SOLUTIONS MANUAL for College Accounting, A practical Approach 15 Canadian Edition Jeffrey Slater by StudyGuide

INSTRUCTOR’S SOLUTIONS MANUAL FOR

College Accounting: A Practical Approach Fifteenth Canadian Edition Jeffrey Slater

North Shore Community College

Mike Deschamps

MiraCosta Community College

Debra Good

Conestoga College

ISBN: 978-0-13-762753-0 Copyright © 2024 Pearson Canada Inc., Toronto, Ontario. All rights reserved. This work is protected by Canadian copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the Internet) will destroy the integrity of the work and is not permitted. The copyright holder grants permission to instructors who have adopted College Accounting by Slater, Deschamps, and Good, to post this material online only if the use of the website is restricted by access codes to students in the instructor’s class that is using the textbook and provided the reproduced material bears this copyright notice.

1 Accounting Concepts and Procedures: An Introduction

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The functions of accounting are to analyze, record, classify, summarize, report, and interpret information. 2. Sole proprietorship—one owner, unlimited liability; easy to form Partnership—two or more owners; unlimited liability, easy to form Corporation—one or more shareholders; limited liability; more difficult to form. 3. Service, merchandising, or manufacturing. 4. The objective of accounting is to provide relevant, timely information for user decision making. Accountants must behave ethically so that the information they provide will be trustworthy and, therefore, useful for all decisions. Ethics are moral principles that guide the conduct of individuals. Sometimes business managers and accountants behave in an unethical manner. 5. The three elements of the basic accounting equation are assets, liabilities, owner’s equity. 6. Capital is the owner’s current investment or equity in the assets of a business. It is one subdivision of owner’s equity. 7. True. The sum of the left side of the equation must equal the sum of the right side of the equation. 8. False. It is the income statement that tells how well the company has performed. 9. False. Revenue is a subdivision of owner’s equity. 10. Owner’s equity is subdivided into Capital, Withdrawals, Revenue, and Expenses. 11. False. It is a subdivision of owner’s equity. 12. Reject. As expenses increase and revenue remains the same, owner’s equity decreases. 13. Revenue less Expenses; an income statement shows performance—profit or loss for the period. 14. False. It calculates ending capital. 15. The question, in this case, is whether Paul should be allowed to “pad” his expense account with an additional $100 of expenses. Paul should be allowed to charge only those items that are business related. Paul’s argument that he is entitled to an additional $100 is not a valid assumption. However, he should be allocated money for any business expenses during the weekend. Paul should also ask his employer for additional compensation for working during his non-scheduled time. The important point is that accountants need to be seen as ethical and should not do unethical activities.

1-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.

a. A b. A c. L d. A e. OE f. A

CDE4.

$24,000 ($12,000 + $12,000)

CDE5.

c. d. f. g.

J. Takibi, Capital Advertising Expense Service Fees Earned J. Takibi, Withdrawals

CDE2.

a. Liabilities b. Assets c. Accounts Payable

CDE6.

c. d.

Accounts Payable Delivery Fees Earned

CDE3.

a. I b. S

CDE7.

a. b. d.

CDE10. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

balance sheet Assets liabilities accounting equation accounts aayable service owner’s equity Accounts receivable transaction creditor

SOLUTIONS TO EXERCISES—SET A E1-1A. a. $15,000

($19,000 − $4,000)

b. $15,000

($ 6,000 + $9,000)

c. $ 6,000

($10,000 − $4,000)

E1-2A. 1. Service 2. Merchandise 3. Service 4. Merchandise 5. Merchandise

E1-3A. 1. b 2. b 3. b 4. a 5. d 6. d 7. d 8. b 9. c 10. a

1-2

6. Service 7. Service 8. Manufacturer 9. Manufacturer 10. Merchandise

CDE8.

a. IS b. BS c. BS d. BS e. IS f. IS g. OE h. BS

CDE9

a. OE b. BS c. BS d. IS

SOLUTIONS TO EXERCISES—SET A Cont. E1-4A.

BELL’S COMPUTER COMPANY Assets Cash

Accounts + Receivable +

= Liabilities + Computer Equipment =

Accounts Payable

+ $60,000 + $7,000 − $200

+ $14,000

B. Bell, Capital

−

B. Bell, Withdrawals

Revenue

− Expenses

+ $60,000

B. C.

Owner’s Equity

+ $7,000 + $200 + $14,000

+ $30,000

− $4,000

+ $4,000

− $1,500

+ $1,500

ENDING BALANCE

$68,300

+ $30,000

+ $7,000 + $105,300

+$7,000

+ $60,000

−$200

+ $44,000

− $5,500

= $105,300

Remember, as withdrawals or expenses increase, the end result is to reduce owner’s equity.

E1-5A. (a) FREDERICK REALTY INCOME STATEMENT FOR THE MONTH ENDED NOVEMBER 30, 20XX Revenue: Professional Fees Operating Expenses: Salaries Expense Utilities Expense Rent Expense

$3 0 0 0 0 0 $ 5 5 0 00 2 0 0 00 8 0 0 00 1 5 5 0 00

Total Operating Expenses

$1 4 5 0 0 0

Net Income

(b) FREDERICK REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 20XX S. Frederick, Capital, November 1, 20XX Net Income for November Less: Withdrawals for November Increase in Capital S. Frederick, Capital, November 30, 20XX

$9 0 0 0 0 0 $1 4 5 0 0 0 1 2 0 00 1 3 3 0 00 $ 10 3 3 0 0 0

1-3

E1-5A, Cont.

SOLUTIONS TO EXERCISES—SET A, Cont.

(c)

FREDERICK REALTY BALANCE SHEET NOVEMBER 30, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Cash Accounts Receivable Office Equipment

Total Assets

$4 8 0 0 0 0 Liabilities Accounts Payable 1 2 3 0 00 8 3 0 0 0 0 Owner’s Equity S. Frederick, Capital $14 3 3 0 0 0

Total Liabilities and Owner’s Equity

SOLUTIONS TO EXERCISES—SET B E1-1B. a. A = $11,300 L = $4,200 OE = $7,100 b. A = $18,000 L = $6,600 OE = $11,400 c. A = $21,000 L = $8,000 OE = $

d. A = $7,500 L = $3,500 OE = $4,000 e. A = $15,270 L = $5,800 OE = $9,470 f. A = $17,600 L = $5,600 OE = $12,000

E1-2B. 1. Increases an asset and increases a liability – Receive a bank loan 2. Increases one asset and decreases another asset. – Receive payment of an accounts receivable 3. Decreases an asset and decreases owner’s equity – Pay wages 4. Decreases an asset and decreases a liability – Pay an accounts payable 5. Increases an asset and increases owner’s equity – Cash sale of a service

EI-3B. Accounting professionals practise in four broad fields including

Accounting-related opportunities within each field are numerous and include

Financial accounting

- Statement preparation - Statement analysis - Auditing - Regulatory - Consulting - Planning - Criminal investigation

Managerial accounting

- General accounting - Cost accounting - Budgeting - Internal auditing - Management advisory services

1-4

$4 0 0 0 0 0 10 3 3 0 0 0 $14 3 3 0 0 0

SOLUTIONS TO EXERCISES—SET B, Cont. E1-3B, Cont. Taxation

- Preparation - Planning - Regulatory - Investigations - Consulting

Accounting-related

- Lenders - Consultants - Analysts - Traders - Managers - Directors - Underwriters - Planners - Appraisers - Teachers

E1-4B.

BELL’S COMPUTER COMPANY Assets Cash

= Liabilities +

Accounts + Receivable +

Computer Equipment =

Accounts Payable

+ $8,000

+ $40,000 – $150

+ $12,000

B. Bell, Capital

−

B. Bell, Withdrawals

Revenue

− Expenses

+ $40,000

B. C.

Owner’s Equity

+ $150 + $12,000 + $25,000

+ $25,000

– $3,000

+ $3,000

– $900

+ $900

ENDING BALANCE

$47,950

+ $25,000

+ $8,000

+ $80,950

$80,950

+ $40,000

– $150

+ $37,000

– $3,900

Remember, as withdrawals or expenses increase, the end result is to reduce owner’s equity.

E1-5B. (a) MALAK REALTY INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 20XX Revenue: Professional Fees Operating Expenses: Salaries Expense Utilities Expense Rent Expense Total Operating Expenses Net Income

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

1-5

SOLUTIONS TO EXERCISES—SET B, Cont. E1-5B, Cont. (b) MALAK REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 20XX $9 0 0 0 0 0

S. Malak, Capital, June 1, 20XX Net Income for June

$3 3 9 0 0 0 6 4 0 00

Less: Withdrawals for June Increase in Capital

2 7 5 0 00

S. Malak, Capital, June 30, 20XX

$11 7 5 0 0 0

LIABILITIES AND OWNER’S EQUITY

Cash Accounts Receivable Office Equipment

$4 6 5 0 0 0 2 6 0 0 00 8 5 0 0 00

Total Assets

$15 7 5 0 0 0

1-6

Liabilities Accounts Payable Owner’s Equity S. Malak, Capital Total Liabilities and Owner’s Equity

$4 0 0 0 0 0 11 7 5 0 0 0 $15 7 5 0 0 0

P1-1A. GROUP A PROBLEMS MIA’S NAIL SPA Assets

Cash

Transaction A

Equipment

Liabilities

Owner’s Equity

Accounts Payable

Mia Annabelle, Capital

+ $20,000

Transaction B Transaction C Transaction D ENDING BALANCE

+ $20,000

−4,000

+$4,000 +6,000

+$6,000

−1,000 $15,000

−1,000 +

$10,000

$5,000

$25,000

$20,000

P1-2A. SEE’S INTERNET SERVICE BALANCE SHEET SEPTEMBER 30, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY Liabilities: Accounts Payable $18 0 0 0 0 0 14 0 0 0 0 0 20 0 0 0 0 0 Owner’s Equity: B. See, Capital

Assets: Cash Equipment Building

Total Assets

$52 0 0 0 0 0

$15 0 0 0 0 0 37 0 0 0 0 0

Total Liabilities and Owner’s Equity

$52 0 0 0 0 0

P1-3A. FONTAN COMPUTER SERVICE Assets

R. Fontan, Capital

−

+$25,000

−

+ $800

−

+2,100

−

+$25,000 +800

Office Equipment + $2,500

= =

Accounts Payable

Owner’s Equity

Cash

Accounts + Receivable +

= Liabilities +

+ $2,500

R. Fontan, Withdrawals

Computer Service + Revenue − Expenses

(275)

−

(170)

−

+ 170

−

+1,200

(700)

−

+$700

−

$24,655

−

$700

F. G. H. ENDING BALANCE

+ $2,100

$2,100

$2,500 $29,255

1,200

$3,700

$25,000

$2,900

−

+ $275

$1,645

$29,255

1-7

GROUP A PROBLEMS, Cont. P1-4A. (a) WEST’S STENCILLING SERVICE INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 20XX Revenue: Stencilling Fees

$3 0 0 0 0 0

Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense

$ 1 1 0 00 2 5 00 2 5 0 00 1 9 0 00 2 5 0 00

Total Operating Expenses Net Income

8 2 5 00 $2 1 7 5 0 0

(b) WEST’S STENCILLING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 20XX J. West, Capital, June 1, 20XX Net Income for June Less: Withdrawals for June

$1 2 0 0 0 0 $2 1 7 5 0 0 3 0 0 00

Increase in Capital

1 8 7 5 00

J. West, Capital, June 30, 20XX

$3 0 7 5 0 0

1-8

GROUP A PROBLEMS, Cont. P1-4A, Cont. (c) WEST’S STENCILLING SERVICE BALANCE SHEET JUNE 30, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Equipment

Liabilities: $2 3 0 0 0 0 Accounts Payable 4 0 0 00 6 8 5 0 0 Owner’s Equity

Total Assets

$ 3 1 0 00

J. West, Capital

3 0 7 5 00

Total Liabilities and $3 3 8 5 0 0 Owner’s Equity

$3 3 8 5 0 0

P1-5A. 1. MARTIN’S CATERING SERVICE Assets Cash

10/28 10/29 10/30 10/31 11/1 11/4 11/8 11/11 11/15 11/18 11/19 11/25 11/28 11/29 ENDING BALANCE

= Liabilities

Accounts + Receivable + Equipment =

Accounts Payable

+ +

+$8,000

Owner’s Equity Jill Martin, Capital

−

Jill Martin, Withdrawals

Catering Revenue

− Expenses

+ $8,000

− 900

+$900 +1,800

+$1,800

−1,000

+ 2,900

+$2,900

− 720

+ $720 +$300

+100

+300

−100

− 75

+ 75

− 90

+$90

+1,800

+1,800 +400

+400 +600

+600

− 400 $9,615

+400 +

$200

$3,100

$1,800

$12,915

$8,000

−

$90

$5,000

−

$1,795

1-9

GROUP A PROBLEMS, Cont. P1-5A., Cont. MARTIN’S CATERING SERVICE

BALANCE SHEET OCTOBER 31, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash

Liabilities: $6 1 0 0 0 0 Accounts Payable

Equipment

$ 8 0 0 00

2 7 0 0 00 Owner’s Equity: Jill Martin, Capital

8 0 0 0 00

Total Liabilities and Owner’s Equity

$8 8 0 0 0 0

Total Assets

$8 8 0 0 0 0

MARTIN’S CATERING SERVICE INCOME STATEMENT FOR THE MONTH ENDING NOVEMBER 30, 20XX

Revenue: Catering Fees Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Total Operating Expenses Net Income

1-10

$5 0 0 0 0 0

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

GROUP A PROBLEMS, Cont. P1-5A., Cont. 4.

MARTIN’S CATERING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 20XX

Jill Martin, Capital, November 1, 20XX Net Income for November Less: Withdrawals for November

$8 0 0 0 0 0 $3 2 0 5 0 0 9 0 00

Increase in Capital

3 1 1 5 00

Jill Martin, Capital, November 30, 20XX

$11 1 1 5 0 0

MARTIN’S CATERING SERVICE BALANCE SHEET NOVEMBER 30, 20XX ASSETS

Assets: Cash Accounts Receivable Equipment

LIABILITIES AND OWNER’S EQUITY Liabilities: $9 6 1 5 0 0 Accounts Payable 2 0 0 00 3 1 0 0 0 0 Owner’s Equity: Jill Martin, Capital

Total Assets

$12 9 1 5 0 0

Total Liabilities and Owner’s Equity

$1 8 0 0 0 0

11 1 1 5 0 0

$12 9 1 5 0 0

1-11

GROUP B PROBLEMS P1-1B. MIA’S NAIL SPA Assets Cash

Transaction A

+ $16,000

Transaction B Transaction C

− 800

Transaction D ENDING BALANCE

Equipment

Liabilities

Owner’s Equity

Accounts Payable

Mia Annabelle, Capital +$16,000

$16,000

+$1,500

− 800

−3,000 $12,200

+ $1,500

+3,000 +

$4,500 $16,700

$700 =

$16,700

P1-2B. SEE’S INTERNET SERVICE BALANCE SHEET SEPTEMBER 30, 20XX ASSETS Assets: Cash Building Equipment

LIABILITIES AND OWNER’S EQUITY Liabilities: $16 0 0 0 0 0 Accounts Payable 28 0 0 0 0 0 40 0 0 0 0 0 Owner’s Equity: B. See, Capital

Total Assets

1-12

Total Liabilities and $84 0 0 0 0 0 Owner’s Equity

$60 0 0 0 0 0

24 0 0 0 0 0

$84 0 0 0 0 0

GROUP B PROBLEMS, Cont. P1-3B. RICK FOX DESKTOP PUBLISHING SERVICE Assets

Cash

A B C D E F G H ENDING BALANCE

Accounts Receivable +

Office Equipment

Liabilities

Accounts Payable

+$9,000

Owner’s Equity R. Fox, Capital

−

R. Fox, Withdrawals

Revenue

−

Expenses

+$9,000 + $3,000

+ $3,000

+1,290

+ $1,290

−625

+$625 +$2,690

+2,690

−500

+500

−350

+$350 +100

$8,815

$2,690

$3,000

$3,100

$14,505

+100 +

$9,000

−

$350

$3,980

−

$1,225

P1-4B. (a) ANTOUN’S STENCILLING SERVICE INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 20XX Revenue: Stencilling Fees Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense Total Operating Expenses Net Income

$1 0 9 8 0 0

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

1-13

GROUP B PROBLEMS, Cont. P1-4B. Cont. (b) ANTOUN’S STENCILLING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 20XX A. Antoun, Capital, June 1, 20XX Net Income for June Less: Withdrawals for June

$3 7 2 0 0 0 $ 3 1 8 00 3 6 0 00

Decrease in Capital

4 2 00

A. Antoun, June 30, 20XX

$3 6 7 8 0 0

Total Assets

1-14

LIABILITIES AND OWNER’S EQUITY $2 0 4 3 0 0 1 1 4 0 00 5 40 00

$3 7 2 3 0 0

Liabilities: Accounts Payable

4 5 00

Owner’s Equity A. Antoun, Capital

3 6 7 8 00

Total Liabilities and Owner’s Equity

$3 7 2 3 0 0

GROUP B PROBLEMS, Cont. P1-5B. 1. THILDORE’S CATERING SERVICE = Liabilities +

Assets

10/25 10/27 10/28 10/29 11/1 11/5 11/8 11/10 11/15 11/17 11/20 11/25 11/28 11/30 ENDING BALANCE

Cash +$25,000

+ +

(1,200)

Accounts Receivable

Accounts Payable

+ +

Equipment

+$1,200

+800

+$800

(400)

+2,200

(550)

+ +

Owner’s Equity J. Thildore, Capital

Thildore, Withdrawals

Catering Revenue

−

+ +

−

+$25,000

+$250

−

(80)

Expenses −

− +$2,200

− −

+250

+80

−

(50)

−

(120)

−

+2,500

+ (550)

$26,910

$170

−

+1,300

−

+650

−

+650

−

+550

−

$1,800

+1,300

$3,300

$2,350

$30,380

$25,000

−

$120

+2,500

+50

+$120

+$550

−

$4,950

2. THILDORE’S CATERING SERVICE BALANCE SHEET OCTOBER 31, 20XX ASSETS Assets Cash Equipment

Total Assets

LIABILITIES AND OWNER’S EQUITY $23 4 0 0 0 0 2 0 0 0 00

$ 25 4 0 0 0 0

Liabilities Accounts Payable

$ 4 0 0 00

Owner’s Equity J. Thildore, Capital

25 0 0 0 0 0

Total Liabilities and Owner’s Equity

$ 25 4 0 0 0 0

1-15

GROUP B PROBLEMS, Cont. P1-5B., cont. 3. THILDORE’S CATERING SERVICE INCOME STATEMENT FOR THE MONTH ENDED NOVEMBER 30, 20XX Revenue: Catering Revenue

$4 9 5 0 00

Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense

$ 5 5 0 00 5 0 00 6 5 0 00 5 5 0 00

Total Operating Expenses

1 8 0 0 00

Net Income

$3 1 5 0 00

4. THILDORE’S CATERING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 20XX J. Thildore, Capital, November 1, 20XX Net Income for November Less: Withdrawals for November Increase in Capital J. Thildore, Capital, November 30, 20XX

1-16

$25 0 0 0 0 0 $3 1 5 0 0 0 1 2 0 00 3 0 3 0 00 $28 0 3 0 0 0

GROUP B PROBLEMS, Cont. P1-5B., Cont. 5. THILDORE’S CATERING SERVICE BALANCE SHEET NOVEMBER 30, 20XX ASSETS Assets Cash Accounts Receivable Equipment

LIABILITIES AND OWNER’S EQUITY Liabilities $26 9 1 0 0 0 Accounts Payable 1 7 0 00 3 3 0 0 0 0 Owner’s Equity J. Thildore, Capital

Total Assets

Total Liabilities and $30 3 8 0 0 0 Owner’s Equity

$2 3 5 0 00

28 0 3 0 0 0

$30 3 8 0 0 0

1-17

GROUP C PROBLEMS P1-1C. GOOD HOME RENTAL SERVICES INCOME STATEMENT FOR THE YEAR ENDED JULY 31, 20X2 Revenues: Service Revenue Repair Revenue

$142 0 0 0 0 0 6 0 0 0 00

Total Revenues Operating Expenses: Wages Expense Rent Expense Supplies Expense Utilities Expense Interest Expense

$148 0 0 0 0 0 $52 0 0 0 0 0 24 0 0 0 0 0 11 4 0 0 0 0 9 8 0 0 00 5 0 0 00

Total Operating Expenses

97 7 0 0 0 0

Net Income

$50 3 0 0 0 0

GOOD HOME RENTAL SERVICES STATEMENT OF OWNER’S EQUITY FOR THE YEAR ENDED JULY 31, 20X2 M. Good, Capital, August 1, 20X1 Add: Investments by Owner Net Income

$79 3 0 0 0 0 $ O 50 3 0 0 0 0

50 3 0 0 0 0

Total Less: Withdrawals by Owner

$129 6 0 0 0 0 34 0 0 0 0 0

M. Good, Capital, July 31, 20X2

$95 6 0 0 0 0

GOOD HOME RENTAL SERVICES BALANCE SHEET JULY 31, 20X2 ASSETS

LIABILITIES

Cash Accounts Receivable Supplies Prepaid Rent Office Equipment Furniture

$11 8 0 0 0 0 56 0 0 0 0 0 2 4 0 0 00 12 0 0 0 0 0 29 2 0 0 0 0 19 0 0 0 0 0

Accounts Payable Notes Payable Total Liabilities

$14 8 0 0 0 0 20 0 0 0 0 0 34 8 0 0 0 0

OWNER’S EQUITY M. Good, Capital

95 6 0 0 0 0

Total Assets

$130 4 0 0 0 0

Total Liabilities and Owner’s Equity

1-18

$130 4 0 0 0 0

GROUP C PROBLEMS, Cont. P1-2C. NEVES TRAINING SERVICES Assets

A B C D E F G H I ENDING BALANCE

Cash

Accounts Receivable

Office Equipment

Liabilities

Accounts Payable

+$9,000

Owner’s Equity M. Neves, Capital

−

M. Neves, Withdrawals

Revenue

−

Expenses

+$9,000 +$4,250

$4,250

+2,350

+$2,350

− 800

+$800 +$3,650

+3,650

− 600

+600

− 1,000

+ $1,000 +400

+400

−192 $8,758

+192 +

$3,650

$4,250

$4,650

$16,658

$9,000

−

$1,000

$6,000

−

$1,992

P1-3C. 1. FIRST CITY SURVEYING SERVICE Assets

04/23 04/26 04/29 04/30 05/02 05/03 05/10 05/13 05/14 05/17 05/21 05/24 05/27 05/28 05/31 ENDING BALANCE

Cash

Accounts Receivable

Surveying Equipment

Liabilities

Accounts Payable

$17,000

Owner’s Equity H. McGraw Capital

−

H. McGraw, Withdrawals

Surveying Revenue

−

− 250

$5,000

− 2,895

+2,895

+$4,750

− 2,375

−2,375

+2,350

+$2,350

− 975

+$975

+2,000

+2,950

+2,500

− 2,500

+4,950

− 104

+104

−1,043

+$1,043

+1,825

+1,825 +2,415

+2,415

− 825

+825

− 246

+246 +410

$16,962

Expenses

$17,000

$450

$10,310

$5,200

$27,722

+410 +

$17,000

−

$1,043

$9,125

−

$2,560

1-19

GROUP C PROBLEMS, Cont. P1-3C., Cont. 2. FIRST CITY SURVEYING SERVICE BALANCE SHEET APRIL 30, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Surveying Equipment

$11 4 8 0 0 0 7 8 9 5 00

Total Assets

$19 3 7 5 0 0

Liabilities: Accounts Payable

$2 3 7 5 0 0

Owner’s Equity: Howard McGraw, Capital

17 0 0 0 0 0

Total Liabilities and Owner’s Equity

$19 3 7 5 0 0

3. FIRST CITY SURVEYING SERVICE INCOME STATEMENT FOR THE MONTH ENDING MAY 31, 20XX Revenues: Surveying Revenue

$9 1 2 5 0 0

Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Advertising Expense Total Operating Expenses Net Income

1-20

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

GROUP C PROBLEMS, Cont. P1-3C., Cont. 4. FIRST CITY SURVEYING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 20XX Howard McGraw, Capital, May 1, 20XX Net Income for May Less: Withdrawals for May

$17 0 0 0 0 0 $6 5 6 5 0 0 1 0 4 3 00

Increase in Capital

5 5 2 2 00

Howard McGraw, Capital, May 31, 20XX

$22 5 2 2 0 0

5. FIRST CITY SURVEYING SERVICE BALANCE SHEET MAY 31, 20XX ASSETS Assets: Cash Accounts Receivable Equipment

LIABILITIES AND OWNER’S EQUITY Liabilities: $16 9 6 2 0 0 Accounts Payable 4 5 0 00 10 3 1 0 0 0 Owner’s Equity: Howard McGraw, Capital

Total Assets

$27 7 2 2 0 0

Total Liabilities and Owner’s Equity

$5 2 0 0 0 0

22 5 2 2 0 0

$27 7 2 2 0 0

1-21

GROUP C PROBLEMS, Cont. P1-4C. Roger’s Window Washing Company Income Statement For The Year Ended December 31, 20XX Revenue: Window Cleaning Operating Expenses: Salaries Expense Supplies Expense Interest Expense Advertising Expense

Insights $14 2 7 6 0 0

$11 3 7 6 0 0 +2 9 0 0 0 0

8 6 7 5 00

$5 0 8 0 0 0 +1 8 0 0 0 0

$5 6 0 1 0 0

$6 8 8 0 0 0

$6 8 8 0 0 0 1 4 0 0 00 3 0 0 00 9 5 00

Total Operating Expenses Net Income

$14 2 7 6 0 0

Advice to Roger: In the long run, a formal bookkeeping and accounting system may prove less costly than creating statements from informal records—and provide more reliance for Canada Revenue Agency as well.

P1-5C. 1.

LUNE CO. BALANCE SHEET DECEMBER 31, 20X1 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Land Building Desks Auto

Liabilities: $10 0 1 6 0 0 Accounts Payable 104 3 3 7 0 0 Notes Payable 72 9 3 5 0 0 Total Liabilities 44 6 0 0 0 0 6 8 2 5 0 0 Owner’s Equity: 14 2 6 8 0 0 J. Lune, Capital

Total Assets

Total Liabilities and $252 9 8 1 0 0 Owner’s Equity

$127 6 0 4 0 0 75 3 2 8 0 0 $202 9 3 2 0 0

50 0 4 9 0 0

$252 9 8 1 0 0

2. Abby Simpson does not seem to understand the basic accounting equation, the classification of accounts, or the double entry accounting system that would keep all of the accounts in balance (including the Capital account). If she stays in the position of bookkeeper, it is likely that the accounting records will not be accurate.

1-22

GROUP C PROBLEMS, Cont. P1-5C., Cont. 3.

LUNE CO. BALANCE SHEET REVISED JANUARY 4, 20X2 ASSETS Assets: Cash Accounts Receivable

LIABILITIES AND OWNER’S EQUITY Liabilities: $ 28 0 1 6 0 0 Notes Payable 104 3 3 7 0 0 Accounts Payable

Land Building Desks Auto

72 9 3 5 0 0 Total Liabilities 44 6 0 0 0 0 14 8 2 5 0 0 Owner’s Equity: 20 2 6 8 0 0 J. Lune, Capital

Total Assets

Total Liabilities and $284 9 8 1 0 0 Owner’s Equity

$ 79 3 2 8 0 0 127 6 0 4 0 0 $206 9 3 2 0 0

78 0 4 9 0 0

$284 9 8 1 0 0

Insight Cash 10,016 20,000

Desks 2,000

Auto

J. Lune, Capital

Notes Payable

6,825

14,268

50,049

75,328

8,000

6,000

28,000

4,000

SOLUTIONS TO ETHICAL CONSIDERATIONS EC1-1. Answers will vary, but here are some points for discussion: 1.

If something at a yard sale is far more valuable than the posted price, do I have to let the seller know? A piece of antique furniture you've been searching for is marked at $225. You know that similar pieces in worse condition have sold for more than 10 times as much. You are under no obligation to correct the seller on her underpricing. One of the beauties of yard sales is such finds!

Is it considered stealing to take pens from a bank? What about extra napkins from a fast-food restaurant? While grabbing a pen is not necessarily considered stealing, you should just ask the teller if you have any doubts. That said, one pen is OK, but enough to stock your home office isn’t (the same goes for napkins). A good rule of thumb: If you don’t feel comfortable about it, then it probably isn’t a good idea.

Is it unfair to move into better (unoccupied) seats at a sporting event or a concert? There’s no harm in seeing if you can move into a better viewing position. But before you do, make sure there’s no posted policy against it. And if an usher asks to see your tickets, be prepared to move back to your original seats without argument as there could be latecomers attending the event.

1-23

SOLUTIONS TO ETHICAL CONSIDERATIONS, Cont. EC1-1,. Cont. 4.

My boss gave me credit for a project on which a colleague did most of the work. Should I accept the praise? Fight the urge to accept the compliment wholeheartedly. It’s unfair for your colleague not to get the credit he or she deserves. But you don’t want to sell yourself too short, either. An appropriate response: “Thanks, but while all of us worked hard, it was Jane who did the bulk of the work on the project.”

Am I obligated to lend money to friends and family? One of your oldest friends asks if you can lend her money to make her condo payment. You feel as if you should help her out since she is a dear friend, but in actuality, you have no such duty, particularly if doing so puts your own finances in a squeeze. If a family member calls seeking aid, again, there’s no requirement. But if he is truly in need and you have the money, concern about his well-being should trump any fears you have about his paying you back. If you do lend money to a family member or friend who has reoccurring financial problems, you should probably document the transaction and determine a payback date.

My boss asked me to cover for him on his expense report by saying I was at a meal when I wasn’t. Should I do it? Your boss put you in a miserable position. Signing your name to the report makes you just as guilty should the misdeed be discovered. But if you stand up to him, you could find yourself out of a job. Bear in mind that a boss who would put you in such a predicament will probably do it again. The choice is yours

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS1-1. 1.

a. Cash Accounts receivable Inventories Prepaid expenses b. Accounts payable and accrued liabilities Deferred revenue Income taxes payable Current portion of long-term debt Derivative Obligation

a. sales for the current period: $240,506,000 b. sales for the previous period: $329,865,000 c. sales decreased by $89,359,000

Roots Corporation sells merchandise to retail customers, so it would be classified as a merchandiser. However, Roots also manufactures leather goods in its Toronto Leather Factory, so it can also be classified as a manufacturer.

AFS1-2. Answers will vary depending on the company chosen.

1-24

CONTINUING PROBLEM 1., 2.

PRECISION COMPUTER CENTRE = Liabilities

Assets Cash

+$4,500

– 1,200

– 600

Supplies

Computer Shop Equipment

Office + Equipment =

Accounts Payable

+ +

Owner’s Equity T. Freedman, Capital

−

T. Freedman, Withdrawals

Service Revenue

−

+$1,200 +$600

+$250

+$250 +$400 Rent

– 400

+250

+$250

+200

+85 Utilities

+85

1,200

−100

ENDING BALANCE

$3,850

Expenses

+$4,500

1,200 +$100 +

$250

$1,200

$600

$335

$5,900

$4,500

−

$100

$1,650

−

$485

PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 20X1

Revenue: Service Revenue Operating Expenses: Rent Expense Utilities Expense Total Operating Expenses Net Income

$1 6 5 0 0 0

$ 4 0 0 00 8 5 00 4 8 5 00 $1 1 6 5 0 0

1-25

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 20X1 T. Freedman, Capital, May 1, 20X1 Plus: Net Income for May Less: Withdrawals for May

$4 5 0 0 0 0 $1 1 6 5 0 0 1 0 0 00

Increase in Capital

1 0 6 5 00

T. Freedman, Capital, May 31, 20X1

$5 5 6 5 0 0

3. PRECISION COMPUTER CENTRE BALANCE SHEET MAY 31, 20X1 ASSETS Assets: Cash Supplies Computer Shop Equipment Office Equipment

Total Assets

1-26

LIABILITIES AND OWNER’S EQUITY $3 8 2 1 2 6

5 5 0 0

0 00 0 00 0 00 0 00

$5 9 0 0 0 0

Liabilities: Accounts Payable

$ 3 3 5 00

Owner’s Equity T. Freedman, Capital

5 5 6 5 00

Total Liabilities and Owner’s Equity

$5 9 0 0 0 0

2 Debits and Credits: Analyzing and Recording Business Transactions

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. A ledger is a group of accounts that record in monetary value the data from business transactions. 2. It is from the Latin word debere, which means left side. 3. False. Accounts with one entry will not need footings. 4. The end product of the accounting process is preparing financial reports. 5. The transaction analysis chart is a teaching device that is not used in the regular accounting process. 6. Accounts affected, category, , rules, update of T accounts. 7. The analysis of transactions results in the total of debits being equal to the total of credits. A double-entry system provides a system of checks and balances. 8. False. Informal report; does not have the same status as financial reports and is not shared with the public. 9. The financial reports are prepared from the ending balances of the accounts (debit or credit) in the ledger. These ending balances are then used in financial reports. The inside columns in financial reports are for sub-totaling. 10. It is easier to prepare the reports from the trial balance, because a list of all accounts and their balances is provided. The columns for revenue, expenses, etc., on the expanded accounting equation do not list specific titles and their balances. 11. The question in this case is whether Audrey should be allowed to put fictitious figures into the trial balance. Although Audrey has good intentions, this type of behavior cannot be tolerated. Her actions are extremely unprofessional and go against all accounting standards (not to mention ethics!). Instead of putting in fictitious figures, Audrey should stay late and correct the trial balance (or perhaps engage an assistant to help her so she could catch the plane).

2-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. Cash C. Clark, Capital

$17,200

Debit Balance

$11,000

Credit Balance

CDE2. a. Asset, Dr. b. Liability, Cr. c. Owner’s Equity, Cr. d. Owner’s Equity, Dr. e. Asset, Dr.

f. Revenue, Cr. g. Expense, Dr. h. Assets, Dr. i. Assets, Dr. j. Expense, Dr.

CDE3. Cash Accounts Receivable Bookkeeping Services

Asset Asset Revenue

Dr. Dr. Cr.

600

Cash

Accounts Receivable 1,900 Bookkeeping Fees 2,500

CDE4. Beginning balance, January 1 Add: Net profit Less: Withdrawals Ending balance, December 31

$24,100 10,500 2,500 $32,100

CDE5. During the year, Davies Construction received $320,550 in cash and paid out $257,250 in cash. a. No, the data simply represents any cash transactions that were made; it does not include transactions recorded on account. b.

2-2

Beginning Cash Balance Add Cash received Less: Cash paid out Ending Cash Balance

$82,750 320,550 257,250 $146,050

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE6. Cash Accounts Receivable

CDE7. A. B.

BS BS

Office Equipment

Accounts Payable

D. BS

L. Bernie, Capital

OE/BS

L. Bernie, Withdrawals

Hair Salon Fees Earned

G. IS

Advertising Expense

H. IS

Salary Expense

Utility Expense

J. IS K.

IS IS

CDE8.

