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College Accounting A Contemporary Approach 3e David Haddock John Ellis Price Michael Farina (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file.

CHAPTER 1 ACCOUNTING: THE LANGUAGE OF BUSINESS Chapter Opener: Thinking Critically Stockholders, the IRS, SEC, banks, lenders and creditors are all examples of organizations that would be interested in how Google is performing.

Fast Facts • Google’s mission is to organize the world’s information and make it universally accessible and useful. • “Googol” is the mathematical term for a 1 followed by 100 zeros. Google’s play on the term reflects the company’s mission to organize the immense amount of information available on the web. • Google’s interface can be customized into more than 100 languages. • Google’s culture is unlike any in corporate America—lava lamps and large rubber balls dot company headquarters and the company’s chef used to cook for the Grateful Dead. Google Inc. puts employees first when it comes to daily life in all of their offices. Managerial Implications: Thinking Critically Managers use financial information to make decisions about adding new products and services, offering current products and services, and choosing vendors. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Public, managerial, and governmental. 2. Auditing, tax, and management advisory services. 3. Advice on how to structure financial affairs in order to reduce taxes without violating tax laws. 4. Establish accounting policies, direct the accounting system, prepare and interpret financial statements, provide financial advice, prepare tax forms. 5. Sole proprietorship (owned by one person). Partnership (owned by two or more people). Corporation (can be owned by one person or many). 6. Measure business performance; separate entity. 7. Owners and managers: evaluate operations. Suppliers: assess ability of a firm to pay debts. Banks: ability to repay loans. Tax authorities: determine a tax base. Governmental agencies: legal compliance. Employees: wage levels and profit-sharing plans. 8. Statements of Financial Accounting Standards. 9. SEC, AICPA, AAA. 10. Regulation of financial reporting by publicly owned corporations. 11. The Public Company Accounting Reform and Investor Protection Act of 2002 was passed in response to the wave of corporate accounting scandals starting with the demise of Enron Corporation in 2001, the arrest of top executives at WorldCom and Adelphia Communications Corporations, and ultimately, the demise of Arthur Andersen, an international public accounting firm. 12. The purpose of the Public Company Accounting Oversight Board is to oversee the accounting profession through its investigative and enforcement powers and to discipline corrupt accountants and auditors. © 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.

1-1

CRITICAL THINKING PROBLEM 1.1 Student answers will vary. The student’s reasons for choosing one form of ownership over another are more important than the specific choice made. Generate a discussion on the proposed name of the business. Ask the students if they think the name is creative. Sole proprietorship: Advantage—Heidi would be her own boss and could direct the business as she wants. Disadvantages—Heidi would be responsible for the debts and taxes of the business and may be limited in the amount of capital she could borrow to finance the business. Partnership: Advantage—Heidi would have one or more partners to assist with business operations and to contribute capital. Disadvantages—Heidi would have to share control of the business, as well as its profits. Heidi could be liable for the debts of the partnership. Corporation: Advantages—The business would be a separate entity. Capital would be easier to raise and liability would be limited to the assets of the business. Disadvantages—A corporation is a more complicated form of ownership and is usually more expensive to form. There is also more government regulation and, consequently, more paperwork with a corporation.

1-2

SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Questions asked might include: What is the profit or loss?, How much cash does the business have?, How much money do customers owe the business?.How much money is owed to suppliers?, What is the change in sales volume?, and what is the cost of merchandise sold? 2. 3. 4. 5.

6. 7. 8.

Financial information is used to evaluate performance and make decisions about a business or a nonprofit Keep your employees, creditors, and investors happy. Yes, financial information is a tool for making business decisions that will yield the above results. Inaccurate accounting records and poor business decisions. Every business needs an efficient accounting system which accumulates financial data, classifies and summarizes the information. Without an accounting system, suppliers, lenders, investors, and governmental tax authorities would not be able to accurately make decisions based on the financial information of the company. The manager makes financial decisions based upon the financial information provided by the accountant. Yes. The firm’s financial records need to be separate from the owner’s personal financial records in order to evaluate and measure the performance of the business. These standards are important to management because they enhance comparability of reporting practices.

Ethical Dilemma: Yes. Ethics and accounting are intertwined. Financial Statement Analysis: Analyze Online: 1. Clothing, accessories, outerwear and footwear. 2. Investors, suppliers, and banks. To assist the users when making financial decisions. 3. 15 to 25 year-olds. 4. Economic entity because it is a business for profit. Teamwork: The bank will ask for information to assess the firm's finanacial position. Questions such as how much property does the firm own?; how much debt does the firm owe?; how much cash does the firm have? Anticipated cost of expansion and future income projections may also be requested. Banks might also require a list of your customers and vendors. There is no requirement to indicate to the bank problems you are having with certain customers and vendors. Internet Connection: The number of Accounting Standards Update used will vary from year to year. Accounting Standards Update are cited as “ASU2016-1 (year) (standard number in chronological order).

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SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. FALSE 3. FALSE 4. TRUE 5. FALSE 6. FALSE 7. FALSE 8. TRUE 9. TRUE 10. TRUE 11. FALSE 12. FALSE Part B Completion 1. language of business 2. international accounting 3. FBI 4. governmental accounting 5. AAA 6. AICPA 7. generally accepted accounting principles 8. SEC 9. IRS 10. stockholders or shareholders 11. shares of stock 12. partnerships 13. social entity 14. recording, classifying 15. financial statements

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CHAPTER 2 ANALYZING BUSINESS TRANSACTIONS Chapter Opener: Thinking Critically The individuals in charge of keeping track of these transactions at Southwest as well as in other companies, are known as accountants. When recording the transactions, accountants are required to follow a set of rules and regulations known as GAAP. For every financial transaction that Southwest has, their accountants determine the accounts that were affected and then they record, report and then analyze these transactions. By doing so they can, at a specific point in time and over a stipulated period, be able to assess the company’s financial performance including profitability of the airline, assets owned by the company and of course the amount owed to creditors and owners.

Fast Facts • Southwest Airlines opened in 1971 with three planes flying between Houston, Dallas, and San Antonio. Southwest Airlines currently flies over 100 million passengers a year to 97 cities all across the country. • For the fiscal year 2012, the company’s net income was $421 million while its total operating revenue was $17.09 billion. • In 2012 Southwest served 63.3 million cans of soda, juices, and water; 14.1 million alcoholic beverages; 37.2 million bags of pretzels; 88.3 million bags of peanuts; 22.9 million Select-ASnacks; and 45.5million other snacks. Managerial Implications: Thinking Critically Answers will vary. Students should mention total assets and the type of assets, the liabilities the business would be responsible for, and whether the business is making a profit. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Assets = Liabilities + Owner’s Equity 2. Assets: property owned. Liabilities: debts. Owners’ equity: owner’s financial interest. 3. Assets, liabilities, and owner’s equity. 4. Revenue and expenses; net income or loss 5. Beginning-of-period capital balance, additional investments, net income/loss for period, less withdrawals ending capital balance. 6. Firm name, title of statement, date of statement or the period of time covered 7. Balance sheet shows position at particular date; increase of operations for a period of time 8. Inflow of money/assets resulting from sales or use of property. 9. Outflow of money/assets for costs used to produce revenue.

