Chapter 7, Problem 1BPSB

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
Nov. 2	$88,500
12		$32,830
15		$6,585
15	$18,170
18	$6,419
19	$13,230
19		$1,960
25	$5,145
30		$6,585
30	$16,703
Nov. 30			$100,207

Accounts Receivable
Date	Debit	Credit	Balance
Nov. 8	$6,550
10	$13,500
15	$5,250
18		$6,550
19		$13,500
22	$3,695
24	$4,280
25		$5,250
Nov. 30			$7,975

Inventory
Date	Debit	Credit	Balance
Nov. 1			$40,000
4	$33,500
8		$3,910
10		$8,500
11	$2,557
12		$670
15		$9,000
15		$2,450
17		$557
19		$40
22		$2,060
24		$2,130
30		$10,200
Nov. 30			$36,540

Office Supplies
Date	Debit	Credit	Balance
Nov. 16	$459		$459
Nov. 30			$459

Store Supplies
Date	Debit	Credit	Balance
Nov. 5	$1,040
Nov. 30			$1,040

Office Equipment
Date	Debit	Credit	Balance
Nov. 1	$5,058
26		$922
Nov. 30			$4,136

Accounts Payable
Date	Debit	Credit	Balance
Nov. 1		$5,058
4		$33,500
5		$1,040
11		$2,557
12	$33,500
16		$459
17	$557
19	$2,000
26	$922
Nov. 30			$5,635

Long-term Notes Payable
Date	Debit	Credit	Balance
Nov. 2		$88,500
Nov. 30			$88,500

C. Grassley, Capital
Date	Debit	Credit	Balance
Nov. 1			$40,000
Nov. 30			$40,000

Sales
Date	Debit	Credit	Balance
Nov. 8		$6,550
10		$13,500
15		$5,250
15		$18,170
22		$3,695
24		$4,280
30		$16,703
Nov. 30			$68,148

Sales Discount
Date	Debit	Credit	Balance
Nov. 18	$131
19	$270
25	$105
Nov. 30			$506

Cost of Goods Sold
Date	Debit	Credit	Balance
Nov. 8	$3,910
10	$8,500
15	$9,000
15	$2,450
22	$2,060
24	$2,130
30	$10,200
Nov. 30			$38,250

Sales Salaries Expense
Date	Debit	Credit	Balance
Nov. 15	$6,585
30	$6,585
$38,250
Nov. 30			$13,170

Accounts Receivable Subsidiary ledger

Cyd Rounder
Date	Debit	Credit	Balance
Nov. 8	$6,550		$6,550
18		$6,550	0
Nov. 30			0

Carlos Mental
Date	Debit	Credit	Balance
10	$13,500		$13,500
19		$13,500	0
22	$3,695		$3,695
Nov. 30			$3,695

Tori Tripp
Date	Debit	Credit	Balance
15	$5,250		$5,250
24	$4,280		$9,530
25		$5,250	$4,280
Nov. 30			$4,280

Accounts Payable Subsidiary Ledger

Brun Supply
Date	Debit	Credit	Balance
Nov. 1	$5,058		$5,058
26		$922
Nov. 30			$4,136

BLR Industries
Date	Debit	Credit	Balance
Nov. 4	$33,500		$33,500
12		$33,500	0
Nov. 30			0

Grebe Company
Date	Debit	Credit	Balance
Nov. 5	$1,040		$1,040
16	$459		$1,499
Nov. 30			$1,499

Lo Company
Date	Debit	Credit	Balance
Nov. 11	$2,557		$2,557
17		$557	$2,000
19		$2,000	0
Nov. 30			$1,499

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
Nov. 8	Cyd Rounder	439	$6,550	$3,910
10	Carlos Mental	440	$13,500	$8,500
15	Tori Tripp	441	$5,250	$2,450
22	Carlos Mental	442	$3,695	$2,060
24	Tori Tripp	443	$4,280	$2,130
Nov. 30	Totals		$33,275	$19,050

Foot and crossfoot of sales journal

Debit Columns		Credit Columns
Accounts Receivable Dr.	$33,275	Sales CR.	$33,275
Cost of Goods Sold Dr.	$19,050	Inventory Cr	$19,050
Total	$52,325		$52,325