1. The left side on the T Account is known as a Debit. 2. A Trial Balance lists the ending balances of each account. 3. The separate record for each asset and liability and the owner’s equity is called a/an Account. 4. A Credit appears on the right side of the T Account 5. A group of accounts that records data from business transactions are recorded in a Ledger. 6. T Account is used for demonstration purposes to show the effects of entries on a standard account. 7. The difference between the footings in a T Account is called Ending Balance. 8. A compound entry is a transaction involving more than one debit or credit. 9. A numbering system of accounts is used in the Chart of Accounts. 10. When adding each side of the T account, the balance of each side represents footings.

2-3

SOLUTIONS TO EXERCISES—SET A E2-1A. Balance Sheet Accounts Assets 111 Cash 112 Accounts Receivable 121 Office Equipment Liabilities 211 Accounts Payable Owner’s Equity 311 L. Jones, Capital 312 L. Jones, Withdrawals Income Statement Accounts Revenue 411 Legal Services Expenses 511 Advertising Expense 512 Repair Expense 513 Salary Expense

E2-2A. a. Liability, Cr. b. Owner’s Equity, Cr. c. Asset, Dr. d. Expense, Dr. e. Asset, Dr.

f. Owner’s Equity, Dr. g. Expense, Dr. h. Revenue, Cr. i. Asset, Dr. j. Asset, Dr.

E2-3A. ACCOUNT

Category

A. Cash L. Saunders, Capital B. Delivery Trucks

Inc.

Dec.

Rules

Asset

Dr.

Capital

Cr. Dr.

Asset

T Accounts Update L. Saunders, Capital 25,000 (A)

Cash (A) 25,000 Delivery Trucks

Accounts Payable

(B) 12,000

Accounts Payable

Liability

C. Rent Expense

Cr. Dr.

Expense

Rent Expense

12,000 (B) Accounts Payable

Accounts Payable D. Cash

Liability Asset Revenue

Cr.

E. Accounts Receivable

Asset

Dr.

Delivery Fees Earned F. L. Saunders, Withdrawals Cash

1,100 (C)

Cr Dr.

Delivery Fees Earned

Revenue Withdrawals

Cash

Delivery Fees Earned

(A) 25,000

1,500 (D)

(D) 1,500 Accounts Receivable

Cr. Dr.

Delivery Fees Earned

(E) 600 L. Saunders, Withdrawals (F) 700

Asset

12,000 (B)

Cr.

1,500 (D) 600 (E) Cash (A) 25,000 (D) 1,500

700 (F)

P2-2B. SHAM'S CONSTRUCTION REPAIR SHOP BALANCE SHEET APRIL 30, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Cash Accounts Receivable

$12 6 0 0 0 0 94 5 0 0 0 0

Accounts Payable Loan Payable

$69 3 0 0 0 0 56 7 0 0 0 0

Construction Supplies

28 3 5 0 0 0

Total Liabilities

126 0 0 0 0 0

Equipment

44 1 0 0 0 0

J. Sham, Capital

53 5 5 0 0 0

Total Assets

$179 5 5 0 0 0

Total Liabilities and Owner’s Equity

$179 5 5 0 0 0

2-17

GROUP B PROBLEMS, Cont. P2-3B. (a)

Cash

111 (A) 10,000 (F) 4,000 (G) 2,000

Accounts Payable

4,000 (C) 310 (D) 50 (E) 600 (H)

16,000

211

Fees Earned

411 4,000 (F) 4,000 (G)

2,000 (B)

8,000

4,960

11,040

Accounts Receivable (G) 2,000

112

Barry Joy, Capital

311 10,000 (A)

Office Equipment (B) 2,000 (C) 4,000

121

Barry Joy, Withdrawals (H) 600

312

Rent Expense (D) 310

511

Utilities Expense (E) 50

512

6,000

2-18

$11 0 4 0 0 0 2 0 0 0 00 6 0 0 0 00

Cr.

$2 0 0 0 0 0 10 0 0 0 0 0

6 0 0 00 8 0 0 0 00 3 1 0 00 5 0 00 $20 0 0 0 0 0

$20 0 0 0 0 0

GROUP B PROBLEMS, Cont. P2-4B. (a) GRETCHEN LYMAN, BARRISTER AND SOLICITOR INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 20XX Revenue: Revenue from Legal Services

$1 3 5 0 0 0

Operating Expenses: Utilities Expense Rent Expense Salaries Expense

$ 3 0 0 00 3 0 0 00 1 0 0 00

Total Operating Expenses

7 0 0 00

Net Income

$ 6 5 0 00

(b) GRETCHEN LYMAN, BARRISTER AND SOLICITOR STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 20XX Gretchen Lyman, Capital, May 1, 20XX Net Income for May Less: Withdrawals for May Increase in Capital Gretchen Lyman, Capital, May 31, 20XX

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

2-19

GROUP B PROBLEMS, Cont. P2-4B., Cont. (c) GRETCHEN LYMAN , BARRISTER AND SOLICITOR BALANCE SHEET MAY 31, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets:

Liabilities:

Cash

$7 0 0 0 0 0

Accounts Payable

$2 9 0 0 0 0

Accounts Receivable

8 0 0 00

Salaries Payable

9 3 0 00

Office Equipment

2 3 0 0 00

Total Liabilities

$3 8 3 0 00

Owner’s Equity Gretchen Lyman, Capital

6 2 7 0 00

Total Assets

2-20

$10 1 0 0 0 0

Total Liabilities and Owner’s Equity

$ 10 1 0 0 0 0

GROUP B PROBLEMS, Cont. P2-5B. The first seven transactions of Lou's Auto Spa have been posted to the company accounts as shown here:

Cash 7500

2 3500

3750

4000

11500 Balance

Supplies 3500

Balance

3500

Balance

Cleaning Fees Earned 7500 1

4000 6500 Balance

2500

Accounts Receivable 6500

Cleaning Equipment 2500 2500

4000

2500

9750

1750

Accounts Payable 2500 2500

4 Balance

6500

14000

Balance

Rent Expense 2500 2500

5 Balance

Wages Expense 3750 3750

Required: Part 1: Indicate for each entry the nature of the transaction. Example: Transaction 1: Received cash for cleaning fees earned for $7,500. Transaction 2: Performed cleaning services on account for $6,500. Transaction 3: Paid $3,500 for cleaning supplies for the Auto Spa. Transaction 4: Purchased cleaning equipment on account for $2,500. Transaction 5: Paid $3,750 for wages Transaction 6: Received $4,000 from the customer in transaction 2 Transaction 7: Paid rent $2,500. Part 2: Foot the T Accounts

2-21

GROUP B PROBLEMS, Cont. P2-6B. 1., 2., 3. Cash

111

(A) 40,000 (E) 13,000 (J) 1,600

54,600

Accounts Payable

211

Delivery Fees Earned

25,000 (B)

2,500 (D) 1,850 (F) 750 (G) 400 (I) 88 (K) 5,588

411

800 (C)

13,000 (E) 5,500 (H)

25,800

18,500

49,012 Accounts Receivable

112

Aarifa Angel, Capital

121

Delivery Trucks

Advertising Expense

40,000 (A)

(H) 5,500 1,600 (J) 3,900

Office Equipment

311

Aarifa Angel, Withdrawals

312

Gas Expense

(K) 88

122

511

512

(G) 750

Salaries Expense

(B) 25,000

513

(F) 1,850

Telephone Expense

514

(I) 400

4. ANGEL’S DELIVERY SERVICE TRIAL BALANCE MARCH 31, 20XX Dr. Cash Accounts Receivable Office Equipment Delivery Trucks Accounts Payable Aarifa Angel, Capital Aarifa Angel, Withdrawals Delivery Fees Earned Advertising Expense Gas Expense Salaries Expense Telephone Expense Totals

2-22

49 0 3 9 2 5 25 0

1 0 0 0

Cr.

2 00 0 00 0 00 0 00 25 8 0 0 0 0 40 0 0 0 0 0

8 8 00 8 7 1 8 4 84 3

0 5 5 0 0

0 00 0 00 0 00 0 00 0 00

18 5 0 0 0 0

84 3 0 0 0 0

GROUP B PROBLEMS, Cont. P2-6B, Cont. 5 (a). ANGEL’S DELIVERY SERVICE INCOME STATEMENT FOR THE MONTH ENDED MARCH 31, 20XX Revenue: Delivery Fees Earned

$18 5 0 0 0 0

Operating Expenses: Advertising Expense Gas Expense Salaries Expense Telephone Expense Total Operating Expenses

$ 8 0 0 00 7 5 0 00 1 8 5 0 00 4 0 0 00 3 8 0 0 00

Net Income

$14 7 0 0 0 0

5 (b). ANGEL’S DELIVERY SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MARCH 31, 20XX A. Angel, Capital, March 1, 20XX Net Income for March Less: Withdrawals for March Increase in Capital A. Angel, Capital, March 31, 20XX

$40 0 0 0 0 0 $14 7 0 0 0 0 8 8 00 14 6 1 2 0 0 $54 6 1 2 0 0

2-23

GROUP B PROBLEMS, Cont. P2-6B, Cont. 5 (c).

ANGEL’S DELIVERY SERVICE BALANCE SHEET MARCH 31, 20XX ASSETS Cash Accounts Receivable Office Equipment Delivery Trucks

Total Assets

2-24

LIABILITIES AND OWNER’S EQUITY $49 0 1 2 0 0 Liabilities: Accounts Payable 3 9 0 0 00 2 5 0 0 00 25 0 0 0 0 0 Owner’s Equity A. Angel, Capital Total Liabilities and $ 80 4 1 2 0 0 Owner’s Equity

$25 8 0 0 0 0

54 6 1 2 0 0 $ 80 4 1 2 0 0

GROUP C PROBLEMS P2-1C. Balance Sheet Total Assets 1

Owner invests cash..........................

Pay wages with cash ........................

Perform services on credit. ..............

Buy store equipment for cash ..........

+/−

Borrow cash with note payable........

Perform services for cash ................

Perform services on credit. ..............

Income Statement

Total Liab.

Equity

Net Income

−

Pay rent with cash ...........................

−

Owner withdraws cash ....................

−

Collect receivable from (7)...............

+/−

P2-2C. NIKOLA’S DELVERY SERVICE BALANCE SHEET DECEMBER 31, 20X1 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Office Supplies Computer Equipment Delivery Equipment

$2 8 0 0 0 0 0 50 0 0 0 00 20 0 0 0 00 120 0 0 0 00 61 0 0 0 00

Total Assets

$279 0 0 0 0 0

Liabilities: Accounts Payable

$10 0 0 0 0 0

Owner’s Equity N. Nowak, Capital

269 0 0 0 0 01

Total Liabilities and Owner’s Equity

$279 0 0 0 0 0

NIKOLA’S DELVERY SERVICE BALANCE SHEET DECEMBER 31, 20X2 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable

$2 0 0 0 0 0 0 60 0 0 0 00

Office Supplies Computer Equipment

25 0 0 0 00 120 0 0 0 00

Delivery Equipment

61 0 0 0 00

Building Total Assets

650 0 0 0 00 $936 0 0 0 0 0

Liabilities: Accounts Payable Loan Payable

$3 0 0 0 0 0 0 520 0 0 0 00

Total Liabilities

550 0 0 0 00

Owner’s Equity N. Nowak, Capital Total Liabilities and Owner’s Equity

3 8 6 0 0 0 0 02 $936 0 0 0 0 0

2-25

GROUP C PROBLEMS, Cont. P2-2C., Cont. Calculations: 1. $279,000 − $10,000 = $269,000 (calculation of unknown capital amount) 2. $936,000 − $550,000 = $386,000 (calculation of unknown capital amount) Part 2

Calculation of net income for 20X2 N. Nowak, Capital December 31, 20X1 + Owner investment + Net income (loss) − Owner withdrawals = N. Nowak, capital December 31, 20X2

$269,000 50,000 ? 24,000 $386,000

OR $269,000 + $50,000 + ? − $24,000 = $386,000; ? = $91,000

P2-3C. (a)

Cash

111 (A) 6,000 (F) 3,500 (G) 3,000 12,500

4,000 (B) 340 (D) 150 (E) 600 (H)

Accounts Receivable (G) 1,000

112

Equipment (B) 4,000 (C) 500

121

4,500

5,090

7,410

Accounts Payable

211

Linda Miyagawa, Capital 311 6,000 (A)

Linda Miyagawa Withdrawals 312 (H) 600

411

Rent Expense (D) 340

Utilities Expense (E) 150

500 (C)

Fees Eearned 3,500 (F) 4,000 (G) 7,500

2-26

511

512

GROUP C PROBLEMS, Cont. P2-3C., Cont. (b) LINDA’S CONSULTING SERVICE TRIAL BALANCE OCTOBER 31, 20XX Dr. Cash Accounts Receivable Equipment Accounts Payable Linda Miyagawa, Capital Linda Miyagawa, Withdrawals Fees Earned Rent Expense Utilities Expense

$7 4 1 0 0 0 1 0 0 0 00 4 5 0 0 00

Totals

Cr.

$5 0 0 0 0 0 0 0 00

5 0 0 00

$14 0 0 0 0 0 $14

0 0 0 00

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

P2-4C. HOLLY’S ACCOUNTING SERVICES INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 20XX Revenue: Accounting Fees Earned Expenses: Salaries Expense Rent Expense

$2 0 0 0 0 0 $1 6 0 0 0 0 6 0 0 00

Total Expenses

$2 2 0 0 0 0

Net Loss

($ 2 0 0 0 0)

HOLLY’S ACCOUNTING SERVICE STATEMENT OF OWNERS’ EQUITY FOR THE MONTH ENDED JULY 31, 20XX H. Good, Capital, July 1, 20XX Less: Net Loss Withdrawals H. Good, Capital, July 31, 20XX

$5 4 8 0 0 0 $ 2 0 0 00 1 5 0 0 00

1 7 0 0 00 $3 7 8 0 0 0

2-27

GROUP C PROBLEMS, Cont.

P2-4C., Cont.

HOLLY’S ACCOUNTING SERVICE BALANCE SHEET JULY 31, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY Accounts Payable Loan Payable

$ 5 2 0 00 1 6 0 0 00

6 0 0 00

Total Liabilities

2 1 2 0 00

Office Equipment

1 4 0 0 00

H. Good, Capital

Total Assets

$5 9 0 0 0 0

Cash Accounts Receivable Prepaid Insurance

2-28

$2 0 0 0 0 0 1 9 0 0 00

Total Liabilities and Owner’s Equity

3 7 8 0 00 $5 9 0 0 0 0

GROUP C PROBLEMS, Cont. P2-5C. RANCH COMPANY TRIAL BALANCE JUNE 30, 20XX Dr. Cash Accounts Receivable Office Equipment Accounts Payable Wages Payable H. Ranch, Capital H. Ranch, Withdrawals Professional Services

$ 4 9 0 00 6 2 0 00 3 6 5 00

Rent Expense Advertising Expense

2 4 0 00 2 5 00

1 4 4 0 00

$3 1 8 0 0 0

Totals

Cr.

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

$3 1 8 0 0 0

Note: 1. The Cash account subtraction error means the amount in Cash is overstated. 2. The normal balance of Accounts Receivable is a debit. Therefore, the $635 should have been on the debit side. ($15 from the $635 = $620.) Accounts Receivable would be severely understated if not corrected. 3. The normal balance of Accounts Payable, Wages Payable and Capital (H. Clo, Capital) is a credit. All understated. 4. Before recording the office equipment on account, Assets and money owed (Accounts Payable) would be understated. 5. Revenue being understated would mean net income would be lower than actual. 6. Expense accounts are normally debit accounts. Therefore, Rent Expense would be understated. To avoid this problem, Ranch Co. might insist that Andy take a course in accounting at a local college. He obviously needs more experience/training before he can be trusted to handle the company’s books. Better supervision may help somewhat, but the real solution is in getting a bookkeeper who is accurate and well trained.

P2-6C. Situation

Totals of Trial Balance

Effect on Accounts

Will balance, but be understated by $765.

Cash overstated by $765 and equipment understated by $765.

Will not balance.

Cash overstated by $200.

Will balance but be overstated by $400.

Capital and Accounts Receivable overstated by $400.

Will balance but be overstated by $360.

Accounts Payable overstated by $360 and Cash overstated by $400. Supplies understated by $40.

Trial Balance will balance with the correct amount.

Supplies overstated and Equipment understated by $800.

Trial Balance will not balance.

Cash overstated by $36.

Mistakes can be avoided in the future by carefully checking entries.

2-29

SOLUTIONS TO ETHICAL CONSIDERATIONS EC2-1. 1. What are the ethical issues? The accounting clerk should not consider changing the numbers as this will inflate or deflate a particular account and it is not ethical in the accounting practice to change numbers to balance. 2. What are the alternatives? The accounting clerk should go through her transactions and make sure her debits and credits equal each other in all transactions. Then she should check her ending balances of each account and make sure they match with the trial balance numbers used. She can also check that all accounts have the correct normal balance (the correct debit or credit balance depending on the type of account). 3. Who are the affected parties? If you recall in Chapter 1 we discussed the users of the financial statements. Remember the trial balance is used to prepare financial statements. Affected users would be both internal (managers, owners,) and external users (Canada Revenue Agency, government agencies, and banking institutions) 4. What would you do? Answers would vary, but perhaps have a conversation with the store manager to indicate that you do not balance and may not have this done by the end of the day. You could then ask for help to find the error.

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS2-1. 1. Current assets: Cash Accounts receivable Inventories Prepaid expenses Non-current assets: Loan receivable Fixed assets Intangible assets Goodwill 2. Current liabilities: Accounts payable and accrued liabilities Deferred revenue Income taxes payable Current portion of long-term debt Derivative Obligations Non-current liabilities: Deferred tax liabilities Deferred lease costs Finance lease obligation Long-term debt 3. Answers can vary, but some accounts would include: Wages Expense Salary Expense Rent Expense Office Expense Insurance Expense Selling Expense Commission Expense

AFS2-2. Answers will vary depending on the company that is selected.

AFS2-3. Answers will vary depending on the company that is selected.

2-30

CONTINUING PROBLEM 1., 2., 3. Cash (p)

3,850 900

4,750

1000 150 (l) 200 (m) 1,400 (n) 85 (q) 50 (r)

285

2000

690

Advertising Expense (n) 1,400

5010

Rent Expense

5020 400

405

1,885

3000

Utilities Expense 85

5030

1020

T. Freedman, Capital 4,500 T. Freedman, Withdrawals 100

3010

Phone Expense (k) 155

5040

1030

Supplies Expense

5050

Insurance Expense

5060

2,865

Accounts Receivable (o) 850 Supplies (s)

Accounts Payable (m) 200 335 (q) 85 155 (k) 200 (s)

250 200

Service Revenue

450

Computer Shop Equipment 1080 1,200

4000 1,650 850 (o) 900 (p)

(l)

150

3,400

Office Equipment 600

1090

Postage Expense (r) 50

5070

PRECISION COMPUTER CENTRE TRIAL BALANCE JUNE 30, 20X1

Cash Accounts Receivable Supplies

$2 8 6 5 0 0 8 5 0 00 4 5 0 00

Computer Shop Equipment Office Equipment Accounts Payable T. Freedman, Capital T. Freedman, Withdrawals Service Revenue Advertising Expense Rent Expense

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

Utilities Expense

8 5 00

Phone Expense

1 5 5 00

Insurance Expense

1 5 0 00

Postage Expense

5 0 00

Total

$8 3 0 5 0 0

2-31

CONTINUING PROBLEM, Cont. 5.

PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE TWO MONTHS ENDED JUNE 30, 20X1

Revenue: Service Revenue Operating Expenses:

$3 4 0 0 00 $1 4 0 0 00 1 5 0 00 1 5 5 00 5 0 00 4 0 0 00 8 5 00

Advertising Expense Insurance Expense Phone Expense Postage Expense Rent Expense Utilities Expense Total Operating Expenses

2 2 4 0 00

Net Income

$1 1 6 0 00

PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE TWO MONTHS ENDED JUNE 30, 20X1 $4 5 0 0 00

T. Freedman, Capital Contributed, May 1, 20X1 Net Income for the two months Less: Withdrawals

$1 1 6 0 00 1 0 0 00

Increase in Capital

1 0 6 0 00 $5 5 6 0 00

T. Freedman, Capital, June 30, 20X1

PRECISION COMPUTER CENTRE BALANCE SHEET JUNE 30, 20X1 ASSETS Assets: Cash Accounts Receivable Supplies Computer Shop Equipment Office Equipment Total Assets

2-32

LIABILITIES AND OWNER’S EQUITY $2 8 6 5 00 8 5 0 00 4 5 0 00 1 2 0 0 00

Liabilities: Accounts Payable

$ 4 0 5 00

Owner’s Equity: T. Freedman, Capital

5 5 6 0 00

Total Liabilities and Owner’s Equity

$5 9 6 5 00

6 0 0 00 $5 9 6 5 00

3 Beginning the Accounting Cycle: Journalizing, Posting, and the Trial Balance

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The accounting cycle represents the normal accounting procedures that are performed in a certain period of time (usually one year). 2. Disagree; it is based on the income statement. 3. Calendar year—January 1 to December 31 Fiscal year—Any 12 consecutive months. (A fiscal year could be a calendar year.) 4. Interim reports are financial reports prepared for parts of the fiscal period. 5. Transactions are first journalized in a book of original entry (general journal) and then posted to the ledger, the book of final entry. 6. The debit and credit parts of recording a transaction are located on the same page of the journal. In the ledger, they would be on separate pages. 7. The chart of accounts provides all the titles of the accounts that will be used in the debit and credit parts of recording each transaction in the general journal. 8. A compound journal entry is a journal entry that requires three or more accounts. 9. Disagree; it means updating the ledger. 10. False. The side that increases the account is the normal balance. 11. Agree. 12. Cross-referencing updates the PR column in the journal after the ledger account has been updated. 13. Transposition is a rearrangement of digits: 5,132.00 → 5,312.00 Sliding means adding or deleting zeros: 4,821.00 → 482.10 14. The question, in this case, is whether Jay should be allowed to copy another company’s software. It is ethically wrong for Jay to ask his friend if he can copy his software. Software is protected under copyright laws. Maybe Jay should check with the manufacturer of the software for delayed billing.

3-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. A. B. C. D. E. F. G. H. I. CDE2. (A) (B) (C) CDE3.

20XX November 19 Cash Equipment B. Moore, Capital Initial investment by owner $9,000 + $10,000 $19,000 1 Owner’s investment of cash and equipment Performed legal services for cash and billed customer for the balance due Salary expense paid

NAME: CASH

Date 20XX May

ACCOUNT NO. Explanation

1 4 11 14

Post Ref.

Debit

GJ1 GJ1

1 9 00 9 00

Dr Dr

6 00

GJ2 GJ3

DR CR

Credit

2 00

Dr Dr

111 Balance 1 9 00 2 8 00 2 2 00 2 4 00

Post. Ref. column of cash tells us from which page of Journal information came. The Acct #111 will be used to cross reference back to the Post Ref. column of the Journal to tell it was posted to Acct. #111 in the General Ledger. CDE4.

LEE COMPANY TRIAL BALANCE OCTOBER 31, 20XX

Cash Equipment Accounts Payable D. Lee, Capital D. Lee, Withdrawals Taxi Fare Income

1 7 00 1 1 2 00

Advertising Expense Rent Expense Totals

3 00 1 7 00 1 5 4 00

1 5 4 00

Dr.

Cr.

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

CDE5. Date 20XX July

Account Title and Description 11

Telephone Expense Repair Expense To correct posting of June 2

Post Ref.

2 1 0 00 2 1 0 00

When the original incorrect entry has been ruled through and the account balance corrected and initialled. Note that, in a computerized accounting environment, the correcting entry should be dated with the original June 2, 20XX date.

3-2

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE6. Here is the list of the words and terms for this chapter: 1. Posting is the process of transferring information from the journal to the ledger accounts. 2. Transactions are first recorded in the general journal. 3. The accidental rearrangement of the digits of a number is called transposition. 4. A general ledger is an informal listing of the ledger accounts and their balances that helps prove the equality of debits and credits. 5. A transaction is a business event that has a monetary impact on the company’s financial statements and is recorded as a journal entry. 6. There are nine steps in the accounting cycle. 7. When a business’s fiscal year ends at the same time as its season ends, it is called a natural business year. 8. Adding the account number of the ledger account in the PR column of the journal and inserting the journal page on the ledger account is called cross-referencing. 9. A fiscal year is a 12-month period a business chooses for its accounting year. 10. A trial balance is a collection of accounts that includes all those needed to contain the individual balances that are used to produce financial statements.

3-3

SOLUTIONS TO EXERCISES—SET A

E3-1A. Date July

Account Name 1

3-4

Debit

Cash J. Yeoman, Capital

5 0 0 0 00

Accounts Receivable Revenue

2 5 0 00

5 0 0 0 00

2 5 0 00

Equipment Cash

2 5 0 0 00

Supplies Accounts Payable

1 5 0 0 00

Cash Accounts Receivable Revenue

4 0 0 00 1 5 0 00

J. Yeoman, Withdrawals Cash

7 5 0 00

Utilities Expense Cash

2 5 0 0 00

1 5 0 0 00

5 5 0 00

7 5 0 00 5 0 00 5 0 00

Advertising Expense Cash

1 2 5 00

Cash Accounts Receivable Revenue

3 5 0 00 4 5 0 00

Cash Accounts Receivable

2 5 0 00

Insurance Expense Cash

2 1 0 00

Accounts Payable Cash

5 0 0 00

Credit

1 2 5 00

8 0 0 00

2 5 0 00

2 1 0 00

5 0 0 00

SOLUTIONS TO EXERCISES—SET A, Cont.

E3-2A. Date 20XX Jan

Account Title and Description 4

Post Ref.

Dr.

Cash Reshma Long, Capital Owner’s investment

16 0 0 0 0 0

Auto Repair Equipment Cash Purchased auto repair equipment for cash

7 0 0 0 00

Auto Repair Equipment Accounts Payable Bought equipment from Lowell Co. on account

6 0 0 0 00

Cr. 16 0 0 0 0 0

7 0 0 0 00

6 0 0 0 00

Cash Repair Fees Earned Fees collected

9 0 0 00

Accounts Receivable Repair Fees Earned Fees charged to Sullivan Co. on account

9 0 0 00

Reshma Long, Withdrawals Cash Personal withdrawal

3 0 0 00

9 0 0 00

3 0 0 00

3-5

SOLUTIONS TO EXERCISES—SET A, Cont. E3-3A.

Page 4

Date 20XX Apr

Post Ref.

Dr.

Cash A. King, Capital Cash investment

111

17 0 0 0 0 0

Equipment Cash Accounts Payable Purchase of equipment

121

Account Title and Description 6

NAME:

Apr

6 13

Apr

17 0 0 0 0 0

Post Ref. GJ4

Explanation

Credit 3 0 0 0 00

Debit

Post Ref.

Debit

Balance

17 0 0 0 0 0 14 0 0 0 0 0

GJ4

Debit

121

DR CR

Balance

8 0 0 0 00

211

Credit

DR CR

Balance

5 0 0 0 00

ACCOUNT NO. Post Ref.

111

DR CR

ACCOUNT NO.

GJ4

Explanation

Credit

8 0 0 0 00

A. KING, CAPITAL

Date 20XX

3-6

GJ4

ACCOUNTS PAYABLE

NAME:

Apr

Debit

ACCOUNT NO.

Date 20XX Apr

Post Ref.

GJ4

Explanation

NAME:

3 0 0 0 00 5 0 0 0 00

211

EQUIPMENT

Date 20XX

8 0 0 0 00

111

ACCOUNT NO. Explanation

NAME:

17 0 0 0 00

311

CASH

Date 20XX

Cr.

311

Credit

DR CR

Balance

17 0 0 0 0 0

Cr.

17 0 0 0 0 0

SOLUTIONS TO EXERCISES—SET A, Cont. E3-4A. Date 20XX March 1

Account Name Cash RND, Capital

Debit 10 0 0 0 0 0

10 0 0 0 0 0

Rent Expense Cash

1 5 0 0 00

Equipment Accounts Payable

6 1 5 0 00

RND, Withdrawals Cash

4 0 0 00

Supplies Cash

4 5 0 00

1 5 0 0 00

6 1 5 0 00

4 0 0 00

4 5 0 00

Telephone Expense Cash

9 0 00

Accounts Receivable Fees Earned

13 4 0 0 0 0

9 0 00

13 4 0 0 0 0

No entry

Cash Accounts Receivable

2 5 0 0 00

Accounts Payable Cash

3 0 0 0 00

Credit

2 5 0 0 00

3 0 0 0 00

Miscellaneous Expense Cash

1 5 0 00

Advertising Expense Cash

9 0 0 00

RND, Withdrawals Cash

1 0 0 0 00

1 5 0 00

9 0 0 00

1 0 0 0 00

3-7

SOLUTIONS TO EXERCISES—SET A Cont. E3-5A. SUN CO. TRIAL BALANCE MARCH 31, 20XX Cash Accounts Receivable Accounts Payable A. Sun, Capital A. Sun, Withdrawals Services Earned Concessions Earned Rent Expense Salaries Expense Miscellaneous Expense Totals

E3-6A.

Put line through both 800.00 figures. Change to 1400.00 and initial.

3-8

10 0 0 0 0 0 1 2 0 0 00 3 0 0 0 00 6 5 0 0 00 3 0 0 00 5 7 0 0 00 2 5 0 0 00 1 4 0 0 00 3 5 0 0 00 1 3 0 0 00 17 7 0 0 0 0

17 7 0 0 0 0

SOLUTIONS TO EXERCISES—SET B E3-1B. Date July 1

Account Name Cash P. Anderson, Capital Accounts Receivable Revenue

Debit 15 0 0 0 0 0

Credit 15 0 0 0 0 0

7 5 0 00 7 5 0 00

Equipment Cash

7 5 0 0 00

Supplies Accounts Payable

4 5 0 0 00

Cash Accounts Receivable Revenue

1 2 0 0 00 4 5 0 00

P. Anderson, Withdrawals Cash

2 2 5 0 00

7 5 0 0 00

4 5 0 0 00

1 6 5 0 00

2 2 5 0 00

Utilities Expense Cash

1 5 0 00

Advertising Expense Cash

3 7 5 00

Cash Accounts Receivable Revenue

1 0 5 0 00 1 3 5 0 00

Cash Accounts Receivable

7 5 0 00

Insurance Expense Cash

6 3 0 00

Accounts Payable Cash

1 5 0 0 00

1 5 0 00

3 7 5 00

2 4 0 0 00

7 5 0 00

6 3 0 00

1 5 0 0 00

3-9

SOLUTIONS TO EXERCISES—SET B, Cont. E3-2B. Date 20XX Jan

Account Title and Description 4

3-10

Post Ref.

Dr.

Cash Reshma Long, Capital Owner’s investment

21 0 0 0 0 0

Auto Repair Equipment Cash Purchased auto repair equipment for cash

9 0 0 0 00

Auto Repair Equipment Accounts Payable Bought equipment from Lowell Co. on account

5 0 0 0 00

Cash Repair Fees Earned Fees collected

1 2 0 0 00

21 0 0 0 0 0

9 0 0 0 00

5 0 0 0 00

1 2 0 0 00

Accounts Receivable Repair Fees Earned Fees charged to Sullivan Co. on account

9 8 0 00

Reshma Long, Withdrawals Cash Personal withdrawal

5 0 0 00

Cr.

9 8 0 00

5 0 0 00

SOLUTIONS TO EXERCISES—SET B, Cont. E3-3B.

Page 4

Date 20XX Apr 6

NAME:

111

Equipment Cash Accounts Payable Purchase of equipment

121

Apr

Post Ref.

Debit

GJ4

52 0 0 0 0 0

10 0 0 0 0 0 20 0 0 0 0 0

Credit 10 0 0 0 0 0

Post Ref.

Debit

GJ4

30 0 0 0 0 0

ACCOUNTS PAYABLE Explanation

A. KINGSTON, CAPITAL

Date 20XX

Explanation 6

30 0 0 0 0 0

Credit

Balance

52 0 0 0 0 0 51 0 0 0 0 0

Debit

GJ4

20 0 0 0 0 0

Credit

Balance

30 0 0 0 0 0

Debit

GJ4

52 0 0 0 0 0

Credit

211

DR CR

Balance

20 0 0 0 0 0

ACCOUNT NO. Post Ref.

121

DR CR

ACCOUNT NO. Post Ref.

111

DR CR

ACCOUNT NO.

NAME:

Apr

52 0 0 0 0 0

211

EQUIPMENT

Date 20XX

52 0 0 0 0 0

111

GJ4

Explanation

NAME:

Cr.

ACCOUNT NO.

6 13

Date 20XX

Dr.

311

CASH Explanation

NAME:

Ref.

Cash A. Kingston, Capital Cash investment

Date 20XX Apr

Post

Account Title and Description

311

DR CR

Balance

52 0 0 0 0 0

3-11

SOLUTIONS TO EXERCISES—SET B, Cont. E3-4B. Date 20XX Nov. 1

Cash A. Albe, Capital

Debit 15 5 0 0 0 0

Rent Expense Cash

1 7 5 0 00

Equipment Accounts Payable

7 5 5 0 00

A. Albe, Withdrawals Cash

2 5 0 00

Supplies Cash

3 5 0 00

Telephone Expense Cash

1 9 0 00

Cash Accounts Receivable Fees Earned

2 5 0 0 00 13 0 0 0 0 0

1 7 5 0 00

7 5 5 0 00

2 5 0 00

3 5 0 00

1 9 0 00

15 5 0 0 0 0

No entry

Cash Accounts Receivable

5 5 0 0 00

Accounts Payable Cash

7 5 5 0 00

Miscellaneous Expense Cash

5 5 0 0 00

7 5 5 0 00 1 7 5 00 1 7 5 00

Wage Expense Cash

1 9 0 0 00

A. Albe, Withdrawals Cash

2 1 5 0 00

Credit 15 5 0 0 0 0

3-12

Account Name

1 9 0 0 00

2 1 5 0 00

SOLUTIONS TO EXERCISES—SET B, Cont. E3-5B.

Put line through both 800.00 figures. Change to 1,600.00 and initial.

GROUP A PROBLEMS P3-1A. JOSIP’S CLEANING SERVICE GENERAL JOURNAL Date 20XX Oct.

Account Title and Description 1

Page 1 Post Ref.

Dr.

Prepaid Rent Cash Rent paid in advance

9 0 0 0 00

Cleaning Equipment Accounts Payable Equipment on account

7 0 0 0 00

Cleaning Supplies

9 0 0 0 00

7 0 0 0 00

6 0 0 00

Cash Purchased Supplies 15

Cr.

6 0 0 00

Cash Cleaning Fees Earned Fees for cash

1 2 0 0 00

Josip Lang, Withdrawals Cash Personal withdrawal

5 0 0 00

Advertising Expense Accounts Payable Advertising bill

4 5 0 00

1 2 0 0 00

5 0 0 00

4 5 0 00

3-13

GROUP A PROBLEMS, Cont. P3-1A., Cont. JOSIP’S CLEANING SERVICE GENERAL JOURNAL Date 20XX Oct.

Account Title and Description

Hydro Expense Cash Paid hydro expense

Page 2 Post Ref.

