Chapter 5, Problem 3E

Chart of accounts

Monet Paints Co. is a newly organized retail business with a list of accounts arranged in alphabetical order, as follows:

Accounts Payable	Land
Accounts Receivable	Miscellaneous Administrative
Accumulated Depreciation—Office Equipment	Expense
Accumulated Depreciation—Store Equipment	Miscellaneous Selling Expense
Advertising Expense	Notes Payable
Cash	Office Equipment
Common Stock	Office Salaries Expense
Cost of Goods Sold	Office Supplies
Customer Refunds Payable	Office Supplies Expense
Delivery Expense	Prepaid Insurance
Depreciation Expense—Office Equipment	Rent Expense
Depreciation Expense—Store Equipment	Retained Earnings
Dividends	Salaries Payable
Estimated Returns Inventory	Sales
Insurance Expense	Sales Salaries Expense
Interest Expense	Store Equipment
Interest Revenue	Store Supplies
Inventory	Store Supplies Expense

Construct a chart of accounts, assigning account numbers and arranging the accounts in balance sheet and income statement order, as illustrated in Exhibit 2. Each account number is three digits: the first digit is to indicate the major classification (1 for assets, and so on); the second digit is to indicate the subclassification (11 for current assets, and so on); and the third digit is to identify the specific account (110 for Cash, 112 for Accounts Receivable, 114 for Inventory, 115 for Estimated Returns Inventory, and so on).