College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
13th Edition
ISBN: 9781337280570
Author: Scott, Cathy J.
Publisher: South-Western College Pub
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Chapter 10, Problem 4PB

The following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer.

Jan. 2    Issued Ck. No. 6981 to Tri-County Management Company for monthly rent, $850.

2    L. Yang, the owner, invested an additional $4,500 in the business.

4    Bought merchandise on account from Valentine and Company, invoice no. A694, $2,830; terms 2/10, n/30; dated January 2.

4    Received check from Velez Appliance for $980 in payment of invoice for $1,000 less discount.

4    Sold merchandise on account to L. Parrish, invoice no. 6483, $755.

6    Received check from Peck, Inc., $637, in payment of $650 invoice less discount.

7    Issued Ck. No. 6982, $588, to Frost and Son, in payment of invoice no. C127 for $600 less discount.

7    Bought supplies on account from Dudley Office Supply, invoice no. 190B, $93.54; terms net 30 days.

7    Sold merchandise on account to Ewing and Charles, invoice no. 6484, $1,115.

9    Issued credit memo no. 43 to L. Parrish, $47, for merchandise returned.

11    Cash sales for January 1 through January 10, $4,454.87.

11    Issued Ck. No. 6983, $2,773.40, to Valentine and Company, in payment of $2,830 invoice less discount.

14    Sold merchandise on account to Velez Appliance, invoice no. 6485, $2,100.

14    Received check from L. Parrish, $693.84, in payment of $755 invoice, less return of $47 and less discount.

Jan. 19    Bought merchandise on account from Crawford Products, invoice no. 7281, $3,700; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to invoice, $142 (total $3,842).

21    Issued Ck. No. 6984, $245, to A. Bautista for miscellaneous expenses not recorded previously.

21    Cash sales for January 11 through January 20, $3,689.

23    Received credit memo no. 163, $87, from Crawford Products for merchandise returned.

29    Sold merchandise on account to Bradford Supply, invoice no. 6486, $1,697.20.

29    Issued Ck. No. 6985 to Western Freight, $64, for freight charges on merchandise purchased January 4.

31    Cash sales for January 21 through January 31, $3,862.

31    Issued Ck. No. 6986, $65, to M. Pineda for miscellaneous expenses not recorded previously.

31    Recorded payroll entry from the payroll register: total salaries, $5,899.95; employees’ federal income tax withheld, $795; FICA Social Security tax withheld, $365.80, FICA Medicare tax withheld, $85.50.

31    Recorded the payroll taxes: FICA Social Security tax, $365.80; FICA Medicare tax, $85.50; state unemployment tax, $318.60; federal unemployment tax, $35.40.

31    Issued Ck. No. 6987, $4,653.65, for salaries for the month.

31    L. Yang, the owner, withdrew $1,000 for personal use, Ck. No. 6988.

Required

  1. 1. Record the transactions for January using a sales journal, page 91; a purchases journal, page 74; a cash receipts journal, page 56; a cash payments journal, page 63; and a general journal, page 119. Assume the periodic inventory method is used.

Chapter 10, Problem 4PB, The following transactions were completed by Yang Restaurant Equipment during January, the first

  1. 2. Post daily all entries involving customer accounts to the accounts receivable ledger.
  2. 3. Post daily all entries involving creditor accounts to the accounts payable ledger.
  3. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owner’s name in the Capital and Drawing accounts.
  4. 5. Add the columns of the special journals and prove the equality of the debit and credit totals.
  5. 6. Post the appropriate totals of the special journals to the general ledger.
  6. 7. Prepare a trial balance.
  7. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?

1.

Expert Solution
Check Mark
To determine

Journalize the transactions using types of journals.

Explanation of Solution

Sales Journal: Sales journal is one form of special journal book, which records all the sales transactions that are sold to customers on credit. In a single column sales journal, debit aspect of accounts receivable and credit aspect of inventory are recorded, and then posted to individual subsidiary customer account.