Dr. 7 0 00

7 0 00

Salaries Expense Cash Paid salaries

1 0 0 0 00

Accounts Receivable

2 3 0 0 00

1 0 0 0 00

Cleaning Fees Earned Fees earned to be paid in October 29

3-14

Accounts Payable Cash Partial payment on account on Brian’s Supply House Account

Cr.

2 3 0 0 00

3 5 0 0 00 3 5 0 0 00

GROUP A PROBLEMS, Cont. P3-2A. BETTY’S ART STUDIO GENERAL JOURNAL Date 20XX June

Account Title and Description 2

Cash Betty Rice, Capital Cash investment Prepaid Rent Cash Rent paid in advance Equipment Accounts Payable Purchased equipment from Astor Co. on account Cash Art Fees Earned Fees for cash Art Supplies Cash Bought art supplies for cash Accounts Receivable Art Fees Earned Fees to Lester Co. on account Salaries Expense Cash Paid salaries Betty Rice, Withdrawals Cash Personal withdrawal Electrical Expense Cash Paid electric bill Telephone Expense Cash Paid telephone bill

Page 1 Post Ref.

Dr.

111

12 0 0 0 0 0 12 0 0 0 0 0

311 114

1 2 0 0 00 1 2 0 0 00

111 131

6 0 0 00 6 0 0 00

211 111

9 0 0 00 9 0 0 00

411 121

4 0 0 00 4 0 0 00

111 112

2 1 0 0 00 2 1 0 0 00

411 521

6 0 0 00 6 0 0 00

111 312

2 0 0 00 2 0 0 00

111 511

1 4 0 00 1 4 0 00

111 531 111

Cr.

2 1 0 00 2 1 0 00

3-15

GROUP A PROBLEMS, Cont. P3-2A., Cont. GENERAL LEDGER OF BETTY’S ART STUDIO NAME:

CASH

Date 20XX June

ACCOUNT NO. Explanation

2 3 6 9 10 16 27 30

GJ1

Explanation 9

NAME: Date 20XX June

3-16

Post Ref.

Debit

GJ1

2 1 0 0 00

Dr.

12 0 0 0 0 0 10 8 0 0 0 0 11 7 0 0 0 0 11 3 0 0 0 0 10 7 0 0 0 0 10 5 0 0 0 0 10 3 6 0 0 0 10 1 5 0 0 0

Dr. Dr. Dr. Dr. Dr. Dr.

Credit

Post Ref.

Debit

GJ1

1 2 0 0 00

Credit

Balance

Dr.

2 1 0 0 00

Debit

GJ1

4 0 0 00

EQUIPMENT

Credit

Balance

Dr.

1 2 0 0 00

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

6 0 0 00

Credit

114

DR CR

ACCOUNT NO. Post Ref.

112

DR CR

ACCOUNT NO.

ART SUPPLIES

Date 20XX

Balance

ACCOUNT NO.

PREPAID RENT Explanation

DR CR

Dr.

4 0 0 00 6 0 0 00 2 0 0 00 1 4 0 00 2 1 0 00

GJ1

Date 20XX

June

1 2 0 0 00

GJ1

Credit

9 0 0 00

GJ1

Explanation

NAME:

12 0 0 0 0 0

GJ1

Date 20XX

June

GJ1 GJ1

ACCOUNTS RECEIVABLE

NAME:

Debit

GJ1

NAME:

June

Post Ref.

111

121 Balance 4 0 0 00

131

DR CR

Balance

Dr.

6 0 0 00

GROUP A PROBLEMS, Cont. P3-2A., Cont. NAME: Date 20XX June

Explanation 4

NAME: Date 20XX June

Date 20XX June

Explanation

6 10

Explanation

June

Post Ref.

Debit

GJ1

2 0 0 00

6 0 0 00

Cr.

Post Ref.

Debit

6 0 0 00

Debit

GJ1

1 4 0 00

DR CR

Balance

12 0 0 0 0 0

Cr.

12 0 0 0 0 0

Credit

DR CR Dr.

Debit

GJ1

6 0 0 00

312 Balance 2 0 0 00

411

Credit

DR CR

Balance

9 0 0 00 2 1 0 0 00

Cr.

9 0 0 00 3 0 0 0 00

Cr.

Credit

DR CR Dr.

ACCOUNT NO. Post Ref.

311

Credit

ACCOUNT NO. Post Ref.

211 Balance

ACCOUNT NO.

SALARIES EXPENSE Explanation

DR CR

ACCOUNT NO.

GJ1

Date 20XX

Debit

GJ1

ELECTRICAL EXPENSE

NAME:

Post Ref.

ART FEES EARNED Explanation

Credit

ACCOUNT NO.

BETTY RICE, WITHDRAWALS

NAME:

June

Debit

GJ1

NAME:

Post Ref.

BETTY RICE, CAPITAL

Date 20XX

ACCOUNT NO.

GJ1

Explanation

NAME:

June

ACCOUNTS PAYABLE

Credit

DR CR Dr.

511 Balance 1 4 0 00

521 Balance 6 0 0 00

3-17

GROUP A PROBLEMS, Cont. P3-2A., Cont. NAME:

TELEPHONE EXPENSE

Date 20XX June

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

2 1 0 00

Credit

531

DR CR

Balance

Dr.

2 1 0 00

BETTY’S ART STUDIO TRIAL BALANCE JUNE 30, 20XX Cash Accounts Receivable Prepaid Rent Art Supplies Equipment Accounts Payable Betty Rice, Capital Betty Rice, Withdrawals Art Fees Earned Electrical Expense Salaries Expense Telephone Expense Totals

3-18

10 1 5 0 0 0 2 1 0 0 00 1 2 0 0 00 4 0 0 00 6 0 0 00 00 00

3 0 0 0

15 6 0 0

2 0 0 00 1 4 0 00 6 0 0 00 2 1 0 00 15 6 0 0 0 0

6 0 0 12 0 0 0

GROUP A PROBLEMS, Cont. P3-3A. (a, b)

A. ONE PLACEMENT AGENCY GENERAL JOURNAL

Date 20XX June

Account Title and Description 1

Page 1 PR.

Cash A. One, Capital Owner investment

111

Equipment Accounts Payable Purchase of equipment on account from Tinker Co.

141

Accounts Receivable Placement Fees Earned Fees on account

112

A. One, Withdrawals Cash Owner withdrawal

312

Wages Expense Cash Wages paid

511

Cash Placement Fees Earned Fee earned for cash

111

Supplies Accounts Payable Purchase of supplies on account from Cinder Co.

131

Telephone Expense Cash Paid telephone bill

521

Advertising Expense Accounts Payable Received advertising bill from Shawl Co.

531

Dr. 9 0 0 0 00

9 0 0 0 00

311

1 5 0 0 00 1 5 0 0 00

211

1 4 0 0 00 1 4 0 0 00

411

6 0 0 00 6 0 0 00

111

3 0 0 00 3 0 0 00

111

4 0 0 0 00 4 0 0 0 00

411

3 5 0 00 3 5 0 00

211

2 2 0 00 2 2 0 00

111

211

Cr.

5 0 0 00 5 0 0 00

3-19

GROUP A PROBLEMS, Cont. P3-3A., Cont. GENERAL LEDGER OF A. ONE PLACEMENT AGENCY CASH

ACCOUNT NO.

Date 20XX June 1 5 7 9 28

Explanation

Post Ref.

Debit

GJ1

9 0 0 0

GJ1 GJ1

4 0 0 0

Explanation

Post Ref.

Debit

GJ1

1 4 0 0

3-20

2 2 0

Explanation

Post Ref.

Debit

GJ1

35 0 0

DR CR Dr.

Credit 00

Post Ref.

Debit

GJ1

1 5 0 0

DR CR Dr.

Credit 00

Post Ref. GJ1 GJ1 GJ1

Debit

DR CR Dr.

Credit 00

Credit 1 5 0 0 3 5 0 5 0 0

9 0 0 0 8 4 0 0 8 1 0 0 1 2 1 0 0 1 1 8 8 0

00 00 00 00 00

Balance 1 4 0 0

Balance 3 5 0 0

141

ACCOUNT NO. Explanation

Balance

131

ACCOUNT NO. Explanation

DR CR Dr. Dr. Dr. Dr. Dr.

112

ACCOUNT NO.

ACCOUNTS PAYABLE Date 20XX June 1 15 29

00 00

ACCOUNT NO.

EQUIPMENT Date 20XX June 1

6 0 0 3 0 0 00

GJ1

SUPPLIES Date 20XX June 15

GJ1

ACCOUNTS RECEIVABLE Date 20XX June 3

Credit

111

00 00 00

Balance 1 5 0 0

211 DR CR Cr. Cr. Cr.

Balance 1 5 0 0 1 8 5 0 2 3 5 0

00 00 00

GROUP A PROBLEMS, Cont. P3-3A., Cont. A. ONE, CAPITAL Date 20XX June 1

ACCOUNT NO. Explanation

Post Ref.

Debit

Date 20XX June 5

9 0 0

Explanation

Post Ref.

Debit

GJ1

6 0 0

Post Ref.

Debit

GJ1

1 4 0 0 4 0 0 0

GJ1

Post Ref.

Debit

GJ1

3 0 0

TELEPHONE EXPENSE Date 20XX June 28

00 00

Explanation

Post Ref.

Debit

GJ1

2 2 0 0

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

5 0 0

Credit 00

Balance 6 0 0

Balance 1 4 0 0 5 4 0 0

00 00

511 Balance 3 0 0

521 DR CR Dr.

Credit

9 0 0

411

DR CR Dr.

Credit

Balance

312

DR CR Cr. Cr.

Credit

ACCOUNT NO.

ADVERTISING EXPENSE Date 20XX June 29

ACCOUNT NO. Explanation

DR CR Cr.

DR CR Dr.

Credit

ACCOUNT NO.

WAGE EXPENSE Date 20XX June 7

ACCOUNT NO.

PLACEMENT FEES EARNED Date 20XX June 3 9

Credit

GJ1

A. ONE, WITHDRAWALS

311

Balance 2 2 0 0

531 DR CR Dr.

Balance 5 0 0

3-21

GROUP A PROBLEMS, Cont. P3-3A., Cont. (c)

A. ONE PLACEMENT AGENCY TRIAL BALANCE JUNE 30, 20XX

Cash Accounts Receivable Supplies Equipment Accounts Payable A. One, Capital A. One, Withdrawals Placement Fees Earned Wage Expensive Telephone Expense Advertising Expense Totals

3-22

Dr. 11 8 8 0 0 0 1 4 0 0 00 3 5 0 00 1 5 0 0 00

Cr.

2 3 5 0 00 9 0 0 0 00 6 0 0 00 5 4 0 0 00 3 0 0 00 2 2 0 00 5 0 0 00 16 7 5 0 0 0

16 7 5 0 0 0

GROUP B PROBLEMS P3-1B. LUCAS’S CLEANING SERVICE GENERAL JOURNAL Date 20XX April

Account Title and Description 1

Cleaning Equipment Cash Lucas Arcand Capital Owner’s investment

Post Ref.

Page 1 Dr.

6 0 0 0 00 3 0 0 0 00 9 0 0 0 00

Cleaning Supplies Accounts Payable Bought supplies from Rex. Co. on account

5 0 0 00

Office Equipment Accounts Payable Equipment from Ross Stationery on account

4 0 0 00

5 0 0 00

4 0 0 00

Lucas Arcand Withdrawals Cash Personal withdrawal

6 0 00

Cash Cleaning Fees Earned Cash fees

6 0 0 00

Advertising Expense Accounts Payable Advertising bill received

Cr.

6 0 00

6 0 0 00

7 5 00 7 5 00

3-23

GROUP B PROBLEMS, Cont. P3-1B., Cont. LUCAS’S CLEANING SERVICE GENERAL JOURNAL Date 20XX April

Account Title and Description

3-24

Hydro Expense Accounts Payable Hydro bill received

Post Ref.

Page 2 Dr. 9 0 00 9 0 00

Accounts Receivable Cleaning Fees Earned Fees re Eastgate School on account

7 0 0 00

Salaries Expense Cash Paid salaries

4 0 0 00

Accounts Payable Cash Reduced amount owed Ross by half

2 0 0 00

Cr.

7 0 0 00

4 0 0 00

2 0 0 00

GROUP B PROBLEMS, Cont. P3-2B. (a, b)

BORANA’S ART STUDIO GENERAL JOURNAL

Date 20XX Apr.

Account Titles and Description 1

Page 1

Cash Borana Orth, Capital Owner investment

111

Prepaid Rent Cash Rent paid in advance

114

Equipment Accounts Payable Purchase of equipment on account from Martin Co.

131

Cash Art Fees Earned Fees earned for cash

111

Art Supplies Cash Purchase of supplies for cash

121

Accounts Receivable Art Fees Earned Fees earned on account

112

Salaries Expense Cash Salaries paid

521

Borana Orth, Withdrawals Cash Owner withdrawal

312

Electrical Expense Cash Paid electrical bill

511

Telephone Expense Cash Paid telephone bill

531

Dr. 15 0 0 0 0 0

15 0 0 0 0 0

311

1 6 0 0 00 1 6 0 0 00

111

1 3 0 0 00 1 3 0 0 00

211

3 0 0 0 00 3 0 0 0 00

411

3 5 0 00 3 5 0 00

111

3 3 0 0 00 3 3 0 0 00

411

7 0 0 00 7 0 0 00

111

1 0 0 0 00 1 0 0 0 00

111

5 0 00 5 0 00

111

Cr.

1 3 0 00 1 3 0 00

3-25

GROUP B PROBLEMS, Cont. P3-2B., Cont. GENERAL LEDGER OF BORANA’S ART STUDIO CASH

ACCOUNT NO.

Date 20XX Apr. 1 1 5 8 10 15 28 29

Explanation

Post Ref.

Debit

GJ1

15 0 0 0

Credit 00

GJ1 GJ1

3 0 0 0

GJ1 GJ1 GJ1 GJ1

Explanation

Post Ref.

Debit

GJ1

3 3 0 0

3-26

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

1 6 0 0

Credit 00

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

3 5 0

Credit 00

EQUIPMENT Date 20XX Apr. 3

00 00 00 00 00

Credit

ART SUPPLIES Date 20XX Apr. 8

3 5 0 7 0 0 1 0 0 0 5 0 1 3 0

ACCOUNT NO.

PREPAID RENT Date 20XX Apr. 1

GJ1

ACCOUNTS RECEIVABLE Date 20XX Apr. 9

1 6 0 0

DR CR Dr. Dr. Dr. Dr. Dr. Dr. Dr. Dr.

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

1 3 0 0

Credit 00

DR CR Dr.

111 Balance 15 0 0 0 13 4 0 0 16 4 0 0 16 0 5 0 15 3 5 0 14 3 5 0 14 3 0 0 14 1 7 0

00 00 00 00 00 00 00 00

112 Balance 3 3 0 0

114 Balance 1 6 0 0

121 Balance 3 5 0

131 Balance 1 3 0 0

GROUP B PROBLEMS, Cont. P3-2B., Cont. ACCOUNTS PAYABLE Date 20XX Apr. 3

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit 1 3 0 0

GJ1

BORANA ORTH, CAPITAL Date 20XX Apr. 1

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit 15 0 0 0 0 0

GJ1

BORANA ORTH, WITHDRAWALS Date 20XX Apr. 15

Explanation

Post Ref.

GJ1

Debit 1 0 0 000

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit 3 0 0 0 3 3 0 0

GJ1 GJ1

Explanation

00 00

DR CR Cr.

ACCOUNT NO. Post Ref.

Debit

GJ1

5 0

Credit 00

SALARIES EXPENSE Date 20XX Apr. 10

DR CR Dr.

Credit

ELECTRICAL EXPENSE Date 20XX Apr. 28

DR CR Cr.

ACCOUNT NO.

ART FEES EARNED Date 20XX Apr. 5 9

DR CR Cr.

DR CR Dr.

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

7 0 0

Credit 00

DR CR Dr.

211 Balance 1 3 0 0

311 Balance 15 0 0 0

312 Balance 1 0 0 0

411 Balance 3 0 0 0 6 3 0 0

00 00

511 Balance 5 0

521 Balance 7 0 0

3-27

GROUP B PROBLEMS, Cont. P3-2B., Cont. TELEPHONE EXPENSE Date 20XX Apr. 29

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

1 3 0

Credit 00

DR CR Dr.

531 Balance 1 3 0

(c) BORANA’S ART STUDIO TRIAL BALANCE APRIL 30, 20XX Dr. Cash Accounts Receivable Prepaid Rent Art Supplies Equipment Accounts Payable Borana Orth, Capital Borana Orth, Withdrawals Art Fees Earned Electrical Expense Salaries Expense Telephone Expense Totals

3-28

Cr.

14 1 7 0 00 3 3 0 0 00 1 6 0 0 00 3 5 0 00 1 3 0 0 00 1 3 0 0 00 15 0 0 0 00 1 0 0 0 00 6 3 0 0 00 5 0 00 7 0 0 00 1 3 0 00 22 6 0 0 0 0

22 6 0 0 0 0

GROUP B PROBLEMS, Cont. P3-3B. LUUK’S AUTO SPA GENERAL JOURNAL Date 20XX June

Account Title and Description 1

Post Ref.

Cash L. Saunders, Capital Owner’s investment

111

Cleaning Equipment Cash Purchased cleaning equipment for cash

141

Accounts Receivable Cleaning Fees Earned Fees to Avon Co. on account

112

Wages Expense Cash Paid wages

511

L. Saunders Withdrawals Cash Personal withdrawals

321

Cash Cleaning Fees Earned Cash fees

111

Cleaning supplies Cash Bought cleaning supplies for cash

131

Telephone Expense Accounts Payable Telephone bill owed

521

Advertising Expense Cash Advertising bill paid

531

Dr.

Cr.

10 0 0 0 0 0 10 0 0 0 0 0

311

3 5 0 0 00 3 5 0 0 00

111

2 5 0 0 00 2 5 0 0 00

411

7 0 0 00 7 0 0 00

111

1 0 0 00 1 0 0 00

111

1 9 0 0 00 1 9 0 0 00

411

5 0 0 00

111

5 0 0 00 1 5 5 00 1 5 5 00

211

2 5 0 00 2 5 0 00

3-29

GROUP B PROBLEMS, Cont. P3-3B., Cont. GENERAL LEDGER OF LUUK’S AUTO SPA NAME:

CASH

Date 20XX June

ACCOUNT NO. Explanation

1 4 8 11 12 15 29

GJ1

NAME:

CLEANING EQUIPMENT

Date 20XX

Explanation 4

Date 20XX June

3-30

Balance

Dr.

10 0 0 0 9 5 0 0 5 8 0 0 5 7 0 0 7 6 0 0 7 1 0 0 6 8 5 0

Dr. Dr. Dr. Dr. Dr.

ACCOUNT NO. Post Ref.

Debit

GJ1

2 5 0 0 00

Credit

Post Ref.

Debit

GJ1

5 0 0 00

Post Ref.

Debit

GJ1

3 5 0 0 00

Credit

Dr.

2 5 0 0 00

GJ1

Debit

131

DR CR

Balance

Dr.

5 0 0 00

141

DR CR

Balance

Dr.

3 5 0 0 00

ACCOUNT NO. Post Ref.

112 Balance

ACCOUNT NO.

ACCOUNTS PAYABLE Explanation

Credit

00 00 00 00 00 00 00

DR CR

ACCOUNT NO. Explanation

NAME:

DR CR

Dr.

5 0 0 00 2 5 0 00

SUPPLIES

June

1 9 0 0 00

GJ1

Credit 3 5 0 0 00 7 0 0 00 1 0 0 00

GJ1

Explanation

June

10 0 0 0 0 0

GJ1

Date 20XX

GJ1 GJ1

ACCOUNTS RECEIVABLE

NAME:

Debit

GJ1

NAME:

June

Post Ref.

111

211

Credit

DR CR

Balance

1 5 5 00

Cr.

1 5 5 00

GROUP B PROBLEMS, Cont. P3-3B., Cont. NAME:

L. SAUNDERS, CAPITAL

Date 20XX

Explanation

June

NAME: Date 20XX

NAME:

CLEANING FEES EARNED

Date 20XX

Explanation

5 12

Date 20XX June

GJ1

1 0 0 00

Post Ref.

Debit

NAME:

ADVERTISING EXPENSE

Date 20XX

Explanation

Balance

10 0 0 0 0 0

Cr.

10 0 0 0 0 0

Credit

Post Ref.

Debit

GJ1

7 0 0 00

Balance

Dr.

1 0 0 00

Debit

GJ1

1 5 5 00

DR CR

Balance

2 5 0 0 00 1 9 0 0 00

Cr.

2 5 0 0 00 4 4 0 0 00

Cr.

Credit

Debit

GJ1

2 5 0 00

Credit

511

DR CR

Balance

Dr.

7 0 0 00

521

DR CR

Balance

Dr.

1 5 5 00

ACCOUNT NO. Post Ref.

411

Credit

ACCOUNT NO. Post Ref.

321

DR CR

ACCOUNT NO.

TELEPHONE EXPENSE Explanation

DR CR

ACCOUNT NO.

WAGES EXPENSE

June 28

June 29

Debit

GJ1

Date 20XX

Post Ref.

311

Credit

ACCOUNT NO.

GJ1

Explanation

NAME:

Debit

L. SAUNDERS, WITHDRAWALS Explanation

NAME:

Post Ref. GJ1

June 11

June

ACCOUNT NO.

531

DR CR

Balance

Dr.

2 5 0 00

3-31

GROUP B PROBLEMS, Cont. P3-3B., Cont. LUUK’S AUTO SPA TRIAL BALANCE JUNE 30, 20XX Cash Accounts Receivable Cleaning Supplies Cleaning Equipment Accounts Payable L. Saunders, Capital L. Saunders, Withdrawals Cleaning Fees Earned Wages Expense Telephone Expense Advertising Expense Totals

3-32

$6 8 5 0 00 2 5 0 0 00 5 0 0 00 3 5 0 0 00 $ 1 5 5 00 10 0 0 0 0 0 1 0 0 00 4 4 0 0 00 7 0 0 00 1 5 5 00 2 5 0 00 $14 5 5 5 0 0

$14 5 5 5 0 0

GROUP C PROBLEMS P3-1C. a. MONIQUE’S OFFICE SERVICES TRIAL BALANCE MARCH 31, 20XX Account Title Cash Office Supplies Prepaid Insurance Office Equipment Accounts Payable M. VanWyk, Capital M. VanWyk, Withdrawals Office Services Earned Wage Expense Rent Expense Totals

Debit $11 5 4 0 0 0 6 6 0 00 3 7 5 0 00 18 5 0 0 0 0

Credit

$18 5 0 0 0 0 5 0 0 0 00 3 0 5 0 00 20 0 0 0 0 0 1 0 0 0 00 5 0 0 0 00 $43 5 0 0 0 0

$43 5 0 0 0 0

b. 1. Purchased $660 of office supplies for cash. 2. Paid $3,750 insurance premium in advance. 3. Purchased $18,500 office equipment on credit. 4. Monique VanWyk invested $5,000 cash in the business. 5. Monique VanWyk withdrew $3,050 cash from the business for personal use. 6. Earned $20,000 of office services and was paid in cash. 7. Paid $5,000 rent expense with cash. 8. Paid wages of $1,000 with cash. $5,000 − 660 − 3750 − 3050 + 20000 − 5000 − 1000 = 11,540 for Cash

3-33

GROUP C PROBLEMS, Cont. P3-2C. a. & b.

MATT NEPOOSE INVESTIGATIVE AGENCY GENERAL JOURNAL

Date 20XX June

Account Title and Description 3

3-34

Post Ref.

Cash M. Nepoose, Capital Owner investment

111

Office Equipment Cash Purchased office equipment

141

Accounts Receivable Investigative Fees Earned Fees on account

112

M. Nepoose, Withdrawals Cash Personal withdrawals

321

Cash Investigative Fees Earned Cash Fees

111

Supplies Cash Bought supplies

131

Wages Expense Cash Paid wages

511

Cash Accounts Receivable Received partial payment on account

111

Rent Expense Accounts Payable Rent bill received

521

Advertising Expense Cash Advertising bill paid

531

Page 1 Dr. 16 5 0 0 0 0 16 5 0 0 0 0

311

5 1 0 0 00 5 1 0 0 00

111

3 2 0 0 00 3 2 0 0 00

411

1 0 7 00 1 0 7 00

111

9 7 5 00 9 7 5 00

411

2 7 0 00 2 7 0 00

111

1 1 0 0 00 1 1 0 0 00

111

1 6 0 0 00 1 6 0 0 00

112

1 3 0 00 1 3 0 00

211

111

Cr.

5 2 5 00 5 2 5 00

GROUP C PROBLEMS, Cont. P3-2C., Cont. GENERAL LEDGER OF MATT NEPOOSE INVESTIGATIVE AGENCY NAME:

CASH

Date 20XX June

ACCOUNT NO. Post Ref.

Debit

3 4 10 11 14 18 25

GJ1

16 5 0 0 0 0

GJ1

Explanation

GJ1

Date 20XX

Explanation

7 25

Date 20XX

June

June 27

Dr.

16 5 0 0 11 4 0 0 11 2 9 3 12 2 6 8 11 9 9 8 10 8 9 8 12 4 9 8

Dr.

11 9 7 3 0 0

Dr. Dr. Dr. Dr.

ACCOUNT NO. Post Ref.

Debit

GJ1

3 2 0 0 00

Credit 1 6 0 0 00

Post Ref.

Debit

GJ1

2 7 0 00

OFFICE EQUIPMENT

Date 20XX

Balance

Post Ref.

Debit

GJ1

5 1 0 0 00

Credit

Dr.

3 2 0 0 00 1 6 0 0 00

Dr.

GJ1

Debit

131

DR CR

Balance

Dr.

2 7 0 00

141

DR CR

Balance

Dr.

5 1 0 0 00

ACCOUNT NO. Post Ref.

112 Balance

ACCOUNT NO.

ACCOUNTS PAYABLE Explanation

Credit

00 00 00 00 00 00 00

DR CR

ACCOUNT NO.

Explanation

NAME:

5 2 5 00

SUPPLIES

June 14

Date 20XX

1 6 0 0 00

GJ1

Explanation

NAME:

DR CR

Dr.

2 7 0 00 1 1 0 0 00

GJ1

ACCOUNTS RECEIVABLE

NAME:

9 7 5 00

GJ1

NAME:

June

5 1 0 0 00 1 0 7 00

GJ1 GJ1

Credit

111

211

Credit

DR CR

Balance

1 3 0 00

Cr.

1 3 0 00

3-35

GROUP C PROBLEMS, Cont. P3-2C., Cont. NAME:

M. NEPOOSE, CAPITAL

Date 20XX June

Explanation 3

NAME:

Debit

GJ1

Explanation

June 10

NAME:

Explanation

7 11

NAME:

Post Ref.

Debit

GJ1

1 0 7 00

Post Ref.

Debit

GJ1 GJ1

Explanation

June 18

NAME:

Explanation

June 27

NAME:

ADVERTISING EXPENSE

Date 20XX

Explanation

June 28

DR CR

Balance

16 5 0 0 0 0

Cr.

16 5 0 0 0 0

Credit

Post Ref.

Debit

GJ1

1 1 0 0 00

Balance

Dr.

1 0 7 00

Debit

GJ1

1 3 0 00

DR CR

Balance

3 2 0 0 00 9 7 5 00

Cr.

3 2 0 0 00 4 1 7 5 00

Cr.

Credit

Debit

GJ1

5 2 5 00

Credit

511

DR CR

Balance

Dr.

1 1 0 0 00

521

DR CR

Balance

Dr.

1 3 0 00

ACCOUNT NO. Post Ref.

411

Credit

ACCOUNT NO. Post Ref.

321

DR CR

ACCOUNT NO.

RENT EXPENSE

Date 20XX

Credit

ACCOUNT NO.

WAGES EXPENSE

Date 20XX

311

ACCOUNT NO.

INVESTIGATIVE FEES EARNED

Date 20XX

3-36

Post Ref.

M. NEPOOSE, WITHDRAWALS

Date 20XX

June

ACCOUNT NO.

531

DR CR

Balance

Dr.

5 2 5 00

GROUP C PROBLEMS, Cont. P3-2C., Cont. c. MATT NEPOOSE INVESTIGATIVE AGENCY TRIAL BALANCE JUNE 30, 20XX Cash Accounts Receivable Supplies Office Equipment Accounts Payable M. Nepoose, Capital M. Nepoose, Withdrawals Investigative Fees Earned Wages Expense Rent Expense Advertising Expense Totals

$ 11 9 7 3 1 6 0 0 2 7 0 5 1 0 0

00 00 00 00 $ 1 3 0 00 16 5 0 0 0 0

1 0 7 00 4 1 7 5 00 1 1 0 0 00 1 3 0 00 5 2 5 00 $20 8 0 5 0 0

$20 8 0 5 0 0

3-37

GROUP C PROBLEMS, Cont. P3-3C. HAMPTON CO. TRIAL BALANCE JUNE 30, 20XX Cash Accounts Receivable Office Supplies Prepaid Rent Office Equipment Notes Payable Accounts Payable D. Houle, Capital D. Houle, Withdrawals Office Sales Wages Expense Rent Expense Utilities Expense Totals

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

00 00 00 00 00 $2 4 0 0 0 0 3 4 8 0 00 11 5 6 0 0 0

1 1 0 0 00 5 7 2 0 00 2 6 0 0 00 9 4 0 00 2 6 0 00 $23 1 6 0 0 0

$23 1 6 0 0 0

Calculations: Cash (3260 − 180 + 400), A/R (5660 + 120), Office supplies (120 + 60 + 60), Prepaid rent (180 + 180), A/P (8800 − 5320), Withdrawals (700 + 200 + 200) Advice to Ken: Paul seems to require more training/experience before he can be trusted with the bookkeeping. Perhaps a course at a local college or technical institute would help. Advice to Paul: You need to be much more careful when doing bookkeeping. Pay strict attention to the rules of debit and credit, and exercise care when posting. Consider some formal training in bookkeeping procedures.

3-38

GROUP C PROBLEMS, Cont. P3-4C. 1. Cash in trial balance is understated. Trial balance will not balance. 2. Computer supplies understated and computer equipment overstated. Trial balance will balance. 3. Wage expense overstated by $8 and trial balance will not balance. 4. Computer supplies understated and computer sales understated. Trial balance will balance. 5. Accounts payable is overstated and trial balance will not balance. Advice to Seleste: These errors can be prevented in the future by ensuring that the bookkeeping is done with care and attention to the rules of debit and credit. Also the posting of all amounts should be carefully thought out and carried through with precision. Some errors, such as the debit to Computer Supplies instead of Computer Equipment, may still slip through (no one is perfect), but the result should be a decrease in the number of errors. Errors such as this one can be caught at year-end or period-end. See the next chapter for details.

SOLUTIONS TO ETHICAL CONSIDERATIONS EC3-1. Is It Ethical to Record the Transactions Directly into the General Ledger Accounts? Answers will vary, but here are some discussion points. The general ledger plays an important role in the accounting process. Most businesses use a double-entry financial accounting system where transactions are first recorded in a general journal and later in the general ledger. It might be easier to simply record transactions directly into the general ledger, thereby passing about half of the typical paperwork needed to record accounting transactions. However, this may result in certain ethical problems.

Generally Accepted Accounting Principles (GAAP) Accountants and businesses are generally expected to follow the set of guidelines known as the generally accepted accounting principles, or GAAP. These principles are fairly broad in scope and should not necessarily be seen as a set of rules that businesses and accountants must follow. However, the fact that these guidelines are generally accepted in the business community means that deviation from them can be looked upon as unethical. The double-entry method of accounting is at the heart of GAAP and is central to ethics in the financial accounting world.

General Ledger The primary purpose of the general ledger is to record and classify the information found in the general journal. The general journal keeps a chronological account of each financial transaction that takes place but does not usually separate these into different types of transactions. Instead, this takes place in the general ledger entries. Bypassing the general journal could result in inaccuracies if the chronology of the transactions is overlooked. General journal entries usually take place at the time of the transaction or soon thereafter. Entering transactions in the general ledger later may require guesswork or may be wrong because of faulty memory. Guessing and speculation are contrary to the basic accounting principles, whereas recording precision is central to those principals.

Accuracy One reason that both entries are usually made is to ensure accuracy. It can actually be faster to record the general journal entry first and then go back later to do the general ledger. Going straight to the general ledger each time requires greater concentration and accuracy. Making one mistake here can throw off your entire account balance and throw your financial world into a tizzy. This may even cause the temptation to "fudge" the numbers so that they match up with your other financial records. This type of number finagling would also be considered unethical by those in the accounting world.

Entries Another possible ethical concern that arises from a single-entry system is that, often, only one person is controlling the financial transactions and entries that are recorded. Without a system of checks and balances in place to ensure entry accuracy, it could be possible to make the numbers say whatever you want them to say. Therefore, if possible, always have a bookkeeper or secretary be responsible for one set of entries and someone else for the other. This will help to maintain the integrity of the accounting system and avoid any ethics violations.

3-39

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS3-1. Analysis of Financial Statements—Roots Corporation 1. Fiscal period The fiscal year of the Company consists of a 52 or 53 week period ending the closest Saturday to January 31 of each year. The current and comparative fiscal periods for the consolidated financial statements contain 52 weeks 2. From page 10 of the 2020 Annual Report

Seasonality We experience seasonal fluctuations in our retail business, as we generate a meaningful portion of our sales and earnings in our third and fourth fiscal quarters. Our working capital requirements generally increase in the periods preceding these peak periods, and it is not uncommon for our EBITDA to be negative in the first two fiscal quarters. The average portion of our annual sales generated during each quarter of a fiscal year over the last three completed fiscal years is outlined in the following table: First fiscal quarter Second fiscal quarter Third fiscal quarter Fourth fiscal quarter Annual Total

14% 16% 27% 43% 100%

3. All amounts are presented in thousands of Canadian dollars, unless otherwise indicated. 4. From page 54 of the 2020 Annual Report: Revenue includes sales to customers through retail stores operated by the Company and through eCommerce. Sales to customers through retail stores are recognized at the time of purchase, net of a provision for returns. eCommerce sales to customers are recognized at the time of delivery, net of a provision for returns. The provision for returns is estimated based on the last 12 months’ return rate for retail stores and eCommerce sales, respectively. Revenue also includes sales to the Company’s international partner and other corporate customers, which are recognized at the time of shipment or receipt, depending on the specific contractual terms with each customer. Contractually, the Company’s international partner and wholesale partners are unable to return goods purchased from the Company. Royalty revenue is included in sales and is recognized on an accrual basis in accordance with the various contractual agreements, based on the financial results as reported by the Company’s international partner and other third-party licensees, and when collectability is reasonably determined. The Company sells gift cards to customers and recognizes revenue as gift cards are redeemed. The Company also recognizes gift card breakage if the likelihood of gift card redemption by the customer is considered to be remote. The liability associated to gift cards is recorded as deferred revenue on the consolidated statement of financial position. 5. Here is the information from the Annual Report – students should be able to summarize this data.

KEY BUSINESS DEVELOPMENTS COVID-19 In December 2019, COVID-19 surfaced in Wuhan, China, spreading quickly, resulting in the World Health Organization declaring a global emergency on January 30, 2020 with respect to the outbreak, which was subsequently characterized as a pandemic on March 11, 2020, leading many countries to take drastic measures to manage the spread of the virus. The worldwide pandemic, along with ensuing recommendations and restrictions imposed by government authorities to help curb the spread of COVID-19, has significantly impacted the operations and financial performance of the Company.

