![Fundamental Accounting Principles](https://www.bartleby.com/isbn_cover_images/9781259536359/9781259536359_largeCoverImage.gif)
Concept explainers
Introduction:
Summary Journals
• Summary journals are accounting documents prepared to record the financial transactions occurring during a month and then posting the totals of the same to the respective ledger accounts. Examples of Summary Journals are Sales Journals, Purchase Journal, Cash receipts and Cash payment Journals
• Sales Journal records the value of credit sales and cost of goods sold of such sales made during a given period. The value of the credit sales is transferred to the
• Purchase Journal records the value of credit purchases made during a given period. The value of the credit purchases is transferred to the Accounts payable ledger and purchases’ ledger at the end of the month.
• Cash receipts record the value of cash receipts and cash sales made during a period along with the cost of goods sold of such sales. Total of cash receipts is transferred to the Cash account at the end of the month.
• Cash payment Journals record the value of cash payments made for purchases and expenses during a given period. Total of cash payments is transferred to the Cash account at the end of the month.
• Journal entries are the first step in recording financial transactions and preparation of financial statements.
• These represent the impact of the financial transaction and demonstrate the effect on the accounts impacted in the form of debits and credits.
• Assets and expenses have debit balances and Liabilities and Incomes have credit balances and according to the business transaction, the accounts are appropriately debited will be credited by credited to reflect the effect of business transactions and events.
To Prepare:
a) Sales Journal
b) Purchases Journal
c) Cash Receipts Journal
d) Cash Payments Journal
e) General Journal
![Check Mark](/static/check-mark.png)
Answer to Problem 1CP
Solution:
Sales Journal | |||
Date | Particulars | Amount | Cost of Goods Sold |
May-02 | Credit Sales | $ 6,100.00 | $4,100.00 |
May-16 | Credit Sales | $ 3,990.00 | $1,890.00 |
May-22 | Credit Sales | $ 6,850.00 | $4,990.00 |
May-26 | Credit Sales | $14,210.00 | $8,230.00 |
May-31 | Total | $31,150.00 | $ 19,210.00 |
Purchases Journal | |||||
Date | Particulars | Amount | Inventory | Supplies | Others |
May-04 | Credit Purchases | $37,729.00 | $ 37,072.00 | $ 83.00 | $ 574.00 |
May-10 | Credit Purchases | $ 4,074.00 | $ - | $- | $ 4,074.00 |
May-11 | Credit Purchases | $ 8,800.00 | $8,800.00 | $- | $- |
May-17 | Credit Purchases | $13,650.00 | $ 13,650.00 | $- | $- |
May-24 | Credit Purchases | $ 9,030.00 | $8,120.00 | $ 280.00 | $ 630.00 |
May-25 | Credit Purchases | $ 3,080.00 | $3,080.00 | $- | $- |
May-31 | Total | $76,363.00 | $ 70,722.00 | $ 363.00 | $ 5,278.00 |
Cash Receipts Journal | ||||||
Date | Particulars | Amount | Sales Discount | Cash Sales | Store Supplies | Cost of Goods Sold |
May-05 | Cash Sales | $ 4,459.00 | $ 91.00 | $- | $- | $ - |
May-09 | Cash Sales | $ 350.00 | $ - | $- | $ 350.00 | $ - |
May-11 | Cash Sales | $ 5,978.00 | $122.00 | $- | $- | $ - |
May-15 | Cash Sales | $59,220.00 | $ - | $59,220.00 | $- | $ 38,200.00 |
May-30 | Cash Sales | $ 6,713.00 | $137.00 | $- | $- | $ - |
May-31 | Cash Sales | $66,052.00 | $ - | $66,052.00 | $- | $ 42,500.00 |
May-31 | Total | $ 142,772.00 | $350.00 | $ 125,272.00 | $ 350.00 | $ 80,700.00 |
Cash Disbursements Journal | ||||||
Date | Particulars | Amount | Purchase Discount | Rent | Salaries | Others |
May-01 | Office Rent | $ 742.00 | $ - | $ 742.00 | $- | $ - |
May-01 | Sales Rent | $ 2,968.00 | $ - | $ 2,968.00 | $- | $ - |
May-08 | Accounts Payable | $ 6,174.00 | $126.00 | $- | $- | $ - |
May-15 | Office Salaries | $ 3,150.00 | $ - | $- | $ 3,150.00 | $ - |
May-15 | Sales Salaries | $ 5,320.00 | $ - | $- | $ 5,320.00 | $ - |
May-19 | Accounts Payable | $ 8,624.00 | $176.00 | $- | $- | $ - |
May-23 | Accounts Payable | $13,377.00 | $273.00 | $- | $- | $ - |
May-26 | Utilities | $ 1,283.00 | $ - | $- | $- | $1,283.00 |
May-29 | Drawings | $ 7,000.00 | $ - | $- | $- | $7,000.00 |
May-30 | Office Salaries | $ 3,150.00 | $ - | $- | $ 3,150.00 | $ - |
May-30 | Sales Salaries | $ 5,320.00 | $ - | $- | $ 5,320.00 | $ - |
May-31 | Total | $57,108.00 | $575.00 | $ 3,710.00 | $16,940.00 | $8,283.00 |
Date | Account Titles | Debit | Credit |
May | |||