Purchase Journal: Purchase journal records all the merchandise purchase on credit. In a single column purchase journal, debit aspect of inventory and credit aspect of accounts payable are recorded, and then posted to individual subsidiary supplier account.

Cash Receipts Journal:  It is a special book where only cash receipts transactions that are received from customers, merchandise sales and service made in cash and collection of accounts receivable are recorded.

Cash payments journal: Cash payments journal refers to the journal that is used to record the all transaction which is involve the cash payments. For example, the business paid cash to employees (salary paid to employees). Cash payments journal is used to record merchandise purchases made in cash and payments of accounts payable. It also records all other cash payments to various purposes. To include all these transactions, companies use multi-column cash payments journal.

General journal is a record of financial transaction. The transactions are recorded in the journal prior to posting them to the accounts in the general ledger.

Journalize the transactions using the types of journals.

  • Sales Journal
Sales Journal                Page no: 91
Date Invoice No. Customer Name Post Ref. Accounts Receivable Dr.
          Sales Cr.($)
20__          
Jan. 4 6483 Mr. P 755
  7 6484 Mr. E&C 1,115
  14 6485 Mr. V 2,100
  29 6486 Mr. B 1,697
  31   Total   $5,667
          (113) (411)

Table (1)

  • Purchase Journal
Purchase Journal                Page no:74
Date Customer name Invoice no. Invoice date Terms. Post Ref. Accounts Payable Freight in Purchases
              Credit ($) Debit ($) Debit ($)
20__                  
Jan. 4 V Company A691 2-Jan 2/10,n/30 2,830   2,830
  18 C Company 7281D 16-Jan 2/10,n/60 3,842 142 3,700
  31 Totals         6,672 142 6,530
              (212) (514) (511)

Table (2)

  • Cash receipts journal
Cash Receipts Journal Page:56
Date Accounts Credited Post ref. Cash Sales Discount Accounts Receivable Sales Other Accounts
        debit($) debit($) credit($)  credit($) Credit($)
20__                
Jan 2 Mr. Y, Capital 311 4,500       4,500
  4 V company   980 20 1,000    
  6 P company   637 13 650    
  11     4,455     4,455  
  14 Mr. P   693 14.16 708    
  21     3,689     3,689  
  31     3,862     3,862  
  31 Totals   18,816.71 47.16 2,358 12,005.87 4,500
        (111) (413) (113) (411) (X)

Table (3)

  • Cash payment journal
Cash payments journal Page:63
Date   CK no Account Debited Post ref. Other accounts Accounts payable Purchases discounts Cash
          debit($) debit($) credit($) credit($)
20__                
Jan 2 6981 Rent expense 627 850     850
  7 6982 F company   600 12 588
  11 6983 V Company   2,830 57 2,773.4
  21 6984 Miscellaneous expense 631 245     245
  29 6985 Freight in 514 64     64
  31 6986 Miscellaneous expense 631 65     65
  31 6987 Salaries payable 215 4,653     4,653.65
  31 6988 Mr. Y drawing 312 1,000     1,000
  31   Totals   6,887.65 3,430 68.6 10,239.05
          (X) (212) (513) (111)

Table (4)

  • General journal
General journal Page:100
Date Description Post ref. Debit ($) Credit($)
20___          
Jan. 7 Supplies 115 93.54  
                    Accounts payable, D company 212/   93.54
    (Record purchase of supplies from D company      
    invoice no. 1906B, terms net 30)      
           
  9 Sales returns and allowances 412 47  
                  Accounts receivable, Mr. L 113/   47
    (Record issued credit memo no.43)      
           
  23 Accounts payable, C company 212/ 87  
                  Purchase returns and allowances 512   87
    (Received credit memo for return of      
    merchandise memo no:163)      
           
  31 Salaries expense 621 5,899.95  
               Employee's federal income tax payable 216   795
                FICA social security tax payable 217   365
                FCIA Medicare tax payable 218   85
                 Salaries payable 215   4,653.65
    (Record salaries paid for the month)      
           
  31 Payroll tax expense 622 805.3  
              FICA social security tax payable 217   365.8
              Medicare tax payable 218   85.5
              State unemployment tax payable 219   318.6
               Federal unemployment tax payable 220   35.4
    ( Record employer's share of FCIA taxes and      
    employer's state and federal unemployment      
    taxes for the month)      

Table (5)

2.

