Chapter 7, Problem 2BPSB

To determine

Concept Introduction:

Sales Journal:

Sales journal is concerned with all the credit sales occurred during an accounting period.

Cash Receipt Journal:

The specific journal where all the cash inflows or received during the period is recorded is called a cash receipt journal.

Requirement 1:

To Prepare:

Prepare sales journal and cash receipts journal of Acorn Industries for the month of July..

Answer to Problem 2BPSB

Journal Name	Transactions took place
Sales Journal	Accounts receivable ,Sales, COGS, inventory
Cash receipt Journal	Cash, sales discount, accounts receivable , sales, other accounts , COGS, inventory

Explanation of Solution

Sales Journal Page 3
Date	Account Debited	Invoice Number	Accounts Receivable Dr. Sales Cr.	Cost of Goods Sold Dr. Inventory Cr.
July 5	Kim Nettle	918	$19,200	$10,500
6	Ruth Blake	919	7,500	4,300
13	Ashton Moore	920	8,550	5,230
14	Kim Nettle	921	5,100	3,800
29	Ruth Blake	922	17,500	10,850
30	Ashton Moore	923	16,820	9,840
31	Total		74,670	44,520

Cash Receipt Journal Page 3
Date	Account Credited	Cash Dr.	Sales Discount Dr.	Accounts Receivable Cr.	Sales Cr.	Other Accounts Cr.	Cost of Goods Sold Dr. Inventory Cr.
July 15	Kim Nettle	$18,816	$384	$19,200
15	Sales	118,350			$118,350		$76,330
16	Ruth Blake	7,350	150	7,500
21	L.T Notes Payable	15,000				$15,000
23	Ashton Moore	8,379	171	8,550
24	Kim Nettle	4,998	102	5,100
31	Sales	80,244			80,244		53,855
31	Total	253,137	807	40,350	198,594	15,000	130,185

To determine

Concept Introduction:

General Ledger:

The grouping of similar nature transactions of a business that helps to prepare the financial statement is known as General ledger.

Subsidiary Ledger:

It is the supporting ledger for preparing the general ledger that gives detailed information.

Requirement 2:

To Prepare:

Open all the general ledger accounts concerned with the transactions which occurred in the month of July and also prepare all the accounts receivable subsidiary ledger accounts?

Answer to Problem 2BPSB

Account Name	Balance
Cash	$ 353,137
Accounts Receivable	$ 34,320
Inventory	$ 25,295
Long Term Notes payable	$ 15,000
Capital	$ 100,000
Sales	$273,264
Sales Discount	$ 807
Cost Of Goods Sold	$174,705

Explanation of Solution

Cash
Date	Debit	Credit	Balance
July 1			$100,000
15	$18,816		118,816
15	118,350		237,166
16	7,350		244,516
21	15,000		259,516
23	8,379		267,895
24	4,998		272,893
31	80,244		353,137

Accounts Receivable
Date	Debit	Credit	Balance
July 5	$19,200		$19,200
6	7,500		26,700
13	8,550		35,250
14	5,100		40,350
15		19,200	21,150
16		7,500	13,650
23		8,550	5,100
24		5,100	0
29	17,500		17,500
30	16,820		34,320

Inventory
Date	Debit	Credit	Balance
July 1			$200,000
5		$10,500	189,500
6		4,300	185,200
13		5,230	179,970
14		3,800	176,170
15		76,330	99,840
29		10,850	88,990
30		9,840	79,150
31		53,855	25,295

Long-Term Notes Payable
Date	Debit	Credit	Balance
July 1			$200,000
21		$15,000	15,000

R. Acorn, Capital
Date	Debit	Credit	Balance
July 1			$100,000

Sales
Date	Debit	Credit	Balance
July 5		$19,200	$19,200
6		7,500	26,700
13		8,550	35,250
14		5,100	40,350
15		118,350	158,700
29		17,500	176,200
30		16,820	193,020
31		80,244	273,264

Sales Discount
Date	Debit	Credit	Balance
July 15	$384		$384
16	150		534
23	171		705
24	102		807

