Chapter 7, Problem 1APSA

To determine

Journals:

Journals are the books where all the original entries of business transactions are recorded on basis of its occurrence order and date.

Sales Journal:

The journal where all the credit sales of merchandise are recorded is called a Sales Journal.

Purchases Journal:

It is the journal where all the purchase on accounts or credit purchase of merchandise, supplies, equipment etc. are recorded.

Cash Receipts Journal:

Cash receipts journal records all type cash receipts of a business organization like cash sales, collections from debtors, loans and borrowings etc.

Cash Disbursements Journal:

The journal where all the cash payments are recorded is called a cash payment journal like cash purchases of equipment, supplies, inventories and payment to creditors.

General Journal:

The transactions which are not recorded in the special journals namely, sales journal, purchase journal, cash receipt journal, and cash disbursement journal are recorded in the general journal.

Accounts Receivable Subsidiary Ledger:

A subsidiary ledger of accounts receivable shows the amount of money paid and owed by debtors for the transactions made on credit individually.

Schedule of Accounts Receivable:

A schedule of accounts receivable represents the overall amount of money owed by the debtors for credit transactions during a specified period.

To determine:

1. Open the general ledger accounts and subsidiary ledger of accounts receivables and accounts payable.

2. Preparation of special journals; sales journal, purchases journal, cash receipts journal, cash disbursements journal and General Journal.

3. Preparation of trial balance and schedules of both accounts receivable and accounts payable to prove the accuracy of subsidiary ledgers.

Explanation of Solution

Explanation:

1. General Ledger Accounts

Cash
Date	Debit	Credit	Balance
6	$82,000
12	$16,464
13		$42,728
13	$9,996
15		$18,300
15	$34,680
20	$5,488
23		$29,596
31		$18,300
31	$30,180
Mar. 31			$69,884

Accounts Receivable
Date	Debit	Credit	Balance
Mar. 2	$16,800
3	$10,200
10	$5,600
12		$16,800
13		$10,200
20		$5,600
27	$14,910
28	$4,315
Mar. 31			$19,225

Inventory
Date	Debit	Credit	Balance
Mar. 1			$10,000
1	$43,600
2		$8,400
3		$5,800
10		$2,900
13		$872
14	$32,625
15		$20,210
17		$2,425
		$604
27		$7,220
28		$3,280
31		$16,820
Mar. 31			$17,694

Office Supplies
Date	Debit	Credit	Balance
Mar. 3	$1,230		$1,230
Mar. 31			$1,230

Store Supplies
Date	Debit	Credit	Balance
16	$1,770		$1,770
Mar. 31			$1,770

Office Equipment
Date	Debit	Credit	Balance
9	$21,850
19		$630
Mar. 31			$21,220

Accounts Payable
Date	Debit	Credit	Balance
Mar. 1		$43,600
3		$1,230
9		$21,850
13	$43,600
14		$32,625
16		$1,770
17	$2,425
19	$630
23	$30,200
Mar. 31			$24,220

Long-term Notes Payable
Date	Debit	Credit	Balance
6		$82,000
Mar. 31			$82,000

Z. Church, Capital
Date	Debit	Credit	Balance
Mar. 1			$10,000
Mar. 31			$10,000

Sales
Date	Debit	Credit	Balance
Mar. 2		$16,800
3		$10,200
10		$5,600
15		$34,680
27		$14,910
28		$4,315
31		$30,180
Mar. 31			$116,685

Sales Discount
Date	Debit	Credit	Balance
12	$336
13	$204
20	$112
Mar. 31			$652

Cost of Goods Sold
Date	Debit	Credit	Balance
Mar. 2	$8,400
3	$5,800
10	$2,900
15	$20,210
27	$7,220
28	$3,280
31	$16,820
Mar. 31			$64,630

Sales Salaries Expense
Date	Debit	Credit	Balance
Mar.15	$18,300
31	$18,300
Mar. 31			$36,600

Accounts Receivable Subsidiary ledger

Min Cho
Date	Debit	Credit	Balance
Mar. 2	$16,800		$16,800
12		$16,800	0
Mar. 31			0

Linda Witt
Date	Debit	Credit	Balance
Mar. 3	$10,200		$10,200
13		$10,200	0
28	$4,315		$4,315
Mar. 31			$4,315

Jovita Albany
Date	Debit	Credit	Balance
Mar. 10	$5,600		$5,600
20		$5,600	0
27	$14,910		$14,910
Mar. 31			$14,910

Accounts Payable Subsidiary Ledger

Van Industries
Date	Debit	Credit	Balance
Mar. 1		$43,600	$43,600
13	$43,600		0
Mar. 31			0

Gabel Company
Date	Debit	Credit	Balance
Mar. 3		$1,230	$1,230
16		$1,770	$3,000
Mar. 31			$3,000

Spell Company
Date	Debit	Credit	Balance
Mar. 9		$21,850	$3,000
20	$630		$21,220
Mar. 31			$21,220