Discussion Questions (continued) 10. Subtract total expenses from revenue 11. Increases owner's equity 12. a. assets increase, owner’s equity increase b. one asset increase and another decrease; no change in total assets c. assets decrease, liabilities decrease d. assets increase, owner’s equity increase e. assets decrease, owner’s equity decrease f. assets decrease, owner’s equity decrease EXERCISE 2.1 Assets: Liabilities: Owners’ Equity

$125,900 $26,225 $99,675

EXERCISE 2.2 1. 2. 3. 4. 5.

$22,240 $19,020 $5,675 $36,725 $8,875

EXERCISE 2.3 Transaction 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Assets I I I/D I/D I D I I/D D D

Liabilities

Owners’ Equity I

I = Increase (-) D = Decrease (+)

I D I D D

EXERCISE 2.4

1. 2. 3. 4. 5.

Assets Cash $13,500 Dental Supplies 3,650 Dental Equipment 26,550 Office Furniture 8,000 Total $51,700

= = = = =

Liabilities Accounts Payable $23,180

$23,180

+ Owner’s Equity + David Malone, Capital $28,520 + + + + $28,520

EXERCISE 2.5 Assets Cash 1.

= +

Accounts Receivable

Liabilities

Equipment

Accounts = Payable

Owner’s Equity John Amos Capital + Revenue

+$60,000

+22,000

+3,100

-4,600

+22,000 +3,100

+5,050 -4,450

+3,200

8. Totals

-13,000 $44,250

+5,050 4,450

-3,200 +

$,1,850

$26,600

-13,000 $9,000

$60,000

$8,150

EXERCISE 2.6 Net income of $23,000 Revenue Repair Fees ………………………………………….. $51,150 Expenses Advertising Expense ………………………………………….. $6,300 Salaries Expense ………………………………………….. 19,100 Telephone Expense ………………………………………….. 1,150 Utilities Expense ………………………………………….. 1,600 Total Expenses ………………………………………….. $28,150 Net Income ………………………………………….. $23,000 EXERCISE 2.7 1. 2. 3. 4. 5. 6. 7.

Expenses

+4,600

5. 6.

+$60,000

Services were performed for cash. Equipment was purchased for cash. A payment was made on the amount owed to a creditor. An expense was paid in cash. Cash was received from charge customer. Services were performed on credit. An expense was paid in cash.

$4,450

EXERCISE 2.8 Perez Investment Services Income Statement Month Ended September 30, 2016 Revenue Fees Income

77 9 0 0 00

Expenses Advertising Expense Salaries Expense Telephone Expense Total Expenses

6 5 0 0 00 16 0 0 0 00 8 0 0 00 23 3 0 0 00 54 6 0 0 00

Net Income

EXERCISE 2.9 NetNet Loss loss of of $1,150 $950 Revenue Service Revenue ………………………………………….. $5,800 Expenses Advertising Expense………………………………………….. $3,100 Telephone Expense………………………………………….. 800 Salaries Expense ………………………………………….. 2,600 Cleaning Expense ………………………………………….. 450 Total Expense ………………………………………….. $6,950 Net Loss ……………………………………………….. -$1,150 EXERCISE 2.10 Perez Investment Services Statement of Owner’s Equity Month Ended September 30, 2016 Alexandria Perez, Capital, September 1, 2016 Net Income for September Less Withdrawals for September Increase in Capital Alexandria Perez, Capital, September 30, 2016

26 7 0 0 00 54 6 0 0 00 9 0 0 0 00 45 6 0 0 00 72 3 0 0 00

EXERCISE 2.10 (continued) Perez Investment Services Balance Sheet September 30, 2016 Assets Cash Accounts Receivable Office Supplies Office Equipment Total Assets

Liabilities 33 1 0 0 00 Accounts Payable 4 0 0 0 00 3 4 0 0 00 Owner's Equity 37 5 0 0 00 Alexandria Perez, Capital 78 0 0 0 00 Total Liabilities and Owner's Equity

5 7 0 0 00

72 3 0 0 00 78 0 0 0 00

PROBLEM 2.1A

Cash +$97,000 -$19,750

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Totals

Assets Accounts + Receivable + Supplies

-$11,800 +$30,000 +$8,200 +$6,300 -$4,000 +$3,500 -$6,460 -$9,000 $87,690

= Liabilities + Owner's Equity Accounts Owner’s Capital + Equipment = Payable + +$97,000 +$19,750 +$14,400 +$14,400 -$11,800 +$30,000 +$8,200 +$6,300 -$4,000

-$3,500 + $6,460 +

$2,800 +

$6,460

$2,600 +

-$9,000 $128,500

= Liabilities + Accounts = Payable +

M. Dickey Capital

Revenue

Expenses

$34,150 =

Analyze: The ending balance in the Cash account is $87,690. PROBLEM 2.2A

Cash Beginning Balances

Assets Accounts Office + Receivable + Furniture +

$61,000

$16,600 +6,680

$35,800

+ $23,500

$11,200

$91,500

$58,600 +6,680

$24,400

23,280

35,800 +1,700

+ $23,500

11,200

91,500

65,280

24,400

61,000 -1,700

23,280 -11,200

37,500

+ $23,500

11,200

91,500

65,280

24,400

59,300 +11,200

1. New Balances New Balances

Auto

Owner’s Equity

2-6

PROBLEM 2.2A (continued)

Cash New Balances

Owner’s Equity M. Dickey Capital

Revenue

Expenses

70,500 -880

12,080

37,500

+ $23,500

11,200

91,500

65,280

24,400 +880

69,620 -4,500

12,080

37,500

+ $23,500

11,200 -4,500

91,500

65,280

25,280

12,080

37,500

+ $23,500

6,700

91,500

65,280

65,120 -9,700

25,280 +9,700

55,420 -1,120

12,080

37,500

+ $23,500

6,700

91,500

65,280

34,980 +1,120

54,300 +10,500

12,080

37,500

+ $23,500

6,700

91,500

65,280 +10,500

36,100

12,080

37,500

+ $23,500

6,700

91,500

75,780

64,800 -2,350

36,100 +2,350

62,450

+ +

12,080 +12,500

37,500

+ $23,500

6,700

91,500

75,780 +12,500

38,450

$62,450

$24,580

$37,500

+ $23,500

$6,700

$91,500

$88,280

$38,450

New Balances New Balances New Balances New Balances New Balances 10.

