Chapter 7, Problem 7CP

Comprehensive Problem for Chapter 7

Completing the Accounting Cycle for a Merchandising Entity—Using Special Journals

Amherst Networking Systems adjusts and closes its books and then prepares financial statements monthly Amherst uses the perpetual inventory system and all sales on credit ha terms of n/30. The company completed the following transactions during August

Aug. 1 Issued check no. 682 for August office rent of $1300.
2 Issued check no. 683 to pay the salaries payable of $1300 from July 31.
2 Issued invoice no. 503 for sale on account R.T. Loeb, $700. Amherst’s cost of this merchandise inventory was $210.
3 Purchased merchandise inventory on credit terms of 1/15, n/60 from Goldner, Inc.. $1,400.
4 Received cash on account from friend Company, $2400.
4 Sold merchandise inventory for cash, $370 (cost, $111).
5 Issued check no. 684 to purchase office supplies for cash, $730.
7 Issued invoice no. 504 for sale on account to K.D. Sanders, $2100 (cost,
$630).
8 Issued check no. 685 to pay Filter Company $2,500 of the amount owed at July 31. This payment occurred after the end of the discount period
11 Issued check no. 686 to pay Goldner, Inc. the net amount owed from August 3.
12 Received cash from R.T. Loeb in full settlement of her account receivable from August 2.
16 Issued check no.687 to pay salaries expense of $1,290.
19 Purchased merchandise inventory for cash, $850. issuing check no. 688.
22 Purchased furniture on credit terms of 3/15, n/60 from Bradford Corporation, $510.
23 Sold merchandise inventory on account to Friend Company, issuing invoice no. 505 for $9,000 (cost, $2,700).
24 Received half the July 31 amount receivable from K.D. Sanders.
26 Purchased office supplies on credit terms of 2/10, n/30 from Filter Company, $240.
30 Returned damaged merchandise inventory to the company from whom Amherst made the cash purchase on August 19, receiving cash of $850.
31 Purchased merchandise inventory on credit terms of 1/10, n/30 from Seacrest Supply, $8,000.
31 Issued check no. 689 to Lenny Moore, owner of the business, for personal withdrawal, $600.
7. Prepare a multistep income statement, statement of owner’s equity, and classified balance sheet.