College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 11, Problem 10SPA

CASH PAYMENTS TR ANS ACTIONS Sam Santiago operates a retail variety store. The books include a general journal and an accounts payable ledger. Selected account balances on May 1 are as follows:

Chapter 11, Problem 10SPA, CASH PAYMENTS TR ANS ACTIONS Sam Santiago operates a retail variety store. The books include a

The following are the transactions related to cash payments for the month of May:

May 1    Issued Check No. 426 in payment of May rent (Rent Expense), $2,400.

3    Issued Check No. 427 to Mueller’s Distributors in payment of merchandise purchased on account, $3,600, less a 3% discount. Check was written for $3,492.

7    Issued Check No. 428 to Van Kooning in partial payment of merchandise purchased on account, $5,500. A cash discount was not allowed.

12    Issued Check No. 429 to Fantastic Toys for merchandise purchased on account, $5,200, less a 1% discount. Check was written for $5,148.

15    Issued Check No. 430 to City Power and Light (Utilities Expense), $1,720.

18    Issued Check No. 431 to A-1 Warehouse for a cash purchase of merchandise, $4,800.

26    Issued Check No. 432 to Goya Outlet for merchandise purchased on account, $3,800, less a 2% discount. Check was written for $3,724.

30    Issued Check No. 433 to Mercury Transit Company for freight charges on merchandise purchased (Freight-In), $1,200.

31    Issued Check No. 434 to Town Merchants for a cash purchase of merchandise, $3,000.

Required

  1. 1. Enter the transactions starting with page 9 of a general journal.
  2. 2. Post from the general journal to the general ledger and the accounts payable ledger. Use general ledger account numbers as shown in the chapter.

1.

Expert Solution
Check Mark
To determine

Journalize the cash payment transactions for the month of May.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

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.

Journalize the cash payment transactions for the month of May.

Transaction on May 1:

Page: 9
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May1Rent Expense5212,400 
   Cash101 2,400
  (Record payment of rent expense)   

Table (1)

Description:

  • Rent Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on May 3:

Page: 9
DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
May3Accounts Payable, M Distributors202/✓3,600 
   Cash101 3,492
   Purchases Discounts501.2 108
  (Record cash paid for purchases on account)   

Table (2)

Description:

  • Accounts Payable, M Distributors is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.
  • Purchases Discounts is a contra-purchases or contra-costs account, and contra-purchases accounts increase the equity value, and an increase in equity is credited.

Working Note 1:

Compute purchases discount value.

Purchases discounts = {(Purchases–Purchase returns and allowances) × Discount percentage}($3,600–$0)×3%= $108

Transaction on May 7:

Page: 9
DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
May7Accounts Payable, VK202/✓5,500 
   Cash101 5,500
  (Record cash paid for purchases on account)   

Table (3)

Description:

  • Accounts Payable, VK is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on May 12:

Page: 9
DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
May12Accounts Payable, F Toys202/✓5,200 
   Cash101 5,148
   Purchases Discounts501.2 52
  (Record cash paid for purchases on account)   

Table (4)

Description:

  • Accounts Payable, F Toys is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.
  • Purchases Discounts is a contra-purchases or contra-costs account, and contra-purchases accounts increase the equity value, and an increase in equity is credited.

Working Note 2:

Compute purchases discount value.

Purchases discounts = {(Purchases–Purchase returns and allowances) × Discount percentage}($5,200–$0)×1%= $52

Transaction on May 15:

Page: 9
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May15Utilities Expense5331,720 
   Cash101 1,720
  (Record payment of utilities expense)   

Table (5)

Description:

  • Utilities Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on May 18:

Page: 9
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May18Purchases5014,800 
   Cash101 4,800
  (Record purchase of inventory)   

Table (6)

Description:

  • Purchases is an expense account which records the cost of inventory purchased. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on May 26:

Page: 9
DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
May26Accounts Payable, G Outlet202/✓3,800 
   Cash101 3,724
   Purchases Discounts501.2 76
  (Record cash paid for purchases on account)   

Table (7)

Description:

  • Accounts Payable, G Outlet is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.
  • Purchases Discounts is a contra-purchases or contra-costs account, and contra-purchases accounts increase the equity value, and an increase in equity is credited.

Working Note 3:

Compute purchases discount value.

Purchases discounts = {(Purchases–Purchase returns and allowances) × Discount percentage}($3,800–$0)×2%= $76

Transaction on May 30:

Page: 9
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May30Freight-In5021,200 
   Cash101 1,200
  (Record payment of freight charges)   

Table (8)

Description:

  • Freight-In is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on May 31:

Page: 9
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May31Purchases5013,000 
   Cash101 3,000
  (Record purchase of inventory)   

Table (9)

Description:

  • Purchases is an expense account which records the cost of inventory purchased. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

2.