Analyze: Total assets equal $148,030.

Auto

= Liabilities + Accounts = Payable +

4. New Balances

New Balances

Assets + Accounts + Office Receivable Furniture +

2-7

MINI-PRACTICE SET 1 SERVICE BUSINESS ACCOUNTING CYCLE PAGE

GENERAL JOURNAL

DATE DESCRIPTION 1 2017 2 Jan. 2 Supplies 3 Cash 4 Bought supplies for cash, Check 1015 5 6 2 Prepaid Insurance 7 Cash 8 Purchased one year of insurance, Check 1016 9 10 7 Cash 11 Accounts Receivable 12 Fees Income 13 Performed services for cash and on account 14 15 12 Cash 16 Accounts Receivable 17 Received cash on account 18 19 12 Advertising Expense 20 Cash 21 Paid for advertising on radio, Check 1017 22 23 13 Cash 24 Accounts Receivable 25 Received cash on account 26 27 14 Cash 28 Supplies 29 Returned damaged supplies for cash refund 30 31 15 Cash 32 Accounts Receivable 33 Fees Income 34 Performed services for cash and on account 35

POST. REF.

DEBIT

121 101

6 0 0 0 00

134 101

7 2 0 0 00

101 111 401

20 0 0 0 00 4 0 0 0 00

101 111

4 0 0 0 00

526 101

3 2 0 0 00

101 111

3 5 0 0 00

101 121

6 5 0 00

101 111 401

20 7 0 0 00 2 3 0 0 00

CREDIT 1 2 6 0 0 0 00 3 4 5 6 7 2 0 0 00 7 8 9 10 11 24 0 0 0 00 12 13 14 15 4 0 0 0 00 16 17 18 19 3 2 0 0 00 20 21 22 23 3 5 0 0 00 24 25 26 27 6 5 0 00 28 29 30 31 32 23 0 0 0 00 33 34 35

MINI-PRACTICE SET 1 (continued) PAGE

GENERAL JOURNAL

DATE DESCRIPTION 1 2017 2 Jan. 20 Supplies 3 Accounts Payable 4 Bought supplies on account 5 6 20 Cash 7 Accounts Receivable 8 Fees Income 9 Performed services for cash and on account 10 11 20 Cash 12 Accounts Receivable 13 Performed services for cash and on account 14 15 21 Maintenance Expense 16 Cash 17 Paid for maintenance on equipment 18 Check 1018 19 20 22 Advertising Expense 21 Cash 22 Paid cash for newspaper ads, Check 1019 23 24 23 Telephone Expense 25 Cash 26 Paid monthly telephone bill, Check 1020 27 28 26 Cash 29 Accounts Receivable 30 Received cash on account 31 32 27 Accounts Payable 33 Cash 34 Made payment to creditor, Check 1021 35 36 37

POST. REF. 121 202

101 111 401

101 111

529 101

526 101

532 101

101 111

202 101

DEBIT

CREDIT

1 4 6 0 0 00 2 4 6 0 0 00 3 4 5 12 5 0 0 00 6 3 3 5 0 00 7 15 8 5 0 00 8 9 10 4 5 0 0 00 11 4 5 0 0 00 12 13 14 6 0 7 5 00 15 6 0 7 5 00 16 17 18 19 3 2 0 0 00 20 3 2 0 0 00 21 22 23 9 2 5 00 24 9 2 5 00 25 26 27 1 6 0 0 00 28 1 6 0 0 00 29 30 31 3 0 0 0 00 32 3 0 0 0 00 33 34 35 36 37

MINI-PRACTICE SET 1 (continued) PAGE

GENERAL JOURNAL

DATE DESCRIPTION 1 2017 28 Utilities Expense 2 Jan. Cash 3 Paid monthly utility bill, Check 1022 4 5 29 Cash 6 Accounts Receivable 7 Fees Income 8 Performed services for cash and on account 9 10 31 Salaries Expense 11 Cash 12 Paid monthly salaries, Checks 1023–1027 13 14 31 Carolyn Wells, Drawing 15 Cash 16 Owner withdrew cash for personal use, 17 Check 1028 18 19 31 Maintenance Expense 20 Cash 21 Paid for monthly maintenance services, 22 Check 1029 23 24 31 Equipment 25 Cash 26 Accounts Payable 27 Bought equipment for cash and on account, 28 Check 1030 29 30 31 Cash 31 Accounts Receivable 32 Fees Income 33 Performed services for cash and on account 34 35 36 37

POST. REF. 514 101

DEBIT 2 3 5 0 00

101 111 401

19 0 0 0 00 2 7 5 0 00

511 101

25 7 5 0 00

302 101

15 0 0 0 00

529 101

4 1 5 0 00

141 101 202

15 0 0 0 00

101 111 401

5 6 0 0 00 1 5 8 0 00

CREDIT 1 2 3 5 0 00 2 3 4 5 6 21 7 5 0 00 7 8 9 10 25 7 5 0 00 11 12 13 14 15 0 0 0 00 15 16 17 18 19 4 1 5 0 00 20 21 22 23 24 10 0 0 0 00 25 5 0 0 0 00 26 27 28 29 30 31 7 1 8 0 00 32 33 34 35 36 37

MINI-PRACTICE SET 1 (continued) PAGE

GENERAL JOURNAL

DATE DESCRIPTION 1 Adjusting Entries 2 2017 3 Jan. 31 Supplies Expense 4 Supplies 5 6 31 Insurance Expense 7 Prepaid Insurance 8 9 31 Rent Expense 10 Prepaid Rent 11 12 31 Depreciation Expense—Equipment 13 Accumulated Depreciation—Equipment 14 15 Closing Entries 16 17 31 Fees Income 18 Income Summary 19 20 31 Income Summary 21 Salaries Expense 22 Utilities Expense 23 Supplies Expense 24 Rent Expense 25 Depreciation Expense—Equipment 26 Advertising Expense 27 Maintenance Expense 28 Telephone Expense 29 Insurance Expense 30 31 31 Income Summary 32 Carolyn Wells, Capital 33 34 31 Carolyn Wells, Capital 35 Carolyn Wells, Drawing 36

POST. REF.

DEBIT

517 121

6 7 5 0 00

535 134

6 0 0 00

520 137

4 0 0 0 00

523 142

1 8 3 00

401 309

91 7 8 0 00

309 511 514 517 520 523 526 529 532 535

57 1 8 3 00

309 301

34 5 9 7 00

301 302

15 0 0 0 00

CREDIT 1 2 3 6 7 5 0 00 4 5 6 6 0 0 00 7 8 9 4 0 0 0 00 10 11 12 1 8 3 00 13 14 15 16 17 91 7 8 0 00 18 19 20 25 7 5 0 00 21 2 3 5 0 00 22 6 7 5 0 00 23 4 0 0 0 00 24 1 8 3 00 25 6 4 0 0 00 26 10 2 2 5 00 27 9 2 5 00 28 6 0 0 00 29 30 31 34 5 9 7 00 32 33 34 15 0 0 0 00 35 36

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

ACCOUNT NO.

