Chapter 5, Problem 5.5APR

All journals and general ledger; trial balance

The transactions completed by Revere Courier Company during December 2016, the first month of the fiscal year, were as follows:

Dec. 1. Issued Check No. 610 for December rent, $4,500.

2. Issued Invoice No. 940 to Capps Co., $1,980.

3. Received check for $5,100 from Trimble Co. in payment of account.

5. Purchased a vehicle on account from Boston Transportation, $39,500.

6. Purchased office equipment on account from Austin Computer Co., $4,800.

6. Issued Invoice No. 941 to Dawar Co., $5,680.

9. Issued Check No. 611 for fuel expense, $800.

10. Received check from Sing Co. in payment of $4,850 invoice.

10. Issued Check No. 612 for $360 to Office To Go Inc. in payment of invoice.

10. Issued Invoice No. 942 to Joy Co., $2,140.

11. Issued Check No. 613 for $3,240 to Essential Supply Co. in payment of account.

11. Issued Check No. 614 for $650 to Porter Co. in payment of account.

12. Received check from Capps Co. in payment of $1,980 invoice of December 2.

13. Issued Check No. 615 to Boston Transportation in payment of $39,500 balance of

December 5.

16. Issued Check No. 616 for $40,900 for cash purchase of a vehicle.

16. Cash fees earned for December 1-16, $21,700.

17. Issued Check No. 617 for miscellaneous administrative expense, $600.

18. Purchased maintenance supplies on account from Essential Supply Co., $1,750.

19. Purchased the following on account from McClain Co.: maintenance supplies, $1,500; office supplies, $325.

20. Issued Check No. 618 in payment of advertising expense, $1,990.

20. Used $3,600 maintenance supplies to repair delivery vehicles.

23. Purchased office supplies on account from Office To Go Inc., $440.

24. Issued Invoice No. 943 to Sing Co., $6,400.

24. Issued Check No. 619 to S. Holmes as a personal withdrawal, $3,200.

25. Issued Invoice No. 944 to Dawar Co., $5,720.

25. Received check for $4,100 from Trimble Co. in payment of balance.

26. Issued Check No. 620 to Austin Computer Co. in payment of $4,800 invoice of December 6.

30. Issued Check No. 621 for monthly salaries as follows: driver salaries, $16,900; office salaries, $7,600.

31. Cash fees earned for December 17-31, $19,700.

31. Issued Check No. 622 in payment for office supplies, $310.

Instructions

1. Enter the following account balances in the general ledger as of December 1:

2. Journalize the transactions for December 2016, using the following journals similar to those illustrated in this chapter: cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), single column revenue journal (p. 35), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

3. Post the appropriate individual entries to the general ledger.

4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances.

5. Prepare a trial balance.

To determine

General Ledger

General ledger refers to the ledger that records all the transactions of the business related to the company’s assets, liabilities, owners’ equities, revenues, and expenses. Each subsidiary ledger is represented in the general ledger by summarizing the account.

Purchase journal:

Purchase journal refers to the journal that is used to record all purchases on account. In the purchase journal, all purchase transactions are recorded only when the business purchased the goods on account. For example, the business purchased cleaning supplies on account.

Cash receipts journal:

Cash receipts journal refers to the journal that is used to record all transaction which involves the cash receipts. For example, the business received cash from rent.

Cash payments journal:

Cash payments journal refers to the journal that is used to record all transaction which involves the cash payments. For example, the business paid cash to employees (salary paid to employees).

Revenue journal:

Revenue journal refers to the journal that is used to record the fees earned on account. In the revenue journal, all revenue transactions are recorded only when the business performed service to customer on account (credit).

To post: The account balances and individual entries to the appropriate general ledger accounts.

Explanation of Solution

Prepare the general ledger for given accounts as follows:

Account:         Cash                                                              Account no. 11
Date		Item	Post. Ref	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓			1,60,900
	31		CR31	57,430		2,18,330
	31		CP34		1,25,350	92,980

Table (1)

Account: Accounts receivable						Account no. 12
Date		Items	Post Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓			14,050
	31		R35	21,920		35,970
	31		CR31		16,030	19,940

Table (2)

Account: Maintenance Supplies						Account no. 14
Date		Items	Post Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓			10,850
	20		J1		3,600	7,250
	31		P37	3,250		10,500

Table (3)

Account: Office Supplies					Account no. 15
Date		Items	Post Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓			4,900
	31		CP34	310		5,210
	31		P37	765		5,975

Table (4)

Account: Office Equipment					Account no. 16
Date		Items	Post Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓			28,500
	6		P37	4,800		33,300

Table (5)

Account: Accumulated Depreciation-Office Equip.					Account no. 17
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓				6,900

Table (6)

Account: Vehicles					Account no.18
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓			95,900
	5		P37	39,500		1,35,400
	16		CP34	40,900		1,76,300

Table (7)

Account: Accumulated Depreciation -Vehicles					Account no. 19
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓				14,700

Table (8)

Account: Accounts Payable						Account Number 21
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓				4,250
	31		P37		48,315		52,565
	31		CP34	48,550			4,015

Table (9)

Account: S. Holmes, Capital						Account Number 31
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1	Balance	✓				2,89,250

Table (10)

Account: S. Holmes, Drawing					Account Number 32
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	24		CP34	3,200		3,200

Table (11)

Account: Fees Earned					Account Number 41
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	16		CR31		21,700		21,700
	31		CR31		19,700		41,400
	31		R35		21,920		63,320

Table (12)

Account: Driver Salaries Expense					Account Number 51
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	30		CP34	16,900		16,900

