,000
1,460
121,540
23,775
97,765
79,590
18,175
Office Supplies
Explanation
PR
Debit
P2
1,300
Acct. No. 124

Credit
Balance
1,300
Store Supplies
Explanation
PR
Debit
Acct. No. 125

Credit
Balance
Mar. 16
P2
1,820
1,820

Date
Mar. 9
19
Office Equipment
Explanation
PR
Debit
P2
21,000
G2
Acct. No. 163

Credit
Balance
21,000
630
20,370
Date
Mar. 17
19
31
31
Accounts Payable
Explanation
PR
Debit
G2
2,500
G2
630
P2
D2
73,000
Acct. No. 201

Credit
Balance
(2,500)
(3,130)
99,620
96,490
23,490
Date
Mar. 6

Explanation
PR
Debit
R2
Acct. No. 251

Credit
Balance
72,000
72,000
Z. Crystal, Capital
Explanation
PR
Debit
Acct. No. 301

Credit
Balance
50,000
Date
Mar. 1
Date
Mar. 31
31
Explanation
Sales
PR
S2
R2
Debit
Acct. No. 413

Credit
Balance
49,900
49,900
145,195
195,095
Date
Mar. 31
Sales Discounts
Explanation
PR
Debit
R2
604
Acct. No. 415

Credit
Balance
604
Date
Mar. 31
Mar. 31
Cost of Goods Sold

Explanation
PR
Debit
S2
23,775
R2
79,590
Acct. No. 502

Credit
Balance
23,775
103,365
Date
Mar. 15
31

Explanation
PR
Debit
D2
17,700
D2
17,700
Acct. No. 621

Credit
Balance
17,700
35,400

Date
Mar. 10
20
27
Date
Mar. 2
12
Date
Mar. 3
13
28
Explanation
Explanation
Explanation
Jovita Altern
PR
Debit
S2
4,700
R2
S2
14,300
Chao Chu
PR
Debit
S2
16,000
R2
Lance Wern
PR
Debit
S2
9,500
R2
S2
5,400
Credit
4,700
Credit
16,000
Credit
9,500
Balance
4,700
0
14,300
Balance
16,000
0
Balance
9,500
0
5,400

Date
Mar. 14
17
23
Date
Mar. 3
16
Date
Mar. 9
19
Date
Mar. 1
13
Explanation
Explanation
Explanation
Explanation
AJ Company
PR
Debit
P2
G2
2,500
D2
29,700
Credit
32,200
Balance
32,200
29,700
0
Credit
1,300
1,820
Balance
1,300
3,120
Simon Supply
PR
Debit
P2
G2
630
Credit
21,000
Balance
21,000
20,370
Value Industries
PR
Debit
P2
D2
43,300
Credit
43,300
Balance
43,300
0
Glen Company
PR
Debit
P2
P2

Part 3
CRYSTAL COMPANY
Trial Balance
March 31
Debit
$139,851
19,700
18,175
1,300
1,820
20,370
Cash......................................................................
Accounts receivable............................................
Inventory...............................................................
Office supplies.....................................................
Store supplies......................................................
Office equipment..................................................
Accounts payable................................................
Long-term notes payable....................................
Z. Crystal, Capital.................................................
Sales......................................................................
Sales discounts....................................................
604
Cost of goods sold.............................................. 103,365
Sales salaries expense........................................
35,400
Totals..................................................................... $340,585
Credit
$ 23,490
72,000
50,000
195,095
_______
$340,585
CRYSTAL COMPANY
March 31
Jovita Altern............................................................
$14,300
Lance Wern.............................................................
5,400
Total accounts receivable......................................
$19,700
CRYSTAL COMPANY
March 31
Glen Company........................................................
$ 3,120
Simon Supply.........................................................
20,370
Total accounts payable..........................................
$23,490

Parts 1 and 2
SALES JOURNAL
Invoice
Number
PR
Mar. 2 Chao Chu............................................