Expert Solution
Check Mark
To determine

Post the given transactions into the accounts of the general ledger, and the suppliers account in accounts payable ledger.

Explanation of Solution

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

Post the given transactions into the accounts of the general ledger.

ACCOUNT    Cash                                                                    ACCOUNT NO. 101
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May1Balance  40,000 
 1 J9 2,40037,600 
 3 J9 3,49234,108 
 7 J9 5,50028,608 
 12 J9 5,14823,460 
 15 J9 1,72021,740 
 18 J9 4,80016,940 
 26 J9 3,72413,216 
 30 J9 1,20012,016 
 31 J9 3,0009,016 

Table (10)

ACCOUNT    Accounts Payable                                              ACCOUNT NO. 202
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May1Balance   20,000
 3 J93,600  16,400
 7 J95,500  10,900
 12 J95,200  5,700
 28 J93,800  1,900

Table (11)

ACCOUNT   Purchases                                                             ACCOUNT NO. 501
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May18 J94,800 4,800 
 31 J93,000 7,800 

Table (12)

ACCOUNT   Purchases Discounts                                          ACCOUNT NO. 501.2
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May3 J9 108 108
 12 J9 52 160
 26 J9 76 236

Table (13)

ACCOUNT   Freight-In                                                         ACCOUNT NO. 502
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May30 J91,200 1,200 

Table (14)

ACCOUNT   Rent Expense                                                    ACCOUNT NO. 521
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May1 J92,400 2,400 

Table (15)

ACCOUNT   Utilities Expense                                                  ACCOUNT NO. 533
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
May15 J91,720 1,720 

Table (16)

Post the accounts payable balances of the suppliers to the supplier accounts in the accounts payable ledger.

NAME         F Toys
ADDRESS
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
May1Balance  5,200
 12 J95,200 0

Table (17)

NAME         G Outlet
ADDRESS
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
May1Balance  3,800
 26 J93,800 0

Table (18)

NAME         M Distributors
ADDRESS
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
May1Balance  3,600
 3 J93,600  

Table (19)

NAME         VK
ADDRESS
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
May18Balance  7,400
 7 J95,500 1,900

Table (20)

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Chapter 11 Solutions

College Accounting, Chapters 1-27

Ch. 11 - Prob. 1CECh. 11 - Prob. 2CECh. 11 - Prob. 3CECh. 11 - Prob. 4CECh. 11 - Identify the major documents commonly used in the...Ch. 11 - Prob. 2RQCh. 11 - What is a voucher system?Ch. 11 - Prob. 4RQCh. 11 - Describe how each of the following accounts is...Ch. 11 - How are cost of goods sold and gross profit...Ch. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - What steps are followed in posting purchases...Ch. 11 - What steps are followed in posting cash payments...Ch. 11 - Prob. 11RQCh. 11 - If the total of the schedule of accounts payable...Ch. 11 - Prob. 1SEACh. 11 - Prob. 2SEACh. 11 - Prob. 3SEACh. 11 - Prob. 4SEACh. 11 - JOURNALIZING PURCHASES TRANSACTIONS Journalize the...Ch. 11 - JOURNALIZING PURCHASES RETURNS AND ALLOWANCES AND...Ch. 11 - Prob. 7SEACh. 11 - SCHEDULE OF ACCOUNTS PAYABLE Ryans Express, a...Ch. 11 - PURCHASES TRANSACTIONS J. B. Speck, owner of...Ch. 11 - CASH PAYMENTS TR ANS ACTIONS Sam Santiago operates...Ch. 11 - PURCHASES AND CASH PAYMENTS TRANSACTIONS Emily...Ch. 11 - SCHEDULE OF ACCOUNTS PAYABLE Based on the...Ch. 11 - Prob. 1SEBCh. 11 - TRADE DISCOUNT AND CASH DISCOUNTS Merchandise was...Ch. 11 - PURCHASE TRANSACTIONS AND T ACCOUNTS Using T...Ch. 11 - COMPUTING GROSS PROFIT The following data were...Ch. 11 - JOURNALIZING PURCHASES TRANSACTIONS Journalize the...Ch. 11 - JOURNALIZING PURCHASES RETURNS AND ALLOWANCES AND...Ch. 11 - Prob. 7SEBCh. 11 - SCHEDULE OF ACCOUNTS PAYABLE Crystals Candles, a...Ch. 11 - PURCHASES TRANSACTIONS Ann Benton, owner of...Ch. 11 - CASH PAYMENTS TRANSACTIONS Kay Zembrowski operates...Ch. 11 - PURCHASES AND CASH PAYMENTS TRANSACTIONS Debbie...Ch. 11 - SCHEDULE OF ACCOUNTS PAYABLE Based on the...Ch. 11 - You are working as a summer intern at a rapidly...Ch. 11 - Prob. 1ECCh. 11 - Michelle French owns and operates Books and More,...Ch. 11 - Prob. 1CP
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