1 | Office Rent | $ 742.00 | |
Sales Rent | $ 2,968.00 | ||
Cash | $ 3,710.00 | ||
(Being office rent paid) | |||
2 | Accounts receivable | $ 6,100.00 | |
Sales | $ 6,100.00 | ||
(Being credit sales recorded) | |||
2 | Cost of goods sold | $ 4,100.00 | |
Merchandise inventory | $ 4,100.00 | ||
(Being cost of goods sold of credit sale recorded) | |||
2 | Sales Returns | $ 175.00 | |
Accounts receivable | $ 175.00 | ||
(Being credit memo issued) | |||
3 | Accounts payable | $ 798.00 | |
Merchandise Inventory | $ 798.00 | ||
(Being credit memo received) | |||
4 | Merchandise inventory | $ 37,072.00 | |
Store supplies | $ 574.00 | ||
Office supplies | $83.00 | ||
Accounts payable | $ 37,729.00 | ||
(Being credit purchases recorded) | |||
5 | Cash | $ 4,459.00 | |
Sales discount | $91.00 | ||
Accounts receivable | $ 4,550.00 | ||
(Being cash received for accounts receivable recorded net of discount) | |||
8 | Accounts payable | $ 6,300.00 | |
Merchandise inventory | $ 126.00 | ||
Cash | $ 6,174.00 | ||
(Being cash paid for accounts payable recorded net of discount) | |||
9 | Cash | $ 350.00 | |
Store supplies | $ 350.00 | ||
(Being cash received for sale of store supplies) | |||
10 | Office equipment | $ 4,074.00 | |
Accounts Payable | $ 4,074.00 | ||
(Being credit purchases recorded) | |||
11 | Cash | $ 5,978.00 | |
Sales discount | $ 122.00 | ||
Accounts receivable | $ 6,100.00 | ||
(Being cash received for accounts receivable recorded net of discount) | |||
11 | Merchandise inventory | $ 8,800.00 | |
Accounts payable | $ 8,800.00 | ||
(Being credit purchases recorded) | |||
12 | Accounts payable | $ 854.00 | |
Office equipment | $ 854.00 | ||
(Being credit memo received) | |||
15 | Office salaries | $ 3,150.00 | |
Sales Salaries | $ 5,320.00 | ||
Cash | $ 8,470.00 | ||
(Being salaries paid in cash) | |||
15 | Cash | $ 59,220.00 | |
Sales | $ 59,220.00 | ||
(Being cash sales recorded) | |||
15 | Cost of goods sold | $ 38,200.00 | |
Merchandise inventory | $ 38,200.00 | ||
(Being cost of goods sold of cash sales recorded) | |||
16 | Accounts receivable | $ 3,990.00 | |
Sales | $ 3,990.00 | ||
(Being credit sales recorded) | |||
16 | Costs of goods sold | $ 1,890.00 | |
Merchandise inventory | $ 1,890.00 | ||
(Being cost of goods sold of credit sale recorded) | |||
17 | Merchandise inventory | $ 13,650.00 | |
Accounts payable | $ 13,650.00 | ||
(Being credit purchases recorded) | |||
19 | Accounts payable | $ 8,800.00 | |
Merchandise inventory | $ 176.00 | ||
Cash | $ 8,624.00 | ||
(Being cash paid for accounts payable recorded net of discount) | |||
22 | Accounts receivable | $ 6,850.00 | |
Sales | $ 6,850.00 | ||
(Being credit sales recorded) | |||
22 | Cost of goods sold | $ 4,990.00 | |
Merchandise inventory | $ 4,990.00 | ||
(Being cost of goods sold of credit sale recorded) | |||
23 | Accounts payable | $ 13,650.00 | |
Merchandise inventory | $ 273.00 | ||
Cash | $ 13,377.00 | ||
(Being cash paid for accounts payable recorded net of discount) | |||
24 | Merchandise inventory | $ 8,120.00 | |
Office supplies | $ 280.00 | ||
Store Supplies | $ 630.00 | ||
Accounts payable | $ 9,030.00 | ||
(Being credit purchases recorded) | |||
25 | Merchandise inventory | $ 3,080.00 | |
Accounts payable | $ 3,080.00 | ||
(Being credit purchases recorded) | |||
26 | Accounts receivable | $ 14,210.00 | |
Sales | $ 14,210.00 | ||
(Being credit sales recorded) | |||
26 | Cost of goods sold | $ 8,230.00 | |
Merchandise inventory | $ 8,230.00 | ||
(Being cost of goods sold of credit sale recorded) | |||
26 | Utilities expense | $ 1,283.00 | |
Cash | $ 1,283.00 | ||
(Being Cash paid for utilities recorded) | |||
29 | Drawings | $ 7,000.00 | |
Cash | $ 7,000.00 | ||
(Being drawings recorded) | |||
30 | Cash | $ 6,713.00 | |
Sales discount | $ 137.00 | ||
Accounts receivable | $ 6,850.00 | ||
(Being cash received for accounts receivable recorded net of discount) | |||
30 | Office salaries | $ 3,150.00 | |
Sales Salaries | $ 5,320.00 | ||
Cash | $ 8,470.00 | ||
(Being salaries paid in cash) | |||
31 | Cash | $ 66,052.00 | |
Sales | $ 66,052.00 | ||
(Being cash sales recorded) | |||
31 | Cost of goods sold | $ 42,500.00 | |
Merchandise inventory | $ 42,500.00 | ||
(Being cost of goods sold of cash sales recorded) |
Explanation of Solution
• Assets and Expenses have debit balances and must be debited in order to increase their balance and credited in order to decrease their balance.