854
16,000
3 Lance Wern.........................................
855
9,500
10 Jovita Altern.........................................
856
4,700
27 Jovita Altern.........................................
857
14,300
28 Lance Wern.........................................
858
5,400
Date
Account Debited
Page 2
Sales Cr.
31 Totals...................................................
49,900
(106/413)
PURCHASES JOURNAL
Date
Account
Date of
Invoice
Terms
PR
Accounts
Payable
Cr.
Purchase
s
Dr.
Office
Supplies
Dr.
Page 2
Other
Accounts
Dr.
3/1
Mar. 1 Value Industries.....................................
2/15, n/30
43,300
3/3
3 Glen Company.......................................
n/10, EOM
1,300
3/9
9 Office Equip./Simon Supply...................
n/10, EOM
163/
21,000
3/13
14 The AJ Company...................................
2/10, n/30
32,200
32,200
3/16
16 Store Supplies/Glen Company.................
n/10, EOM
125/
1,820
_____
____
1,820
99,620
75,500
1,300
22,820
31 Totals.....................................................
43,300
1,300
21,000
(201)
(505)
(124)
()

Date
Account
Credited
Explanation
PR
Sales
Discount
Dr.
Cash
Dr.
Page 2
Accounts
Receivable
Cr.
Sales
Cr.
251
Mar. 6 L.T. Notes Pay.........................................
Note to bank..........................................................................
72,000
Other
Accounts
Cr.
72,000
12 Chao Chu...............................................
Invoice, 3/2............................................................................
15,680
320
16,000
13 Lance Wern............................................
Invoice 3/3.............................................................................
9,310
190
9,500
15 Sales......................................................
Cash sales.............................................................................
67,570
67,570
20 Jovita Altern...........................................
Invoice, 3/10...........................................................................
4,606
94
4,700
31 Sales......................................................
Cash sales.............................................................................
77,625
___
_____
31 Totals.....................................................
246,791
604
30,200
77,625
145,195
(101)
(415)
(106)
(413)

Date
Ck.
No.
Payee
Account Debited
PR
Cash
Cr.
_____
72,000
()
Page 2
Purchase
s
Discounts
Other
Accounts
Dr.
Accounts
Payable
Dr.
Cr.
Mar.13 416
Value Industries.....................................
Value Industries.....................................................................
42,434
866
43,300
15 417
621
Payroll...................................................
17,700
17,700
23 418
The AJ Co..............................................
The AJ Company...................................................................
29,106
594
29,700
31 419
621
Payroll...................................................
17,700
____
17,700
_____
31
Totals.....................................................
73,000
106,940
1,460
35,400
(101)
(507)
()
(201)

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

201/
2,500
Purchases Returns and Allowances....................
506
2,500
19 Accounts PayableSimon Supply...........................

201/
Office Equipment....................................................
163
630
630
GENERAL LEDGER
Date
Mar. 31
31
Date
Mar. 31
31
Date
Mar. 1
Debit
246,791
Acct. No. 101

Credit
Balance
246,791
106,940
139,851
Accounts Receivable
Explanation
PR
Debit
S2
49,900
R2
Acct. No. 106

Credit
Balance
49,900
30,200
19,700
Explanation
Explanation
Cash
PR
R2
D2
Inventory
PR
Debit
Acct. No. 119

Credit
Balance
50,000
Date
Mar. 31
Office Supplies
Explanation
PR
Debit
P2
1,300
Acct. No. 124

Credit
Balance
1,300
Date
Mar. 16
Store Supplies
Explanation
PR
Debit
P2
1,820
Acct. No. 125

Credit
Balance
1,820
Date
Mar. 9
19
Office Equipment
Explanation
PR
Debit
P2
21,000
G2
Acct. No. 163

Credit
Balance
21,000
630
20,370

Date
Mar. 17
19
31
31
Accounts Payable
Explanation
PR
Debit
G2
2,500
G2
630
P2
D2
73,000
Acct. No. 201

Credit
Balance
(2,500)
(3,130)
99,620
96,490
23,490
Date
Mar. 6

Explanation
PR
Debit
R2
Acct. No. 251

Credit
Balance
72,000
72,000
Z. Crystal, Capital
Explanation
PR
Debit
Acct. No. 301

Credit
Balance
50,000
Date
Mar. 1
Date
Mar. 31
31
Date
Mar. 31
Date
Mar. 31
Explanation
Sales
PR
S2
R2
Debit
Sales Discounts
Explanation
PR
Debit
R2
604
Explanation
Purchases
PR
P2
Debit
75,500
Acct. No. 413

Credit
Balance
49,900
49,900
145,195
195,095
Acct. No. 415
Credit
Balance
604
Acct. No. 505
Credit
Balance
75,500
Date
Mar. 17
Purchases Returns and Allowances

Acct. No. 506
Explanation
PR
Debit
Credit
Balance
G2
2,500
2,500
Date
Mar. 31
Purchases Discounts
Explanation
PR
Debit
D2
Acct. No. 507