Operational Response In March 2020, we temporarily closed our corporate retail stores in Canada and the United States in response to COVID-19, prioritizing the health and safety of our customers and employees and helping to manage the spread of the virus. In accordance with local government and health organization guidelines, we began a phased reopening of our corporate retail stores, under reduced operating hours and other procedural and capacity provisions, starting on May 15, 2020. During Q4 2020, in response to a second wave of government mandated lockdowns, we temporarily closed our corporate retail stores within certain regions of Canada. As of January 30, 2021, 69 of our corporate retail stores in Ontario and Québec remained temporarily closed under local government guidelines. We will continue to adhere to all future guidelines provided by the local government and health organizations. See also “Subsequent Events” for further details on store closures in relation to COVID-19. 6. As permitted by government regulations, through the pandemic we continue to operate our global eCommerce business and our distribution centre, with strict cleaning protocols and social distancing measures in place. We have also continued to operate our wholesale, business-tobusiness and licensing business, as well as our head office functions under a “work-from-home” model. In addition, we repurposed a portion of our Company-operated leather factory for nonmedical face mask production and donated a portion of the proceeds to charitable organizations across Canada. In March 2020, our international operating partner in Asia temporarily closed select stores in China and reduced hours across the remainder of its store portfolio in China, Hong Kong, and Taiwan. All Roots stores operated by our international operating partner in Asia were reopened during Q1 2020.

3-40

Financial Performance & Liquidity Impact As a result of the significant negative impact that COVID-19 has had on the global economy, consumer confidence, and the retail operating environment, our consolidated financial results in F2020 have been materially impacted. The temporary corporate retail store closures in F2020, adjusting consumer behaviours in response to COVID-19, capacity restrictions and adherence to strict social distancing practices since reopening have caused our F2020 corporate retail store sales to be below prior year sales. Store sales decline has been partially offset by an increase in eCommerce sales year-over-year as a result of our omni-channel platform. Since March 2020, we have implemented many strategies to reduce costs and manage liquidity to overcome the negative impacts of the pandemic, including the following: • Substantially reduced selling, general and administrative expenses (“SG&A expenses”), capital expenditures and discretionary spending across all areas of the business; • Realized personnel cost savings related to temporary layoffs as a result of store closures, temporary reductions in compensation to the Board and head office employees, hiring and salary freezes, and the elimination of F2019 bonuses; • Reduced and adjusted forward inventory purchases; • Worked closely with our partners and suppliers, as well as service and logistics providers, to identify further areas of cost reduction and/or payment deferral; • Worked with our landlords to abate or defer a portion of our corporate retail store rent during the store shut down and/or subsequent periods; and • Evaluated, qualified and applied for applicable government relief programs, including the Canada Emergency Wage Subsidy (“CEWS”) program and the Canada Emergency Rent Subsidy (“CERS”) program. See Note 20 in our Annual Financial Statements for further details. On March 11, 2020, COVID-19 was declared a pandemic by the World Health Organization, leading many countries to take drastic measures to manage the spread of the virus. The worldwide pandemic, along with ensuing recommendations and restrictions imposed by government authorities to help curb the spread of COVID-19, has significantly impacted the operations and financial performance of the Company. Since March 2020, in accordance with local government and health organization guidelines, the Company has experienced intermittent government mandated closures of its corporate retail stores and partner-operated stores, as well as capacity restrictions. The Company continued to operate its global eCommerce business and its distribution centre, with strict cleaning protocols and social distancing measures in place, successfully leveraging its omni-channel platform to generate substantial online sales growth that has partially offset the impact of retail store closures, constraints and store traffic declines. The Company also continued to operate its wholesale, business-to-business and licensing business, as well as its head office functions under a primarily “work-from-home” model. As a result of the significant negative impact that COVID-19 has had on the global economy, consumer confidence, and the retail operating environment, the Company’s consolidated financial results in fiscal 2020 have been materially impacted. Since March 2020, the Company has implemented many strategies to reduce costs and manage liquidity to overcome the negative impacts of the pandemic, including the following: • Substantially reduced selling, general and administrative costs, capital expenditures and discretionary spending across all areas of the business; • Realized personnel cost savings related to temporary layoffs as a result of store closures, temporary reductions in compensation to the Board and head office employees, hiring and salary freezes, and the elimination of fiscal 2019 bonuses; • Reduced and adjusted forward inventory purchases; • Worked closely with partners and suppliers, as well as service and logistics providers, to identify further areas of cost reduction and/or payment deferral; • Worked with landlords to abate or defer a significant portion of corporate retail store rent during the store shut down or subsequent period; and • Evaluated, qualified and applied for applicable government relief programs, including the Canada Emergency Wage Subsidy (“CEWS”) program and the Canada Emergency Rent Subsidy (“CERS”) program. See Note 20. Management recognizes that while it has implemented an action plan to best navigate the impacts of COVID-19 on the business, there is still uncertainty with respect to the duration and extent to which the pandemic may adversely impact the Company. The Company expects to have access to borrowings and other forms of support to be available to businesses impacted by this pandemic. However, to the extent that COVID-19 continues, or further public restrictions are imposed by the government, the degree to which the Company’s operations could be affected may increase. AFS3-2. Analysis of Financial Statements—Company of Your Choice Answers will vary depending on the company chosen.

SOLUTIONS TO ACCOUNTING OPPORTUNITIES AO3-1 Opportunities for Accounting Positions Answers will vary.

3-41

CONTINUING PROBLEM 1.

PRECISION COMPUTER CENTRE—GENERAL JOURNAL Date 20X1

June

Account Title and Description 3

Post Ref.

Prepaid Rent Rent Expense Cash (Cheque #210) Rent paid for June, July and August 20X1

1025

Cash Service Revenue Cash fees for Invoice 12671

1000

Cash Service Revenue Cash fees for Invoice 12672

1000

Accounts Payable Cash

2000

5020

Page 1 Dr.

Cr.

8 0 0 00 4 0 0 00 1 2 0 0 00

1000

3 2 5 00 3 2 5 00

4000

2 2 0 00 2 2 0 00

4000

1 5 5 00 1 5 5 00

1000

Paid May telephone bill 12

3-42

Cash Accounts Receivable Fees from Jeannine Sparks

1000

Accounts Payable Cash Paid Computer Connection account due

2000

Computer Shop Equipment Cash Paid Multi-Systems PO 200

1080

Phone Expense Accounts Payable June phone bill received

5040

Utilities Expense Accounts Payable June utilities bill received

5030

Cash Service Revenue Cash fees for Invoice 12673

1000

Accounts Receivable Service Revenue Fees to Dr. Anthony Pitale on account, re: Invoice 12674

1020

8 5 0 00 8 5 0 00

1020

2 0 0 00 2 0 0 00

1000

1 2 0 0 00 1 2 0 0 00

1000

6 5 00 6 5 00

2000

9 5 00 9 5 00

2000

1 4 0 00 1 4 0 00

4000

2 6 0 0 00 2 6 0 0 00

CONTINUING PROBLEM, Cont. 2.

GENERAL LEDGER OF PRECISION COMPUTER CENTRE

NAME: CASH Date 20X1 June

Explanation

1 3 5 8 10 12 15

Balance

GJ1

2 0 0 00

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

GJ1

1 2 0 0 00

1 5 0 5 00

GJ1

1 6 4 5 00

GJ1 GJ1 GJ1

Explanation

1 12 30

NAME:

Post Ref.

Debit

NAME:

8 5 0 00 2 6 0 0 00

Post Ref.

Debit

GJ1

8 0 0 00

Post Ref.

Debit

Balance

Date 20X1

Explanation

NAME:

Post Ref.

Debit

Credit

Balance GJ1

Date 20X1

Explanation Balance

8 5 0 00 0 2 6 0 0 00

1 2 0 0 00

Balance

8 0 0 00

Debit

Balance

4 5 0 00

1080

DR CR

Balance

1 2 0 0 00 2 4 0 0 00

Credit

1030

DR CR

ACCOUNT NO. Post Ref.

1025

DR CR

ACCOUNT NO.

OFFICE EQUIPMENT

Credit

1020 Balance

Credit

00 00 00 00 00 00 00

DR CR

ACCOUNT NO.

COMPUTER SHOP EQUIPMENT

1 17

Credit

ACCOUNT NO. Explanation

1 4 0 00

SUPPLIES

Date 20X1

ACCOUNT NO.

GJ1

June

8 5 0 00

PREPAID RENT

NAME:

1 5 5 00

GJ1

Explanation

Dr Dr

Balance

Date 20X1 June

3 2 5 00 2 2 0 00

GJ1

Date 20X1

July

DR CR

Credit 1 2 0 0 00

GJ1

ACCOUNTS RECEIVABLE

June

Debit

1000

Balance

NAME:

June

Post Ref.

ACCOUNT NO.

1090

DR CR

Balance

6 0 0 00

3-43

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE, Cont. NAME:

ACCOUNTS PAYABLE

Date 20X1 June

Explanation

1 10 15 19 24

NAME:

GJ1 GJ1 GJ1

Explanation

NAME:

Explanation

NAME:

Post Ref.

Debit

Credit

Post Ref.

Debit

Credit

Balance

Explanation

00 00 00 00

Post Ref.

Debit

GJ1

4 0 0 00

Credit

00 00 00 00 00

3000

DR CR

Balance

4 5 0 0 00

3010

DR CR

Balance

1 0 0 00

4000

DR CR

Balance

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

Cr Cr Cr Cr

00 00 00 00 00

5010

DR CR

Balance

1 4 0 0 00

ACCOUNT NO.

Balance

ACCOUNT NO.

RENT EXPENSE

1 3

Credit

3 2 5 2 2 0 1 4 0 2 6 0 0

GJ1

Date 20X1

ACCOUNT NO.

GJ1

Explanation

3-44

Debit

GJ1

Date 20X1

June

Post Ref.

GJ1

ADVERTISING EXPENSE

Credit

Balance

NAME:

4 0 5 2 5 0 5 0 1 1 5 2 1 0

ACCOUNT NO.

SERVICE REVENUE

1 5 8 26 30

June

Debit

Balance

Date 20X1

Cr Cr

Balance

Date 20X1

Balance

ACCOUNT NO. Post Ref.

2000

DR CR

6 5 00 9 5 00

T. FREEDMAN, WITHDRAWALS

Credit

1 5 5 00 2 0 0 00

GJ1

Explanation

NAME:

June

Debit

T. FREEDMAN, CAPITAL

June

Post Ref.

Balance

Date 20X1 June

ACCOUNT NO.

5020

DR CR

Balance

4 0 0 00 8 0 0 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE, Cont. NAME:

UTILITIES EXPENSE

Date 20X1 June

Explanation

1 24

NAME:

GJ1

Explanation

NAME:

9 5 00

Post Ref.

Debit

GJ1

Explanation

6 5 00

Explanation 1

NAME:

Post Ref.

Debit

Credit

Post Ref.

Debit

Credit

Balance

1 5 5 00 2 2 0 00

DR CR

Debit

Credit

5050 Balance

5060

DR CR

Balance

1 5 0 00

ACCOUNT NO. Post Ref.

5040

DR CR

ACCOUNT NO.

POSTAGE EXPENSE Explanation

8 5 00 1 8 0 00

Balance

Date 20X1

ACCOUNT NO.

INSURANCE EXPENSE

Date 20X1

Balance

Credit

5030

DR CR

ACCOUNT NO.

SUPPLIES EXPENSE

NAME:

Credit

Balance

Date 20X1

June

Debit

PHONE EXPENSE

1 19

June

Post Ref.

Balance

Date 20X1 June

ACCOUNT NO.

DR CR Dr

5070 Balance 5 0 00

3-45

CONTINUING PROBLEM, Cont. 3.

PRECISION COMPUTER CENTRE TRIAL BALANCE JUNE 30, 20X1

Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment Accounts Payable T. Freedman, Capital T. Freedman, Withdrawals Service Revenue Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense

1 6 4 5 00 2 6 0 0 00 8 0 0 00 4 5 0 00 2 4 0 0 00 O 6 0 0 00 2 1 0 00 4 5 0 0 00 1 0 0 00 6 6 8 5 00 1 4 0 0 00 8 0 0 00 1 8 0 00 2 2 0 00 1 5 0 00 5 0 00

Totals

11 3 9 5 0 0

PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE THREE MONTHS ENDING JUNE 30, 20X1

Revenue: Service Revenue Operating Expenses: Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense Total Operating Expenses Net Income

3-46

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

CONTINUING PROBLEM, Cont. 4., Cont. PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE THREE MONTHS ENDING JUNE 30, 20X1 T. Freedman, Capital May 1, 20X1 Net Income Less: T. Freedman, Withdrawals

$4 5 0 0

Net Increase in Capital

3 7 8 5

T. Freedman, Capital July 31, 20X1

$8 2 8 5

$3 8 8 5 0 0 1 0 0 00

PRECISION COMPUTER CENTRE BALANCE SHEET JUNE 30, 20X1 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets: Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment Total Assets

Liabilities: $1 6 4 5 2 6 0 0 8 0 0 4 5 0

0 0 Accounts Payable 00 0 0 Owner’s Equity: 00 T. Freedman, Capital

$ 2 1 0 00

8 2 8 5 00

2 4 0 0 00 6 0 0 00 Total Liabilities and $8 4 9 5 00 Owner’s Equity

$8 4 9 5 00

3-47

4 The Accounting Cycle Continued: Preparing Worksheets and Financial Statements

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Disagree; worksheets are optional (and often used), but are not required. 2. The purpose of adjusting is to update accounts to the latest balance before financial reports are prepared, thus presenting an up-to-date picture in the financial reports. 3. The internal transactions make it necessary to make adjustments. Example: Rent expiring over a period of time. 4. An example would be an depreciation adjustment: Depreciation Expense goes on the income statement and Accumulated Depreciation goes on the balance sheet. 5. We need the Accumulated Depreciation account because it records a history of depreciation that has been accumulated and aids in preserving the original cost of an asset in the ledger. 6. False; Depreciation Expense goes on the income statement. 7. Disagree; cost of equipment remains the same. 8. Accrued salaries are salaries that are unpaid and that are unpaid and so far have not been journalized. They therefore need to be recorded in this accounting period (and thus will need to be recorded by an adjustment) and will not come due for payment until the next accounting period. 9. The balances of accounts, which appear on formal reports, were accumulated by the recording of debits or credits; it is not necessary to repeat this on the formal statements. 10. The worksheet provides all the data to prepare the financial statements. We start with the trial balance numbers and then add adjustments. Those adjusted numbers are then carried over into either the Income Statement column and the Balance Sheet columns. The accountant would take the information from the Income Statement and Balance Sheet to produce formal Financial Statements. Remember: The worksheet has the old figure for capital, which is updated when the statement of owner’s equity and balance sheet are prepared. 11. All expenses that are incurred in the old year (whether paid or not) should be shown. Discussions should centre around expenses that could be postponed until next year to take advantage of accounting rules. Accountants are required to follow GAAP principles even though it might mean losing the client as a customer. This request is unethical and the customer should be made aware of this.

4-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. a.

Date

Account Name

Sept. 30 Salaries Expense

Debit

Credit

20,000

Salaries Payable

20,000

Record accrued payroll b.

Date Oct.

Account Name 6

Salaries Payable

Debit

Credit

20,000

Cash

20,000

Pay salaries

CDE2. a.

Date Jan.

Account Name 2

Prepaid Insurance

Debit

Credit

1,200

Cash

1,200

Record payment of annual insurance policy b.

Date Jan.

Account Name

31 Insurance Expense

Debit 100

Prepaid Insurance

100

Record 1 month of insurance CDE3. a. b. c.

4-2

Equipment. Accumulated Depreciation, Equipment 1 Accounts Affected

2 Category

4 Rules

5 T-Account Acc. Depn., Equip. 2,000 2,000

Acc. Depn., Equipment

A (C)

Cr.

Depn. Exp., Equip.

Exp.

Dr.

Equipment

$9,000 Dr.

Acc. Depn., Equip.

4,000 Cr.

Depn. Exp., Equip.

2,000 Dr.

Credit

Depn. Exp., Equip. 2,000

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont.

CDE4. a.

Date Sept.

Account Name 6

Debit

Supplies Cash Record purchase of supplies

220

Sept. 19 Supplies Cash Record purchase of supplies

370

Date

Account Name

Sept. 30 Supplies Expense

Credit 220

370

Debit

Credit

$630

Supplies

$630

Record use of supplies during September Supplies Beg Bal

470

Purchases

220

Purchases

370

End Bal

430

630

Supplies Used

4-3

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE5.

a. b. c. d. e. f. g.

IC BC BD BD BC ID BC

h. i. j. k. l. m. n.

BD BD ID BC ID BC BC

CDE6.

On the worksheet, Equipment was in debit column and Accumulated Depreciation is in credit column. Formal reports have no debits and credits. Inside columns are only for subtotalling on the formal reports. A. Equipment and Accumulated Depreciation are listed separately on the worksheet, not the net difference. B. The $3 of total liabilities is not on the worksheet since each one is shown separately.

CDE7.

(Note: Memo line explanations omitted intentionally)

Date 20XX Dec

GENERAL JOURNAL Post Ref.

Account Title and Description

31 Insurance Expense

514

Store Supplies

116

31 Depreciation Expense, Store Equipment

4 00 4 00 9 00 9 00

516

Accrued Salaries

5 00

210

Prepaid Insurance 115

Accrued Salaries

Store Supplies GJ3

6 00

119

31 Salaries Expense

6 00

512

Accumulated Depreciation, Store Equipment

GJ3

Cr.

115

31 Supplies Expense

Dr.

510

Prepaid Insurance

Page 3

GJ3

116 4

Accumulated Depreciation, Store Equipment 119

Insurance Expense GJ3

5 00

210 5

Supplies Expense GJ3

4-4

6 Salaries Expense

Depreciation Expense, Store Equipment 512

GJ3

510

13 GJ3

514

GJ3

9 5

516

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE8.

1. The number of years over which an asset is depreciated is the asset’s useful life. 2. A contra-asset account is an account that is subtracted from its related asset account on the balance sheet. 3. The cost of an asset less its accumulated depreciation is the asset’s book value. 4. The ten-column form used to organize the data necessary for journalizing the adjustments and preparing the financial statements is the worksheet. 5. The expected worth of an asset at the end of its useful life is its residual value. 6. Accrued salaries is a liability account that records salaries that are earned by employees but not yet paid. 7. A journal entry made at the end of an accounting period and brings the ledger up to date is called a/an adjusting entry. 8. Historical cost is the actual cost of an asset. 9. The allocation of the cost of an asset over its expected useful life is called depreciation. 10. The accumulated depreciation account accumulates the amount of depreciation that has been taken on an asset.

4-5

SOLUTIONS TO EXERCISES—SET A E4-1A. Account Accounts Payable Prepaid Rent Office Equipment Depreciation Expense B. Reel, Capital

Category Liability Asset Asset Expense Owner’s Equity

Normal Balance Cr. Dr. Dr. Dr. Cr.

B. Reel, Withdrawals Office Supplies Accumulated Depreciation

Owner’s Equity Asset Contra-Asset

Dr. Dr. Cr.

Found on which Financial Statement(s) Balance Sheet Balance Sheet Balance Sheet Income Statement Statement of Owner’s Equity Balance Sheet Statement of Owner’s Equity Balance Sheet Balance Sheet

E4-2A. Date 20XX Dec. 31

Account Name Unearned Fees Fees Earned Record fees earned ($9,000 -$1,875)

31 Accounts Receivable Revenue Record unbilled fees 31 Supplies Expense Supplies Record use of supplies ($975 − $300) 31 Rent Expense Prepaid Rent Record rent used

4-6

Debit 7,125

7,125

2,250 2,250

675 675

3,000 3,000

31 Depreciation Expense Accumulated Depreciation Record depreciation

500

31 Wages Expense Wages Payable Record accrued wages

950

Credit

500

950

SOLUTIONS TO EXERCISES—SET A, Cont. E4-3A. J. REVERE WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Account Titles Cash

Trial Balance Dr. Cr.

Adjustments Dr. Cr.

4 00

Accounts Receivable

1 0 00

Prepaid Insurance

7 00

(B)

3 00

Store Supplies

1 0 00

(C)

5 00

Store Equipment

2 0 00 (A)

6 00

(D)

8 00

Accumulated Depreciation, Store Equipment

6 00

Accounts Payable

1 2 00

J. Revere, Capital J. Revere, Withdrawals

6 00 3 00

Revenue from Clients

4 6 00

Rent Expense

9 00

Wage Expense

7 00

(D)

8 00

Depreciation Expense, Store Equipment

(A)

6 00

Insurance Expense

(B)

3 00

Store Supplies Expense

(C)

5 00

7 0 00

Wages Payable 2 2 00

2 2 00

Net Income

4-7

SOLUTIONS TO EXERCISES—SET A, Cont. E4-3A., Cont. J. REVERE WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 4 00 1 0 00 4 00 5 00 2 0 00 1 2 00 1 2 00 6 00 3 00 4 6 00 9 00 1 5 00 6 00 3 00 5 00 8 4 00

Income Statement Dr.

Cr.

Balance Sheet Dr. Cr. 4 00 1 0 00 4 00 5 00 2 0 00 1 2 00 1 2 00 6 00 3 00

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

8 00 8 4 00

3 8 00

4 6 00

8 00 3 8 00

4 6 00

8 00 4 6 00

4-8

8 00

SOLUTIONS TO EXERCISES—SET A, Cont. E4-4A. a.

J. REVERE INCOME STATEMENT FOR THE MONTH ENDED DECEMBER 31, 20XX

Revenue: Revenue From Clients Operating Expenses: Rent Expense Wage Expense Depreciation Expense, Equipment Insurance Expense

$ 4 6 00 $

Store Supplies Expense

9 1 5 6 3

00 00 00 00

5 00

Total Operating Expenses

3 8 00

Net Income

8 00

6 00

J. REVERE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED DECEMBER 31, 20XX

J. Revere, Capital, December 1, 20XX Net Income for January Less: Withdrawals for December Increase in Capital J. Revere, Capital, December 31, 20XX

8 00 3 00 5 00 $ 1 1 00

4-9

SOLUTIONS TO EXERCISES—SET A, Cont. E4-4a, Cont. J. REVERE BALANCE SHEET DECEMBER 31, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY

Cash Accounts Receivable Prepaid Insurance Store Supplies Store Equipment Less Accumulated Depreciation Total Assets

4-10

2 0 00 (1 2 0 0)

4 00 1 0 00 4 00

Liabilities Accounts Payable Wages Payable

5 00

Total Liabilities Owner’s Equity J. Revere, Capital Total Liabilities and Owner’s Equity

8 00 $ 3 1 00

$ 1 2 00 8 00 $ 2 0 00 1 1 00 $ 3 1 00

SOLUTIONS TO EXERCISES—SET A, Cont. E4-5A.

(Note: Explanations omitted intentionally)

Date Dec

Post

Account Title and Description 31 31 31 31

Ref.

Rent Expense Prepaid Rent Office Supplies Expense Office Supplies Depreciation Expense, Equipment Accumulated Depreciation, Equipment Salaries Expense Accrued Salaries

Dr.

Cr.

9 0 0 00 9 0 0 00 3 0 0 00 3 0 0 00 2 0 0 00 2 0 0 00 2 0 0 00 2 0 0 00

SOLUTIONS TO EXERCISES—SET B

E4-1B. Account Cash Office Supplies Building Depreciation Expense B. Reel, Capital

Category Asset Asset Asset Expense Owner’s Equity

Normal Balance Dr. Dr. Dr. Dr. Cr.

B. Reel, Withdrawals Prepaid Insurance Accrued Salaries

Owner’s Equity Asset Liability

Dr. Dr. Cr.

Found on which Financial Statement(s) Balance Sheet Balance Sheet Balance Sheet Income Statement Statement of Owner’s Equity Balance Sheet Statement of Owner’s Equity Balance Sheet Balance Sheet

4-11

SOLUTIONS TO EXERCISES—SET B, Cont. E4-2B. Date Account Name 20XX Jul 31 Unearned Fees Fees Earned Record fees earned ($4,500 − 940) 31 Accounts Receivable Revenue Record unbilled fees

Debit 3,560

3,.560

1,125 1,125

31 Supplies Expense Supplies Record use of supplies ($490 − $150) 31 Rent Expense Prepaid Rent Record rent used

340 340

1,500 1,500

31 Depreciation Expense Accumulated Depreciation Record depreciation

250

31 Wages Expense Wages Payable Record accrued wages

475

250

475

E4-3B. a. b.

4-12

Accounts Affected

Category

Rules

Depreciation Expense

Expense

Dr. $1,000

Accumulated Depreciation

Asset (Contra)

Cr. $1,000

Insurance Expense

Expense

Dr. $1,350

Prepaid Insurance

Asset

Cr. $1,350

Credit

SOLUTIONS TO EXERCISES—SET B, Cont. E4-4B. D. NAHARIS WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Account Titles

Trial Balance Dr.

Adjustments Cr.

Dr.

Cr.

Cash Accounts Receivable

8 00 9 00

Prepaid Insurance

6 00

(b)

2 00

6 00 2 4 00

(c)

4 00

(a)

3 00

(d)

6 00

Store Supplies Store Equipment Accumulated Depreciation, Store Equipment Accounts Payable J. Trent, Capital J. Trent, Withdrawals Revenue from Clients Rent Expense Wage Expense

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

(d)

6 00

Depreciation Expense, Store Equipment

(a)

3 00

Insurance Expense Store Supplies Expense Accrued Wages

(b) (c)

2 00 4 00

8 1 00

1 5 00

Net Income

4-13

SOLUTIONS TO EXERCISES—SET B, Cont. E4-4B., Cont. D. NAHARIS WORKSHEET—CONTINUED FOR MONTH ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 8 00 9 00 4 00 2 00 2 4 00

Income Statement Dr. Cr.

Balance Sheet Dr.

8 9 4 2 2 4

00 00 00 00 00

9 00 2 7 00 1 0 00

8 00

8 00 3 8 00

3 8 00

8 00 1 8 00

3 00 2 00 4 00

3 00 2 00 4 00 6 00

9 0 00

6 00 3 5 00

3 8 00

5 5 00

3 00 3 8 00

4-14

Cr.

5 2 00 3 00

3 8 00

5 5 00

SOLUTIONS TO EXERCISES—SET B, Cont.

E4-4B., Cont. a.

D. NAHARIS INCOME STATEMENT FOR THE MONTH ENDED DECEMBER 31, 20XX

Revenue: Revenue From Clients Operating Expenses: Rent Expense Wage Expense Depreciation Expense, Equipment Insurance Expense Store Supplies Expense

$ $

8 1 8 3 2 4

3 8 00

00 00 00 00 00

Total Operating Expenses

3 5 00

Net Income

3 00

1 0 00

D. NAHARIS STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED DECEMBER 31, 20XX

J. Trent, Capital, December 1, 20XX $

Net Income For December Less Withdrawals

3 00 8 00

Decrease in Capital

5 00

J. Trent, Capital, December 31, 20XX

5 00

D. NAHARIS BALANCE SHEET DECEMBER 31, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets

Liabilities

Cash Accounts Receivable Prepaid Insurance Store Supplies Store Equipment Less Accumulated Depreciation

Total Assets

8 9

00 00

Accounts Payable Accrued Wages

4 2

00 00

Total Liabilities

2 4 00

2 7 00 6 00 3 3 00

Owner’s Equity

9 00

1 5

J. Trent, Capital

3 8

Total Liabilities and Owner’s Equity

5 00

3 8 00

4-15

SOLUTIONS TO EXERCISES—SET B, Cont. E4-6B.

(Note: Memo line explanations omitted intentionally)

Date Dec

Account Title and Description 31

4-16

Post Ref.

Dr.

Rent Expense Prepaid Rent

7 0 0 00

Office Supplies Expense Office Supplies

2 0 0 00

Depreciation Expense, Equipment Accumulated Depreciation, Equipment

3 0 0 00

Salaries Expense Accrued Salaries

4 0 0 00

Cr. 7 0 0 00

2 0 0 00

3 0 0 00

4 0 0 00

GROUP A PROBLEMS P4-1A. 1. KEVIN’S MOVING CO. WORKSHEET FOR THE MONTH ENDED OCTOBER 31, 20XX

Cash

Trial Balance Dr. Cr. 3 9 2 0 00

Prepaid Insurance

3 2 8 8 00

(a) 1 0 0 0 0 0

Moving Supplies

1 4 0 0 00

(b) 1 2 9 0 0 0

Moving Truck

10 6 5 8 00

Account Titles

Accumulated Depreciation, Moving Truck

3 6 6 0 00

Accounts Payable

1 3 1 2 00

K. Hoff, Capital

17 4 8 2 00

K. Hoff, Withdrawals

(c)

6 0 0 00

(d)

5 0 0 00

8 1 6 2 00

Wages Expense

5 7 1 2 00

Rent Expense

1 0 8 0 00

(d)

5 0 0 00

3 1 8 00 30 6 1 6 00

30 6 1 6 00

Insurance Expense

(a) 1 0 0 0 0 0

Moving Supplies Expense

(b) 1 2 9 0 0 0

Depreciation Expense, Moving Truck

(c)

Accrued Wages `

Cr.

4 2 4 0 00

Revenue from Moving

Advertising Expense

Adjustments Dr.

6 0 0 00 3 3 9 0 00

3 3 9 0 00

Net Loss

4-17

GROUP A PROBLEMS, Cont. P4-1A., Cont. KEVIN’S MOVING CO. WORKSHEET FOR THE MONTH ENDED OCTOBER 31, 20XX Adjusted Trial Balance Dr. Cr. 3 9 2 0 00 2 2 8 8 00 1 1 0 00 10 6 5 8 00 4 2 6 0 00 1 3 1 2 00 17 4 8 2 00 4 2 4 0 00 8 1 6 2 00 6 2 1 2 00 1 0 8 0 00 3 1 8 00

1 0 0 0 00 1 2 9 0 00 6 0 0 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 3 9 2 0 00 2 2 8 8 00 1 1 0 00 10 6 5 8 00 4 2 6 0 00 1 3 1 2 00 17 4 8 2 00 4 2 4 0 00

8 1 6 2 00 6 2 1 2 00 1 0 8 0 00 3 1 8 00

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

31 6 0 6 0 0

31 6 0 6 00

5 0 0 00 10 5 0 0 0 0 10 5 0 0 0 0

4-18

8 1 6 2 00

21 2 1 6 00

2 3 3 8 00

10 5 0 0 0 0

23 5 5 4 00

23 5 5 4 00 23 5 5 4 00

GROUP A PROBLEMS, Cont. P4-1A., Cont. 2. KEVIN’S MOVING CO. INCOME STATEMENT FOR THE MONTH ENDED OCTOBER 31, 20XX Revenue: Revenue From Moving Operating Expenses: Wages Expense Rent Expense Advertising Expense Insurance Expense Moving Supplies Expense Depreciation Expense, Moving Truck

$8 1 6 2 0 0 $6 2 1 2 0 0 1 0 8 0 00 3 1 8 00 1 0 0 0 00 1 2 9 0 00 6 0 0 00

Total Operating Expenses

10 5 0 0 0 0

Net Loss

$2 3 3 8 0 0 KEVIN’S MOVING CO. STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED OCTOBER 31, 20XX

K. Hoff, Capital, October 1, 20XX Net Loss For October Add Withdrawals

$1 7 4 8 2 0 0 $2 3 3 8 0 0 4 2 4 0 00

Decrease in Capital

6 5 7 8 00

K. Hoff, Capital, October 31, 20XX

$10 9 0 4 0 0

KEVIN’S MOVING CO. BALANCE SHEET OCTOBER 31, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets

Liabilities

Cash Prepaid Insurance Moving Supplies Moving Truck Less Accumulated Depreciation

Total Assets

$3 9 2 0 0 0 2 2 8 8 00

Accounts Payable Accrued Wages

1 1 0 00

Total Liabilities

6 3 9 8 00

Owner’s Equity

$1 3 1 2 0 0 5 0 0 00 1 8 1 2 00

$1 0 6 5 8 0 0 4 2 6 0 00

$1 2 7 1 6 0 0

K. Hoff, Capital

10 9 0 4 0 0

Total Liabilities and Owner’s Equity

$1 2 7 1 6 0 0

4-19

GROUP A PROBLEMS, Cont. P4-2A. CJ’S MOUNTAIN SAFETY TRAINING WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Account Titles Cash Accounts Receivable Supplies Safety Equipment Accumulated Depreciation, Safety Equipment Chris Janz, Capital Chris Janz, Withdrawals Fees Earned Rent Expense Advertising Expense Utilities Expense

12 1 1 3 2 1 3 1

Trial Balance Dr. Cr. 0 0 00 7 0 00 7 0 00 8 0 00 1 0 6 0 00 15 4 1 6 0 0

(a) 1 3 6 5 0 0 (b)

4-20

5 3 0 00

4 7 7 0 00 9 0 0 00 3 7 0 00 4 5 6 00 21 2 4 6 0 0 (a) 1 3 6 5 0 0 (b) 5 3 0 00 1 8 9 5 00

Net Income

Cr.

7 0 0 00

21 2 4 6 0 0 Supplies Expense Depreciation Expense, Safety Equipment

Adjustments Dr.

1 8 9 5 00

GROUP A PROBLEMS, Cont. P4-2A., Cont. CJ’S MOUNTAIN SAFETY TRAINING WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 12 1 0 0 0 0 1 3 7 0 00 8 0 5 00 3 1 8 0 00 1 5 9 0 00 15 4 1 6 0 0 7 0 0 00 4 7 7 0 00 9 0 0 00 3 7 0 00 4 5 6 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr.

1 3 6 5 00 5 3 0 00 21 7 7 6 0 0

21 7 7 6 0 0

4-21

GROUP A PROBLEMS, Cont. P4-3A. LING’S LANDSCAPING SERVICE WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Account Titles Cash Accounts Receivable Prepaid Rent Landscaping Supplies Landscaping Equipment Accumulated Depreciation, Landscaping Equipment Accounts Payable A. Ling, Capital Landscaping Revenue Heat Expense Advertising Expense Wages Expense

Trial Balance Dr. Cr. 4 0 0 0 00 7 0 0 00 8 0 0 00 7 4 2 00

Adjustments Cr.

(a) 6 0 0 0 0 (b) 5 4 2 0 0

1 4 0 0 00 1 0 6 0 00 8 3 6 00

(c)

4 0 0 00 2 0 0 00 1 2 6 0 00

(d) 4 0 0 0 0 9 5 0 2 00 (a) 6 0 0 0 0 (b) 5 4 2 0 0 (c) 3 0 0 0 0 (d) 4 0 0 0 0 1 8 4 2 00

Net Income

4-22

3 0 0 00

3 2 5 0 00 4 3 5 6 00

9 5 0 2 00 Rent Expense Landscaping Supplies Expense Depreciation Expense, Landscaping Equipment Accrued Wages

Dr.

1 8 4 2 00

GROUP A PROBLEMS, Cont. P4-3A., Cont. LING’S LANDSCAPING SERVICE WORKSHEET FOR THE MONTH ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 4 0 0 0 00 7 0 0 00 2 0 0 00 2 0 0 00

Income Statement Dr. Cr.