Purchase Journal
Date	Account	Date of Invoice	Terms	Accounts Payable Cr.	Inventory Dr.	Office Supplies Dr.	Other Accounts Dr.
Nov. 1	Brun Supply	11/1	n/10 EOM	$5,058			$5,058
4	BLR Industries	11/3	2/10, n/30	$33,500	$33,500
5	Grebe Company	11/5	n/10 EOM	$1,040			$1,040
11	Lo Company	11/10	2/10, n/30	$2,557	$2,557
16	Grebe Company	11/16	n/10 EOM	$459		$459
Nov. 30	Totals			$42,614	$36,057	$459	$6,098

Foot and crossfoot of purchase journal

Debit Columns		Credit Columns
Inventory Dr.	$36,057	Accounts Payable Cr.	$42,614
Office Supplies Dr.	$459
Other Accounts Dr.	$6,098
Total	$42,614		$42,614

Cash Receipt Journal
Date	Account Credited	Cash Dr.	Sales Discount Dr.	Accounts Receivables Cr.	Sales Cr	Other Account Cr.	Cost of Goods Sold Dr. Inventory Cr.
Nov. 2	Long-term note payable	$88,500				$88,500
15	Sales	$18,170			$18,170		$9,000
18	Cyd Rounder	$6,419	$131	$6,550
19	Carlos Mental	$13,230	$270	$13,500
25	Tori Tripp	$5,145	$105	$5,250
30	Sales	$16,703			$16,703		$10,200
Nov. 30	Totals	$148,167	$506	$25,300	$34,873	$88,500	$19,200

Foot and crossfoot of cash receipts journal

Debit Columns		Credit Columns
Cash Dr.	$148,167	Accounts Receivables Cr.	$25,300
Sales Discount Dr.	$506	Sales Cr.	$34,873
Cost of Goods Sold Dr.	$19,200	Other Account Cr.	$88,500
		Inventory Cr.	$19,200
Total	$167,873		$167,873

Cash Disbursements Journal
Date	Check Number	Payee	Account Debited	Cash Cr.	Inventory Cr	Other Account Dr.	Accounts Payable Dr.
Nov. 12	633	BRL Industries	BRL Industries	$32,830	$670		$33,500
15	634	Payroll	Sales Salaries expense	$6,585		$6,585
19	635	Lo Company	Lo Company	$1,960	$40		$2,000
30	636	Payroll	Sales Salaries expense	$6,585		$6,585
Nov. 30		Totals		$47,960	$710	$13,170	$35,500

Foot and crossfoot of cash disbursements journal

Debit Columns		Credit Columns
Other Account Dr.	$13,170	Cash Cr	$47,960
Accounts Payable Dr.	$35,500	Inventory Cr	$710
Total	$48,670		$48,670

General Journal
Date	Accounts name	Debit	Credit
Mar. 17	Accounts Payable – Lo Company	$557
	Merchandise inventory		$557
26	Accounts Payable – Brun Supply	$922
	Office Equipment		$922

Foot and crossfoot of general journal

Debit Columns		Credit Columns
Accounts Payable Dr.	$1,479	Merchandise inventory Cr.	$557
		Office Equipment Cr	$922
Total	$1,479		$1,479

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

GRASSELY COMPANY Trial balance November 30.
Accounts	Debit	Credit
Cash	$100,207
Accounts Receivable	$7,975
Inventory	$36,540
Office supplies	$459
Store supplies	$1,040
Office equipment	$4,136
Accounts Payable		$5,635
Long-term notes payable		$88,500
C G. Capital		$40,000
Sales		$68,148
Sales Discount	$506
Cost of Goods Sold	$38,250
Sales salaries expense	$13,170
Total	$202,283	$202,283

Schedule of accounts receivable

GRASSELY COMPANY Schedule of Accounts Receivable November 30.
Carlos Mantel	$3,695
Tori Tripp	$4,280
Total Accounts Receivable	$7,975

Schedule of accounts payable

CHURCH COMPANY Schedule of Accounts Payable November 30.
Brun Supply	$4,136
Grebe Company	$1,499
Total Accounts Receivable	$5,635