Cash

DATE DESCRIPTION 2017 Jan. 1 Balance 2 2 7 12 12 13 14 15 20 20 21 22 23 26 27 28 29 31 31 31 31 31

POST. REF. ✔ J3 J3 J3 J3 J3 J3 J3 J4 J4 J4 J4 J4 J4 J4 J5 J5 J5 J5 J5 J5 J5 J5

DEBIT

CREDIT

6 0 0 0 00 7 2 0 0 00 20 0 0 0 00 4 0 0 0 00 3 2 0 0 00 3 5 0 0 00 6 5 0 00 20 7 0 0 00 12 5 0 0 00 4 5 0 0 00 6 0 7 5 00 3 2 0 0 00 9 2 5 00 1 6 0 0 00 3 0 0 0 00 2 3 5 0 00 19 0 0 0 00 25 7 5 0 00 15 0 0 0 00 4 1 5 0 00 10 0 0 0 00 5 6 0 0 00

101

BALANCE DEBIT CREDIT 111 3 5 0 00 105 3 5 0 00 98 1 5 0 00 118 1 5 0 00 122 1 5 0 00 118 9 5 0 00 122 4 5 0 00 123 1 0 0 00 143 8 0 0 00 156 3 0 0 00 160 8 0 0 00 154 7 2 5 00 151 5 2 5 00 150 6 0 0 00 152 2 0 0 00 149 2 0 0 00 146 8 5 0 00 165 8 5 0 00 140 1 0 0 00 125 1 0 0 00 120 9 5 0 00 110 9 5 0 00 116 5 5 0 00

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

DATE DESCRIPTION 2017 Jan. 1 Balance 7 12 13 15 20 20 26 29 31

ACCOUNT

ACCOUNT NO.

Accounts Receivable POST. REF. ✔ J3 J3 J3 J4 J4 J4 J4 J5 J5

DEBIT

CREDIT

4 0 0 0 00 4 0 0 0 00 3 5 0 0 00 2 3 0 0 00 3 3 5 0 00 4 5 0 0 00 1 6 0 0 00 2 7 5 0 00 1 5 8 0 00

111

BALANCE DEBIT CREDIT 5 0 9 0 5 0 1 5 3 8 7 1 2 6 1 0 3 8 5 3

0 0 0 0 0 5 5 5 0 8

0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00

Supplies

ACCOUNT NO.

POST. DESCRIPTION REF.

BALANCE DEBIT CREDIT

DATE 2017 Jan. 1 Balance 2 14 20 31 Adjusting

✔ J3 J3 J4 J6

DEBIT

6 0 0 0 00 4 6 0 0 00

CREDIT

1 0 7 0 6 5 0 00 6 3 10 9 6 7 5 0 00 4 2

0 0 5 5 0

0 00 0 00 0 00 0 00 0 00

121

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

ACCOUNT NO.

Accounts Payable

POST. DATE DESCRIPTION REF. 2017 Jan. 1 Balance ✔ 20 J4 27 J5 31 J5

ACCOUNT

CREDIT

DATE 2017 Jan. 1 Balance 31 Closing 31 Closing

✔ J6 J6

Carolyn Wells, Drawing

BALANCE DEBIT CREDIT 3 5 0 0 00 8 1 0 0 00 5 1 0 0 00 10 1 0 0 00

4 6 0 0 00 3 0 0 0 00 5 0 0 0 00

ACCOUNT NO.

Carolyn Wells, Capital POST. DESCRIPTION REF.

ACCOUNT

DEBIT

CREDIT

202

301

BALANCE DEBIT CREDIT 128 6 6 7 00 163 2 6 4 00 148 2 6 4 00

34 5 9 7 00 15 0 0 0 00

ACCOUNT NO.

302

BALANCE POST. DEBIT CREDIT DATE DESCRIPTION REF. DEBIT CREDIT 2017 Jan. 31 J5 15 0 0 0 00 15 0 0 0 00 31 Closing J6 15 0 0 0 00 − 0 −

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

DATE DESCRIPTION 2017 Jan. 2 31 Adjusting

ACCOUNT

ACCOUNT NO.

Prepaid Insurance POST. REF. J3 J6

DATE 2017 Jan. 1 Balance 31 Adjusting

7 2 0 0 00 6 0 0 00

DEBIT

✔ J6

CREDIT

4 0 0 0 00

✔ J5

DEBIT

CREDIT

POST. DESCRIPTION REF. ✔ J6

DEBIT

137

BALANCE DEBIT CREDIT 4 0 0 0 00 − 0−

141

BALANCE DEBIT CREDIT 11 0 0 0 00 26 0 0 0 00

15 0 0 0 00

Accumulated Depreciation—Equipment

DATE 2017 Jan. 1 Balance 31 Adjusting

7 2 0 0 00 6 6 0 0 00

ACCOUNT NO.

Equipment

DATE 2017 Jan. 1 Balance 31

BALANCE DEBIT CREDIT

ACCOUNT NO.

POST. DESCRIPTION REF.

ACCOUNT

CREDIT

Prepaid Rent POST. DESCRIPTION REF.

ACCOUNT

DEBIT

134

ACCOUNT NO.

CREDIT

142

BALANCE DEBIT CREDIT

1 8 3 00

1 8 3 00 3 6 6 00

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

ACCOUNT NO.

Income Summary

POST. DATE DESCRIPTION REF. DEBIT CREDIT 2017 Jan. 31 Closing J6 91 7 8 0 00 31 Closing J6 57 1 8 3 00 31 Closing J6 34 5 9 7 00

ACCOUNT

POST. DESCRIPTION REF.

DATE 2017 Jan. 7 15 20 29 31 31 Closing

ACCOUNT

J3 J4 J4 J5 J5 J6

DEBIT

CREDIT

91 7 8 0 00 34 5 9 7 00 − 0 −

24 0 0 0 00 47 0 0 0 00 62 8 5 0 00 84 6 0 0 00 91 7 8 0 00 − 0 −

91 7 8 0 00

ACCOUNT NO.

POST. DESCRIPTION REF. J5 J6

DEBIT 25 7 5 0 00

CREDIT

401

BALANCE DEBIT CREDIT

24 0 0 0 00 23 0 0 0 00 15 8 5 0 00 21 7 5 0 00 7 1 8 0 00

Salaries Expense

DATE 2017 Jan. 31 31 Closing

BALANCE DEBIT CREDIT

ACCOUNT NO.