CD Company
Date	Debit	Credit	Balance
Mar. 14		$32,625	$32,625
19	$2,425		$30,200
23	$30,200		0
Mar. 31			0

2. Special Journals and General Journal

Sales Journal
Date	Account debited	Invoice Number	Accounts Receivable Dr. Sales CR.	Cost of Goods Sold Dr. Inventory Cr
Mar. 2	Min Cho	854	$16,800	$8,400
3	Linda Witt	855	$10,200	$5,800
10	Jovita Albany	856	$5,600	$2,900
27	Jovita Albany	857	$14,910	$7,220
28	Linda Witt	858	$4,315	$3,280
Mar. 31	Totals		$51,825	$27,600

Foot and crossfoot of sales journal

Debit Columns		Credit Columns
Accounts Receivable Dr.	$51,825	Sales CR.	$51,825
Cost of Goods Sold Dr.	$27,600	Inventory Cr	$27,600
Total	$79,425		$79,425

Purchases Journal
Date	Account	Date of Invoice	Terms	Accounts Payable Cr.	Inventory Dr.	Office Supplies Dr.	Other Accounts Dr.
1	Van Industries	3/1	2/15, n/30	$43,600	$43,600
3	Gabel Company	3/3	n/10 EOM	$1,230		$1,230
9	Spell Supply	3/9	n/10 EOM	$21,850			$21,850
14	CD Company	3/13	2/10, n/30	$32,625	$32,625
16	Gabel Company	3/16	n/10 EOM	$1,770			$1,770
Mar. 31	Totals			$101,075	$76,225	$1,230	$23,620

Foot and crossfoot of purchase journal

Debit Columns		Credit Columns
Inventory Dr.	$76,225	Accounts Payable Cr.	$101,075
Office Supplies Dr.	$1,230
Other Accounts Dr.	$23,620
Total	$101,075		$101,075

Cash Receipts Journal
Date	Account Credited	Cash Dr.	Sales Discount Dr.	Accounts Receivables Cr.	Sales Cr	Other Account Cr.	Cost of Goods Sold Dr. Inventory Cr.
6	Lon-term Note Payable	$82,000				$82,000
12	Min Cho	$16,464	$336	$16,800
13	Linda Witt	$9,996	$204	$10,200
15	Sales	$34,680			$34,680		$20,210
20	Jovita Albany	$5,488	$112	$5,600
31	Sales	$30,180			$30,180		$16,820
Mar. 31	Totals	$178,808	$652	$32,600	$64,860	$82,000	$37,030

Foot and crossfoot of cash receipts journal

Debit Columns		Credit Columns
Cash Dr.	$178,808	Accounts Receivables Cr.	$32,600
Sales Discount Dr.	$652	Sales Cr.	$64,860
Cost of Goods Sold Dr.	$37,030	Other Account Cr.	$82,000
		Inventory Cr.	$37,030
Total	$216,490		$216,490

Cash Disbursements Journal
Date	Check Number	Payee	Account Debited	Cash Cr.	Inventory Cr	Other Account Dr.	Accounts Payable Dr.
13	416	Van Industries	Van Industries	$42,728	$872		$43,600
15	417	Payroll	Sales Salaries expense	$18,300		$18,300
23	418	CD Company	CD Company	$29,596	$604		$30,200
31	419	Payroll	Sales Salaries expense	$18,300		$18,300
Mar. 31		Totals		$108,924	$1,476	$36,600	$73,800

Foot and crossfoot of cash disbursements journal

Debit Columns		Credit Columns
Other Account Dr.	$36,600	Cash Cr	$108,924
Accounts Payable Dr.	$73,800	Inventory Cr	$1,476
Total	$110,400		$110,400

General Journal
Date	Accounts name	Debit	Credit
Mar. 17	Accounts Payable – CD Company	$2,425
	Merchandise inventory		$2,425
19	Accounts Payable – Spell Supply	$630
	Office Equipment		$630

Foot and crossfoot of general journal

Debit Columns		Credit Columns
Accounts Payable Dr.	$3,055	Merchandise inventory Cr.	$2,425
		Office Equipment Cr	$630
Total	$3,055		$3,055

3. Trial balance and schedules of accounts receivable and accounts payable

CHURCH COMPANY Trial balance March 31.
Accounts	Debit	Credit
Cash	$69,884
Accounts Receivable	$19,225
Inventory	$17,694
Office supplies	$1,230
Store supplies	$1,770
Office equipment	$21,220
Accounts Payable		$24,220
Long-term notes payable		$82,000
Capital		$10,000
Sales		$116,685
Sales Discount	$652
Cost of Goods Sold	$64,630
Sales salaries expense	$36,600
Total	$232,905	$232,905

Schedule of accounts receivable

CHURCH COMPANY Schedule of Accounts Receivable March 31.
Jovita Albany	$14,910
Linda Witt	$4,315
Total Accounts Receivable	$19,225

Schedule of accounts payable

CHURCH COMPANY Schedule of Accounts Payable March 31.
Gabel Company	$3,000
Spell Company	$21,220
Total Accounts Receivable	$24,220