1 4 0 0 00

Balance Sheet Dr. Cr. 4 0 0 0 00 7 0 0 00 2 0 0 00 2 0 0 00 1 4 0 0 00

1 3 6 0 00

8 3 6 00 3 2 5 0 00

4 3 5 6 00

4 0 0 00 2 0 0 00

1 6 6 0 00

6 0 0 00 5 4 2 00 3 0 0 00

3 5 6 00

4 0 0 00 10 2 0 2 0 0

10 2 0 2 0 0

4 0 0 00 3 7 0 2 00

4 3 5 6 00

6 5 0 0 00

6 5 4 00 4 3 5 6 00

5 8 4 6 00 6 5 4 00

4 3 5 6 00

6 5 0 0 00

4-23

GROUP A PROBLEMS, Cont. P4-4A. 1. DAMON’S REPAIR SERVICE WORKSHEET FOR THE MONTH ENDED APRIL 30, 20XX Account Titles Cash Prepaid Insurance Repair Supplies Repair Equipment Accumulated Depreciation, Repair Equip. Accounts Payable D. Heines, Capital Revenue from Repairs Wages Expense Rent Expense Advertising Expense

3 5 4 4

Dr. 0 0 0 1 0 0 5 0 0 5 0 0

Trial Balance Cr. 00 00 00 00 1 4 0 0 00 4 8 5 0 00 4 1 7 0 00

(A) 6 0 0 00 (B) 2 1 0 0 0 0

1 8 0 0 00 7 0 0 00 3 2 0 00

(D)

2 0 0 00

19 9 2 0 0 0 (A) 6 0 0 00 (B) 2 1 0 0 0 0 (C) 6 0 0 00 3 5 0 0 00

4-24

6 0 0 00

2 0 0 00

Wages Payable Net Income

(C)

9 5 0 0 00

19 9 2 0 0 0 Insurance Expense Repair Supplies Expense Depreciation Expense, Repair Equipment

Dr.

Adjustments Cr.

3 5 0 0 00

GROUP A PROBLEMS, Cont. P4-4A., Cont. DAMON’S REPAIR SERVICE WORKSHEET FOR THE MONTH ENDED APRIL 30, 20XX Adjusted Trial Balance Dr. Cr. 3 0 0 0 00 4 5 0 0 00 2 4 0 0 00 4 5 0 0 00 2 0 0 0 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 3 0 0 0 00 4 5 0 0 00 2 4 0 0 00 4 5 0 0 00 2 0 0 0 00

4 8 5 0 00 4 1 7 0 00

9 5 0 0 00

2 0 0 0 00 7 0 0 00

3 2 0 00

6 0 0 00 2 1 0 0 00 6 0 0 00

6 0 0 00 2 1 0 0 00 6 0 0 00 2 0 0 00

20 7 2 0 00

2 0 0 00 6 3 2 0 00

9 5 0 0 00

14 4 0 0 00

3 1 8 0 00 9 5 0 0 00

11 2 2 0 00 3 1 8 0 00

9 5 0 0 00

14 4 0 0 00

4-25

GROUP A PROBLEMS, Cont. P4-4A., Cont. 2. DAMON’S REPAIR SERVICE INCOME STATEMENT FOR THE MONTH ENDED APRIL 30, 20XX Revenue: Revenue From Repairs Operating Expenses: Wages Expense Rent Expense Advertising Expense Insurance Expense Repair Supplies Expense Depreciation Expense, Repair Equipment T lOperating O i Expenses E Total

$9 5 0 0 0 0 $2 0 0 0 0 0 7 0 0 00 3 2 0 00 6 0 0 00 2 1 0 0 00 6 0 0 00

R Income Net

6 3 2 0 00 $3 1 8 0 0 0

DAMON’S REPAIR SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED APRIL 30, 20XX

D. Heines, Capital, April 1, 20XX

$4 1 7 0 0 0

Net Income for April D. Heines, Capital, April 30, 20XX

3 1 8 0 00

4-26

$7 3 5 0 0 0

GROUP A PROBLEMS, Cont. P4-4A., Cont. DAMON’S REPAIR SERVICE BALANCE SHEET APRIL 30, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY

Assets:

Liabilities

Cash

$3 0 0 0 0 0

Prepaid Insurance Repair Supplies

4 5 0 0 00 2 4 0 0 00

Accounts Payable Wages Payable

2 5 0 0 00

Total Liabilities Owner’s Equity D. Heines, Capital

$12 4 0 0 0 0

Total Liabilities and Owner’s Equity

Repair Equipment Less Acc. Dep.

Total Assets

$4 5 0 0 0 0 (2 0 0 0 0 0)

$4 8 5 0 0 0 2 0 0 00 $5 0 5 0 0 0 7 3 5 0 00 $12 4 0 0 0 0

4-27

GROUP B PROBLEMS P4-1B.

SAMIYA DANCE STUDIO WORKSHEET FOR THE MONTH ENDED JUNE 30, 20XX Account Titles Cash Accounts Receivable Prepaid Insurance Dance Supplies Dance Equipment Accumulated Depreciation, Dance Equipment Accounts Payable S. Arevalo, Capital S. Arevalo, Withdrawals Dance Fees Earned Salaries Expense Telephone Expense Advertising Expense

Trial Balance Dr. Cr. 10 1 5 0 0 0 5 0 0 0 00 7 0 0 00 3 0 0 00

Adjustments Cr.

(A) 1 0 0 0 0 (B) 2 8 0 0 0

12 9 5 0 0 0 4 0 0 0 00 5 7 5 0 00

15 1 5 0 0 0 4 0 0 00 5 2 0 0 00 4 5 0 00 7 0 00 8 0 00 30 1 0 0 0 0

Insurance Expense Dance Supplies Expense Depreciation Expense, Dance Equipment

Dr.

(D) 4 9 0 0 0

30 1 0 0 0 0 (A) 1 0 0 0 0 (B) 2 8 0 0 0 (C) 2 0 0 0 0

Accrued Salaries 1 Net Income

4-28

0 7 0 00

(D) 4 9 0 0 0 1

0 7 0 00

GROUP B PROBLEMS, Cont. P4-1B., Cont. SAMIYA DANCE STUDIO WORKSHEET FOR THE MONTH ENDED JUNE 30, 20XX Adjusted Trial Balance Dr Cr 10 1 5 0 00 5 0 0 0 00 6 0 0 00 2 0 00

Income Statement Dr Cr

12 9 5 0 00

Balance Sheet Dr 10 1 5 0 00 5 0 0 0 00 6 0 0 00 2 0 00 12 9 5 0 00

4 2 0 0 00 5 7 5 0 00

4 2 0 0 00 5 7 5 0 00 15 1 5 0 00

15 1 5 0 00 4 0 0 00

4 0 0 00 5

2 0 0 00

5 2 0 0 00

9 4 0 00 7 0 00

8 0 00

1 0 0 00 2 8 0 00 2 0 0 00

1 0 0 00 2 8 0 00 2 0 0 00 4 9 0 00

30 7 9 0 00

4 9 0 00 1 6 7 0 00

5 2 0 0 00

29 1 2 0 00

3 5 3 0 00 5 2 0 0 00

25 5 9 0 00 3 5 3 0 00

5 2 0 0 00

29 1 2 0 00

4-29

GROUP B PROBLEMS, Cont. P4-1B., Cont. SAMIYA DANCE STUDIO GENERAL JOURNAL Date 20XX June

Account Title and Description Adjusting Entries 30

4-30

Post Ref.

Page 3 Dr.

Insurance Expense Prepaid Insurance Insurance expired

1 0 0 00

Dance Supplies Expense Dance Supplies Supplies used

2 8 0 00

Depreciation Expense, Dance Equipment Accumulated Depreciation, Dance Equipment Estimated depreciation

2 0 0 00

Salaries Expense Accrued Salaries Salaries to be paid

4 9 0 00

Cr.

1 0 0 00

2 8 0 00

2 0 0 00

4 9 0 00

GROUP B PROBLEMS, Cont. P4-2B. THE DEBBIE ROSE ART STUDIO WORKSHEET FOR THE MONTH ENDED NOVEMBER 30, 20XX Account Titles Cash Accounts Receivable Prepaid Rent Painting Supplies Studio Equipment Accumulated Depreciation, Studio Equipment Accounts Payable Debbie Rose Allen, Capital Painting Revenue Advertising Expense Utilities Expense Wages Expense

Trial Balance Dr. Cr. 3 8 1 3 00 2 8 2 0 00 8 5 0 00 9 2 1 00

(b) 4 2 5 0 0 (a) 3 2 6 0 0

5 9 8 5 00 1 9 9 5 00 1 7 8 8 00

(c)

9 1 75

5 8 2 8 00 7 8 1 6 00 5 1 0 00 2 7 8 00 2 2 5 0 00 17 4 2 7 00

Painting Supplies Expense Rent Expense Depreciation Expense, Studio Equipment

Adjustments Dr. Cr.

(d) 2 4 5 0 0 17 4 2 7 00 (a) 3 2 6 0 0 (b) 4 2 5 0 0 (c) 9 1 75 (d) 2 4 5 0 0

Accrued Wages 1 0 8 7 75

1 0 8 7 75

Net Income

4-31

GROUP B PROBLEMS, Cont. P4-2B., Cont. THE DEBBIE ROSE ART STUDIO FOR THE MONTH ENDED NOVEMBER 30, 20XX Adjusted Trial Balance Dr. Cr. 3 8 1 3 00 2 8 2 0 00 4 2 5 00 5 9 5 00

Income Statement Dr. Cr.

5 9 8 5 00

Balance Sheet Dr. 3 8 1 3 00 2 8 2 0 00 4 2 5 00 5 9 5 00 5 9 8 5 00

2 0 8 6 75 1 7 8 8 00

2 0 8 6 75 1 7 8 8 00 5 8 2 8 00

5 8 2 8 00 7 8 1 6 00

7 8 1 6 00

5 1 0 00 2 7 8 00

2 4 9 5 00

3 2 6 00 4 2 5 00 9 1 75

3 2 6 00 4 2 5 00 9 1 75 2 4 5 00

17 7 6 3 75

2 4 5 00 4 1 2 5 75

7 8 1 6 00

13 6 3 8 00

3 6 9 0 25 7 8 1 6 00

4-32

Cr.

9 9 4 7 75 3 6 9 0 25

7 8 1 6 00

13 6 3 8 00

GROUP B PROBLEMS, Cont. P4-3B. 1. JELISA REPAIR CO. WORKSHEET FOR THE MONTH ENDED OCTOBER 31, 20XX Account Titles Cash Prepaid Insurance Repair Supplies Repair Equipment Accumulated Depreciation, Repair Equipment Building Accumulated Depreciation, Building Accounts Payable Jelisa Hunter, Capital Jelisa Hunter, Withdrawals Repair Services Revenue Wages Expense Utilities Expense Advertising Expense

Trial Balance Dr. 3 3 2 6 00 1 3 8 9 00

Repair Supplies Expense Depreciation Expense, Repair Equipment Depreciation Expense, Building Accrued Wages

Cr.

Dr.

Cr. (a)

3 4 7 25

(b)

3 5 3 00

3 9 5 2 00

(c)

6 0 50

12 5 0 0 00 2 7 2 4 00 43 0 8 5 00

(d)

8 3 33

1 1 4 8 00 8 4 6 0 00 50 0 0 0 00

13 4 0 0 00 28 6 8 5 00 10 8 9 0 00 8 4 1 00 1 4 9 2 00 90 9 4 6 00

Insurance Expense

Adjustments

(e) 1 0 6 4 0 0

90 9 4 6 00 (a)

3 4 7 25

(b)

3 5 3 00 6 0 50 8 3 33

(e) 1 0 6 4 0 0 1 9 0 8 08

1 9 0 8 08

Net Income

4-33

GROUP B PROBLEMS, Cont. P4-3B., Cont. JELISA’SREPAIR CO. WORKSHEET FOR THE MONTH ENDED OCTOBER 31, 20XX Adjusted Trial Balance Dr. Cr. 3 3 2 6 00 1 0 4 1 75 7 9 5 00 8 4 6 0 00 4

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 3 3 2 6 00 1 0 4 1 75 7 9 5 00 8 4 6 0 00

0 1 2 50

4 0 1 2 50

50 0 0 0 00

50 0 0 0 00 12 5 8 3 33 2 7 2 4 00 43 0 8 5 00

12 5 8 3 33 2 7 2 4 00 43 0 8 5 00

13 4 0 0 00

13 4 0 0 00 28 6 8 5 00

28 6 8 5 00

11 9 5 4 00 8 4 1 00 1 4 9 2 00

3 4 7 25 3 5 3 00 6 0 50 8 3 33

1 92 1 5 3 83

0 6 4 00

92 1 5 3 83

15 1 3 1 08

1 0 6 4 00 28 6 8 5 00

77 0 2 2 75

13 5 5 3 92 28 6 8 5 00

4-34

63 4 6 8 83 13 5 5 3 92

28 6 8 5 00

77 0 2 2 75

GROUP B PROBLEMS, Cont. P4-3B., Cont. 2. JELISA’S REPAIR CO. INCOME STATEMENT FOR THE SIX MONTHS ENDED OCTOBER 31, 20XX Revenue: Repair Services Operating Expenses: Wages Expense Utilities Expense Advertising Expense Insurance Expense

$2 8 6 8 5 0 0 $1 1 9 8 1 4 3

Repair Supplies Expense

5 4 00 4 1 00 9 2 00 4 7 25

3 5 3 00

Depreciation Expense, Repair Equipment

6 0 50

Depreciation Expense, Building

8 3 33

Total Operating Expenses

15 1 3 1 08

Net Income

$1 3 5 5 3 9 2

JELISA’S REPAIR CO. STATEMENT OF OWNER’S EQUITY FOR THE SIX MONTHS ENDED OCTOBER 31, 20XX Jelisa Hunter, Capital, October 1, 20XX Net Income For October Less Withdrawals

$4 3 0 8 5 0 0 $1 3 5 5 13 4 0

3 0

92 00

Increase in Capital

1 5 3 92

Jelisa Hunter, Capital, October 31, 20XX

$4 3 2 3 8 9 2

JELISA’SREPAIR CO. BALANCE SHEET OCTOBER 31, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets

Liabilities

Cash Prepaid Insurance Repair Supplies Repair Equipment Less: Accumulated Depreciation Building Less: Accumulated Depreciation Total Assets

$3 3 2 6 0 0 1 0 4 1 75

Accounts Payable Accrued Wages

$2 7 2 4 0 0 1 0 6 4 00

7 9 5 00

Total Liabilities

3 7 8 8 00

$8 4 6 0 0 0 (4 0 1 2 5 0)

4 4 4 7 50

$5 0 0 0 0 0 0 (12 5 8 3 3 3)

Owner’s Equity Jelisa Hunter, Capital

43 2 3 8 92

Total Liabilities and Owner’s Equity

$4 7 0 2 6 9 2

37 4 1 6 67 $4 7 0 2 6 9 2

4-35

GROUP C PROBLEMS P4-1C. ECO DOCUMENT DISPOSAL COMPANY WORKSHEET FOR THE MONTH ENDED MAY 31, 20XX Account Titles Cash Accounts Receivable Prepaid Insurance Disposal Supplies Disposal Equipment Acc. Depn., Disposal Equipment Building Acc. Depn., Building Accounts Payable A. Hoang, Capital A. Hoang, Withdrawals Disposal Fees Revenue Wages Expense Utilities Expense Advertising Expense

Trial Balance Dr. 22 2 1 0 00 1 2 0 0 00

Adjustments Cr.

Dr.

Cr.

6 8 1 00

(A)

5 1 0 75

1 5 4 2 00 11 7 4 0 00

(B)

8 1 9 00

(C)

8 7 6 25

7 0 1 0 00 48 0 0 0 00 20 7 0 0 00 4 6 6 0 00 48 6 8 1 00

(D)1 1 5 0 0 0

16 7 4 2 00 52 7 2 0 00 28 2 4 0 00 2 5 4 4 00 8 7 2 00

(E) 1 3 6 8 0 0

133 7 7 1 00 133 7 7 1 00 Insurance Expense Disposal Supplies Expense Depn. Exp., Disposal Equipment Depn. Exp., Building Accrued Wages

(A)

5 1 0 75 (B) 8 1 9 0 0 (C) 8 7 6 2 5 (D) 1 1 5 0 0 0 (E)1 3 6 8 0 0 4 7 2 4 00

Net Income

4-36

4 7 2 4 00

GROUP C PROBLEMS, Cont. P4-1C., Cont. ECO DOCUMENT DISPOSAL COMPANY WORKSHEET FOR THE MONTH ENDED MAY 31, 20XX Adjusted Trial Balance Dr. Cr. 22 2 1 0 00 1 2 0 0 00 1 7 0 25 7 2 3 00

Income Statement Dr. Cr.

11 7 4 0 00

Balance Sheet Dr. 22 2 1 0 1 2 0 0 1 7 0 7 2 3

00 00 25 00

11 7 4 0 00 7 8 8 6 25

7 8 8 6 25

48 0 0 0 00

48 0 0 0 00 21 8 5 0 00 4 6 6 0 00 48 6 8 1 00

21 8 5 0 00 4 6 6 0 00 48 6 8 1 00

16 7 4 2 00

16 7 4 2 00 52 7 2 0 00

29 6 0 8 00 2 5 4 4 00 8 7 2 00

5 1 0 8 1 9 8 7 6 1 1 5 0

52 7 2 0 00 29 6 0 8 00 2 5 4 4 00 8 7 2 00

75 00 25 00

137 1 6 5 25

Cr.

5 1 0 8 1 9 8 7 6 1 1 5 0 1 3 6 8 00 137 1 6 5 25

75 00 25 00

36 3 8 0 00

52 7 2 0 00

100 7 8 5 25

16 3 4 0 00 52 7 2 0 00

1 3 6 8 00 84 4 4 5 25 16 3 4 0 00

52 7 2 0 00

100 7 8 5 25

4-37

GROUP C PROBLEMS, Cont. P4-1C., Cont. ECO DOCUMENT DISPOSAL COMPANY GENERAL JOURNAL Date 20XX

Account Title and Description

Post Ref.

Page 1 Dr.

Cr.

Adjusting Entries May

4-38

Insurance Expense Prepaid Insurance Insurance expired

5 1 0 75

Disposal Supplies Expense Disposal Supplies Supplies used

8 1 9 00

Depreciation Expense, Disposal Equipment Accumulated Depreciation, Disposal Equipment Estimated depreciation

8 7 6 25

5 1 0 75

8 1 9 00

8 7 6 25

Depreciation Expense, Building Accumulated Depreciation, Building Estimated depreciation

1 1 5 0 00

Wages Expense Accrued Wages Wages to be paid

1 3 6 8 00

1 1 5 0 00

1 3 6 8 00

GROUP C PROBLEMS, Cont. P4-2C, Date 20XX

Account Title and Description

Post Ref.

Dr.

Cr.

Adjusting Entries a)

Sept.

Interest Expense

$ 1 5 0 00

Interest Payable

$ 1 5 0 00

To record accrued interest. b)

Depreciation Expense, Office Furniture

$ 2 5 0 00

Accumulated Depreciation, Office Furniture

$ 2 5 0 00

To record depreciation on the office furniture; 35,000 − 5,000 = 30,000/10 yrs = 3,000/yr ÷ 12 = 250/month. c)

Repair Supplies Expense

$ 7 0 0 00

Repair Supplies

$ 7 0 0 00

To record repair supplies used; 5,200 ‒ 4,500 = 700 used. d)

Insurance Expense

$5 0 0 0 0 0

Prepaid Insurance

$5 0 0 0 0 0

To record expired insurance e)

Wages Expense Wages Payable

$10 0 0 0 0 0 $10 0 0 0 0 0

To record accrued wages.

4-39

GROUP C PROBLEMS, Cont. P4-2C, cont.

CHEN’SREPAIR SERVICE TRIAL BALANCES SEPTEMBER 30, 20XX Unadjusted Trial Balance Dr. Cr.

Cash

$18 0 0 0 0 0

Accounts Receivable Repair Supplies Prepaid Insurance Office Furniture Accounts Payable Loan Payable C. Leung, Capital C. Leung, Withdrawals Repair Revenues Salaries Expense Wages Expense Totals

12 0 0 0 0 0 5 2 0 0 00 9 3 5 0 00 35 0 0 0 0 0

5 0 0 0 00 50 0 0 0 0 0 17 5 0 0 0 0 $152 0 5 0 0 0

Interest Expense Interest Payable Depreciation Expense, office fAccumulated it Depreciation, office f it Repair Supplies Expense Insurance Expense Wages Payable Totals

4-40

Adjustments Dr.

Cr.

Adjusted Trial Balance Dr. Cr. $38 0 0 0 0 0

$ 7 0 0 00 5 0 0 0 00 $8 0 0 0 0 0 23 7 5 0 0 0 40 3 0 0 0 0

56 0 0 0 0 0 4 5 0 0 00 4 3 5 0 00 35 0 0 0 0 0

5 0 0 0 00

80 0 0 0 0 0

45 0 0 0 0 0 22 5 0 0 0 0

$10 0 0 0 00

$8 0 0 0 0 0 23 7 5 0 0 0 35 3 0 0 0 0 144 0 0 0 0 0

$152 0 5 0 0 0 1 5 0 00 2 5 0 00 7 0 0 00 5 0 0 0 00 $16 1 0 0 00

1 5 0 00 2 5 0 00

10 0 0 0 00

1 5 0 00 3 0 0 0 00 7 0 0 00 5 0 0 0 00

1 5 0 00 3

0 0 0 00

$16 1 0 0 00 $219 2 0 0 0 0 $219 2 0 0 0 0

GROUP C PROBLEMS, Cont. P4-2C, Cont. a.

CHEN’S REPAIR SERVICE INCOME STATEMENT FOR THE MONTH ENDED SEPTEMBER 30, 20XX

Revenue: Repair Revenues Operating Expenses: Salaries Expense Wages Expense Insurance Expense Repair Supplies Expense

$80 0 0 0 0 0 $50 0 0 0 27 5 0 0 5 0 0 0 7 0 0

00 00 00 00

2 5 0 00

Depreciation Expense, Office Furniture

1 5 0 00

Interest Expense Total Operating Expenses

83 6 0 0 0 0

Net loss b.

$(3

6 0 0 0 0)

CHEN’S REPAIR SERVICE STATEMENT OF CHANGES IN EQUITY FOR THE MONTH ENDED SEPTEMBER 30, 20XX

C.Leung, Capital, September 1, 20XX

$35 3 0 0

Add: Investment by owner

0 0 0

Total Less: Withdrawal by owner Net loss

3 0 0

6 0 0) 0 0

$(5 0 0 0) 0 0 (3 6 0 0) 0 0

$31 7 0 0

C.Leung, Capital, September 30, 20XX

Calculation: The adjusted balance of $40,300 is after the owner invested $5,000 during September. Therefore, the balance at the beginning of September was $35,300 ($40,300 – $5,000). c.

CHEN’S REPAIR SERVICE BALANCE SHEET SEPTEMBER 30, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Cash

$18 0 0 0 0 0

Accounts Payable

$8 0 0 0 0 0

Accounts Receivable Prepaid Insurance Repair Supplies

12 0 0 0 0 0 4 3 5 0 00 4 5 0 0 00

Interest Payable Wages Payable Loan Payable

1 5 0 00 10 0 0 0 0 0 23 7 5 0 0 0

Total Liabilities

41 9 0 0 0 0

Office Furniture Less Accumulated Depreciation, office Total Assets

$35 0 0 0 00 (2 5 0) 00

34 7 5 0 0 0

Equity

$73 6 0 0 0 0 C. Leung, Capital Total Liabilities and Equity

31 7 0 0 0 0 $73 6 0 0 0 0

4-41

GROUP C PROBLEMS, Cont. P4-3C. 1.

MARITIME INTERNET ACCESS SERVICE WORKSHEET FOR THE THREE MONTHS ENDED AUGUST 31, 20XX Account Titles

Cash Prepaid Insurance Computer Supplies Computer Equipment Accumulated Depreciation, Computer Equipment Accounts Payable Lucy Northwest, Capital Lucy Northwest, Withdrawals Revenue From Services Provided Wages Expense Rent Expense Advertising Expense

Trial Balance Dr. Cr. 8 0 0 7 0 1 0 5 0 00

Disposal Supplies Expense Depreciation Expense, Disposal Equipment Accrued Wages

(b) 1 5 8 0 0

11 4 8 0 00 (c) 6 3 0 0 0 (e) 2 4 5 0 0

4 2 0 0 00 8 4 0 00 2 8 8 7 00 1 4 7 8 00 14 3 8 5 00 4 7 6 0 00 1 4 8 5 00 9 2 5 00

(d) 9 6 0 0 0 (e)

2 4 5 00

22 3 1 2 00 (a) 3 5 0 0 0 (b) 1 5 8 0 0 (c) 6 3 0 0 0 (d) 9 6 0 0 0 2 3 4 3 00

Net Income

4-42

Cr. (a) 3 5 0 0 0

4 2 6 00

22 3 1 2 00 Insurance Expense

Adjustments Dr.

2 3 4 3 00

GROUP C PROBLEMS, Cont. P4-3C., Cont. MARITIME INTERNET ACCESS SERVICE WORKSHEET FOR THE THREE MONTHS ENDED AUGUST 31, 20XX Adjusted Trial Balance Dr. Cr. 7 0 8 00 7 0 0 00 2 6 8 00 11 4 8 0 0 0 4 8 3 0 00 1 0 8 5 00 2 8 8 7 00 1 4 7 8 00 14 3 8 5 00 5 7 2 0 00 1 4 8 5 00 1 1 7 0 00

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

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 7 0 8 00 7 0 0 00 2 6 8 00 11 4 8 0 0 0 4 8 3 0 00 1 0 8 5 00 2 8 8 7 00 1 4 7 8 00

14 3 8 5 00 5 7 2 0 00 1 4 8 5 00 1 1 7 0 00

3 5 0 00 1 5 8 00 6 3 0 00 9 6 0 00

24 1 4 7 00

9 6 0 00 9 5 1 3 00

14 3 8 5 00

14 6 3 4 00

4 8 7 2 00 14 3 8 5 00

9 7 6 2 00 4 8 7 2 00

14 3 8 5 00

14 6 3 4 00

4-43

GROUP C PROBLEMS, Cont. P4-3C., Cont. 2. MARITIME INTERNET ACCESS SERVICE INCOME STATEMENT FOR THE THREE MONTHS ENDED AUGUST 31, 20XX Revenue: Revenue From Services Provided Operating Expenses: Wages Expense Rent Expense Advertising Expense Insurance Expense

$1 4 3 8 5 0 0 $5 7 1 4 1 1 3

2 0 00 8 5 00 7 0 00 5 0 00

Computer Supplies Expense

1 5 8 00

Depreciation Expense, Computer Equipment

6 3 0 00

Total Operating Expenses

9 5 1 3 00

Net Income

$4 8 7 2 0 0

MARITIME INTERNET ACCESS SERVICE STATEMENT OF OWNER'S EQUITY FOR THE THREE MONTHS ENDED AUGUST 31, 20XX Lucy Northwest, Capital, June 1, 20XX

$2 8 8 7 00

Net Income For August Less Withdrawals Increase in Capital

$4 8 7 1 4 7

2 00 8 00 3 3 9 4 00

Lucy Northwest, Capital, August 31, 20XX

$6 2 8 1 00

MARITIME INTERNET ACCESS SERVICE BALANCE SHEET AUGUST 31, 20XX ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets

Liabilities

Cash Prepaid Insurance

$ 7 0 8 00 7 0 0 00

Accounts Payable Accrued Wages

$1 0 8 5 00 9 6 0 00

Computer Supplies

2 6 8 00

Total Liabilities

2 0 4 5 00

Computer Equipment Less Accumulated Depreciation

$11 4 8 0 00 (4 8 3 0 0 0)

6 6 5 0 00

Owner’s Equity Lucy Northwest, Capital

6 2 8 1 00

Total Liabilities and Total Assets

4-44

$8 3 2 6 0 0

Owner’s Equity

$8 3 2 6 00

GROUP C PROBLEMS, Cont. P4-4C. a.

Policy No. 100

$480 48 months

= $10 per month

12 months X $10 = $120

Note: 14 months have elapsed since purchase of Policy No. 100. Two months of the insurance would have already been adjusted in the previous fiscal year.

200

$600 24

= $25 per month

8 months X 25 = $200

300

$240 12

= $20 per month

4 months X 20 = $80

Insurance Expense

400

Prepaid Insurance b.

Rent Expense

400 200

Prepaid Rent c.

200

Storage Fees Receivable Storage Fees Earned

500 500

These adjustments must be made to reflect the state of affairs more accurately at year (or period) end. This is a basic feature of accrual accounting. If cash accounting were used (and this is not very common in Canada, due mainly to tax laws as well as generally accepted accounting principles), no adjustments would be made.

P4-5C. a. Advertising Expense = $600 + $3,800

= $4,400 − 1,200 $3,200

b. Interest Expense = $1,500 + $150 − $350 = $1,300 c. Rent Fees Earned = $4,600 + $1,000 − $600 = $5,000 Unearned Rent is a liability because, at year end, the business owes a service which has, in effect, been paid for in advance. It is true that no money needs to be paid, but this is not part of the definition of a liability. Many times a liability does mean that money must be disbursed in a future period, but not always is this the case — such as unearned rent. Another example of this sort of liability is a business which has offered a free premium (such as a “free” toy on sending in a coupon from a box of cereal.) A liability exists in respect of the boxes of cereal sold despite the fact that the toys are on hand waiting to be sent.

4-45

SOLUTIONS TO ETHICAL CONSIDERATIONS EC4-1. – Ethics in Accounting This ethical situation will lead to interesting discussion and answers will vary. Here are some topics to include in the discussion. As the accountant, your response to the president’s request would likely affect your reputation as a professional and your future as an accountant or bookkeeper. The unethical behaviour at corporations like Xerox, Enron, and WorldCom in recent years makes it imperative that we know both how to act ethically and how to resolve ethical conflicts. To help guide accounting professionals through ethical dilemmas like the one described here, the Institute of Management Accountants (IMA) has established a Statement of Ethical Professional Practice, which appears in Figure 1.2 “IMA Statement of Ethical Professional Practice”. The standards outlined in this statement are guidelines that can help accountants choose an ethically acceptable course of action. Several options exist for resolving ethical conflicts. The IMA suggests the following courses of action: o

Follow the policies of the organization involving the resolution of ethical conflicts.

If following the organization’s policies does not effectively resolve the conflict, discuss the problem with your immediate supervisor unless the supervisor is involved.

If the immediate superior cannot reach a satisfactory resolution, the problem should be presented to the next higher managerial level.

If all higher levels of management do not reach a satisfactory resolution, an acceptable reviewing authority may be a group, such as the audit committee, executive committee, board of directors, board of trustees, or owners. This will be difficult to do. The IMA suggests first following the organization’s policies with regard to resolving ethical conflicts. If the company does not have policies in place or if following the organization’s policies does not resolve the conflict, the next step is to discuss the conflict with the immediate supervisor. However, the president of Drive Write (the immediate supervisor) is involved in the conflict, so approaching the president’s superiors would be best. This could be the audit committee, executive committee, board of directors, or owners. If after pursuing these different courses of action the ethical conflict still exists, it may be appropriate to consult an objective advisor (e.g., the IMA helpline) and perhaps consult an attorney as to legal obligations and rights concerning the ethical conflict. (Many would argue that regardless of the outcome, one would not want to work for a company where this type of unethical behavior occurs at the top, or anywhere within the organization, and that resigning is the best course of action.)

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS4-1. Analysis of Financial Statements—Roots Corporation a. b.

Land, Building, Equipment Accrued Wages, Unearned Revenue, Interest Payable, Taxes Payable

Fixed assets Fixed assets are recorded at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of fixed assets have different useful lives, they are accounted for as separate items (major components) of fixed assets. Depreciation is primarily recognized in selling, general and administrative expenses in the consolidated statement of net income (loss), on a diminishing-balance or straight-line basis, over the estimated useful lives of each component of an item of fixed assets from the date that they are available for use. Depreciation methods, useful lives and residual values are reviewed at each annual reporting date and adjusted, prospectively, if appropriate. Fixed assets are depreciated over the estimated useful lives of the assets, from the date they are available for use, based on the following annual rates: Asset Computer hardware Furniture and fixtures Equipment Computer software Leasehold improvements

Basis Diminishing-balance Diminishing-balance Diminishing-balance Straight-line Straight-line

Assets held under finance leases

Straight-line

Rate 20% 20% 10% 3 – 5 years Term of lease to a maximum of 10 years Term of lease

AFS4-2. Analysis of Financial Statements—Company of Your Choice Answers will vary depending on the company chosen

4-46

CONTINUING PROBLEM PRECISION COMPUTER CENTRE WORKSHEET FOR THREE MONTHS ENDED JULY 31, 20X1 Account Titles Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Office Equipment Accounts Payable T. Freedman, Capital T. Freedman, Withdrawals Service Revenue Advertising Expense Rent Expense Utilities Expense Phone Expense Insurance Expense Postage Expense

Trial Balance Dr. 1 6 4 5 00 2 6 0 0 00

Cr.

Dr.

Cr.

8 0 0 00

(D)

4 0 0 00

4 5 0 00 2 4 0 0 00 6 0 0 00

(A)

9 0 00

(B)

9 9 00

(C)

2 0 00

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

0 0 8 2 5 5

0 0 0 0 0 0

00 00 00 00 00 00

11 3 9 5 0 0 Supplies Expense Depreciation Expense, Computer Shop Equipment Accumulated Depreciation, Computer Shop Equipment Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equipment

Adjustments

(D)

4 0 0 00

(A)

9 0 00

(B)

9 9 00

11 3 9 5 0 0

(C)

2 0 00

6 0 9 00

Net Income

4-47

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE WORKSHEET - CONTINUED FOR THREE MONTHS ENDED JULY 31, 20X1 Adjusted Trial Balance Dr. Cr. 1 6 4 5 00 2 6 0 0 00 4 0 0 00 9 0 00 2 4 0 0 00

Income Statement Dr. Cr.

