Concept explainers
Shirley’s Beauty Store records sales and purchase transactions in the general journal. In addition to a general ledger, Shirley’s Beauty Store also uses an
Jan. 3 Bought 30 Mango Bath and Shower Gels from Madden, Inc., $660, invoice no. 3487, dated January 1; terms 2/10, n/30; FOB shipping point, freight prepaid and added to the invoice, $125.43 (total $785.43).
4 Bought ten Beauty Candle Travel Sets from Calhoun Candles, Inc., $420, invoice no. 4513, dated January 1; terms net 45; FOB destination.
12 Sold four Mango Bath and Shower Gels on account to R. Kielman, sales slip no. 1456, $120, plus sales tax of $9.60, total $129.60.
13 Received credit memo no. 8715 from Calhoun Candles, Inc., for merchandise returned, $84.
21 Bought five Winter Skin Essentials Kits from Whitney and Waters, $197.50, invoice no. A875, dated January 18; terms 2/15, n/45; FOB destination.
25 Sold three Winter Skin Essentials on account to A. Benner, sales slip no. 1457, $135.75, plus sales tax of $10.86, total $146.61.
27 Issued credit memo no. 33 to A. Benner for merchandise returned, $45.25 plus $3.62 sales tax, total $48.87.
Required
- 1. If using Working Papers, open the following accounts in the accounts receivable ledger and record the balances as of January 1: A. Benner, $45.77; R. Kielman, $175.39. Write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
- 2. If using Working Papers, open the following accounts in the accounts payable ledger and record the balances as of January 1: Calhoun Candles, Inc., $355.23; Madden, Inc., $573.15; Whitney and Waters, $50.25. Write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
- 3. If using Working Papers, record the January 1 balances in the general ledger as given: Accounts Receivable 113 controlling account, $221.16; Accounts Payable 212 controlling account, $978.63; Sales Tax Payable 214, $128.45. Write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
- 4. Record the transactions in the general journal. If using Working Papers, begin on page 25.
- 5.
Post the entries to the general ledger and accounts receivable ledger or accounts payable ledger as appropriate. - 6. Prepare a schedule of accounts receivable.
- 7. Prepare a schedule of accounts payable.
- 8. Compare the totals of the schedules with the balances of the controlling accounts.
4.
Prepare journal entry to record the given transaction.
Explanation of Solution
Merchandise Inventory:
Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a trader, to be sold within a year. Merchandise Inventory is a current asset account which includes all the costs incurred to acquire merchandise, and process it further for sale.
Date | Account Titles and explanation | Post.Ref | Debit ($) | Credit ($) |
January3 | Purchase | 511 | 660.00 | |
Freight in | 514 | 125.43 | ||
Accounts payable | 212 | 785.43 | ||
(To record the purchase of merchandise from the Company M, invoice no.3487 terms n/30) | ||||
January 4 | Purchase | 511 | 420.00 | |
Accounts payable | 212 | 420.0 | ||
(To record the purchase of merchandise from the Company C, invoice no.4513 terms n/30) | ||||
January12 | Accounts receivable | 113 | 129.60 | |
Sales | 411 | 120.00 | ||
Sales tax payable | 214 | 9.60 | ||
(To record the sale of merchandise to Company K, sales slip no.1456) | ||||
January13 | Accounts payable | 212 | 84.00 | |
Purchase returns and allowance | 512 | 84.00 | ||
(To record the credit memo no.8715 for return of merchandise) | ||||
January21 | Purchase | 511 | 197.50 | |
Accounts payable | 212 | 197.50 | ||
(To record the purchase of merchandise from the Company W, invoice no. A875) | ||||
January25 | Accounts receivable | 113 | 146.61 | |
Sales | 411 | 135.75 | ||
Sales tax payable | 214 | 10.86 | ||
(To record the sale of merchandise to Company B, sales slip no.1457) | ||||
January27 | Sales returns and allowances | 412 | 45.25 | |
Sales tax payable | 214 | 3.62 | ||
Accounts receivable | 113 | 48.87 | ||
(To record the issuance of credit memo no.33) |
Table (1)
1 , 2 ,3 and 5
Enter the opening balance, post the transactions and close the balance of the respective accounts in the general ledger and accounts payable ledger and accounts receivable ledger.