Expert Solution
Check Mark
To determine

Record the entries from customer accounts to the accounts receivable ledger.

Explanation of Solution

Account receivable: The amount of money to be received by a company for the sale of goods and services to the customers is referred to as account receivable.

Accounts Receivable Ledger
Name: B company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 29   S91 1,697   1,697.2
             
             
Name: E and C company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 7   S91 1,115   1,115
             
             
Name: Mr. P
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 4   S91 755   755
  9   J119   47 708
  14   CR56   708  
             
Name: P company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 1 Balance     650
  6   CR38   650 0
             
             
Name: V company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 1 Balance     1,000
  4   CR56   1,000 0
  14   S91 2,100   2,100

Table (6)

3.

Expert Solution
Check Mark
To determine

Record the entries from creditor accounts to the accounts payable ledger.

Explanation of Solution

Account payable: The amount of money to be paid by a company for the purchase of goods and services from the seller is referred to as account payable.

Record the entries from creditor accounts to the accounts payable ledger.

Accounts payable ledger
Name: C company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 19   P74   3,842 3,842
  23   J119 87   3,755
             
Name: D company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 7   J119   93.54 93.54
             
Name: F and sons
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 1 Balance       600
  7   CP63 600   0
             
             
Name: V company
Address:
Date Items Post ref. Debit ($) Credit ($) Balance ($)
20___            
Jan 4   P74   2,830 2,830
  11   CP63 2,830   0

Table (7)

4.

Expert Solution
Check Mark
To determine

Post the prepared journals and other accounts column to general ledger.

Explanation of Solution

Posting of transaction: The process of transferring the journalized transactions into the accounts of the ledger is known as posting of transaction.

Post the prepared journals to the general ledger:

General ledger
Account: Cash Account No:111
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance     8,740  
  31   CR56 18,816.71   27,556.71  
  31   CP63   10,239.05 17,317.66  
               
Account: Accounts receivable Account No:113
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance     1,650  
  9   J119   47 1,603  
  31   S91 5,667.20   7,270.2  
  31   CR56   2,358.00 4,912  
               
               
Account: Merchandise inventory Account No:114
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance     20,584  
               
Account: Supplies Account No:115
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance     592  
  7   J119 93.54   685.54  
               
Account: Prepaid insurance Account No:116
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance     390  
               
Account: Equipment Account No:121
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance     3,644  
               
Account: Accounts payable Account No:212
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31 Balance       600
  7   J119   93.54   693.54
  23   J119 87     606.54
  31   P74   6,672   7,278.54
  31   CP63 3,430     3,848.54
               
Account: Salaries payable Account No:215
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119   4,653.65   4,653.65
  31   CP63 4,653.65      
               
Account: Employees federal income tax payable Account No:216
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119   795   795
               
Account: FICA social security tax payable Account No:217
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119   365.8   365.8
  31   J119   365.8   731.6
               
Account: FICA Medicare payable Account No:218
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119   85.5   85.5
  31   J119   85.5   171
               
Account: State Unemployment tax payable Account No:219
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119   318.6   318.6
               
Account: Federal unemployment tax payable Account No:220
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119   35.4   35.4
               
Account: Mr. Y Capital Account No:311
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 1 Balance       35,000
  2   CR56   4,500   39,500
               
Account: Mr. Y Drawing Account No:312
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   CP63 1,000   1,000  
               