6 0 0 00

Balance Sheet Dr. Cr. 1 6 4 5 00 2 6 0 0 00 4 0 0 00 9 0 00 2 4 0 0 00 6 0 0 00

2 1 0 00 4 5 0 0 00

1 0 0 00

1 0 0 00 6 6 8 5 00

6 6 8 5 00

1 4 0 0 00 1 2 0 0 00 1 8 0 00 2 2 0 00 1 5 0 00 5 0 00

3 6 0 00 9 9 00

2 0 00 11 5 1 4 0 0

9 9 00 2 0 00 11 5 1 4 0 0

9 9 00

2 0 00 3 6 7 9 00

2 0 00 6 6 8 5 00

7 8 3 5 00

3 0 0 6 00 6 6 8 5 00

4-48

4 8 2 9 00 3 0 0 6 00

6 6 8 5 00

7 8 3 5 00

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE THREE MONTHS ENDED JULY 31, 20X1 Revenue: Service Revenue Operating Expenses: Advertising Expense Rent Expense Utilities Expense Phone Expense

$6 6 8 5 0 0 $1 4 1 2 1 2

0 0 00 0 0 00 8 0 00 2 0 00

Insurance Expense

1 5 0 00

Postage Expense

5 0 00

Supplies Expense

3 6 0 00

Depreciation Expense, Computer Shop Equipment

9 9 00

Depreciation Expense, Office Equipment

2 0 00 3 6 7 9 00

Net Income

$3 0 0 6 0 0 PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE THREE MONTHS ENDED JULY 31, 20X1

T. Freedman, Capital, May 1, 20X1 Net Income Less: T. Freedman, Withdrawals

$4 5 0 0 0 0 $3 0 0 1 0

6 00 0 00

Net Increase in Capital

2 9 0 6 00

T. Freedman, Capital, July 31, 20X1

$7 4 0 6 0 0

4-49

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE BALANCE SHEET JULY 31, 20X1 ASSETS

LIABILITIES AND OWNER’S EQUITY

Assets Cash Accounts Receivable Prepaid Rent Supplies Computer Shop Equipment Less Accumulated Depreciation Office Equipment Less Accumulated Depreciation

Liabilities $1 6 4 5 00 2 6 0 0 00 4 0 0 00 9 0 00 $2 4 0 0 00

Total Assets

4-50

9 9 00

Accounts Payable

$ 2 1 0 00

Owner’s Equity T. Freedman, Capital

7 4 0 6 00

Total Liabilities and Owner’s Equity

$7 6 1 6 00

2 3 0 1 00

6 0 0 00 2 0 00

5 8 0 00

$7 6 1 6 00

5 The Accounting Cycle Completed: Closing and Post-Closing Trial Balance

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Only the balances in the original trial balance are found in the general ledger. At this point, no adjustments have been journalized or posted. 2. Adjusting entries must be journalized because the ledger needs to be brought up to date before the beginning of the next accounting cycle. 3. Defend. Closing cleans up the ledger so that only permanent accounts have a balance carried into the next fiscal year, it is a necessary item. All temporary accounts are zero, which will, in the next period, allow accumulation of new data about revenue, expenses, and withdrawals. 4. Temporary accounts have no balances carried forward to the new fiscal year; permanent accounts do have balances carried forward to the new fiscal year. 5. The two major goals of the closing process are to update the Capital account in the ledger and clear all temporary accounts in the ledger to a zero balance. 6. The four steps of closing are as follows: a. Revenue closed to Income Summary. b. Expenses closed to Income Summary. c. Balance in Income Summary transferred to Capital. d. Withdrawals directly closed to Capital. 7. Income Summary summarizes revenue and expenses in the closing process. It is a temporary account located in the general ledger. It does not appear on any financial statements. 8. All closing entries can be prepared from the worksheet. Note: The Income Summary account is not located on the worksheet. 9. Assets, contra assets, liabilities, and the ending figure for capital are listed on a post-closing trial balance. 10. Disagree; closing entries are only prepared at the end of the fiscal year. 11. The question in the case is whether Todd should purchase 75% of his orders from Gem Company. Although Todd is offered a luxurious vacation, he should not let this affect his decision to purchase products from Gem. Also, Todd should not be influenced by the fact that he’s upset with his management. Thus, Todd should not purchase the supplies solely because he is offered a free vacation. This is a conflict of interest.

5-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. Step 1: Revenue ($200) is closed to Income Summary. Step 2: Expenses (each individual one — $100 and $60) are closed to Income Summary. Step 3: Balance in Income Summary (Net Income — $40) is closed to Capital. Step 4: Withdrawals ($15) are closed directly to Capital. CDE2.

Dec.

Taxi Fare Income Income Summary

Income Summary Gas Expense Advertising Expense Depn. Expense, Taxi

Income Summary Mel Blanc, Capital

Mel Blanc, Capital Mel Blanc, Withdrawals

39 8 12 8 11 7

CDE3. Geddes Garage Statement of Owner’s Equity For the Year Ended December 31, 20XX D. Geddes, Capital, January 1, 20XX Net Income Withdrawals D. Geddes, Capital, December 31, 20XX

$160,000 12,000

$300,000 148,000 $448,000

CDE4. Indicate whether each of these accounts is permanent (P) or temporary (T). P P T P T

Accounts Receivable Furniture Interest Expense Equipment Rent Expense

P T P P P

Taxes Payable Service Revenue Salaries Payable Accumulated Depreciation H. Ryder, Capital

CDE5. 1. Temporary accounts are the accounts that are not carried over to the next fiscal year. 2. The last step in the accounting cycle is the post-closing trial balance. 3. The process of bringing the balances of all revenue, expense, and withdrawal accounts to zero is called closing. 4. Income Summary is a temporary account that summarizes revenue and expenses. 5. Closing journal entries are prepared to clear all temporary accounts to zero and update the capital account. 6. Permanent accounts are the accounts that are carried over to the next fiscal year.

5-2

SOLUTIONS TO EXERCISES —SET A

E5-1A. 1. 2. 3. 4. 5. 6. 7.

Income Summary Jen Rich, Capital Salary Expense Jen Rich, Withdrawals Fees Earned Accounts Payable Cash

TEMPORARY X

PERMANENT X

X X X

WILL BE CLOSED X X X X

E5-2A. Dec

Fees Earned Income Summary

33,000

Income Summary Rent Expense Wage Expense Insurance Expense Dep Exp Office Equip

14,100

Income Summary J. Takibi, Capital J. Takibi, Capital J. Takibi, Withdrawals

18,900

4,000

33,000 5,000 7,000 1,200 900 18,900 4,000

E5-3A. (Note: Explanations omitted intentionally) 1. Journalizing transactions. 2. Posting the transaction entries. 3. Preparing the unadjusted trial balance. 4. Completing the worksheet (optional). 5. Journalizing and posting adjusting entries. 6. Preparing the financial statements. 7. Journalizing and posting closing entries. 8. Preparing the post-closing trial balance.

5-3

SOLUTIONS TO EXERCISES—SET A, Cont.

E5-4A.

(Note: Explanations omitted intentionally)

2. 3. 4.

B D B

6. 7. 8.

A A D

10. C

E5-5A. WEY CO. POST-CLOSING TRIAL BALANCE DECEMBER 31, 20XX Dr. Cash Accounts Receivable Legal Library Office Equipment Accounts Payable P. Wey, Capital

Cr.

32 0 0 0 00 18 8 7 5 00 14 2 5 0 00 61 8 0 0 00 45 0 0 0 00 81 9 2 5 00 126 9 2 5 0 0 126 9 2 5 0 0

E5-6A. Pria's Music Lessons showed the following adjusted trial balance on June 30, 20XX:

Debit Cash Accounts Receivable Equipment Accumulated Depreciation Accounts Payable Income Taxes Payable Long-term Debt P Chai, Capital P. Chai, Withdrawals Lessons Revenue Interest Income Advertising Expense Salaries Expense Rent Expense Depreciation Expense Interest Expense Income Taxes Expense

Credit

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

$6 6 3 0 0 0

Required 1. Journalize the closing entries of Pria's Music Lessons on June 30, 20XX. 2. How much net income or net loss did Pria’s Music Lessons earn for the period ended June 30, 20XX? How can you tell?

5-4

E5-6A., Cont. 1. Date June

June

30 June

Account Name

Dr.

Lessons Revenue Interest Income Income Summary Income Summary Advertising Expense Salaries Expense Rent Expense Depreciation Expense Interest Expense Income Tax Expense Income Summary P.Chai, Capital P.Chai, Captial P. Chai, Withdrawals

Cr.

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

2. Net income = $2,625 ($4,160 − $1,535). This is the debit amount used to close the Income Summary account to Capital. (Income Summary balance = Revenues less Expenses)

SOLUTIONS TO EXERCISES—SET B

E5-1B. TEMPORARY 1. Store Supplies on Hand 2. Accrued Salaries 3. Jon Rich, Withdrawals 4. Income Summary 5. Commissions Earned 6. Accounts Payable 7. Accumulated Depreciation

X X X

PERMANENT X X

WILL BE CLOSED

X X X

X X

5-5

SOLUTIONS TO EXERCISES—SET B, Cont. E5-2B.

(Note: Explanations omitted intentionally)

Date 20XX Dec

31 31

E5-3B.

Account Title and Description Fees Earned Income Summary Income Summary Rent Expense Salaries Expense Insurance Expense Depreciation Expense, Office Equipment Income Summary J. Kohl, Capital J. Kohl, Capital J. Kohl, Withdrawals

Post Ref.

Dr.

Cr.

41 0 0 0 00 41 0 0 0 00 19 7 0 0 00 7 5 0 0 00 8 2 0 0 00 3 1 0 0 00 9 0 0 00 21 3 0 0 00 21 3 0 0 0 0 3 0 0 0 00 3 0 0 0 00

(Note: Explanations omitted intentionally)

1. K. Bauman, Withdrawals; Gaming Services Revenue, Insurance Expense, and Wages Expense have not been closed. 2. Date Sept

Account Name Gaming Services Revenue Income Summary To close Revenue account to Income Summary account Income Summary Insurance Expense Wages Expense Office Expense Gaming Supplies Expense To close Expense accounts to Income Summary Account K. Bauman, Capital Income Summary To close Income Summary account K. Bauman, Capital K. Bauman, Withdrawals To close Withdrawals account to Capital account

3. Beginning Capital + Net Income − Withdrawals = Ending Capital Balance = $35,500 − $6000 − $4500 = $25,000

5-6

Debit

Credit

45 0 0 0 00 45 0 0 0 00 51 0 0 0 00 6 0 0 0 00 32 0 0 0 00 5 0 0 0 00 8 0 0 0 00 6 0 0 0 00 6 0 0 0 00 4 5 0 0 00 4 5 0 0 00

SOLUTIONS TO EXERCISES—SET B, Cont. E5-4B. OKEYO CO. POST-CLOSING TRIAL BALANCE DECEMBER 31, 20XX Dr. 18 2 3 0 0 0 8 7 5 0 00 6 8 3 0 00 15 7 0 0 00

Cash Accounts Receivable Legal Library Office Equipment Accumulated Depreciation, Office Equipment Accounts Payable P. Okeyo, Capital

Cr.

3 0 0 0 00 15 2 0 0 00 31 3 1 0 00 49 5 1 0 00 49 5 1 0 00

E5-5B. Shown below is a partially completed worksheet to the adjusted trial balance for Cayuga Ltd.: CAYUGA LTD. PARTIALLY COMPLETED WORKSHEET DECEMBER 31, 20XX (in thousands of dollars) Unadjusted Debit

Adjustments

Credit

Debit

Credit

Adjusted Debit

Cash

38.00

Accounts Receivable

9.00

Prepaid Insurance

6.00

Machinery

80.00

a 4.00

Credit

2.00 80.00

Accumulated Depreciation

8.00

Accounts Payable

9.00

b 4.00

12.00 9.00

Wages Payable

c 8.00

8.00

Income Taxes Payable

d 9.00

9.00

P. Luuk, Captital P. Luuk, Withdrawls

68.00

4.00

Revenues (not detailed)

4.00 84.00

84.00 a 4.00

Expenses (not detailed)

b 4.00

32.00

57.00

c 8.00 d 9.00

Totals

169.00

25.00

190.00

Required 1. Journalize the closing entries of Cayuga Ltd. on December 31, 20XX. 2. How much net income or net loss did Cayuga Ltd. earn for the period ended December 31, 20XX? How can you tell?

5-7

E5-5B., Cont. 1. Date Dec.

31 31 31 31

Account Name Sales Revenue (not detailed) Income Summary Income Summary Expenses (not detailed) Income Summary P. Luuk, Capital P. Luuk, Capital P. Luuk, Withdrawals

Dr.

Cr.

8 4 00 5 7 00

5 7 00 2 7 00 2 7 00 4 00

2. Net income = $27 ($84 − $57). This is the debit amount used to close the Income Summary account. (Income Summary balance = Revenues less Expenses)

5-8

8 4 00

4 00

GROUP A PROBLEMS P5-1A Date 20XX Apr. 30

Closing entries: Plumbing Fees Earned Income Summary To close revenue to the income summary. Income Summary Depreciation Expense, Equipment Wage Expense Insurance Expense Advertising Expense To close expense accounts to income Summary Income Summary T. Murray, Capital To close income summary to capital. T. Murray, Capital T. Murray, Withdrawals To close withdrawals to capital.

Debit 80 0 0 0 00

Credit 80 0 0 0 00

63 0 0 0 00 11 0 0 0 00 32 0 0 0 00 12 0 0 0 00 8 0 0 0 00 17 0 0 0 00 17 0 0 0 00 11 0 0 0 00 11 0 0 0 00

TYLER’S PLUMBING CO. POST-CLOSING TRIAL BALANCE APRIL 30, 20XX Acct. No. 101 106 153 154 193 201 209 233 301

Account Cash Accounts Receivable Equipment Accumulated Depreciation, Equipment Land Accounts Payable Wages Payable Loan Payable T. Murray, Capital Totals

Debit

Credit

$8 2 0 0 0 0 24 0 0 0 00 41 0 0 0 00 $16 5 0 0 0 0 30 0 0 0 00 14 0 0 0 3 2 0 0 2 6 0 0 66 9 0 0

00 00 00 0 0*

$103 2 0 0 0 0 $103 2 0 0 0 0

*Beginning Balance + Net Income − Withdrawals = Ending Balance = $60,900 + 17000 − 11000 = $66,900

5-9

GROUP A PROBLEMS, Cont. P5-2A. YUVRAJ CLEANING SERVICE GENERAL JOURNAL Date 20XX Mar.

Account Title and Description

5-10

Adjusting Entries Insurance Expense Prepaid Insurance Insurance expired Cleaning Supplies Expense Cleaning Supplies Cleaning supplies used Depreciation Expense, Auto Accumulated Depreciation, Auto Estimated depreciation Salaries Expense Accrued Salaries Salaries to be paid Closing Entries Cleaning Fees Income Summary To close income account Income Summary Salaries Expense Telephone Expense Advertising Expense Gas Expense Insurance Expense Cleaning Supplies Expense Depreciation Expense, Auto To close expense accounts Income Summary B. Yuvraj, Capital Net income closed to capital B. Yuvraj, Capital B. Yuvraj, Withdrawals Close withdrawals into capital

Post Ref.

Page 2 Dr.

517 114

1 8 0 00

518 115

1 0 0 00

519 122

1 5 0 00

513 213

1 6 0 00

412 314

4 6 8 0 00

314 513 514 515 516 517 518 519

2 6 5 0 00

314 312

2 0 3 0 00

312 313

4 6 0 00

Cr.

1 8 0 00

1 0 0 00

1 5 0 00

1 6 0 00

4 6 8 0 00

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

2 0 3 0 00

4 6 0 00

GROUP A PROBLEMS, Cont. P5-2A., Cont. YUVRAJ CLEANING SERVICE GENERAL LEDGER NAME: CASH Date 20XX Mar. 31

ACCOUNT NO. Explanation

Post Ref.

Debit

Date 20XX

Explanation

Mar. 31

Balance

Adjusting

ACCOUNT NO. Post Ref.

Debit

Date 20XX

Explanation

Mar. 31

Balance

Adjusting

Post Ref.

Debit

Post Ref.

Debit

Date 20XX

Explanation

Mar. 31

Balance

Adjusting

Post Ref.

Debit

Credit

1 5 0 00

GJ2

Explanation Balance

4 4 00

ACCOUNT NO.

NAME: ACCOUNTS PAYABLE Date 20XX

1 4 4 00

NAME: ACCUMULATED DEPRECIATION, AUTO

Ref.

Debit

Credit

121 Balance 2 7 2 0 00

122 Balance

8 6 0 00

1 0 1 0 00

ACCOUNT NO. Post

Balance

115

Credit

Balance

3 4 0 00

ACCOUNT NO. Explanation

114

1 0 0 00

GJ2

4 0 0 00

5 2 0 00

Credit

Balance

ACCOUNT NO.

NAME: AUTO Date 20XX

Credit

1 8 0 00

GJ2

NAME: CLEANING SUPPLIES

Mar. 31

Balance

NAME: PREPAID INSURANCE

Mar. 31

Credit

112

DR CR Cr

212 Balance 2 2 4 00

5-11

GROUP A PROBLEMS, Cont. P5-2A., Cont. YUVRAJ CLEANING SERVICE GENERAL LEDGER NAME: ACCRUED SALARIES Date 20XX Mar. 31

Explanation Balance

ACCOUNT NO. Post Ref.

Debit

1 6 0 00

GJ2

NAME: B. YUVRAJ, CAPITAL Date 20XX

Explanation

Post Ref.

Closing

GJ2

Closing

GJ2

Debit

2 0 3 0 00 4 5 0 00

NAME: B. YUVRAJ, WITHDRAWALS Explanation

Post Ref.

Debit

Credit

Balance GJ2

Explanation

Post Ref.

Debit

Mar. 31

Balance

GJ2

Closing

GJ2

2 6 5 0 00

Closing

GJ2

2 0 3 0 00

Explanation

Mar. 31

Balance

Closing

Post Ref.

Debit

Explanation

Ref.

2 5 7 0 00

2 1 1 0 00

DR CR

Mar. 31

Balance

Adjusting

GJ2

Closing

GJ2

313 Balance 4 6 0 00

ACCOUNT NO.

314

Credit

DR CR

Balance

4 6 8 0 00

2 0 3 0 00

Credit

DR CR

412 Balance 4 6 8 0 00

4 6 8 0 00

Debit

Balance

ACCOUNT NO. Post

312

5 4 0 00

CR GJ2

1 6 0 00

ACCOUNT NO.

NAME: SALARIES EXPENSE Date 20XX

Balance

4 6 0 00

4 6 8 0 00

NAME: CLEANING FEES Date 20XX

Closing

Date 20XX

ACCOUNT NO.

NAME: INCOME SUMMARY

5-12

Credit

Balance

Date 20XX

ACCOUNT NO.

Mar. 31 31

Credit

213

Credit

1 6 0 00 1 6 0 0 00

DR CR

513 Balance

1 4 4 0 00

1 6 0 0 00

GROUP A PROBLEMS, Cont. P5-2A., Cont.

YUVRAJ CLEANING SERVICE GENERAL LEDGER

NAME: TELEPHONE EXPENSE Date 20XX

Explanation

Mar. 31

Balance

Closing

ACCOUNT NO. Post Ref.

Debit

GJ2

Explanation

Mar. 31

Balance

Closing

Post Ref.

Debit

GJ2

Explanation

Mar. 31

Balance

Closing

Post Ref.

Debit

NAME: INSURANCE EXPENSE Date 20XX

Explanation

Post Ref.

Mar. 31

Balance

GJ2

Adjusting

GJ2

Debit

Date 20XX Mar. 31 31

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

Mar. 31 31

515

Credit

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

Balance 1 9 6 00

1 9 6 00

ACCOUNT NO.

516

Credit

Balance 1 6 0 00

1 6 0 00

ACCOUNT NO.

517

Credit

CR Dr

Balance 1 8 0 00

1 8 0 00

ACCOUNT NO.

518

Credit

1 0 0 00

NAME: DEPRECIATION EXPENSE, AUTO Date 20XX

ACCOUNT NO.

1 8 0 00

NAME: CLEANING SUPPLIES EXPENSE

2 6 4 00

Dr GJ2

Balance

2 6 4 00

NAME: GAS EXPENSE Date 20XX

CR Dr

NAME: ADVERTISING EXPENSE Date 20XX

Credit

514

Balance 1 0 0 00

1 0 0 00

ACCOUNT NO.

519

Credit

1 5 0 00

Balance 1 5 0 00

5-13

GROUP A PROBLEMS, Cont. P5-2A., Cont. YUVRAJ CLEANING SERVICE POST-CLOSING TRIAL BALANCE MARCH 31, 20XX Cash Prepaid Insurance Cleaning Supplies Auto Accumulated Depreciation, Auto Accounts Payable Accrued Salaries B. Yuvraj, Capital Totals

5-14

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

$3 5 0 4 0 0

GROUP A PROBLEMS, Cont. P5-3A. PETE’S PLOWING GENERAL JOURNAL Date 20XX Jan.

Page 1 Post Ref.

Dr.

Cash

111

7 0 0 0 00

Snow Equipment

123

6 0 0 0 00

Account Title and Description

Pete Mack, Capital

311

Cr.

13 0 0 0 00

Owner investment 3

Prepaid Rent

114

Cash

111

2 0 0 0 00 2 0 0 0 00

Rent paid in advance 5

Office Equipment Accounts Payable

121

7 2 0 0 00

211

7 2 0 0 00

Bought equipment from Ling Corp. on account 6

Snow Supplies Cash

115

7 0 0 00

111

7 0 0 00

Cash purchase of supplies 9

Cash Plowing Services

111

15 0 0 0 00

411

15 0 0 0 00

Cash fees earned 12

Pete Mack, Withdrawals Cash

312

1 0 0 0 00

111

1 0 0 0 00

Cash withdrawal 20

Accounts Receivable

112

Plowing Services

411

5 0 0 0 00 5 0 0 0 00

Fees earned on account - North East Co. 26

Salaries Expense Cash

511 111

1 8 0 0 00 1 8 0 0 00

Paid salaries

5-15

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL JOURNAL Date 20XX Jan.

Account Title and Description Accounts Payable

Page 2 Post Ref.

211

Cash

Dr.

Cr.

3 6 0 0 00

111

3 6 0 0 00

Paid Ling Corp. 1/2 amount owed 30

Advertising Expense

512

Accounts Payable

211

9 0 0 00 9 0 0 00

Advertising bill received 31

Telephone Expense

513

Cash

2 1 0 00

111

2 1 0 00

Paid telephone bill Adjusting Entries 31

Snow Supplies Expense

515

Snow Supplies

3 0 0 00

115

3 0 0 00

Supplies used 31

Rent Expense

514

Prepaid Rent

6 0 0 00

114

6 0 0 00

Rent expired 31

Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equipment

516

1 2 0 00

122

1 2 0 00

Estimated depreciation 31

Depreciation Expense, Snow Equipment Accumulated Depreciation, Snow Equipment

517

1 0 0 00

124

1 0 0 00

Estimated depreciation 31

Salaries Expense

511

Accrued Salaries

1 9 0 00

212

1 9 0 00

Salaries to be paid Closing Entries 31

Plowing Services Income Summary To close income account

5-16

411 2 0 0 0 0 0 0 313

20 0 0 0 00

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL JOURNAL Date 20XX Jan.

Account Title and Description Income Summary

Page 3 Post Ref.

Dr.

313

4 2 2 0 00

Cr.

Salaries Expense

511

1 9 9 0 00

Advertising Expense

512

9 0 0 00

Telephone Expense

513

2 1 0 00

Rent Expense

514

6 0 0 00

Snow Supplies Expense

515

3 0 0 00

Depreciation Expense, Office Equipment

516

1 2 0 00

Depreciation Expense, Snow Equipment

517

1 0 0 00

To close expense accounts 31

Income Summary Pete Mack, Capital

313 1 5 7 8 0 0 0 311

15 7 8 0 00

Net income closed to capital 31

Pete Mack, Capital Pete Mack, Withdrawals

311 312

1 0 0 0 00 1 0 0 0 00

Close withdrawals into capital

5-17

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL LEDGER NAME: CASH Date 20XX Jan.

ACCOUNT NO. Explanation

Post Ref.

GJ1

Debit 7 0 0 0 00

5 0 0 0 00

7 0 0 00

4 3 0 0 00

19 3 0 0 00

1 0 0 0 00

18 3 0 0 00

GJ1

1 8 0 0 00

16 5 0 0 00

GJ2

3 6 0 0 00

12 9 0 0 00

GJ2

2 1 0 00

12 6 9 0 00

Explanation

15 0 0 0 00

ACCOUNT NO. Post Ref. GJ1

Date 20XX

Debit

Explanation

Post Ref. GJ1

Adjusting

5 0 0 0 00

Debit

Explanation

DR CR

Post Ref.

GJ2

Debit

Credit

7 0 0 00 3 0 0 00

112 Balance 5 0 0 0 00

114 Balance

2 0 0 0 00

1 4 0 0 00

ACCOUNT NO.

GJ1

Adjusting

Credit

6 0 0 00

GJ2

6 31

DR Dr

2 0 0 0 00

NAME: SNOW SUPPLIES Date 20XX

Credit

ACCOUNT NO.

3 31

5-18

Balance

2 0 0 0 00

NAME: PREPAID RENT

Jan.

7 0 0 0 00

Date 20XX

Jan.

DR Dr

NAME: ACCOUNTS RECEIVABLE

Jan.

Credit

111

DR CR

115 Balance

7 0 0 00

4 0 0 00

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL LEDGER NAME: OFFICE EQUIPMENT Date 20XX Jan.

Explanation

ACCOUNT NO. Post Ref. GJ1

Debit

Jan.

Explanation Adjusting

Post Ref.

Debit

Jan.

Explanation

Post Ref.

Debit

Jan.

Adjusting

Post Ref.

Debit

Jan.

Explanation

CR Cr

Credit

CR Dr

ACCOUNT NO. DR

Credit

1 0 0 00

GJ2

NAME: ACCOUNTS PAYABLE Date 20XX

Credit

6 0 0 0 00

NAME: ACCUMULATED DEPRECIATION, SNOW EQUIPMENT Explanation

ACCOUNT NO.

GJ2

Date 20XX

1 2 0 00

GJ2

NAME: SNOW EQUIPMENT Date 20XX

7 2 0 0 00

NAME: ACCUMULATED DEPRECIATION, OFFICE EQUIPMENT Date 20XX

Credit

ACCOUNT NO. Post Ref.

GJ1

GJ2

Debit

Credit

7 2 0 0 00 3 6 0 0 00 9 0 0 00

121 Balance 7 2 0 0 00

122 Balance 1 2 0 00

123 Balance 6 0 0 0 00

124 Balance 1 0 0 00

211 Balance

7 2 0 0 00

3 6 0 0 00

4 5 0 0 00

5-19

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL LEDGER NAME: ACCRUED SALARIES Date 20XX Jan.

Explanation

Adjusting

ACCOUNT NO. Post Ref.

Debit

1 9 0 00

GJ2

NAME: PETE MACK, CAPITAL Date 20XX Jan.

Explanation 3

Post Ref.

Debit

28 7 8 0 00

27 7 8 0 00

1 0 0 0 00

ACCOUNT NO. Post Ref. GJ1

Debit

NAME: INCOME SUMMARY

Jan.

Post Ref.

Debit

Closing

GJ2

Closing

GJ3

4 2 2 0 00

Closing

GJ3

15 7 8 0 00

Jan.

Explanation

Ref.

Debit

Balance 1 0 0 0 00

1 0 0 0 00

ACCOUNT NO.

313

Credit

DR CR

Balance

21 0 0 0 00

15 7 8 0 00

ACCOUNT NO. Post

312

Credit

DR CR

411 Balance

GJ1

15 0 0 0 00

GJ1

5 0 0 0 00

20 0 0 0 00

5-20

DR Dr

20 0 0 0 00

NAME: PLOWING SERVICES Date 20XX

Credit

1 0 0 0 00

GJ3

Explanation

Balance

GJ3

Date 20XX

15 7 8 0 00

Closing

311

13 0 0 0 00

Credit

1 9 0 00

GJ3

Balance

13 0 0 0 00

NAME: PETE MACK, WITHDRAWALS

Jan.

GJ1

Closing

Explanation

ACCOUNT NO.

Date 20XX

Credit

212

Closing

GJ2

20 0 0 0 00

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL LEDGER NAME: SALARIES EXPENSE Date 20XX Jan.

Explanation

ACCOUNT NO. Post Ref.

Debit

1 8 0 0 00

1 9 0 00

1 9 9 0 00

GJ2

Closing

GJ3

NAME: ADVERTISING EXPENSE

Jan.

30 31

Post Ref. GJ2

Closing

Debit

GJ3

Jan.

Explanation

31 31

Post Ref. GJ2

Closing

Debit

GJ3

Jan.

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Debit

Jan.

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

ACCOUNT NO.

512

Credit

CR Dr

Debit

Balance 9 0 0 00

9 0 0 00

ACCOUNT NO.

513

Credit

CR Dr

Balance 2 1 0 00

2 1 0 00

ACCOUNT NO.

514

Credit

6 0 0 00

NAME: SNOW SUPPLIES EXPENSE Date 20XX

2 1 0 00

NAME: RENT EXPENSE Date 20XX

1 9 9 0 00

9 0 0 00

NAME: TELEPHONE EXPENSE Date 20XX

Balance

1 8 0 0 00

Adjusting

Explanation

GJ1

Date 20XX

Credit

511

Balance 6 0 0 00

6 0 0 00

ACCOUNT NO.

515

Credit

3 0 0 00

Balance 3 0 0 00

5-21

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING GENERAL LEDGER NAME: DEPRECIATION EXPENSE, OFFICE EQUIPMENT Date 20XX Jan.

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

ACCOUNT NO. Debit 1 2 0 00

NAME: DEPRECIATION EXPENSE, SNOW EQUIPMENT Date 20XX Jan.

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Credit

DR CR Dr

516 Balance 1 2 0 00

1 2 0 00

ACCOUNT NO.

517

Debit

Credit

1 0 0 00

DR CR Dr

1 0 0 00

Balance 1 0 0 00

PETE’S PLOWING INCOME STATEMENT FOR THE MONTH ENDED JANUARY 31, 20XX Revenue: $2 0 0 0 0 0 0

Plowing Services Operating Expenses: Salaries Expense

$1 9 9 0 0 0

Advertising Expense

9 0 0 00

Telephone Expense

2 1 0 00

Snow Supplies Expense

3 0 0 00

Rent Expense

6 0 0 00

Depreciation Expense, Office Equipment

1 2 0 00

Depreciation Expense, Snow Equipment

1 0 0 00

Total Operating Expenses Net Income

5-22

4 2 2 0 00 $1 5 7 8 0 0 0

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JANUARY 31, 20XX

Pete Mack, Capital, January 1, 20XX Net Income for January Less Withdrawals

$1 3 0 0 0 0 0 $1 5 7 8 0 0 0 1 0 0 0 00

Increase in Capital

14 7 8 0 00

Pete Mack, Capital, January 31, 20XX

$2 7 7 8 0 0 0

5-23

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING WORKSHEET FOR THE MONTH ENDED JANUARY 31, 20XX Account Titles

Cash Accounts Receivable

Trial Balance Dr. Cr. 12 6 9 0 00 5 0 0 0 00

Adjustments Dr.

Cr.

Prepaid Rent

2 0 0

(B)

6 0 0 00

Snow Supplies Office Equipment Snow Equipment Accounts Payable Pete Mack, Capital Pete Mack, Withdrawals Plowing Services Salaries Expense Advertising Expense Telephone Expense

7 0 7 2 0 6 0 0

0 0

00 00

(A)

3 0 0 00

(C)

1 2 0 00

(D) (E)

1 0 0 00 1 9 0 00

4 5 0 0 00 13 0 0 0 00 1 0 0

00 20 0 0 0 00

1 8 0 9 0 2 1

0 0 0

00 00 00

37 5 0

00 37 5 0 0 00

(E) 1 9 0 0 0

Snow Supplies Expense

(A) 3 0 0 0 0

Rent Expense

(B) 6 0 0 0 0

Depn. Exp., Office Equipment

Acc. Depn., Office Equipment Depn. Exp., Snow Equipment

(D) 1 0 0 0 0

Acc. Depn., Snow Equipment Accrued Salaries 1 3 1 0 00 Net Income

5-24

1 3 1 0 00

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING WORKSHEET FOR THE MONTH ENDED JANUARY 31, 20XX Adjusted Trial Balance Dr. Cr. 12 6 9 0 00 5 0 0 0 00 1 4 0 0 00 4 0 0 00 7 2 0 0 00

Income Statement Dr. Cr.

Balance Sheet

12 6 5 0 1 4 4 7 2 6 0

6 0 0 0 00

Dr. 9 0 00 0 0 00 0 0 00 0 0 00 0 0 00

Cr.

0 0 00

4 5 0 0 00 13 0 0 0 00

1 0 0 0 00

1 0 0 0 00 20 0 0 0 00

20 0 0 0 00

1 9 9 0 00 9 0 0 00 2 1 0 00

3 0 0 00 6 0 0 00 1 2 0 00

3 0 0 00 6 0 0 00 1 2 0 00 1 2 0 00

1 0 0 00

1 2 0 00 1 0 0 00

1 0 0 00 1 9 0 00 37 9 1 0 00 37 9 1 0 00

1 0 0 00 1 9 0 00 4 2 2 0 00 20 0 0 0 00 15 7 8 0 00 20 0 0 0 00 20 0 0 0 00

33 6 9 0 00 17 9 1 0 00 15 7 8 0 00 0 00 33 6 9 0 00 33 6 9 0 00

5-25

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING BALANCE SHEET JANUARY 31, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY

Assets Cash Accounts Receivable Prepaid Rent Snow Equipment Office Equipment Less Accumulated Depreciation Snow Equipment Less Accumulated Depreciation

Total Assets

5-26

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

7 0 8 0 00

Liabilities Accounts Payable Accrued Salaries

$4 5 0 0 0 0 1 9 0 00

Total Liabilities

$4 6 9 0 0 0

Owner’s Equity Pete Mack, Capital

27 7 8 0 00

Total Liabilities and Owner’s Equity

$3 2 4 7 0 0 0

6 0 0 0 00 1 0 0 00

5 9 0 0 00

$3 2 4 7 0 0 0

GROUP A PROBLEMS, Cont. P5-3A., Cont. PETE’S PLOWING POST CLOSING TRIAL BALANCE JANUARY 31, 20XX Cash

12 6 9 0 00

Accounts Receivable

5 0 0 0 00

Prepaid Rent

1 4 0 0 00

Snow Supplies

4 0 0 00

Office Equipment

7 2 0 0 00 1 2 0 00

Accumulated Depreciation, Office Equipment Snow Equipment Accumulated Depreciation, Snow Equipment

6 0 0 0 00 1 0 0 00

Accounts Payable

4 5 0 0 00

Accrued Salaries

1 9 0 00

Pete Mack, Capital Totals

27 7 8 0 00 32 6 9 0 00 32 6 9 0 00

5-27

GROUP B PROBLEMS P5-1B Date 20XX Jun.

Closing entries:

Debit

Electrical Fees Earned Income Summary To close revenue to the income summary. Income Summary Depreciation Expense, Office Equipment Depreciation Expense, Electrical Equipment Salaries Expense Rent Expense Advertising Expense To close expense accounts to income summary. A. Altaz, Capital Income Summary To close income summary to capital. A. Altaz, Capital A. Altaz, Withdrawals To close withdrawals to capital.

Credit

64 1 0 0

65 5 0 0

64 1 0 0 00

5 11 0 22 5 24 0 7 5 1 4 0 0

0 0 0 0 0

0 00 0 00 0 00 0 00 0 00

00 1 4 0 0 00

7 5 0 0

00 7 5 0 0 00

ALTAZ’S ELECTRICAL CO. POST-CLOSING TRIAL BALANCE JUNE 30, 20XX Acct. No. 101 103 105 107 108 120 121 201 215 240 301

Account Cash Accounts Receivable Prepaid Rent Office Equipment Accumulated Depreciation, Office Equipment Electrical Equipment Accumulated Depreciation, Electrical Equipment Accounts Payable Salaries Payable Loan Payable A. Altaz, Capital Totals

*Beginning Balance − Net Loss − Withdrawals = 32,200 − 1,400 − 7,500 = 23,300

5-28

Debit $7 14 6 4

5 0 0 5

5 0 0 0

Credit 0 0 0 0

73 5 0 0

$105 5 5 0

00 00 00 00 $1 7 5 0

26 7 24 5 3 2 26 0 23 3

0 0 0 0 0

00 00 00 00 0 0*

0 0 $105 5 5 0

00 5 5 0 0 0

GROUP B PROBLEMS, Cont. P5-2B. HARVEY’S CLEANING SERVICE GENERAL JOURNAL Date 20XX

Account Title and Description

Post Ref.