Fees Income

309

511

BALANCE DEBIT CREDIT

25 7 5 0 00 25 7 5 0 00 − 0 −

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

DATE DESCRIPTION 2017 Jan. 28 31 Closing

ACCOUNT

J5 J6

DEBIT

CREDIT

2 3 5 0 00 2 3 5 0 00

POST. REF. J6 J6

DEBIT

CREDIT

6 7 5 0 00 6 7 5 0 00

J6 J6

DEBIT

CREDIT

4 0 0 0 00 4 0 0 0 00

Depreciation Expense—Equipment

DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing

2 3 5 0 00 − 0 −

POST. REF. J6 J6

DEBIT

517

BALANCE DEBIT CREDIT 6 7 5 0 00 − 0 −

ACCOUNT NO. POST. REF.

514

BALANCE DEBIT CREDIT

ACCOUNT NO.

Rent Expense

DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing

ACCOUNT

POST. REF.

Supplies Expense

DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing

ACCOUNT

ACCOUNT NO.

Utilities Expense

520

BALANCE DEBIT CREDIT 4 0 0 0 00 − 0 −

ACCOUNT NO.

523

CREDIT

BALANCE DEBIT CREDIT

1 8 3 00

1 8 3 00 − 0 −

1 8 3 00

MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT

DATE DESCRIPTION 2017 Jan. 12 22 31 Closing

ACCOUNT

J3 J4 J6

DEBIT

CREDIT

3 2 0 0 00 3 2 0 0 00 6 4 0 0 00

POST. REF. J4 J5 J6

DEBIT 6 0 7 5 00 4 1 5 0 00

CREDIT

J4 J6

DEBIT

BALANCE DEBIT CREDIT

CREDIT

9 2 5 00

9 2 5 00 − 0 −

9 2 5 00

J6 J6

DEBIT

532

BALANCE DEBIT CREDIT

ACCOUNT NO.

POST. REF.

529

6 0 7 5 00 10 2 2 5 00 10 2 2 5 00 − 0 −

Insurance Expense

DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing

3 2 0 0 00 6 4 0 0 00 − 0 −

ACCOUNT NO.

POST. REF.

526

BALANCE DEBIT CREDIT

ACCOUNT NO.

Telephone Expense

DATE DESCRIPTION 2017 Jan. 23 31 Closing

ACCOUNT

POST. REF.

Maintenance Expense

DATE DESCRIPTION 2017 Jan. 21 31 31 Closing

ACCOUNT

ACCOUNT NO.

Advertising Expense

535

CREDIT

BALANCE DEBIT CREDIT

6 0 0 00

6 0 0 00 − 0 −

6 0 0 00

MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Worksheet Month Ended January 31, 2017

ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Prepaid Rent 6 Equipment 7 Accumulated Depreciation—Equipment 8 Accounts Payable 9 Carolyn Wells, Capital 10 Carolyn Wells, Drawing 11 Income Summary 12 Fees Income 13 Salaries Expense 14 Utilities Expense 15 Supplies Expense 18 Insurance Expense 16 Rent Expense 17 Depreciation Expense—Equipment 19 Advertising Expense 20 Telephone Expense 21 Maintenance Expense 22 Totals

TRIAL BALANCE DEBIT CREDIT 116 5 5 0 00 5 3 8 0 00 10 9 5 0 00 7 2 0 0 00 4 0 0 0 00 26 0 0 0 00 1 8 3 00

ADJUSTMENTS DEBIT CREDIT

(a) 6 7 5 0 00 (b) 6 0 0 00 (c) 4 0 0 0 00 (d)

1 8 3 00

10 1 0 0 00 128 6 6 7 00 15 0 0 0 00 91 7 8 0 00 25 7 5 0 00 2 3 5 0 00 (a) 6 (b) (c) 4 (d)

7 5 0 00 6 0 0 00 0 0 0 00 1 8 3 00

6 4 0 0 00 9 2 5 00 10 2 2 5 00 230 7 3 0 00

230 7 3 0 00

11 5 3 3 00

23 Net Income 24 25

11 5 3 3 00

MINI-PRACTICE SET 1 (continued)

ADJUSTED TRIAL BALANCE DEBIT CREDIT 116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 − 0 − 6 6 0 0 00 26 0 0 0 00 3 6 6 00

INCOME STATEMENT DEBIT CREDIT

BALANCE SHEET DEBIT CREDIT 116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 − 0 − 6 6 0 0 00 26 0 0 0 00 3 6 6 00

10 1 0 0 00 128 6 6 7 00 15 0 0 0 00

25 7 5 0 00 2 3 5 0 00 6 7 5 0 00 4 0 0 0 00 1 8 3 00 6 0 0 00 6 4 0 0 00 9 2 5 00 10 2 2 5 00 230 9 1 3 00

10 1 0 0 00 128 6 6 7 00

8 9 10 11 12 13 14 15 16 17 18 19 20 21

139 1 3 3 00

34 5 9 7 00

173 7 3 0 00

15 0 0 0 00 91 7 8 0 00

91 7 8 0 00 25 7 5 0 00 2 3 5 0 00 6 7 5 0 00 4 0 0 0 00 1 8 3 00 6 0 0 00 6 4 0 0 00 9 2 5 00 10 2 2 5 00

230 9 1 3 00

57 1 8 3 00

91 7 8 0 00

173 7 3 0 00

34 5 9 7 00 91 7 8 0 00

91 7 8 0 00

173 7 3 0 00

1 2 3 4 5 6 7

MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Income Statement Month Ended January 31, 2017 Revenue Fees Income Expenses Salaries Expense Utilities Expense Supplies Expense Rent Expense Insurance Expense Depreciation Expense—Equipment Advertising Expense Telephone Expense Maintenance Expense Total Expenses Net Income

91 7 8 0 00 25 7 5 0 00 2 3 5 0 00 6 7 5 0 00 4 0 0 0 00 6 0 0 00 1 8 3 00 6 4 0 0 00 9 2 5 00 10 2 2 5 00 57 1 8 3 00 34 5 9 7 00

Wells’ Consulting Services Statement of Owner's Equity Month Ended January 31, 2017 Carolyn Wells, Capital, January 1, 2017 Net Income for January Less Withdrawals for January Increase in Capital for January Carolyn Wells, Capital, January 31, 2017

128 6 6 7 00 34 5 9 7 00 15 0 0 0 00

19 5 9 7 00 148 2 6 4 00

MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Balance Sheet January 31, 2017 Assets Cash Accounts Receivable Supplies Prepaid Insurance Equipment Less Accumulated Depreciation—Equipment Total Assets