Account: Sales Account No:411
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   S91   5,667   5,667.2
  31   CR56   12,005.9   17,673.07
               
Account: Sales return and allowance Account No:412
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 9   J119 47   47  
               
Account: Sales discounts Account No:413
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   CR56 47   47  
               
Account: Purchases Account No:511
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   P74 6,530   6,530  
               
Account: Purchases returns and allowances Account No:512
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 23   J119   87   87
               
Account: Purchase discounts Account No:513
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   CP63   68.6   68.6
               
Account: Freight in Account No:514
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 29   CP63 64   64  
  31   P74 142   206  
               
Account: Salary expense Account No:621
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119 5,899.95   5,899.95  
               
Account: Payroll tax expense Account No:622
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 31   J119 805.3   805.3  
               
Account: Rent expense Account No:627
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 2   CP63 850   850  
               
Account: Miscellaneous expense Account No:631
Date Item Post ref Debit Credit Balance
20___       ($) ($) Debit ($) Credit($)
Jan 21   CP63 245   245  
  31   CP63 65   310  

Table (8)

5.

Expert Solution
Check Mark
To determine

Report the equality of debit and credit totals in special journal column.

Explanation of Solution

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Equality of debit and credit column in purchase journal:

      EQUALITY OF DEBITS AND CREDITS
   DEBITS ($)   CREDITS ($)  
  142 6,672  
  6,530    
  6,672 6,672  

Table (9)

Equality of debit and credit column in Cash receipt journal:

      EQUALITY OF DEBITS AND CREDITS
  DEBITS ($) CREDITS ($)  
  47.16 4,500  
  18,816.71 2,358  
    12,005.87  
  18,816.87 18,863.87  

Table (10)

Equality of debit and credit column in Cash payment journal:

      EQUALITY OF DEBITS AND CREDITS
  DEBITS ($) CREDITS ($)  
  6,877.65 68.6  
  3,430.00 10,239.05  
  10,307.65 10,307.65  

Table (11)

2, 3, 4, and 6.

Expert Solution
Check Mark
To determine

Post the appropriate special journal to the general ledger.

Explanation of Solution

General ledger: General ledger is a record of all accounts of assets, liabilities, and stockholders’ equity, necessary to prepare financial statements.

7.

Expert Solution
Check Mark
To determine

Prepare a trail balance of Y Company.

Explanation of Solution

Prepare a trail balance of Y Company.

Y company
Trail balance
January 31, 20__
Account Name Debit ($) Credit($)
Cash 17,317.66  
Accounts receivable 4,912.2  
Merchandise inventory 20,584  
Supplies 685.54  
Prepaid insurance 390  
Equipment 3,644  
Accounts payable   3,848.54
Employee's federal income tax payable   795
FICA social security tax payable   731.6
FICA Medicare tax payable   171
State unemployment tax payable   318.6
Federal unemployment tax payable   35.4
Mr. Y Capital   39,500
Mr. Y Drawings 1,000  
Sales   17,673.07
Sales returns and allowances 47  
Sales discounts 47.16  
Purchases 6,530  
Purchases returns and allowances   87
Purchases discounts   68.6
Freight in 206  
Salary expense 5,899.95  
Payroll tax expense 805.3  
Rent expense 850  
Miscellaneous expense 310  
  63,228.81 63,228.81

Table (12)

8.

Expert Solution
Check Mark
To determine

Prepare a schedule for accounts receivable and accounts payable.

Explanation of Solution

Schedule for the accounts receivable:

Y company
Schedule of accounts receivable
January 31, 20__
Particulars Amount($)
B company 1,697.2
E and C company 1,115
V company 2,100
Total accounts receivable 4912.2

Table (13)

H company
Schedule of accounts payable
January 31, 20__
Particulars Amount($)
C company 3,755
D company 93.54
Total accounts payable 3848.54

Table (14)

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