Page 2 Dr.

Cr.

Adjusting Entries Mar.

Insurance Expense

517

Prepaid Insurance

2 0 0 00

114

2 0 0 00

Insurance expired 31

Cleaning Supplies Expense Cleaning Supplies

518

6 0 0 00

115

6 0 0 00

Supplies used 31

Depreciation Expense, Auto Accumulated Depreciation, Auto

519

1 5 0 00

122

1 5 0 00

Estimated depreciation 31

Salaries Expense

513

Accrued Salaries

1 7 5 00

213

1 7 5 00

Salaries to be paid Closing Entries 31

Cleaning Services Income Summary

412

3 7 0 0 00

314

3 7 0 0 00

To close income account 31

Income Summary

314

3 9 4 5 00

Salaries Expense

513

2 1 7 5 00

Telephone Expense

514

2 8 4 00

Advertising Expense

515

2 7 6 00

Gas Expense

516

2 6 0 00

Insurance Expense

517

2 0 0 00

Cleaning Supplies Expense

518

6 0 0 00

Depreciation Expense, Auto

519

1 5 0 00

To close expense accounts 31

B. Harvey, Capital

312

Income Summary

314

2 4 5 00 2 4 5 00

Close loss to capital 31

B. Harvey, Capital B. Harvey, Withdrawals

312 313

6 0 0 00 6 0 0 00

Close withdrawals into capital

5-29

GROUP B PROBLEMS, Cont. P5-2B., Cont. HARVEY’S CLEANING SERVICE GENERAL JOURNAL NAME: CASH Date 20XX Mar. 31

ACCOUNT NO. Explanation

Post Ref.

Debit

Balance

Date 20XX

Explanation

Mar. 31

Balance

Adjusting

Post Ref.

Debit

Balance

Adjusting

Post Ref.

Debit

Post Ref.

Debit

Adjusting

Ref.

Debit

1 5 0 00

GJ2

NAME: ACCOUNTS PAYABLE Date 20XX

Explanation Balance

Credit

Ref.

Debit

Credit

114 Balance

1 5 0 00

DR CR

115 Balance

8 0 0 00

2 0 0 00

DR CR

121 Balance 1 2 2 0 00

122 Balance

6 6 0 00

8 1 0 00

ACCOUNT NO. Post

1 7 2 4 00

3 5 0 00

ACCOUNT NO. Post

Balance

Explanation Balance

5-30

Credit

Balance

Mar. 31

ACCOUNT NO.

NAME: ACCUMULATED DEPRECIATION, AUTO

Mar. 31

Credit

6 0 0 00

GJ2

Explanation

Date 20XX

ACCOUNT NO.

NAME: AUTO Date 20XX

Credit

2 0 0 00

GJ2

Explanation

Mar. 31

ACCOUNT NO.

NAME: CLEANING SUPPLIES Date 20XX

DR Dr

NAME: PREPAID INSURANCE

Mar. 31

Credit

112

DR CR Cr

212 Balance 6 7 4 00

GROUP B PROBLEMS, Cont. P5-2B., Cont. HARVEY’S CLEANING SERVICE GENERAL JOURNAL NAME: ACCRUED SALARIES Date 20XX Mar. 31

Explanation Adjusting

ACCOUNT NO. Post Ref.

Debit

Explanation

Post Ref.

Closing

GJ2

Closing

GJ2

Debit

Credit

Balance

Explanation

Mar. 31

Balance

Closing

Ref.

2 2 3 5 00

6 0 0 00

1 6 3 5 00

Debit

GJ2

Post Ref. GJ2

Closing Closing

Closing

GJ2

Debit

Explanation

Mar. 31

Balance

Closing

Post Ref.

Debit

Explanation

Ref.

314

Credit

Mar. 31

Balance

Adjusting

GJ2

Closing

GJ2

Balance

3 7 0 0 00

2 4 5 00

ACCOUNT NO.

412

Credit

Balance 3 7 0 0 00

3 7 0 0 00

Debit

6 0 0 00

ACCOUNT NO.

ACCOUNT NO. Post

Balance

Cr GJ2

313

6 0 0 00

3 9 4 5 00

NAME: SALARIES EXPENSE Date 20XX

Credit

3 7 0 0 00

NAME: CLEANING SERVICES Date 20XX

Balance

Explanation

312

2 4 5 00

NAME: INCOME SUMMARY Date 20XX

1 7 5 00

2 4 8 0 00

ACCOUNT NO. Post

Balance

NAME: B. HARVEY, WITHDRAWALS Date 20XX

ACCOUNT NO.

Mar. 31 31

Mar. 31

1 7 5 00

GJ2

NAME: B. HARVEY, CAPITAL Date 20XX

Credit

213

Credit

1 7 5 00 2 1 7 5 00

513 Balance

2 0 0 0 00

2 1 7 5 00

5-31

GROUP B PROBLEMS, Cont. P5-2B., Cont. HARVEY’S CLEANING SERVICE GENERAL LEDGER NAME: TELEPHONE EXPENSE Date 20XX

Explanation

Mar. 31

Balance

Closing

ACCOUNT NO. Post Ref.

Debit

GJ2

Explanation

Mar. 31

Balance

Closing

Post Ref.

Debit

GJ2

Explanation

Mar. 31

Balance

Closing

Post Ref.

Debit

GJ2

Mar. 31 31

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

Date 20XX Mar. 31 31

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

Date 20XX Mar. 31 31

5-32

ACCOUNT NO.

515

Credit

DR CR

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

Balance 2 7 6 00

2 7 6 00

ACCOUNT NO.

516

Credit

DR CR

Balance 2 6 0 00

2 6 0 00

ACCOUNT NO.

517

Credit

DR CR Dr

Balance 2 0 0 00

2 0 0 00

ACCOUNT NO.

518

Credit

6 0 0 00

NAME: DEPRECIATION EXPENSE, AUTO

2 8 4 00

2 0 0 00

NAME: CLEANING SUPPLIES EXPENSE

Balance

2 8 4 00

NAME: INSURANCE EXPENSE Date 20XX

NAME: GAS EXPENSE Date 20XX

DR Dr

NAME: ADVERTISING EXPENSE Date 20XX

Credit

514

DR CR Dr

Balance 6 0 0 00

6 0 0 00

ACCOUNT NO.

519

Credit

1 5 0 00

DR CR Dr

1 5 0 00

Balance 1 5 0 00

GROUP B PROBLEMS, Cont. P5-2B., Cont. HARVEY’S CLEANING SERVICE POST-CLOSING TRIAL BALANCE MARCH 31, 20XX Dr. Cash

$1 7 2 0 0 0

Prepaid Insurance

1 5 0 00

Cleaning Supplies

2 0 0 00

Auto Accumulated Depreciation, Auto

Cr.

1 2 2 0 00 $ 8 1 0 00

Accounts Payable

6 7 4 00

Accrued Salaries

1 7 5 00

B. Harvey, Capital

2 6 3 5 00

Totals

$3 2 9 4 0 0 $3 2 9 4 0 0

5-33

GROUP B PROBLEMS, Cont. P5-3B. RJ’S BASEBALL ACADEMY GENERAL JOURNAL Date Mar.

Account Name Training Fees Earned Rent Earned

Dr.

Cr.

65 5 0 0 00 5 0 0 0 00

Income Summary

70 5 0 0 00

To close Revenue account to Income Summary account 31

Income Summary

42 8 5 0 00

Depreciation Expense – Baseball Equipment

7 5 0 0 00

Depreciation Expense - Building

5 2 0 0 00

Salaries Expense

20 0 0 0 00

Telephone Expense

3 1 5 0 00

Utilities Expense

7 0 0 0 00

To close Expense accounts to Income Summary Account 31

Income Summary

27 6 5 0 00

R. J. Good, Capital

27 6 5 0 00

To close Income Summary Account 31

R. J. Good, Capital R. J. Good, Withdrawals To close withdrawal account to capital account

5-34

5 7 5 0 00 5 7 5 0 00

GROUP B PROBLEMS, Cont. P5-3B., Cont. RJ’S BASEBALL ACADEMY POST-CLOSING TRIAL BALANCE MARCH 31, 20XX Account Name

Dr.

Cash

17 0 0 0 00

Accounts Receivable

27 7 5 0 00

Store Supplies Baseball Equipment

5 1 5 0 00 75 0 0 0 00

Accumulated Depreciation, Baseball Equipment Building

53 7 5 0 00 10 2 0 0 00

Accumulated Depreciation, Building

20 5 0 0 00

1 5 0 0 00

Land Accounts Payable Loan Payable R. J. Good, Capital

5 0 0 0 00

Totals

Cr.

4 0 7 0 00 5 5 0 0 00 1 2 1 9 5 0 0 0* 291 9 0 0 00 291 9 0 0 00

*Beginning Balance + Net Profit − Withdrawals = 100,050 + 27,650 − 5,750 = 121,950

5-35

GROUP C PROBLEMS P5-1C. MUHAMMAD’S COMPUTER REPAIR SERVICE GENERAL JOURNAL Date 20XX

Account Title and Description

Post Ref.

Dr.

5114 1100

3 6 84

5125 1250

3 4 7 40

5140 1120

2 3 8 19

5185 1160

5 4 0 27

5180 2150

4 2 0 00

5100 2100

2 4 3 00

Page 1 Cr.

Adjusting Entries Nov

5-36

Bank Charges Expense Cash To correct bank account Depreciation Expense, Van Accumulated Depreciation, Van Estimated depreciation Insurance Expense Prepaid Insurance Insurance expired Supplies Expense Repair Parts and Supplies Supplies used Salaries Expense Accrued Salaries Salaries to be paid Advertising Expense Accounts Payable Accrued charge Closing Entries Repair Revenue Income Summary To close income accounts Income Summary Advertising Expense Automotive Expense Cleaning Expense Miscellaneous Expense Postage and Office Expense Salaries Expense Insurance Expense Bank Charges Expense Depreciation Expense, Van Supplies Expense To close expense accounts Income Summary Muhammad Hamza, Capital Net income closed to capital Muhammad Hamza, Capital Mahammad Hamza, Withdrawals Close withdrawals into capital

3 6 84

3 4 7 40

2 3 8 19

5 4 0 27

4 2 0 00

2 4 3 00

4100 1 6 4 5 8 7 0 3199 16 4 5 8 70 3199 5100 5112 5120 5145 5160 5180 5140 5114 5125 5185

9 5 9 3 30

3199 3100

6 8 6 5 40

3100 3150

2 6 0 0 00

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

38 51 00 14 17 40 19 84 40 27

6 8 6 5 40

2 6 0 0 00

GROUP C PROBLEMS, Cont. P5-1C., Cont. MUHAMMAD’S COMPUTER REPAIR SERVICE GENERAL LEDGER NAME: CASH Date 20XX Nov.

ACCOUNT NO. Explanation

Balance

Adjusting

Post Ref.

Debit

Nov.

Explanation

Balance

Adjusting

Post Ref.

Debit

Nov.

Post Ref.

Debit

Explanation

Balance

Adjusting

Ref.

Debit

Nov.

Post Ref.

Debit

Balance

Adjusting

Ref.

GJ1

Debit

DR CR

3 4 7 40

1160 Balance

1 0 5 7 20

Credit

5 2 7 7 42

ACCOUNT NO. Post

Balance

1 5 9 7 47

Explanation

1140

Credit

Balance

NAME: ACCUMULATED DEPRECIATION, VAN

Nov.

Credit

ACCOUNT NO. Explanation

Date 20XX

4 7 6 37

5 4 0 27

GJ1

NAME: VAN Date 20XX

ACCOUNT NO. Post

Balance 7 1 4 56

Credit

1120

NAME: REPAIR PARTS AND SUPPLIES

Nov.

2 3 5 9 64

ACCOUNT NO.

Balance

Date 20XX

2 3 8 19

GJ1

Explanation

2 3 9 6 48

Credit

Balance

ACCOUNT NO.

NAME: ACCOUNTS RECEIVABLE Date 20XX

3 6 84

GJ1

NAME: PREPAID INSURANCE Date 20XX

Credit

1100

1200 Balance 21 6 7 5 00

1250 Balance

8 1 0 3 65

8 4 5 1 05

5-37

GROUP C PROBLEMS, Cont. P5-1C., Cont. MUHAMMAD’S COMPUTER REPAIR SERVICE GENERAL LEDGER NAME: ACCOUNTS PAYABLE Date 20XX Nov.

Explanation

Balance

Adjusting

ACCOUNT NO. Post Ref.

Debit

2 4 3 00

GJ1

NAME: ACCRUED SALARIES Date 20XX Nov.

Explanation Adjusting

Post Ref.

Debit

Nov.

Post Ref.

Balance

Closing

GJ1

Closing

GJ1

Debit

Nov.

Balance

Closing

2 6 0 0 00

Post Ref.

Debit

Nov.

5-38

Credit

3 8 0 2 60

4 0 4 5 60

DR CR Cr

DR CR

Explanation

Ref.

Closing

GJ1

Closing

GJ1

9 5 9 3 30

Closing

GJ1

6 8 6 5 40

Credit 16 4 5 8 00

4 2 0 00

3100 Balance

20 5 2 8 98

17 9 2 8 98

DR CR

3150 Balance 2 6 0 0 00

2 6 0 0 00

Debit

Balance

13 6 6 3 58

ACCOUNT NO. Post

2150

Dr GJ1

Balance

ACCOUNT NO.

NAME: INCOME SUMMARY Date 20XX

Credit

6 8 6 5 40

NAME: MUHAMMAD HAMZA, WITHDRAWALS Explanation

ACCOUNT NO.

Date 20XX

Credit 4 2 0 00

GJ1

Explanation

ACCOUNT NO.

NAME: MUHUMMAD HAMZA, CAPITAL Date 20XX

Credit

2100

DR CR

3199 Balance

16 4 5 8 70

6 8 6 5 40

GROUP C PROBLEMS, Cont. P5-1C., Cont. MUHAMMAD’S COMPUTER REPAIR SERVICE GENERAL LEDGER NAME: REPAIR REVENUE Date 20XX Nov.

Explanation

Balance

Closing

ACCOUNT NO. Post Ref.

Debit

Nov.

GJ1

Explanation

Post Ref.

Balance

Adjusting

GJ1

Closing

GJ1

Debit

Nov.

Explanation

Balance

Closing

Post Ref.

Debit

Nov.

Ref.

Adjusting

GJ1

Closing

GJ1

Debit

Nov.

Explanation

Balance

Closing

Post Ref.

Debit

NAME: DEPRECIATION EXPENSE, VAN Date 20XX Nov.

9 5 7 38

ACCOUNT NO.

5112

Credit

Explanation

Post Ref.

Adjusting

GJ1

Closing

GJ1

Debit

Balance 2 3 4 5 51

CR Dr

5114 Balance 3 6 84

3 6 84

ACCOUNT NO.

5120

Credit

CR Dr

GJ1

Balance

9 5 7 38

3 6 84

NAME: CLEANING EXPENSE

5100

7 1 4 38

ACCOUNT NO. Post

16 4 5 8 70

2 3 4 5 51

GJ1

Explanation

Date 20XX

NAME: BANK CHARGES EXPENSE Date 20XX

Credit

2 4 3 00

NAME: AUTOMOTIVE EXPENSE

Balance

16 4 5 8 70

ACCOUNT NO.

Date 20XX

CR Cr

NAME: ADVERTISING EXPENSE Date 20XX

Credit

4100

Balance 3 7 5 00

3 7 5 00

ACCOUNT NO.

5125

Credit

3 4 7 40

Balance 3 4 7 40

5-39

GROUP C PROBLEMS, Cont. P5-1C., Cont. MUHAMMAD’S COMPUTER REPAIR SERVICE GENERAL LEDGER NAME: INSURANCE EXPENSE Date 20XX Nov.

Explanation

ACCOUNT NO. Post Ref.

Adjusting

GJ1

Closing

GJ1

Debit 2 3 8 19

NAME: MISCELLANEOUS EXPENSE Date 20XX Nov.

Explanation

Balance

Closing

Post Ref.

Debit

Nov.

GJ1

Explanation

Balance

Closing

Post Ref.

Debit

Nov.

GJ1

Explanation

Post Ref.

Balance

Adjusting

GJ1

Closing

GJ1

Debit

Nov.

5-40

Explanation

Post Ref.

Adjusting

GJ1

Closing

GJ1

2 3 8 19

ACCOUNT NO.

5145

Credit

DR CR

Balance 1 7 8 14

1 7 8 14

ACCOUNT NO.

5160

Credit

DR CR

Balance 2 8 4 17

2 8 4 17

ACCOUNT NO.

5180

Credit

DR CR

4 2 0 00

Debit

Balance

2 3 8 19

NAME: SUPPLIES EXPENSE Date 20XX

NAME: SALARIES EXPENSE Date 20XX

NAME: POSTAGE AND OFFICE EXPENSE Date 20XX

Credit

5140

Balance 3 8 7 0 40 4 2 9 0 40

4 2 9 0 40

ACCOUNT NO.

5185

Credit

5 4 0 27

DR CR Dr

5 4 0 27

Balance 5 4 0 27

GROUP C PROBLEMS, Cont. P5-1C., Cont. MUHAMMAD’S COMPUTER REPAIR SERVICE POST-CLOSING TRIAL BALANCE NOVEMBER 30, 20XX Cash

2 3 5 9 64

Prepaid Insurance

4 7 6 37

Accounts Receivable

5 2 7 7 42

Repair Parts and Supplies

1 0 5 7 20

Van

21 6 7 5 00

Accumulated Depreciation, Van

8 4 5 1 05

Accounts Payable

4 0 4 5 60

Accrued Salaries

4 2 0 00

Muhammad Hamza, Capital Totals

17 9 2 8 98 30 8 4 5 63 30 8 4 5 63

5-41

GROUP C PROBLEMS, Cont. P5-2C. MIKE’S PLUMBING GENERAL JOURNAL Date 20XX May

Account Title and Description

Page 1 Post Ref.

Dr.

Cash

111 1 0 0 0 0 0 0

Plumbing Equipment

123

Mike Quinlan, Capital

Cr.

7 4 0 0 00

311

17 4 0 0 00

Owner investment 1

Prepaid Rent

114

Cash

111

1 9 8 0 00 1 9 8 0 00

Paid rent in advance 3

Office Equipment Accounts Payable

121

3 8 0 0 00

211

3 8 0 0 00

Purchased office equipment from MacKenzie Co. 7

Plumbing Supplies Cash

115

1 6 4 5 00

111

1 6 4 5 00

Purchased plumbing supplies 8

Cash Plumbing Services

111

3 6 0 0 00

411

3 6 0 0 00

Collected plumbing service fees 9

Mike Quinlan, Withdrawals Cash

312

1 2 2 00

111

1 2 2 00

Paid personal expenses 10

Accounts Receivable

112

Plumbing Services

411

9 6 0 0 00 9 6 0 0 00

Billed Western Construction for plumbing services 14

Advertising Expense

512

Accounts Payable

211

Received bill for advertising from ABCD Radio

5-42

4 2 0 00 4 2 0 00

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING GENERAL JOURNAL Date 20XX May

Account Title and Description Cash

Page 2 Post Ref.

111

Accounts Receivable

Dr.

Cr.

4 8 0 0 00

112

4 8 0 0 00

Received partial payment from Western Construction 28

Accounts Payable

211

Cash

1 9 0 0 00

111

1 9 0 0 00

Paid MacKenzie Co. one-half owed 31

Telephone Expense

513

Cash

1 8 4 00

111

1 8 4 00

Paid telephone bill 31

Cleaning Expense

514

Accounts Payable

2 1 5 00

211

2 1 5 00

Received bill from George’s Cleaning 31

Salaries Expense

511

Cash

4 1 0 0 00

111

4 1 0 0 00

Paid salaries for May Adjusting Entries May

Plumbing Supplies Expense Plumbing Supplies

515

1 3 1 7 00

115

1 3 1 7 00

Supplies used 31

Rent Expense

516

Prepaid Rent

114

4 9 5 00 4 9 5 00

Rent expired 31

Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equipment

517

5 5 00

122

5 5 00

Estimated depreciation 31

Depreciation Expense, Plumbing Equipment Accumulated Depreciation, Plumbing Equipment

518 124

2 0 5 56 2 0 5 56

Estimated depreciation

5-43

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING GENERAL JOURNAL Date 20XX

Account Title and Description

Page 3 Post Ref.

Dr.

Cr.

Adjusting Entries May

Salaries Expense

511

Accrued Salaries

8 2 0 00

212

8 2 0 00

Salaries to be paid Closing Entries May

Plumbing Services Income Summary

411 1 3 2 0 0 0 0 313

13 2 0 0 00

To close income account 31

Income Summary

313

7 8 1 1 56

Salaries Expense

511

4 9 2 0 00

Advertising Expense

512

4 2 0 00

Telephone Expense

513

1 8 4 00

Cleaning Expense

514

2 1 5 00

Plumbing Supplies Expense

515

1 3 1 7 00

Rent Expense

516

4 9 5 00

Depreciation Expense, Office Equipment

517

5 5 00

Depreciation Expense, Plumbing Equipment

518

2 0 5 56

To close expense account 31

Income Summary Mike Quinlan, Capital

313

5 3 8 8 44

311

5 3 8 8 44

Net income closed to capital 31

Mike Quinlan, Capital Mike Quinlan, Withdrawals Close withdrawals into capital

5-44

311 312

1 2 2 00 1 2 2 00

GROUP C PROBLEMS, Cont. P5-2C., Cont. GENERAL LEDGER OF MIKE’S PLUMBING NAME: CASH Date 20XX May

ACCOUNT NO. Explanation

Post

Debit

Ref.

GJ1

GJ2

May

Explanation

GJ2

Debit

Adjusting

Debit

Ref. 1

6 3 7 5 00

9 9 7 5 00

9 8 5 3 00

14 6 5 3 00

1 9 0 0 00

12 7 5 3 00

1 8 4 00

12 5 6 9 00

4 1 0 0 00

8 4 6 9 00

Credit

4 8 0 0 00

Debit

Ref. GJ1 GJ2

1 9 8 0 00 1 4 8 5 00

1 6 4 5 00 1 3 1 7 00

Balance

Credit

114

ACCOUNT NO. Post

Balance 9 6 0 0 00

4 9 5 00

112

Credit

1 9 8 0 00

GJ2

Explanation

Adjusting

4 8 0 0 00

Post GJ1

1 6 4 5 00

9 6 0 0 00

NAME: PLUMBING SUPPLIES

May

8 0 2 0 00

ACCOUNT NO. Explanation

Date 20XX

4 8 0 0 00

Ref. GJ1

1 9 8 0 00

1 2 2 00

NAME: PREPAID RENT

May

10 0 0 0 0 0

3 6 0 0 00

Post

Balance

ACCOUNT NO.

Date 20XX

10 0 0 0 00

NAME: ACCOUNTS RECEIVABLE Date 20XX

Credit

111

115 Balance

1 6 4 5 00

3 2 8 00

5-45

GROUP C PROBLEMS, Cont. P5-2C., Cont. GENERAL LEDGER OF MIKE’S PLUMBING, Cont. NAME: OFFICE EQUIPMENT Date 20XX May

Explanation 3

ACCOUNT NO. Post Ref. GJ1

Debit 3 8 0 0 00

NAME: ACCUMULATED DEPRECIATION, OFFICE EQUIPMENT Date 20XX May

Explanation

Adjusting

Post Ref.

Debit

May

Explanation 1

Post Ref.

Debit

May

Adjusting

Post Ref.

Debit

May

5-46

Explanation

Credit

DR CR Cr

DR CR Dr

ACCOUNT NO. Credit 2 0 5 56

GJ2

NAME: ACCOUNTS PAYABLE Date 20XX

ACCOUNT NO.

7 4 0 0 00

NAME: ACCUMULATED DEPRECIATION, PLUMBING EQUIPMENT Explanation

ACCOUNT NO.

GJ1

Date 20XX

DR Dr

5 5 00

GJ2

NAME: PLUMBING EQUIPMENT Date 20XX

Credit

DR CR Cr

ACCOUNT NO. Post Ref.

Debit

Credit

DR CR

121 Balance 3 8 0 0 00

122 Balance 5 5 00

123 Balance 7 4 0 0 00

124 Balance 2 0 5 56

211 Balance

GJ1

3 8 0 0 00

GJ1

4 2 0 00

4 2 2 0 00

GJ2

2 3 2 0 00

GJ2

2 5 3 5 00

1 9 0 0 00 2 1 5 00

GROUP C PROBLEMS, Cont. P5-2C., Cont. GENERAL LEDGER OF MIKE’S PLUMBING, Cont. NAME: ACCRUED SALARIES Date 20XX May

Explanation

Adjusting

ACCOUNT NO. Post Ref.

Debit

May

Explanation 1

Post Ref.

Debit

5 3 8 8 44

22 7 8 8 00

22 6 6 6 44

GJ3

1 2 2 00

NAME: MIKE QUINLAN, WITHDRAWALS

ACCOUNT NO. Post Ref. GJ1

Closing

Debit

GJ3

May

Explanation

Post Ref.

Debit

Closing

GJ3

Closing

GJ3

7 8 1 1 56

Closing

GJ3

5 3 8 8 44

May

Explanation

CR Dr

Ref.

Debit

Balance 1 2 2 00

ACCOUNT NO.

313

Credit

Balance

13 2 0 0 00

5 3 8 8 44

ACCOUNT NO. Post

312

1 2 2 00

13 2 0 0 00

NAME: PLUMBING SERVICES Date 20XX

Credit

1 2 2 00

NAME: INCOME SUMMARY Date 20XX

Balance 17 4 0 0 00

Closing

311

8 2 0 00

17 4 0 0 0 0

GJ3

May

Credit

Balance

GJ1

Closing

Explanation

ACCOUNT NO.

Date 20XX

8 2 0 00

GJ3

NAME: MIKE QUINLAN, CAPITAL Date 20XX

Credit

212

Credit

411 Balance

GJ1

3 6 0 0 00

GJ1

9 6 0 0 00

13 2 0 0 00

Closing

GJ3

13 2 0 0 00

5-47

GROUP C PROBLEMS, Cont. P5-2C., Cont. GENERAL LEDGER OF MIKE’S PLUMBING, Cont. NAME: SALARIES EXPENSE Date 20XX May

Explanation

ACCOUNT NO. Post Ref.

Debit

4 1 0 0 00

8 2 0 00

4 9 2 0 00

GJ3

Closing

GJ3

14 31

Post Ref. GJ1

Closing

Debit

GJ3

May

Explanation

31 31

Post Ref. GJ2

Closing

Debit

GJ3

May

Explanation

31 31

Post Ref. GJ2

Closing

Debit

GJ3

May

5-48

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

ACCOUNT NO.

512

Credit

Debit

DR CR Dr

Balance 4 2 0 00

4 2 0 00

ACCOUNT NO.

513

Credit

DR CR Dr

Balance 1 8 4 00

1 8 4 00

ACCOUNT NO.

514

Credit

2 1 5 00

NAME: PLUMBING SUPPLIES EXPENSE Date 20XX

1 8 4 00

NAME: CLEANING EXPENSE Date 20XX

4 9 2 0 00

4 2 0 00

NAME: TELEPHONE EXPENSE Date 20XX

Balance

NAME: ADVERTISING EXPENSE

May

4 1 0 0 00

Adjusting

Explanation

GJ2

Date 20XX

Credit

511

DR CR Dr

Balance 2 1 5 00

2 1 5 00

ACCOUNT NO.

515

Credit

1 3 1 7 00

DR CR Dr

1 3 1 7 00

Balance 1 3 1 7 00

GROUP C PROBLEMS, Cont. P5-2C., Cont. GENERAL LEDGER OF MIKE’S PLUMBING, Cont. NAME: RENT EXPENSE Date 20XX May

ACCOUNT NO. Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Debit

May

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Debit

May

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Debit

Balance 4 9 5 00

4 9 5 00

ACCOUNT NO.

517

Credit

5 5 00

NAME: DEPRECIATION EXPENSE, PLUMBING EQUIPMENT Date 20XX

4 9 5 00

NAME: DEPRECIATION EXPENSE, OFFICE EQUIPMENT Date 20XX

Credit

516

Balance 5 5 00

5 5 00

ACCOUNT NO.

518

Credit

2 0 5 56

Balance 2 0 5 56

5-49

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING WORKSHEET FOR THE MONTH ENDED MAY 31, 20XX Account Titles

Trial Balance Dr. Cr.

Dr.

Adjustments Cr.

Cash

8 4 6 9 00

Accounts Receivable

4 8 0 0 00

Prepaid Rent

1 9 8 0 00

(B)

Plumbing Supplies

1 6 4 5 00

(A) 1 3 1 7 0 0

Office Equipment

3 8 0 0 00

Plumbing Equipment

7 4 0 0 00

Accounts Payable

2 5 3 5 00

Mike Quinlan, Capital Mike Quinlan, Withdrawals

4 9 5 00

17 4 0 0 00 1 2 2 00

Plumbing Services

13 2 0 0 00

Salaries Expense

4 1 0 0 00

Advertising Expense

4 2 0 00

Telephone Expense

1 8 4 00

Cleaning Expense

2 1 5 00

(E)

8 2 0 00

33 1 3 5 00 33 1 3 5 00

Plumbing Supplies Expense

(A) 1 3 1 7 0 0

Rent Expense

(B)

4 9 5 00

Depn. Exp., Office Equipment

(C)

5 5 00

Acc. Depn., Office Equipment

(C)

5 5 00

Acc. Depn., Plumbing Equipment

(D)

2 0 5 56

Accrued Salaries

(E)

8 2 0 00

Depn. Exp., Plumbing Equipment

(D)

2 0 5 56

2 8 9 2 56 Net Income

5-50

2 8 9 2 56

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING WORKSHEET FOR MONTH ENDED MAY 31, 20XX Adjusted Trial Balance Dr. Cr. 8 4 6 9 00 4 8 0 0 00 1 4 8 5 00 3 2 8 00 3 8 0 0 00

Income Statement Dr. Cr.

7 4 0 0 00

Balance Sheet Dr. Cr. 8 4 6 9 00 4 8 0 0 00 1 4 8 5 00 3 2 8 00 3 8 0 0 00 7 4 0 0 00

2 5 3 5 00 17 4 0 0 00

1 2 2 00

1 2 2 00 13 2 0 0 00

4 9 4 1 2

2 0 00 2 0 00

13 2 0 0 00 4 9 4 1 2

8 4 00 1 5 00

1 3 1 7 00 4 9 5 00 5 5 00

2 0 00 2 0 00 8 4 00 1 5 00

1 3 1 7 00 4 9 5 00 5 5 00 5 5 00

2 0 5 56

5 5 00 2 0 5 56

2 0 5 56 8 2 0 00 3 4 2 1 5 56

34 2 1 5 56

2 0 5 56 8 2 0 00 7 8 1 1 56

13 2 0 0 00

26 4 0 4 00

5 3 8 8 44 13 2 0 0 00

21 0 1 5 56 5 3 8 8 44

13 2 0 0 00

26 4 0 4 00

5-51

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 20XX Revenue: Plumbing Services

$1 3 2 0 0 0 0

Operating Expenses: Salaries Expense Advertising Expense Telephone Expense Cleaning Expense Plumbing Supplies Expense Rent Expense Depreciation Expense, Office Equipment Depreciation Expense, Plumbing Equipment

$4 9 2 0 0 0 4 2 0 00 1 8 4 00 2 1 5 00 1 3 1 7 00 4 9 5 00 5 5 00 2 0 5 56

Total Operating Expenses

7 8 1 1 56

Net Income

$5 3 8 8 4 4

MIKE’S PLUMBING STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 20XX Mike Quinlan, Capital, May 1, 20XX Net Income for May Less Withdrawals Increase in Capital Mike Quinlan, Capital, May 31, 20XX

5-52

$1 7 4 0 0 0 0 $5 3 8 8 4 4 1 2 2 00 5 2 6 6 44 $2 2 6 6 6 4 4

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING BALANCE SHEET MAY 31, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY

Assets

Liabilities

Cash

$8 4 6 9 0 0

Accounts Payable

$2 5 3 5 0 0

Accounts Receivable

4 8 0 0 00

Accrued Salaries

8 2 0 00

Prepaid Rent

1 4 8 5 00

Total Liabilities

Plumbing Supplies Office Equipment Less Accumulated Depreciation Plumbing Equipment Less Accumulated Depreciation

$3 3 5 5 0 0

3 2 8 00 $3 8 0 0 0 0 5 5 00

Owner’s Equity 3 7 4 5 00

7 4 0 0 00 2 0 5 56

Mike Quinlan, Capital

22 6 6 6 44

7 1 9 4 44 Total Liabilities and

Total Assets

$2 6 0 2 1 4 4

Owner’s Equity

$2 6 0 2 1 4 4

5-53

GROUP C PROBLEMS, Cont. P5-2C., Cont. MIKE’S PLUMBING POST-CLOSING TRIAL BALANCE MAY 31, 20XX Cash

8 4 6 9 00

Accounts Receivable

4 8 0 0 00

Prepaid Rent

1 4 8 5 00

Plumbing Supplies

3 2 8 00

Office Equipment

3 8 0 0 00

Accumulated Depreciation, Office Equipment Plumbing Equipment Accumulated Depreciation, Plumbing Equipment

5 5 00 7 4 0 0 00 2 0 5 56

Accounts Payable

2 5 3 5 00

Accrued Salaries

8 2 0 00

Mike Quinlan, Capital Totals

5-54

22 6 6 6 44 26 2 8 2 00 26 2 8 2 00

GROUP C PROBLEMS, Cont. P5-3C. 1. Request to see current as well as past financial reports. Unadjusted trial balance not adequate. Need up-to-date information. 2. In proportion to fees, salaries appear very high and cash is low. 3. Would like to know why no withdrawal account. 4. Would like to see a projected set of figures for future financial report.

P5-4C. Beg. Capital + Net Income

$34,400 $ 19,300 − 14,360

4,940 39,340

− Withdrawals Ending Capital

8,000 $31,340

Recommend that all the closing entries be completed after the closing journal entries have been recorded in the journal.