• Liabilities and Incomes have credit balances and must be debited in order to decrease their balance and credited in order to increase their balance.
• On May 1 Office Rent will be debited by $ 742.00, Sales Rent will be debited by $ 2,968.00 and Cash will be credited by $ 3,710.00 since office rent was paid with 80% and 20% divided between Office and selling space.
• On May 2 Accounts receivable will be debited by $ 6,100.00 and Sales will be credited by $ 6,100.00 since credit sales to Hansel were recorded.
• On May 2 Cost of goods sold will be debited by $ 4,100.00 and Merchandise inventory will be credited by $ 4,100.00 since cost of goods sold of credit sale were recorded.
• On May 2 Sales Returns will be debited by $ 175.00 and Accounts receivable will be credited by $ 175.00 since credit memo was issued.
• On May 3 Accounts payable will be debited by $ 798.00 and Merchandise Inventory will be credited by $ 798.00 since credit memo was received.
• On May 4 Merchandise inventory will be debited by $ 37,072.00, Store supplies will be debited by $ 574.00, Office supplies will be debited by $83.00 and Accounts payable will be credited by $ 37,729.00 since credit purchases of inventory and supplies were recorded.
• On May 5 Cash will be debited by $ 4,459.00, Sales discount will be debited by $91.00 and Accounts receivable will be credited by $ 4,550.00 since cash received for accounts receivable was were recorded net of discount of 2% as per terms of sale.
• On May8 Accounts payable will be debited by $ 6,300.00, Merchandise inventory will be credited by $ 126.00 and Cash will be credited by $ 6,174.00 since cash was paid for accounts payable were recorded net of discount and credit memo of $798 issued.
• On May 9 Cash will be debited by $ 350.00 and Store supplies will be credited by $ 350.00 since cash was received for sale of store supplies.
• On May 10 Office equipment will be debited by $ 4,074.00 and Accounts Payable will be credited by $ 4,074.00 since credit purchases of office equipment were recorded.
• On May11 Cash will be debited by $ 5,978.00, Sales discount will be debited by $ 122.00 and Accounts receivable will be credited by $ 6,100.00 since cash received for accounts receivable was were recorded net of discount of 2%.
• On May11 Merchandise inventory will be debited by $ 8,800.00 and Accounts payable will be credited by $ 8,800.00 since credit purchases were recorded.
• On May12 Accounts payable will be debited by $ 854.00 and Office equipment will be credited by $ 854.00 since credit memo was received.
• On May15 Office salaries will be debited by $ 3,150.00, Sales Salaries will be debited by $ 5,320.00 and Cash will be credited by $ 8,470.00 since salaries was paid in cash.
• On May15 Cash will be debited by $ 59,220.00 and Sales will be credited by $ 59,220.00 since cash sales for first 15 days were recorded.
• On May15 Cost of goods sold will be debited by $ 38,200.00 and Merchandise inventory will be credited by $ 38,200.00 since cost of goods sold of cash sales were recorded.
• On May16 Accounts receivable will be debited by $ 3,990.00 and Sales will be credited by $ 3,990.00 since credit sales were recorded.
• On May16 Costs of goods sold will be debited by $ 1,890.00 and Merchandise inventory will be credited by $ 1,890.00
• Since cost of goods sold of credit sale were recorded.
• On May17 Merchandise inventory will be debited by $ 13,650.00 and Accounts payable will be credited by $ 13,650.00 since credit purchases were recorded.