Table (13)

Account: Maintenance Supplies Exp.					Account Number 52
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	20		J1	3,600		3,600

Table (14)

Account: Fuel Expense					Account Number 53
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	9		CP34	800		800

Table (15)

Account: Office Salaries Expense					Account Number 61
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	30		CP34	7,600		7,600

Table (16)

Account: Rent Expense					Account Number 62
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	1		CP34	4,500		4,500

Table (17)

Account: Advertising Expense					Account Number 63
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	20		CP34	1,990		1,990

Table (18)

Account: Miscellaneous Administrative Expense					Account Number 64
Date		Items	Post Ref.	Debit  ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
2016
Dec.	17		CP34	600		600

Table (19)

To determine

To Prepare: Purchase journal, Cash receipts journal, single column revenue journal, cash payments journal and two column general journal

Explanation of Solution

Purchase journal

Purchase journal of Company RC in the month of December, 2016 is as follows:

Purchase Journal

Page 37

Date		Account Credited	Post Ref.	Accounts Payable Cr.	Maintenance Supplies Dr.	Office Supplies Dr.	Other Accounts Dr.	Post Ref.	Amount ($)
Dec.	5	B Transportation	✓	39,500			Vehicles	18	39,500
	6	A Computer Co.	✓	4,800			Office Equipment	16	4,800
	18	E Supply Co.	✓	1,750	1,750
	19	M Co.	✓	1,825	1,500	325
	23	O T G Inc.	✓	440		440
	31			48,315	3,250	765			44,300
				(21)	(14)	(15)			✓

Table (20)

Cash Receipt Journal

Cash receipts journal of Company RC in the month of December, 2016 is as follows:

Cash Receipts Journal

Page 31

Date		Account Credited	Post Ref.	Other Accounts Cr.	Accounts Receivable Cr.	Cash Dr.
Dec.	3	T Co.	✓		5,100	5,100
	10	S Co.	✓		4,850	4,850
	12	C Co.	✓		1,980	1,980
	16	Fees Earned	41	21,700		21,700
	25	T Co.	✓		4,100	4,100
	31	Fees Earned	41	19,700		19,700
	31			41,400	16,030	57,430
				✓	(12)	(11)

Table (21)

Revenue Journal

Revenue journal of Company RC in the month of December, 2016 is as follows:

Revenue Journal

Page 35

Date		Invoice No.	Accounts Debited	Post Ref.	Accounts Receivable Dr. Fees Earned Cr.
Dec.	2	940	C Co.	✓	1,980
	6	941	D Co.	✓	5,680
	10	942	J Co.	✓	2,140
	24	943	S Co.	✓	6,400
	25	944	D Co.	✓	5,720
	31				21,920
					(12)(41)

Table (22)

Cash Payment Journal

Cash payment journal of Company RC in the month of December is as follows:

Cash payment journal

Page 34

Date		Ck No.	Account Credited	Post Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.
Dec.	1	610	Rent Expense	62	4,500		4,500
	9	611	Fuel Expense	53	800		800
	10	612	O T G Inc.	✓		360	360
	11	613	E Supply Co.	✓		3,240	3,240
	11	614	Porter Co.	✓		650	650
	13	615	B Transportation	✓		39,500	39,500
	16	616	Vehicles	18	40,900		40,900
	17	617	Misc. Admin. Expense	64	600		600
	20	618	Advertising Expense	63	1,990		1,990
	24	619	S. Holmes, Drawing	32	3,200		3,200
	26	620	A Computer Co.	✓		4,800	4,800
	30	621	Driver Salaries Exp.	51	16,900		16,900
			Office Salaries Exp.	61	7,600		7,600
	31	622	Office Supplies	15	310		310
	31				76,800	48,550	1,25,350
					✓	(21)	(11)

Table (23)

To determine

To Prepare: Two column general journal to record individual entry of RC Company.

Explanation of Solution

General journal

General journal of Company RC in the month of December is as follows:

Journal				Page 1
Date		Description	Post Ref.	Debit  ($)	Credit ($)
2016
Dec.	20	Maintenance Supplies Expenses	52	3,600
		Maintenance Supplies	14		3,600
		(To record the use of maintenance supplies to repair delivery vehicles)

Table (24)

To determine

To Prepare: Unadjusted Trial balances of RC Company at December 31, 2016.

Explanation of Solution

Unadjusted Trial balances of RC Company at December 31, 2016 is presented below:

REVERE COURIER COMPANY
Unadjusted Trial Balance
December 31, 2016
	Account No.	Debit  Balances ($)	Credit Balances ($)
Cash	11	92,980
Accounts Receivable	12	19,940
Maintenance Supplies	14	10,500
Office Supplies	15	5,975
Office Equipment	16	33,300
Accumulated Depreciation—Office Equipment	17		6,900
Vehicles	18	1,76,300
Accumulated Depreciation—Vehicles	19		14,700
Accounts Payable	21		4,015
S. Holmes, Capital	31		2,89,250
S. Holmes, Drawing	32	3,200
Fees Earned	41		63,320
Driver Salaries Expense	51	16,900
Office Salaries Expense	61	7,600
Maintenance Supplies Expense	52	3,600
Fuel Expense	53	800
Rent Expense	62	4,500
Advertising Expense	63	1,990
Miscellaneous Administrative Expense	64	600
		3,78,185	3,78,185

Table (25)

Conclusion

This problem will help us to understand the process of recording of accounting transactions in journal and its further posting into respective ledgers. Additionally, it shows the process of reporting of different ledger balances in unadjusted Trial balance.