Explanation of Solution
Accounts Receivable Account No: 113 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 1 | Balance | 221.61 | ||||
12 | 129.60 | 350.76 | |||||
25 | 146.61 | 497.37 | |||||
27 | 48.87 | 448.50 |
Table (2)
Accounts Payable Account No: 212 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 1 | Balance | 978.63 | ||||
3 | 785.43 | 1,764.06 | |||||
4 | 420.00 | 2,184.06 | |||||
13 | 84.00 | 2,100.06 | |||||
21 | 197.50 | 2,297.56 |
Table (3)
Sales tax payable Account No: 214 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 1 | Balance | 128.45 | ||||
12 | 9.60 | 138.05 | |||||
25 | 10.86 | 148.91 | |||||
27 | 3.62 | 145.29 |
Table (4)
Sales Account No: 411 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 12 | 120.00 | 120.00 | ||||
25 | 135.75 | 255.75 |
Table (5)
Sales returns and allowance Account No: 412 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 27 | 45.25 | 45.25 | ||||
Table (6)
Purchase Account No: 511 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 3 | 660.00 | 660.00 | ||||
4 | 420.00 | 1,080.00 | |||||
21 | 197.50 | 1,277.50 |
Table (7)
Purchase returns and allowance Account No: 512 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 13 | 84.00 | 84.00 | ||||
Table (8)
Freight In Account No: 514 | |||||||
Date | Item | Post Ref. | Debit | Credit | Balance | ||
Debit | Credit | ||||||
January | 3 | 125.43 | 125.43 | ||||
Table (9)
Accounts receivable ledger | ||||||
Name : Company B | ||||||
Date | Item | Post Ref. | Debit | Credit | Balance | |
January | 1 | Balance | 45.77 | |||
25 | 146.61 | 192.38 | ||||
27 | 48.87 | 143.51 |
Table (10)
Accounts receivable ledger | ||||||
Name : Company K | ||||||
Date | Item | Post Ref. | Debit | Credit | Balance | |
January | 1 | 175.39 | ||||
12 | 129.60 | 304.99 |
Table (11)
Accounts payable ledger | ||||||
Name : Company C | ||||||
Date | Item | Post Ref. | Debit | Credit | Balance | |
January | 1 | Balance | 355.23 | |||
4 | 420.00 | 775.23 | ||||
13 | 84.00 | 691.23 |
Table (12)
Accounts payable ledger | ||||||
Name : Company M | ||||||
Date | Item | Post Ref. | Debit | Credit | Balance | |
January | 1 | 573.15 | ||||
3 | 785.43 | 1,358.58 |
Table (13)
Accounts payable ledger | ||||||
Name : Company W | ||||||
Date | Item | Post Ref. | Debit | Credit | Balance | |
January | 1 | 50.25 | ||||
21 | 197.50 | 247.75 |
Table (14)
6, 7 and 8
Prepare Company S’s schedule of accounts receivable, accounts payable and compare the total with accounts receivable controlling ledger and accounts payable controlling ledger.
Explanation of Solution
Prepare Company S’s schedule of accounts receivable and accounts payable:
Company S | |
Schedule of accounts receivable | |
January 31,20-- | |
Particulars | Amount in $ |
Company B | 143.51 |
Company K | 304.99 |
Total accounts receivable | 448.50 |
Table (15)
Company S | |
Schedule of accounts payable | |
January 31,20-- | |
Particulars | Amount in $ |
Company C | 691.23 |
Company M | 1,358.58 |
Company W | 247.75 |
Total accounts receivable | 2,297.56 |
Table (16)
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