• On May19 Accounts payable will be debited by $ 8,800.00, Merchandise inventory will be credited by $ 176.00 and Cash will be credited by $ 8,624.00 since cash was paid for accounts payable were recorded net of discount.
• On May22 Accounts receivable will be debited by $ 6,850.00 and Sales will be credited by $ 6,850.00 since credit sales were recorded.
• On May22 Cost of goods sold will be debited by $ 4,990.00 and Merchandise inventory will be credited by $ 4,990.00 since cost of goods sold of credit sale were recorded.
• On May23 Accounts payable will be debited by $ 13,650.00 Merchandise inventory will be credited by $ 273.00 and Cash will be credited by $ 13,377.00 since cash was paid for accounts payable were recorded net of discount.
• On May24 Merchandise inventory will be debited by $ 8,120.00, Office supplies will be debited by $ 280.00, Store Supplies will be debited by $ 630.00 and Accounts payable will be credited by $ 9,030.00 since credit purchases of inventory and supplies were recorded.
• On May25 Merchandise inventory will be debited by $ 3,080.00 and Accounts payable $ 3,080.00 since credit purchases were recorded.
• On May26 Accounts receivable will be debited by $ 14,210.00 and Sales will be credited by $ 14,210.00 since credit sales were recorded.
• On May26 Cost of goods sold will be debited by $ 8,230.00 and Merchandise inventory will be credited by $ 8,230.00 since cost of goods sold of credit sale were recorded.
• On May26 Utilities expense will be debited by $ 1,283.00 and Cash will be credited by $ 1,283.00 since Cash was paid for utilities were recorded.
• On May29 Drawings will be debited by $ 7,000.00 and Cash will be credited by $ 7,000.00 since drawings made by the owner were recorded.
• On May30 Cash will be debited by $ 6,713.00, Sales discount will be debited by $ 137.00 and Accounts receivable will be credited by $ 6,850.00 since cash received for accounts receivable were recorded net of discount of 2%.
• On May30 Office salaries will be debited by $ 3,150.00, Sales Salaries will be debited by $ 5,320.00 and Cash will be credited by $ 8,470.00 since salaries was paid in cash.
• On May31 Cash will be debited by $ 66,052.00 and Sales will be credited by $ 66,052.00 since cash sales were recorded.
• On May31 Cost of goods sold will be debited by $ 42,500.00 and Merchandise inventory will be credited by $ 42,500.00 since cost of goods sold of cash sales were recorded.
Hence the summary journals have been prepared.
Want to see more full solutions like this?
Chapter 7 Solutions
Fundamental Accounting Principles
- $ 36,000 204,000 The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash Noncash assets Liabilities Drysdale, loan $ 50,000 10,000 Total assets $ 240,000 Drysdale, capital (50%) Koufax, capital (30%) Marichal, capital (20%) Total liabilities and capital 70,000 60,000 50,000 $ 240,000 Required: a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $15,000. Prepare a predistribution schedule to guide the distribution of cash. b. Assume that assets costing $74,000 are sold for $60,000. How is the available cash to be divided? Complete this question by entering your answers in the tabs below.arrow_forwardCalculate GP ratio round answers to decimal placearrow_forwardWhat is the gross profit percentage for this periodarrow_forward
- The company's gross margin percentage is ?arrow_forwardProblem 19-13 (Algo) Shoney Video Concepts produces a line of video streaming servers that are linked to personal computers for storing movies. These devices have very fast access and large storage capacity. Shoney is trying to determine a production plan for the next 12 months. The main criterion for this plan is that the employment level is to be held constant over the period. Shoney is continuing in its R&D efforts to develop new applications and prefers not to cause any adverse feelings with the local workforce. For the same reason, all employees should put in full workweeks, even if that is not the lowest-cost alternative. The forecast for the next 12 months is MONTH FORECAST DEMAND January February March April 530 730 830 530 May June 330 230 July 130 August 130 September 230 October 630 730 800 November December Manufacturing cost is $210 per server, equally divided between materials and labor. Inventory storage cost is $4 per unit per month and is assigned based on the ending…arrow_forwardCompute 007s gross profit percentage and rate of inventory turnover for 2016arrow_forward
- Headland Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed. Earnings to Weekly Vacation Pay to Be Employee July 31 Pay Received in August Mark Hamill $5,180 $280 Karen Robbins 4,480 230 $460 Brent Kirk 3,680 190 380 Alec Guinness 8,380 330 Ken Sprouse 8,980 410 820 Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $7,000 maximum. The FICA rate is 7.65% on employee and employer on a maximum of $142,800 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee's wages in excess of $142,800. Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the…arrow_forwardThe direct materials variance is computed when the materials are purchasedarrow_forwardAction to increase net incomearrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)