116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 6 6 0 0 00 26 0 0 0 00 3 6 6 00

25 6 3 4 00 158 3 6 4 00

Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Carolyn Wells, Capital Total Liabilities and Owner's Equity

10 1 0 0 00 148 2 6 4 00 158 3 6 4 00

MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Post-closing Trial Balance January 31, 2017 ACCOUNT NAME Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation—Equipment Accounts Payable Carolyn Wells, Capital Totals

Analyze:

DEBIT 116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 6 6 0 0 00 26 0 0 0 00

CREDIT

3 6 6 00 10 1 0 0 00 148 2 6 4 00 158 7 3 0 00 158 7 3 0 00

a. Total assets increased by $26,197 ($158,364 – $132,167). Total liabilities increased by $6,600 ($10,100 – $3,500). Owner’s capital increased by $19,597 ($148,264 – 128,667). b. The balance of Cash increased by $5,200 ($116,550 – $111,350). The balance of Accounts Receivable increased by $380 ($5,380 – $5,000). c. Yes. The firm’s financial position improved through the increases in capital of $19,597 ($148,264 – $128,667).

CHAPTER 7 ACCOUNTING FOR SALES, ACCOUNTS RECEIVABLE, AND CASH RECEIPTS Chapter Opener: Thinking Critically It is common practice for stores to offer trade and/or cash discounts to its customers. For example, if a store purchases larger quantities of goods then Kellogg may offer it a trade discount based on the size of its order. It may also offer a store an early payment discount if the store pays its balance owed within a certain period of time. In this way, Kellogg can increase its volume of sales as well as collect more quickly, the amounts owed from its customers.

Fast Facts • Kellogg offers more than 1,600 products, which are produced in 18 countries and marketed in over 180 countries. • Kellogg's employs over 31,000 people. • As of 2012, the North America frozen food business alone generates $1 billion in revenues. • Kellogg's business in Latin America, Asia, South Africa, Mediterranean and Russia reached $2 billion in 2012, which is a 140% increase since 2001. Discussion Questions These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Retail: sell goods directly to consumers. Wholesale: sell goods to retailers. Net sales are sales, less sales returns and allowances and less sales discounts. Prove balances, summarize receivables. Separate record of returns and allowances. Contra revenue account. Contra revenue account. Time of sale; Sales Tax Payable. Divide total of Sales account by 105 percent, multiply by sales tax rate. a. Debit Accounts Receivable, credit Sales, b. Debit Accounts Receivable from Credit Card Companies, credit Sales.of credit card sales submitted to the credit card company for payment. Summaries The credit card company. No responsibility for collecting cash from customer exists. Credit Card Expense. Purchase amount to be paid at a later date. A reduction from the list price, offered by wholesalers; attracts customers.

EXERCISE 7.1 Cr Sales Dr Sales Returns and Allowances Dr Sales Discounts

Dr Credit Card Expense Cr Sales Tax Payable

EXERCISE 7.2 PAGE

GENERAL JOURNAL DATE

DESCRIPTION

Post Ref.

1 2016 2 June 5 Accounts Receivable 3 Sales 4 Sold merchandise on account to Mahonga Company, 5 Sales Slip 1200, terms n/30 6 7 15 Cash 8 Sales 9 Recorded cash sales 10 11 30 Cash 12 Accounts Receivable 13 Received cash from Mahonga Company on account 14

DEBIT

8 7 5 00

1 8 4 0 00

8 7 5 00

CREDIT 1 2 8 7 5 00 3 4 5 6 7 1 8 4 0 00 8 9 10 11 8 7 5 00 12 13 14

EXERCISE 7.3 PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 May 1 Accounts Receivable ($2,000 + $160) 3 Sales 4 Sales Tax Payable ($2,000 x 8%) 5 Sold merchandise on credit to Bill Walker, 6 Sales Slip 1015, terms n/30 7 8 15 Cash ($4,800 + $384) 9 Sales 10 Sales Tax Payable ($4,800 x 8%) 11 Recorded cash sales 12 13 31 Cash 14 Accounts Receivable 15 Received payment on account from Bill Walker 16

Post Ref.

DEBIT

2 1 6 0 00

5 1 8 4 00

2 1 6 0 00

CREDIT 1 2 2 0 0 0 00 3 1 6 0 00 4 5 6 7 8 4 8 0 0 00 9 3 8 4 00 10 11 12 13 2 1 6 0 00 14 15 16

EXERCISE 7.4 PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 April 2 Cash ($1,500 + $120) 3 Sales 4 Sales Tax Payable ($1,500 x 8%) 5 Recorded cash sales 6 7 3 Sales Returns and Allowances 8 Sales Tax Payable ($150 x 8%) 9 Cash ($150 + $12) 10 Recorded sales return 11 12 4 Accounts Receivable ($1,050 + $84) 13 Sales 14 Sales Tax Payable ($1,050 × 8%) 15 Sold merchandise on credit to Tisha Lee, 16 Sales Slip 908, terms n/30 17 18 6 Sales Returns and Allowances 19 Sales Tax Payable ($75 x 8%) 20 Accounts Receivable ($75+ $6) 21 Accept a return of defective merchandise, Credit 22 Memorandum 302; original sale made on 23 Sales Slip 908 to Tisha Lee on April 4 24 25 30 Cash ($1,134 - $81) 26 Accounts Receivable 27 Received cash from Tisha Lee, after deducting 28 Credit Memorandum 302 29

Post Ref.

DEBIT

1 6 2 0 00

1 5 0 00 1 2 00

1 1 3 4 00

7 5 00 6 00

1 0 5 3 00

CREDIT 1 2 1 5 0 0 00 3 1 2 0 00 4 5 6 7 8 1 6 2 00 9 10 11 12 1 0 5 0 00 13 8 4 00 14 15 16 17 18 19 8 1 00 20 21 22 23 24 25 1 0 5 3 00 26 27 28 29

EXERCISE 7.5 PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 Feb. 2 Credit Card Expense ($3,800 + $304) × 2% 3 Cash ($3,800 + $304 - $82.08) 4 Sales 5 Sales Tax Payable ($3,800 × 8%) 6 Record sales to customers using bank credit cards 7 8 15 Accounts Receivable ($2,100 + $168) 9 Sales 10 Sales Tax Payable ($2,100 × 8%) 11 Record sales to customers using American Express 12 13 20 Credit Card Expense ($2,268 × 3%) 14 Cash ($2,268 - $68.04) 15 Accounts Receivable 16 Record payment received from American Express 17

Post Ref.

DEBIT

8 2 08 4 0 2 1 92

2 2 6 8 00

6 8 04 2 1 9 9 96

CREDIT 1 2 3 3 8 0 0 00 4 3 0 4 00 5 6 7 8 2 1 0 0 00 9 1 6 8 00 10 11 12 13 14 2 2 6 8 00 15 16 17

EXERCISE 7.6 1. 2. 3.