Cost of Goods Sold
Date	Debit	Credit	Balance
July 5	$10,500		$10,500
6	4,300		14,800
13	5,230		20,030
14	3,800		23,830
15	76,330		100,160
29	10,850		111,010
30	9,840		120,850
31	53,855		174,705

Accounts Receivable Subsidiary Ledger Accounts

Kim Nettle
Date	Debit	Credit	Balance
July 5	$19,200		$19,200
14	5,100		24,300
15		$19,200	5,100
24		5,100	0

Ruth Blake
Date	Debit	Credit	Balance
July 6	7,500		$7,500
16		$7,500	0
29	17,500		17,500

Ashton Moore
Date	Debit	Credit	Balance
July 13	$8,550		$8,550
23		$8,550	0
30	16,820		16,820

To determine

Concept Introduction:

Journal:

The recording of financial transactions are known as Journal .

Requirement 3:

To Verify:

Verify that amounts that should be posted as individual amounts from the journals have been posted.

Explanation of Solution

Cash
Date	Debit	Credit	Balance
July 1			$100,000
15	$18,816		118,816
15	118,350		237,166
16	7,350		244,516
21	15,000		259,516
23	8,379		267,895
24	4,998		272,893
31	80,244		353,137

Accounts Receivable
Date	Debit	Credit	Balance
July 5	$19,200		$19,200
6	7,500		26,700
13	8,550		35,250
14	5,100		40,350
15		19,200	21,150
16		7,500	13,650
23		8,550	5,100
24		5,100	0
29	17,500		17,500
30	16,820		34,320

Inventory
Date	Debit	Credit	Balance
July 1			$200,000
5		$10,500	189,500
6		4,300	185,200
13		5,230	179,970
14		3,800	176,170
15		76,330	99,840
29		10,850	88,990
30		9,840	79,150
31		53,855	25,295

Long-Term Notes Payable
Date	Debit	Credit	Balance
July 1			$200,000
21		$15,000	15,000

R. Acorn, Capital
Date	Debit	Credit	Balance
July 1			$100,000

Sales
Date	Debit	Credit	Balance
July 5		$19,200	$19,200
6		7,500	26,700
13		8,550	35,250
14		5,100	40,350
15		118,350	158,700
29		17,500	176,200
30		16,820	193,020
31		80,244	273,264

Sales Discount
Date	Debit	Credit	Balance
July 15	$384		$384
16	150		534
23	171		705
24	102		807

Cost of Goods Sold
Date	Debit	Credit	Balance
July 5	$10,500		$10,500
6	4,300		14,800
13	5,230		20,030
14	3,800		23,830
15	76,330		100,160
29	10,850		111,010
30	9,840		120,850
31	53,855		174,705

Accounts Receivable Subsidiary Ledger Accounts

Kim Nettle
Date	Debit	Credit	Balance
July 5	$19,200		$19,200
14	5,100		24,300
15		$19,200	5,100
24		5,100	0

Ruth Blake
Date	Debit	Credit	Balance
July 6	7,500		$7,500
16		$7,500	0
29	17,500		17,500

Ashton Moore
Date	Debit	Credit	Balance
July 13	$8,550		$8,550
23		$8,550	0
30	16,820		16,820

To determine

Concept Introduction:

Trial Balance:

The listing of all accounts in debits and credits is known as Trial balance.

Requirement 4:

To Prepare:

(a) Prepare a trial balance of the general ledger.

(b) Prove the accuracy of the subsidiary ledgers by preparing schedule of accounts receivable.

Answer to Problem 2BPSB

Account Names	Totals
Trial balance	$ 588,264
Accounts Receivable	$ 34,320

Explanation of Solution

a. Trial Balance

ACORN INDUSTRIES Trial Balance July 31
Accounts	Debit	Credit
Cash	$353,137
Accounts Receivable	34,320
Inventory	25,295
Long-Term Notes Payable		215,000
R. Acorn, Capital		100,000
Sales		273,264
Sales Discount	807
Cost of Goods Sold	174,705
	588,264	588,264

b. Schedule of Accounts Receivable

ACORN INDUSTRIES Schedule of Accounts Receivable July 31
Ruth Blake	$17,500
Ashton Moore	16,820
Total Accounts Receivable	$34,320