Credit
Balance
1,460
1,460
Date
Mar. 15
31

Explanation
PR
Debit
D2
17,700
D2
17,700
Acct. No. 621

Credit
Balance
17,700
35,400

Date
Mar. 10
20
27
Date
Mar. 2
12
Date
Mar. 3
13
28
Jovita Altern
Explanation
PR
Debit
S2
4,700
R2
S2
14,300
Explanation
Chao Chu
PR
S2
R2
Lance Wern
Explanation
PR
S2
R2
S2
Debit
16,000
Credit
4,700
Credit
16,000
Debit
9,500
Credit
9,500
5,400
Balance
4,700
0
14,300
Balance
16,000
0
Balance
9,500
0
5,400

Date
Mar. 14
17
23
Date
Mar. 3
16
Date
Mar. 9
19
Date
Mar. 1
Explanation
AJ Company
PR
Debit
P2
G2
2,500
D2
29,700
Glen Company
Explanation
PR
Debit
P2
P2
Explanation
Explanation
Simon Supply
PR
Debit
P2
G2
630
Value Industries
PR
Debit
P2
Credit
32,200
Balance
32,200
29,700
0
Credit
1,300
1,820
Balance
1,300
3,120
Credit
21,000
Balance
21,000
20,370
Credit
43,300
Balance
43,300
13
D2
43,300
Problem 7-6AA (Concluded)

Part 3
CRYSTAL COMPANY
Trial Balance
March 31
Debit
Credit
Cash..............................................................................$139,851
Accounts receivable.................................................... 19,700
Inventory...................................................................... 50,000
Office supplies............................................................. 1,300
Store supplies.............................................................. 1,820
Office equipment......................................................... 20,370
Accounts payable........................................................
$ 23,490
Long-term notes payable............................................
72,000
Z. Crystal, Capital........................................................
50,000
Sales.............................................................................
195,095
Sales discounts...........................................................
604
Purchases.................................................................... 75,500
Purchases returns and allowances...........................
2,500
Purchases discounts..................................................
1,460
Sales salaries expense............................................... 35,400 _______
Totals............................................................................$344,545 $344,545
CRYSTAL COMPANY
March 31
Jovita Altern............................................................ $14,300

Lance Wern............................................................. 5,400
Total accounts receivable...................................... $19,700
CRYSTAL COMPANY
March 31
Glen Company........................................................ $ 3,120

Simon Supply......................................................... 20,370
Total accounts payable.......................................... $23,490

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Chapter 7

Accounting Information Systems

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

McGraw-Hill Companies, 2009

Quick Study 7-2 (5 minutes)

enterprise resource planning

McGraw-Hill Companies, 2009

Fundamental Accounting Principles, 19th Edition

Quick Study 7-3 (15 minutes)

Quick Study 7-4 (10 minutes)

Cash Receipts Journal

Quick Study 7-5 (15 minutes)

[In Purchases Journal]

Owner contributed an auto to the business.

[In Sales Journal]

Sales Returns and Allowances...............................

Customer returned (worthless) merchandise.

McGraw-Hill Companies, 2009

Quick Study 7-6 (15 minutes)

Interpretation: The Americas segment reports the highest return on

Percent of Total Sales

*0.1% rounding error

Interpretation: Sales of Apples iPod make up its largest percentage of total

McGraw-Hill Companies, 2009

Fundamental Accounting Principles, 19th Edition

Exercise 7-2 (10 minutes)

Cash Receipts Journal

Exercise 7-3A (15 minutes)

Solutions Manual, Chapter 7

Exercise 7-4 (20 minutes)

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

Exercise 7-5 (10 minutes)

Exercise 7-6A (25 minutes)

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

13 I. Uno, Capital..... Contribution

McGraw-Hill Companies, 2009

Fundamental Accounting Principles, 19th Edition

Exercise 7-7 (20 minutes)

Exercise 7-8 (10 minutes)

Exercise 7-9A (20 minutes)

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

Solutions Manual, Chapter 7

McGraw-Hill Companies, 2009

Fundamental Accounting Principles, 19th Edition

Exercise 7-10 (25 minutes)

Exercise 7-11 (10 minutes)

Cash Disbursements Journal

Cash Disbursements Journal

Cash Disbursements Journal

Cash Disbursements Journal

McGraw-Hill Companies, 2009

Exercise 7-12A (25 minutes)

Purchases Other Accounts

Exercise 7-13 (10 minutes)

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

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

McGraw-Hill Companies, 2009

Fundamental Accounting Principles, 19th Edition

Exercise 7-14 (30 minutes)

Sales Returns and

Cost of Goods Sold

Accounts Receivable Controlling Account

Exercise 7-15 (30 minutes)