$512 ($640 × 20% = $128; $640 - $128 = $512) $444 ($740 × 40% = $296; $740 - $296 = $444) $224 ($320 × 30% = $96; $320 - $96 = $224)

EXERCISE 7.7 1.

List price Less first discount ($4,500 × 30%)

$4,500.00 1,350.00

Difference Less second discount ($3,150×20%)

$3,150.00 630.00

Invoice price

$2,520.00

List price Less first discount ($5,200 × 30%)

$5,200.00 1,560.00

Difference Less second discount ($3,640× 20%)

$3,640.00 728.00

Invoice price

$2,912.00

List price Less first discount $3,550 × 20%)

$3,550.00 710.00

Difference Less second discount ($2,840 × 10%)

$2,840.00 284.00

Invoice price

$2,556.00

EXERCISE 7.8 PAGE

GENERAL JOURNAL DATE

DESCRIPTION

Post Ref.

1 2016 2 April 1 Accounts Receivable 3 Sales 4 Sold merchandise on account to Fronke's 5 Franks, Invoice 1001, terms 1/10, n30. 6 7 10 Sales Discounts ($3,000 x 1%) 8 Cash ($3,000 - $30 discount) 9 Accounts Receivable 10 Received payment from Fronke's Franks for 11 Invoice 1001, dated April 1. 12 13

DEBIT

CREDIT

3 0 0 0 00 3 0

3 0 00 2 9 7 0 00 3 0

1 2 0 0 00 3 4 5 6 7 8 0 0 00 9 10 11 12 13

EXERCISE 7.9 PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 Jan. 8 Cash 3 Accounts Receivable/John Gibrone 4 5 6 7 8 9 10 11 12 13

Post Ref.

DEBIT

CREDIT

1 2 4 0 00 3

4 5 6 7 8 1 6 00 9

6 4 0 00 111

✔

Received partial payment on account from John Gibrone 20 Sales Returns and Allowances Sales Tax Payable Accounts Receivable/Jim Garcia

2 0 0 00 1 6 00 111

✔

Accept return of defective merchandise, Credit Memorandum 121; original sale made on Sales Slip 11102 of December 27, 2015

10 11 12 13

EXERCISE 7.9 (continued) GENERAL LEDGER ACCOUNT NO. 111

ACCOUNT Accounts Receivable DATE

DESCRIPTION

Post Ref.

2016 Jan. 1 Balance 8 20

DEBIT

CREDIT

✔ J40 J40

6 4 0 00 2 1 6 00

BALANCE DEBIT CREDIT 9 8 4 0 00 9 2 0 0 00 8 9 8 4 00

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Jim Garcia ADDRESS DATE

DESCRIPTION

2016 Jan. 1 Balance 20

Post Ref.

DEBIT

✔ J40

CREDIT

2 1 6 00

BALANCE

2 2 6 0 00 2 0 4 4 00

NAME John Gibrone ADDRESS DATE

DESCRIPTION

2016 Jan. 1 Balance 8

Post Ref.

DEBIT

✔ J40

CREDIT

6 4 0 00

BALANCE

6 4 0 0 00 5 7 6 0 00

NAME June Lin ADDRESS DATE 2016 Jan. 1 Balance

DESCRIPTION

Post Ref.

DEBIT

CREDIT

✔

BALANCE

1 1 8 0 00

EXERCISE 7.10 1. Calderone Company Schedule of Accounts Receivable January 31, 2016 Jim Garcia John Gibrone June Lin Total

2 0 4 4 00 5 7 6 0 00 1 1 8 0 00 8 9 8 4 00

2. Yes, they should be equal. The balance of the Accounts Receivable control account is also $8,984.00.

PROBLEM 7.1A PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 March 1 Accounts Receivable/Dave Allen ($600 + $36) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Sales Sales Tax Payable ($600 × 6%) Sold merchandise on credit to Dave Allen, Sales Slip 101 4 Accounts Receivable/Castor Phan ($900 + $54) Sales Sales Tax Payable ($900 × 6%) Sold merchandise on credit to Castor Phan, Sales Slip 102 12 Accounts Receivable/Chris Hughes ($1,100 + $66) Sales Sales Tax Payable ($1,100 × 6%) Sold merchandise on credit to Chris Hughes, Sales Slip 103

Post Ref.

DEBIT

111

6 3 6 00

1 2

9 5 4 00

6 0 0 00 3 3 6 00 4 5 6 7 8

1 1 6 6 00

9 0 0 00 9 5 4 00 10 11 12 13 14

✔

401 221

111

✔

401 221

111

✔

401 221

15 Cash ($7,600 + $456) Sales Sales Tax Payable ($7,600 × 6%) Record cash sales, March 1-15

101 401 221

25 Accounts Receivable/Brian Cooley ($850 + $51)

111

Sales Sales Tax Payable ($850 × 6%) Sold merchandise on credit to Brian Cooley, Sales Slip 104 28 Cash Accounts Receivable/Castor Phan

✔

8 0 5 6 00

9 0 1 00

401 221

101 111

2 2 0 00

✔

Received partial payment on account from Castor Phan

CREDIT

1 1 0 0 00 15 6 6 00 16 17 18 19 20 7 6 0 0 00 21 4 5 6 00 22 23 24 25 8 5 0 00 26 5 1 00 27 28 29 30 31 2 2 0 00 32 33 34 35 36

PROBLEM 7.1A (continued) PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 March 31 Cash ($4,500 + $270) 3 Sales 4 Sales Tax Payable ($4,500 × 6%) 5 Record cash sales, March 16 - 31 6 7 31 Cash 8 Accounts Receivable/Dave Allen 9 10

Post Ref.

DEBIT

101 401 221

4 7 7 0 00

101

6 3 6 00

111

✔

Received full payment on account from Dave Allen

CREDIT 1 2 4 5 0 0 00 3 2 7 0 00 4 5 6 7 6 3 6 00 8 9 10

PROBLEM 7.1A (continued) GENERAL LEDGER ACCOUNT NO. 101

ACCOUNT Cash DATE

DESCRIPTION

2016 March 15 28 31 31

Post Ref.

DEBIT

J1 J1 J2 J2

8 0 5 6 00 2 2 0 00 4 7 7 0 00 6 3 6 00

CREDIT

8 0 5 6 00 8 2 7 6 00 13 0 4 6 00 13 6 8 2 00

ACCOUNT NO. 111

ACCOUNT Accounts Receivable DATE

DESCRIPTION

2016 March 1 4 12 25 28 31

Post Ref.

DEBIT

J1 J1 J1 J1 J1 J2

6 3 6 00 9 5 4 00 1 1 6 6 00 9 0 1 00

CREDIT

2 2 0 00 6 3 6 00

2016 March 1 4 12 15 25 31

DESCRIPTION

BALANCE DEBIT CREDIT 6 3 6 00 1 5 9 0 00 2 7 5 6 00 3 6 5 7 00 3 4 7 3 00 2 8 0 1 00

ACCOUNT NO. 221

ACCOUNT Sales Tax Payable DATE

BALANCE DEBIT CREDIT

Post Ref. J1 J1 J1 J1 J1 J2

DEBIT

CREDIT

BALANCE DEBIT CREDIT

3 6 00 5 4 00 6 6 00 4 5 6 00 5 1 00 2 7 0 00

3 6 00 9 0 00 1 5 6 00 6 1 2 00 6 6 3 00 9 3 3 00

PROBLEM 7.1A (continued) ACCOUNT NO. 401

ACCOUNT Sales DATE 2016 March 1 4 12 15 25 31

DESCRIPTION

Post Ref.

DEBIT

J1 J1 J1 J1 J1 J2

CREDIT

BALANCE DEBIT CREDIT

6 0 0 00 9 0 0 00 1 1 0 0 00 7 6 0 0 00 8 5 0 00 4 5 0 0 00

Analyze: The total cash receipts during March were $13,682.

6 0 0 00 1 5 0 0 00 2 6 0 0 00 10 2 0 0 00 11 0 5 0 00 15 5 5 0 00

PROBLEM 7.2A PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 Sept. 1 Accounts Receivable/Candy Cho ($2,400 + $168) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Sales Sales Tax Payable ($2,400 × 7%) Sold TV on credit to Candy Cho, Sales Slip 101 3 Accounts Receivable/Jim Peterson ($900 + $63) Sales Sales Tax Payable ($900 × 7%) Sold stereo equip. on credit to Jim Peterson, Sales Slip 102 7 Accounts Receivable/Bridgette Huffman ($200 + $14) Sales Sales Tax Payable ($200 × 7%) Sold microwave oven on credit to Bridgette Huffman Sales Slip 103 12 Sales Returns and Allowances Sales Tax Payable ($200 × 7%) Accounts Receivable/Jim Peterson

Post Ref.

DEBIT

111

2 5 6 8 00

1 2

9 6 3 00

2 4 0 0 00 3 1 6 8 00 4 5 6 7 8

✔

401 221

111

✔

401 221

111

✔

2 1 4 00

401 221

421 221 111

2 0 0 00 1 4 00

✔

Accepted return of defective merchandise, Credit Memorandum 101; original sale made on Sales Slip 102 of September 3 15 Cash ($10,800 + $756) Sales Sales Tax Payable ($10,800 × 7%) Record cash sales, Sept. 1-15

101 401 221

16 Accounts Receivable/Kathy Sundstrand ($500 + $35)

111

Sales Sales Tax Payable ($500 × 7%) Sold gas dryer on credit to Kathy Sundstrand, Sales Slip 104

✔

11 5 5 6 00

5 3 5 00

401 221

CREDIT

9 0 0 00 9 6 3 00 10 11 12 13 14 2 0 0 00 15 1 4 00 16 17 18 19 20 21 2 1 4 00 22 23 24 25 26 27 10 8 0 0 00 28 7 5 6 00 29 30 31 32 5 0 0 00 33 3 5 00 34 35 36 37

PROBLEM 7.2A (continued) PAGE

GENERAL JOURNAL DATE

DESCRIPTION

1 2016 2 Sept. 17 Accounts Receivable/Mark Navalta ($2,400 + $168) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Sales Sales Tax Payable ($2,400 × 7%) Sold home entertainment system on credit to Mark Navalta, Sales Slip 105 18 Cash Accounts Receivable/Candy Cho

Post Ref.

DEBIT

111

2 5 6 8 00

✔

401 221

101 111

7 0 0 00

✔

Received partial payment on account from Candy Cho 20 Cash ($963 - $214) Accounts Receivable/Jim Peterson

101 111

7 4 9 00

✔

Received payment on account from Jim Peterson for sale of Sept. 3, less return of Sept. 12. 25 Sales Returns and Allowances Sales Tax Payable ($200 × 7%) Accounts Receivable/Mark Navalta

421 221 111

2 0 0 00 1 4 00

✔

Issued Credit Memorandum 102 due to scratches on home entertainment system 27 Cash Accounts Receivable/Bridgette Huffman

Sales Sales Tax Payable ($600 × 7%) Sold dishwasher on credit to Mark Navalta, Sales Slip 106 30 Cash Sales Sales Tax Payable ($11,100 × 7%) Record cash sales, Sept. 16 – 30

111

1 2 2 4 0 0 00 3 1 6 8 00 4 5 6 7 8 7 0 0 00 9 10 11 12 13 7 4 9 00 14 15 16 17 18 19 2 1 4 00 20

✔

26 27 28

2 1 4 00

Received payment from Bridgette Huffman 29 Accounts Receivable/Mark Navalta

CREDIT

21 22 23 24 2 1 4 00 25

101 111

6 4 2 00

221

101 401 221

11 8 7 7 00

Analyze: $5,300 /$28,500 = 18.6%; 18.6% of the sales in September were for entertainment items.

6 0 0 00 29 4 2 00 30 31 32 33 34 11 1 0 0 00 35 7 7 7 00 36 37 38

PROBLEM 7.3A GENERAL LEDGER ACCOUNT NO. 101

ACCOUNT Cash DATE

DESCRIPTION

2016 Sept. 15 18 20 27 30

Post Ref.

DEBIT

J1 J2 J2 J2 J2

11 5 5 6 00 7 0 0 00 7 4 9 00 2 1 4 00 11 8 7 7 00

CREDIT

11 5 5 12 2 5 13 0 0 13 2 1 25 0 9

2016 Sept. 1 3 7 12 16 17 18 20 25 27 29

DESCRIPTION

6 00 6 00 5 00 9 00 6 00

ACCOUNT NO. 111

ACCOUNT Accounts Receivable DATE

BALANCE DEBIT CREDIT

Post Ref.

DEBIT

J1 J1 J1 J1 J1 J2 J2 J2 J2 J2 J2

2 5 6 8 00 9 6 3 00 2 1 4 00

CREDIT

2 1 4 00 5 3 5 00 2 5 6 8 00 7 0 0 00 7 4 9 00 2 1 4 00 2 1 4 00 6 4 2 00

BALANCE DEBIT CREDIT 2 5 6 3 5 3 3 7 4 3 5 3 4 0 6 6 6 3 5 9 3 5 1 8 4 9 7 4 7 5 5 3 9

8 00 1 00 5 00 1 00 6 00 4 00 4 00 5 00 1 00 7 00 9 00