SOLUTIONS TO ETHICAL CONSIDERATIONS EC5-1. Why should a Company Close Its Books at the End of the Fiscal Year? a. Closing entries are journal entries that move balances from temporary income and expense accounts to the permanent balance sheet account called the capital account. Closing entries follow period-end adjustments in the closing cycle. Missing a closing entry causes misreporting of the current period’s retained earnings, and if not corrected, it creates errors in the current or next period’s financial reports. b. The Income Summary Account - Central to the closing process, the Income Summary account accumulates the period-end balances sitting in temporary revenue and expenses accounts. An accountant systematically reviews the accounts holding revenue, income and gains, transferring these balances to the Income Summary account. The accountant applies the same procedure to expense and loss accounts. Each account is reset to zero as a result of the transfer, ready for next period’s accounting. The accountant credits the Income Summary balance to the capital account, which accumulates the profits and losses of the company since inception. Finally, the accountant debits the Capital account for any owner withdrawals recorded during the period. c. Temporary Accounts - Revenue and expense accounts on the income statement are considered temporary accounts. Unlike balance sheet accounts that are permanent, allowing account balances to accumulate over time, temporary income statement accounts report revenues and expenses periodically for given accounting periods. The amount of revenues and expenses from one period to the next are independent of each other. Thus, at the end of an accounting period, revenues and expenses must be closed out so they can start at a zero balance for the next period. Closing Entries - Closing entries are the opposite entries of the original entries for revenues and expenses. To close a revenue account, which is originally entered with a credit entry, a company records a revenue closing entry as a debit in the same amount of the revenue. Meanwhile, the company uses a clearing account, called income summary, to record a credit entry as the opposing entry to the debit closing entry for the revenue. To close an expense account, which is originally entered with a debit entry, a company records an expense closing entry as a credit in the same amount of the expense. The company then uses the same income summary to record a debit entry as the opposing entry to the credit closing entry for the expense. d. Reset Temporary Accounts - The closing entries for any revenues and expenses are subsequently posted to the existing revenue and expense accounts in the general ledger. Since a revenue account has a current credit balance, posting a debit closing entry of the same amount to the revenue account will bring the revenue account balance to zero. On the other hand, an expense account has a current debit balance, and posting a credit closing entry of the same amount to the expense account will reset the expense account balance to zero. With both revenue and expense accounts reset to zero balance, they are ready for recording any revenues and expenses for the next accounting period. If the Revenue account is not closed at the end of the period and reset to zero, revenue will be reported in the wrong accounting period and the amount of Revenue will be incorrect.

5-55

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS5-1. Analysis of Financial Statements—Roots Corporation 1.

a. and b. (all amounts in thousands of dollars) Date

Account Name

Debit

Jan

31 Sales Income Summary

240,506

Jan

31 Income Summary Cost of Goods Sold Selling, General & Admin Expenses Interest Expense Income Tax Expense

232200

Credit 240,506 100,767 114,807 11,741 4,885

Fiscal period The fiscal year of the Company consists of a 52 or 53 week period ending the closest Saturday to January 31 of each year. The current and comparative fiscal periods for the consolidated financial statements contain 52 weeks.

AFS5-2. Analysis of Financial Statements—Company of Your Choice Answers will vary depending on the company chosen. Have students follow the same solution as AFS5-1.

5-56

CONTINUING PROBLEM PRECISION COMPUTER CENTRE - GENERAL JOURNAL Date 20X1 July

Account Title and Description

Supplies Expense

5050

Supplies 31

Depreciation Expense, Computer Shop Equipment

Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equipment

Dr.

Cr.

3 6 0 00

1030

Accumulated Depreciation, Computer Shop Equipment 31

Ref.

Adjusting Entries

31 31

Post

Page 2

Rent Expense

5080

9 9 00

1081 5090

9 9 00 2 0 00

1091 5020

Prepaid Rent

3 6 0 00

2 0 00 4 0 0 00

1025

4 0 0 00

Closing Entries 31

Service Revenue Income Summary

Income Summary

6 6 8 5 00

3020 3020

6 6 8 5 00 3 6 7 9 00

Advertising Expense

5010

1 4 0 0 00

Rent Expense

5020

1 2 0 0 00

Utilities Expense

5030

1 8 0 00

Phone Expense

5040

2 2 0 00

Insurance Expense

5060

1 5 0 00

Postage Expense

5070

5 0 00

Supplies Expense

5050

3 6 0 00

Depn. Expense, Computer Shop Equipment

5080

9 9 00

Depn. Expense, Office Equipment

5090

2 0 00

Income Summary T. Freedman, Capital

4000

Freedman, Capital T. Freedman, Withdrawals

3020

3 0 0 6 00

3000 3000 3010

3 0 0 6 00 1 0 0 00 1 0 0 00

5-57

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTER NAME: CASH Date 20X1 July

ACCOUNT NO. Explanation

Post Ref.

Debit

Balance

Date 20X1 31

Explanation

Post Ref.

Debit

Explanation

Balance

Adjusting

Date 20X1

Post Ref.

Debit

Balance

Adjusting

July

Post Ref.

Debit

5-58

DR CR

Post Ref.

Debit

Credit

Balance

Post Ref. GJ2

Debit

9 9 00

1020 Balance 2 6 0 0 00

1025 Balance 8 0 0 00 4 0 0 00

DR CR

1030 Balance

4 5 0 00

9 0 00

DR CR

ACCOUNT NO. Credit

1 6 4 5 00

Explanation

Balance

ACCOUNT NO.

NAME: ACCUM. DEPRECIATION, COMPUTER SHOP EQUIPMENT

July

Credit

3 6 0 00

GJ2

Explanation

Date 20X1

ACCOUNT NO.

NAME: COMPUTER SHOP EQUIPMENT Date 20X1

Credit

4 0 0 00

GJ2

Explanation

ACCOUNT NO.

NAME: SUPPLIES

July

Credit

NAME: PREPAID RENT

July

ACCOUNT NO.

Balance

Date 20X1

DR Dr

NAME: ACCOUNTS RECEIVABLE

July

Credit

1000

DR CR Cr

1080 Balance 2 4 0 0 00

1081 Balance 9 9 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTER NAME: OFFICE EQUIPMENT Date 20X1 July

Explanation

ACCOUNT NO. Post Ref.

Debit

Date 20X1 31

Explanation Adjusting

Post Ref.

Debit

Date 20X1 31

Explanation

Post Ref.

Debit

CR Dr

Explanation

ACCOUNT NO. Post Ref.

Balance

Closing

GJ2

Closing

GJ2

Debit

Explanation

Balance

Closing

Credit

3 0 0 6 00 1 0 0 00

NAME: T. FREEDMAN, WITHDRAWALS Date 20X1

Credit

Balance

Date 20X1

July

Credit

ACCOUNT NO.

NAME: T. FREEDMAN, CAPITAL

July

ACCOUNT NO.

2 0 00

GJ2

NAME: ACCOUNTS PAYABLE

July

Balance

NAME: ACCUMULATED DEPRECIATION, OFFICE EQUIPMENT

July

Credit

Ref.

Debit

Balance 2 0 00

2000 Balance 2 1 0 00

3000 Balance

7 5 0 6 00

7 4 0 6 00

1 0 0 00

1091

Cr GJ2

6 0 0 00

4 5 0 0 00

Credit

Balance

ACCOUNT NO. Post

1090

3010 Balance 1 0 0 00

5-59

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTER NAME: INCOME SUMMARY Date 20X1 July

Explanation

ACCOUNT NO. Post Ref.

Debit

Closing (Revenue)

GJ2

Closing (Expense)

GJ2

3 6 7 9 00

Closing (Income)

GJ2

3 0 0 6 00

6 6 8 5 00

NAME: SERVICE REVENUE Date 20X1 July

Explanation

Balance

Closing

July

Balance

Closing

Post Ref.

Debit

GJ2

July

6 6 8 5 00

3 0 0 6 00

Credit

DR CR

Ref.

Debit

Credit

DR CR Dr

GJ2

Explanation

Post Ref.

Debit

4000 Balance 6 6 8 5 00

ACCOUNT NO. Post

Balance

6 6 8 5 00

NAME: RENT EXPENSE Date 20X1

Explanation

ACCOUNT NO.

NAME: ADVERTISING EXPENSE Date 20X1

Credit

3020

5010 Balance 1 4 0 0 00

1 4 0 0 00

ACCOUNT NO.

5020

Credit

DR CR

Balance

Adjusting

Closing

1 2 0 0 00

NAME: UTILITIES EXPENSE

ACCOUNT NO.

5030

Date 20X1 July

5-60

GJ2

Explanation

Balance

Closing

Post Ref.

4 0 0 00

Debit

Credit

8 0 0 00

1 2 0 0 00

DR CR Dr

GJ2

1 8 0 00

Balance 1 8 0 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTER NAME: PHONE EXPENSE Date 20X1 July

Explanation

Balance

Closing

ACCOUNT NO. Post Ref.

Debit

July

GJ2

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

July

Explanation

Balance

Closing

Post Ref.

Debit

NAME: POSTAGE EXPENSE Date 20X1 July

Explanation

Balance

Closing

Post Ref.

Debit

NAME: DEPRECIATION EXPENSE, COMPUTER SHOP EQUIPMENT Date 20X1 July

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

July

5040

Credit

CR Dr

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ2

Debit

Balance 3 6 0 00

3 6 0 00

ACCOUNT NO.

5060

Credit

Balance 1 5 0 00

1 5 0 00

ACCOUNT NO.

5070

Credit

Balance 5 0 00

5 0 00

ACCOUNT NO.

5080

Credit

9 9 00

NAME: DEPRECIATION EXPENSE, OFFICE EQUIPMENT Date 20X1

ACCOUNT NO.

Dr GJ2

2 2 0 00

Dr GJ2

Balance

2 2 0 00

3 6 0 00

NAME: INSURANCE EXPENSE Date 20X1

CR Dr

NAME: SUPPLIES EXPENSE Date 20X1

Credit

5040

Balance 9 9 00

9 9 00

ACCOUNT NO.

5090

Credit

2 0 00

Balance 2 0 00

5-61

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE POST-CLOSING TRIAL BALANCE JULY 31, 20X1 Cash

1 6 4 5 00

Accounts Receivable

2 6 0 0 00

Prepaid Rent Supplies Computer Shop Equipment

4 0 0 00 9 0 00 2 4 0 0 00

Accumulated Depreciation, Computer Shop Equipment Office Equipment

9 9 00 6 0 0 00

Accumulated Depreciation, Office Equipment

2 0 00

Accounts Payable

2 1 0 00

T. Freedman, Capital Totals

5-62

7 4 0 6 00 7 7 3 5 00

7 7 3 5 00

MINI PRACTICE SET: SULLIVAN REALTY SULLIVAN REALTY GENERAL JOURNAL Date 20XX June

Account Title and Description

Page 1 Post Ref.

Dr.

Cash

111

20 0 0 0 00

Office Equipment

121

4 0 0 0 00

John Sullivan, Capital

311

Cr.

24 0 0 0 00

Owner investment 3

Prepaid Rent

114

Cash

111

3 0 0 0 00 3 0 0 0 00

Rent paid in advance, Cheque #601 4

Automobile

123

Cash

111

14 0 0 0 00 14 0 0 0 00

Auto purchased, Cheque #602 4

Office Supplies Cash

115

3 0 0 00

111

3 0 0 00

Supplies purchased for cash, Cheque #603 5

Office Supplies Accounts Payable

115

1 5 0 00

211

1 5 0 00

Supplies purchased on account 6

Cash Commissions Earned

111

6 0 0 0 00

411

6 0 0 0 00

Cash fees 7

Gas Expense

513

Cash

111

2 2 00 2 2 00

Paid gas bill, Cheque #604 14

Salaries Expense Cash

512 111

3 5 0 00 3 5 0 00

Paid salary, Cheque #605

5-63

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY GENERAL JOURNAL Date 20XX

Account Title and Description

June 18

Accounts Receivable Commissions Earned

Page 2 Post Ref.

112

Dr.

Cr.

6 5 0 0 00

411

6 5 0 0 00

Charge fees 21

John Sullivan, Withdrawals Cash

312

1 0 0 0 00

111

1 0 0 0 00

Cash withdrawal for personal use, Cheque #606 21

Cash Commissions Earned

111

3 5 0 0 00

411

3 5 0 0 00

Cash fee 24

Gas Expense

513

Cash

111

2 5 00 2 5 00

Paid gas bill, Cheque #607 25

Repairs Expense Cash

514

6 0 0 00

111

6 0 0 00

Cash repairs, Cheque #608 28

Salaries Expense Cash

512

3 5 0 00

111

3 5 0 00

Paid salary, Cheque #609 28

Telephone Expense Cash

515

5 1 0 00

111

5 1 0 00

Paid telephone bill, Cheque #610 28

Advertising Expense

516

Accounts Payable

211

Advertising bill incurred

5-64

1 2 0 0 00 1 2 0 0 00

MINI PRACTICE SET: SULLIVAN REALTY SULLIVAN REALTY WORKSHEET FOR MONTH ENDED JUNE 30, 20XX Account Titles

Dr.

Trial Balance Cr.

Cash

9 3 4 3 00

Accounts Receivable

6 5 0 0 00

Prepaid Rent

3 0 0 0 00

Office Supplies

4 5 0 00

Office Equipment

4 0 0 0 00

Automobile

(B)

4 0 0 00

(C)

1 0 0 00

(D)

2 0 0 00

24 0 0 0 00 1 0 0 0 00

Commissions Earned Gas Expense

(A) 1 0 0 0 0 0

1 3 5 0 00

John Sullivan, Capital

Salaries Expense

Adjustments Cr.

14 0 0 0 00

Accounts Payable John Sullivan, Withdrawals

Dr.

16 0 0 0 00 7 0 0 00 4 7 00

Repairs Expense

6 0 0 00

Telephone Expense

5 1 0 00

Advertising Expense

1 2 0 0 00 41 3 5 0 00 41 3 5 0 00

Rent Expense

(A) 1 0 0 0 0 0

Office Supplies Expense

(B)

4 0 0 00

Depreciation Expense, Office Equipment

(C)

1 0 0 00

Accumulated Depreciation, Office Equipment Depreciation Expense, Automobile

(D)

2 0 0 00

Accumulated Depreciation, Automobile 1 7 0 0 00

1 7 0 0 00

Net Income

5-65

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY WORKSHEET—CONTINUED FOR MONTH ENDED JUNE 30, 20XX Income Statement Dr. Cr.

Adjusted Trial Balance Dr. Cr. 9 3 4 3 00 6 5 0 0 00 2 0 0 0 00 5 0 00 4 0 0 0 00 14 0 0 0 00 1 3 5 0 00 24 0 0 0 00 1 0 0 0 00 16 0 0 0 00 7 0 0 00 4 7 00 6 0 0 00 5 1 0 00 1 2 0 0 00

Balance Sheet Dr. Cr. 9 3 4 3 00 6 5 0 0 00 2 0 0 0 00 5 0 00 4 0 0 0 00 14 0 0 0 00 1 3 5 0 00 24 0 0 0 00 1 0 0 0 00

16 0 0 0 00 7 0 0 00 4 7 00 6 0 0 00 5 1 0 00 1 2 0 0 00

1 0 0 0 00 4 0 0 00 1 0 0 00

1 0 0 0 00 4 0 0 00 1 0 0 00 1 0 0 00

1 0 0 00

2 0 0 00

2 0 0 00 2 0 0 00

41 6 5 0 00

2 0 0 00

41 6 5 0 00

4 7 5 7 00

16 0 0 0 00

36 8 9 3 00

11 2 4 3 00 16 0 0 0 00

5-66

25 6 5 0 00 11 2 4 3 00

16 0 0 0 00

36 8 9 3 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY GENERAL JOURNAL Date 20XX

Account Title and Description

Page 3 Post Ref.

Dr.

Cr.

Adjusting Entries June

Rent Expense

511

Prepaid Rent

1 0 0 0 00

114

1 0 0 0 00

Rent expired 30

Office Supplies Expense Office Supplies

517

4 0 0 00

115

4 0 0 00

Supplies used 30

Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equipment

518

1 0 0 00

122

1 0 0 00

Estimated depreciation 30

Depreciation Expense, Auto Accumulated Depreciation, Auto

519

2 0 0 00

124

2 0 0 00

Estimated depreciation Closing Entries 30

Commissions Earned

411

Income Summary

313

16 0 0 0 00 16 0 0 0 00

To close income account 30

Income Summary

313

4 7 5 7 00

Rent Expense

511

1 0 0 0 00

Salaries Expense

512

7 0 0 00

Gas Expense

513

4 7 00

Repairs Expense

514

6 0 0 00

Telephone Expense

515

5 1 0 00

Advertising Expense

516

1 2 0 0 00

Office Supplies Expense

517

4 0 0 00

Depreciation Expense, Office Equipment

518

1 0 0 00

Depreciation Expense, Auto

519

2 0 0 00

To close expense accounts 30

Income Summary John Sullivan, Capital

313

11 2 4 3 00

311

11 2 4 3 00

Net income closed to capital 30

John Sullivan, Capital John Sullivan, Withdrawals

311 312

1 0 0 0 00 1 0 0 0 00

Close withdrawals into capital

5-67

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY GENERAL JOURNAL Date 20XX July

Account Title and Description 2

Accounts Payable Cash

Page 4 Post Ref.

211

Dr.

Cr.

1 5 0 00

111

1 5 0 00

Paid for June supplies, Cheque #611 2

Office Supplies Accounts Payable

115

7 0 0 00

211

7 0 0 00

Supplies purchased on account 2

Accounts Payable Cash

211

1 2 0 0 00

111

1 2 0 0 00

Paid advertising bill from June, Cheque #612 4

Cash Commissions Earned

111

6 6 0 0 00

411

6 6 0 0 00

Cash fees 5

Gas Expense

513

Cash

111

2 9 00 2 9 00

Paid gas bill, Cheque #613 9

Cash Accounts Receivable

111

6 5 0 0 00

112

6 5 0 0 00

Collected cash from June 18 commission 12

Miscellaneous Expense Cash

524

3 0 0 00

111

3 0 0 00

Realtor’s workshop, Cheque #614 15

Salaries Expense Cash Paid salary, Cheque #615

5-68

512 111

3 5 0 00 3 5 0 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY GENERAL JOURNAL Date 20XX July

Account Title and Description Accounts Receivable Commissions Earned

Page 5 Post Ref.

112

Dr.

Cr.

2 4 0 0 00

411

2 4 0 0 00

Fees on account 19

Cash Commissions Earned

111

7 0 0 0 00

411

7 0 0 0 00

Cash fees 23

Miscellaneous Expense Cash

524

4 0 00

111

4 0 00

Sponsor local road race, Cheque #616 26

Repairs Expense Cash

514

5 9 0 00

111

5 9 0 00

Paid for auto repairs, Cheque #617 29

John Sullivan, Withdrawals Cash

312

1 8 0 0 00

111

1 8 0 0 00

Personal withdrawals, Cheque #618 31

Salaries Expense Cash

512

3 5 0 00

111

3 5 0 00

Paid salary, Cheque #619 31

Telephone Expense Cash

515

2 3 6 00

111

2 3 6 00

Paid telephone bill, Cheque #620 31

Advertising Expense

516

Accounts Payable

211

1 4 0 0 00 1 4 0 0 00

Advertising bill received

5-69

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY GENERAL JOURNAL Date 20XX

Account Title and Description

Page 6 Post Ref.

Dr.

Cr.

Adjusting Entries July

Rent Expense

511

Prepaid Rent

1 0 0 0 00

114

1 0 0 0 00

Rent expired 31

Office Supplies Expense Office Supplies

517

6 6 0 00

115

6 6 0 00

Supplies used 31

Depreciation Expense, Office Equipment Accumulated Depreciation, Office Equipment

518

1 0 0 00

122

1 0 0 00

Estimated depreciation 31

Depreciation Expense, Auto Accumulated Depreciation, Auto

519

2 0 0 00

124

2 0 0 00

Estimated depreciation Closing Entries 31

Commissions Earned

411

Income Summary

313

16 0 0 0 00 16 0 0 0 00

To close income account 31

Income Summary

313

5 2 5 5 00

Rent Expense

511

1 0 0 0 00

Salaries Expense

512

7 0 0 00

Gas Expense

513

2 9 00

Repairs Expense

514

5 9 0 00

Telephone Expense

515

2 3 6 00

Advertising Expense

516

1 4 0 0 00

Office Supplies Expense

517

6 6 0 00

Depreciation Expense, Office Equipment

518

1 0 0 00

Depreciation Expense, Auto

519

2 0 0 00

Miscellaneous

524

3 4 0 00

To close expense accounts 31

Income Summary John Sullivan, Capital

313

10 7 4 5 00

311

10 7 4 5 00

Net income closed to capital 31

John Sullivan, Capital John Sullivan, Withdrawals Close withdrawals into capital

5-70

311 312

1 8 0 0 00 1 8 0 0 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY WORKSHEET FOR MONTH ENDED JULY 31, 20XX Account Titles Cash

Dr.

Trial Balance

2 4 0 0 00

Prepaid Rent

2 0 0 0 00

Office Supplies

7 5 0 00

Office Equipment

4 0 0 0 00

Acc. Depn., Office Equipment

Accounts Payable

(C)

1 0 0 00

2 0 0 00

(D)

2 0 0 00

2 9 00 2 3 6 00

Advertising Expense

1 4 0 0 00

Miscellaneous Expense

3 4 0 00 52 6 4 3 00

Depn. Exp., Automobile

1 0 0 00

7 0 0 00

Telephone Expense

Depn. Exp., Office Equipment

6 6 0 00

16 0 0 0 00

5 9 0 00

Office Supplies Expense

(B)

1 8 0 0 00

Repairs Expense

Rent Expense

(A) 1 0 0 0 0 0

34 2 4 3 00

Commissions Earned Gas Expense

Cr.

2 1 0 0 00

John Sullivan, Capital

Salaries Expense

Adjustments

14 0 0 0 00

Acc. Depn., Automobile

John Sullivan, Withdrawals

Dr.

24 3 9 8 00

Accounts Receivable

Automobile

Cr.

52 6 4 3 00 (A) 1 0 0 0 0 0 (B) 6 6 0 0 0 (C) 1 0 0 0 0 (D) 2 0 0 0 0 1 9 6 0 0

1 9 6 0 00

Net Income

5-71

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY WORKSHEET FOR MONTH ENDED JULY 31, 20XX Adjusted Trial Balance Dr. Cr. 24 3 9 8 00

Income Statement Dr. Cr.

Balance Sheet Dr. 24 3 9 8 00

2 4 0 0 00

1 0 0 0 00

9 0 00

4 0 0 0 00

4 0 0 0 00 2 0 0 00

2 0 0 00

14 0 0 0 00

14 0 0 0 00 4 0 0 00

4 0 0 00

2 1 0 0 00

34 2 4 3 00

1 8 0 0 00

1 8 0 0 00 16 0 0 0 00

16 0 0 0 00

7 0 0 00

2 9 00

5 9 0 00

2 3 6 00

1 4 0 0 00

3 4 0 00

1 0 0 0 00

6 6 0 00

1 0 0 00

2 0 0 00

52 9 4 3 00

5 2 5 5 00

16 0 0 0 00

47 6 8 8 00

10 7 4 5 00 16 0 0 0 00

5-72

Cr.

36 9 4 3 00 10 7 4 5 00

16 0 0 0 00

47 6 8 8 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. GENERAL LEDGER OF SULLIVAN REALTY NAME: CASH Date 20XX June

July

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

20 0 0 0 00

111

DR CR

Balance

20 0 0 0 00

GJ1

3 0 0 0 00

17 0 0 0 00

GJ1

14 0 0 0 00

3 0 0 0 00

GJ1

3 0 0 00

2 7 0 0 00

GJ1

8 7 0 0 00

GJ1

2 2 00

8 6 7 8 00

GJ1

3 5 0 00

8 3 2 8 00

GJ2

1 0 0 0 00

7 3 2 8 00

GJ2

10 8 2 8 00

GJ2

2 5 00

10 8 0 3 00

GJ2

6 0 0 00

10 2 0 3 00

GJ2

3 5 0 00

9 8 5 3 00

GJ2

5 1 0 00

9 3 4 3 00

GJ4

1 5 0 00

9 1 9 3 00

GJ4

1 2 0 0 00

7 9 9 3 00

GJ4

14 5 9 3 00

GJ4

14 5 6 4 00

GJ4

21 0 6 4 00

GJ4

3 0 0 00

20 7 6 4 00

GJ4

3 5 0 00

20 4 1 4 00

GJ5

27 4 1 4 00

GJ5

4 0 00

27 3 7 4 00

GJ5

5 9 0 00

26 7 8 4 00

GJ5

1 8 0 0 00

24 9 8 4 00

GJ5

3 5 0 00

24 6 3 4 00

GJ5

2 3 6 00

24 3 9 8 00

6 0 0 0 00

3 5 0 0 00

6 6 0 0 00 2 9 00 6 5 0 0 00

7 0 0 0 00

5-73

MINI PRACTICE SET: SULLIVAN REALTY, Cont. NAME: ACCOUNTS RECEIVABLE Date 20XX

Explanation

ACCOUNT NO. Post Ref.

June 18

GJ2

July

GJ4

GJ5

Debit 6 5 0 0 00

June July

2 4 0 0 00

Explanation 3

Post Ref. GJ1

Debit

Credit

3 0 0 0 00

Balance

6 5 0 0 00

2 4 0 0 00

DR CR

114 Balance

3 0 0 0 00

Adjusting

GJ3

1 0 0 0 00

2 0 0 0 00

Adjusting

GJ6

1 0 0 0 00

Date 20XX June

Explanation

July

ACCOUNT NO. Post Ref.

Debit

Credit

DR CR

115 Balance

GJ1

3 0 0 00

GJ1

1 5 0 00

4 5 0 00

5 0 00

7 5 0 00

9 0 00

Adjusting

4 0 0 00

GJ3

2 31

GJ4

Adjusting

7 0 0 00 6 6 0 00

GJ6

NAME: OFFICE EQUIPMENT Date 20XX

5-74

ACCOUNT NO.

NAME: OFFICE SUPPLIES

June

6 5 0 0 00

NAME: PREPAID RENT Date 20XX

Credit

112

Explanation 3

ACCOUNT NO. Post Ref. GJ1

Debit 4 0 0 0 00

Credit

DR CR Dr

121 Balance 4 0 0 0 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. NAME: ACCUMULATED DEPRECIATION, OFFICE EQUIPMENT Date 20XX

Explanation

Post Ref.

Debit

ACCOUNT NO. DR

Credit

122 Balance

June 30

Adjusting

GJ3

1 0 0 00

July

Adjusting

GJ6

1 0 0 00

2 0 0 00

NAME: AUTOMOBILE Date 20XX June

ACCOUNT NO. Explanation

Post Ref. GJ1

Debit

Explanation

Post Ref.

14 0 0 0 00

NAME: ACCUMULATED DEPRECIATION, AUTOMOBILE Date 20XX

Credit

ACCOUNT NO. Debit

Credit

123 Balance 14 0 0 0 00

124 Balance

June 30

Adjusting

GJ3

2 0 0 00

July

Adjusting

GJ6

2 0 0 00

4 0 0 00

NAME: ACCOUNTS PAYABLE Date 20XX June

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

211 Balance

Adjusting

GJ1

1 5 0 00

Adjusting

GJ2

1 2 0 0 00

1 3 5 0 00

1 2 0 0 00

1 9 0 0 00

7 0 0 00

2 1 0 0 00

July

GJ4

GJ5

1 5 0 00 7 0 0 00 1 2 0 0 00 1 4 0 0 00

NAME: ACCRUED SALARIES Date 20XX

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

DR CR

212 Balance

5-75

MINI PRACTICE SET: SULLIVAN REALTY, Cont. NAME: JOHN SULLIVAN, CAPITAL Date 20XX June

July

Explanation 3

ACCOUNT NO. Post Ref.

Debit

24 0 0 0 00

11 2 4 3 00

35 2 4 3 00

34 2 4 3 00

44 9 8 8 00

43 1 8 8 00

Closing

GJ3

Closing

GJ6

Closing

GJ6

1 0 0 0 00 10 7 4 5 00 1 8 0 0 00

NAME: JOHN SULLIVAN, WITHDRAWALS

30 July

Post Ref.

Debit

GJ5

Closing

Post Ref.

Debit

June 30

Closing

GJ3

Closing

GJ3

4 7 5 7 00

Closing

GJ3

11 2 4 3 00

Closing

GJ6

Closing

GJ6

5 2 5 5 00

Closing

GJ6

10 7 4 5 00

July

June

Explanation

ACCOUNT NO.

313

Credit

DR CR

Balance

16 0 0 0 00

11 2 4 3 00

16 0 0 0 00

10 7 4 5 00

O O

Credit

DR CR

411 Balance

GJ1

6 0 0 0 00

GJ2

6 5 0 0 00

12 5 0 0 00

GJ2

3 5 0 0 00

16 0 0 0 00

GJ4

6 6 0 0 00

GJ4

2 4 0 0 00

9 0 0 0 00

GJ4

7 0 0 0 00

16 0 0 0 00

5-76

18 0 0 0 00

16 0 0 0 00

Debit

1 0 0 0 00

30 July

Ref.

Balance

18 0 0 0 00

ACCOUNT NO. Post

312

O Dr

16 0 0 0 00

NAME: COMMISSIONS EARNED Date 20XX

CR Dr

1 8 0 0 00

GJ6

Explanation

1 0 0 0 00

NAME: INCOME SUMMARY Date 20XX

Credit

1 0 0 0 00

GJ3

29 31

ACCOUNT NO.

GJ2

Closing

Balance

GJ3

June 21

24 0 0 0 00

Closing

Explanation

GJ1

Date 20XX

Credit

311

Closing

GJ3

GJ6

16 0 0 0 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. NAME: RENT EXPENSE Date 20XX

Explanation

June 30 July

ACCOUNT NO. Post Ref.

Adjusting

GJ3

Closing

GJ3

Adjusting

GJ6

Closing

GJ6

Debit

Explanation

Post Ref.

1 0 0 0 00 1 0 0 0 00

Debit

Balance

1 0 0 0 00

NAME: SALARIES EXPENSE Date 20XX

Credit

511

1 0 0 0 00

ACCOUNT NO.

512

Credit

Balance

June 14

GJ1

3 5 0 00

GJ2

3 5 0 00

7 0 0 00

30 July

Closing

7 0 0 00

GJ3

GJ4

3 5 0 00

GJ5

3 5 0 00

7 0 0 00

Closing

7 0 0 00

GJ6

NAME: GAS EXPENSE Date 20XX June

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

O 513 Balance

GJ1

2 2 00

GJ2

2 5 00

4 7 00

30 July

Closing

GJ4

Closing

2 9 00

GJ6

NAME: REPAIRS EXPENSE Date 20XX

Explanation

June 25 30

Ref. GJ2

Closing

26 31

Post

Closing

Debit

GJ6

2 9 00

ACCOUNT NO.

514

Credit

6 0 0 00

5 9 0 00

Balance 6 0 0 00

6 0 0 00

GJ3 GJ5

4 7 00

GJ3

5 31

July

5 9 0 00

5-77

MINI PRACTICE SET: SULLIVAN REALTY, Cont. NAME: TELEPHONE EXPENSE Date 20XX

Explanation

June 28 30 July

Post Ref. GJ2

Closing

Debit

GJ5

Closing

2 3 6 00

GJ6

Explanation

June 28 30 July

Ref. GJ2

Closing

Debit

GJ5

Closing

June 30 July

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Adjusting

GJ6

Closing

GJ6

Debit

June 30 July

5-78

Explanation

Post Ref.

Adjusting

GJ2

Closing

GJ3

Adjusting

GJ6

Closing

GJ6

2 3 6 00

ACCOUNT NO.

516

Credit

DR CR Dr

1 2 0 0 00 1 4 0 0 00

1 4 0 0 00

ACCOUNT NO.

517

Credit

DR CR

6 6 0 00

Balance

4 0 0 00

6 6 0 00

4 0 0 00

Debit

Balance

O Dr

4 0 0 00

NAME: DEPRECIATION EXPENSE, OFFICE EQUIPMENT Date 20XX

5 1 0 00

1 4 0 0 00

GJ6

Balance

1 2 0 0 00

NAME: OFFICE SUPPLIES EXPENSE Date 20XX

515

2 3 6 00

1 2 0 0 00

GJ3

31 31

Post

5 1 0 00

NAME: ADVERTISING EXPENSE Date 20XX

Credit

5 1 0 00

GJ3

31 31

ACCOUNT NO.

6 6 0 00

ACCOUNT NO.

518

Credit

1 0 0 00

DR CR Dr

1 0 0 00

1 0 0 00 1 0 0 00

Balance

1 0 0 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. NAME: DEPRECIATION EXPENSE, AUTOMOBILE Date 20XX June 30 July

Explanation

ACCOUNT NO. Post Ref.

Adjusting

GJ3

Closing

GJ3

Adjusting

GJ6

Closing

GJ6

Debit

Explanation

Post Ref.

2 0 0 00 2 0 0 00

Debit

Balance

2 0 0 00

NAME: MISCELLANEOUS EXPENSE Date 20XX

Credit

519

2 0 0 00

ACCOUNT NO.

524

Credit

Balance

June 12

GJ4

3 0 0 00

GJ5

4 0 00

3 4 0 00

Closing

GJ6

3 4 0 00

5-79

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 20XX Revenue: Commissions Earned

$1 6 0 0 0 0 0

Operating Expenses: Salaries Expense

$ 7 0 0 00 4 7 00

Gas Expense Repairs Expense

6 0 0 00

Telephone Expense

5 1 0 00

Advertising Expense

1 2 0 0 00

Rent Expense

1 0 0 0 00

Office Supplies Expense

4 0 0 00

Depreciation Expense, Office Equipment

1 0 0 00

Depreciation Expense, Automobile

2 0 0 00 4 7 5 7 00

Total Operating Expenses Net Income

$11 2 4 3 0 0

SULLIVAN REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 20XX

John Sullivan, Capital, June 1, 20XX Net Income for June Less Withdrawals

$2 4 0 0 0 0 0 $1 1 2 4 3 0 0 1 0 0 0 00

Increase in Capital

10 2 4 3 00

John Sullivan, Capital, June 30, 20XX

$3 4 2 4 3 0 0

5-80

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY BALANCE SHEET JUNE 30, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY

Assets

Liabilities

Cash

$9 3 4 3 0 0

Accounts Receivable

6 5 0 0 00

Prepaid Rent

2 0 0 0 00

Office Supplies Office Equipment Less Accumulated Depreciation Automobile Less Accumulated Depreciation

5 0 00

Accounts Payable

$1 3 5 0 00

Owner’s Equity

$4 0 0 0 00 1 0 0 00

3 9 0 0 00

John Sullivan, Capital

34 2 4 3 0 0

14 0 0 0 00 2 0 0 00

13 8 0 0 00

Total Liabilities and Total Assets

$3 5 5 9 3 0 0

Owner’s Equity

$3 5 5 9 3 0 0

5-81

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY POST-CLOSING TRIAL BALANCE JUNE 30, 20XX Cash

9 3 4 3 00

Accounts Receivable

6 5 0 0 00

Prepaid Rent

2 0 0 0 00

Office Supplies Office Equipment

5 0 00 4 0 0 0 00

Accumulated Depreciation, Office Equipment Automobile Accumulated Depreciation, Automobile Accounts Payable John Sullivan, Capital Totals

5-82

1 0 0 00 14 0 0 0 00 2 0 0 00 1 3 5 0 00 34 2 4 3 00 35 8 9 3 00 35 8 9 3 00

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 20XX Revenue: Commissions Earned

$1 6 0 0 0 0 0

Operating Expenses: Salaries Expense

$ 7 0 0 00

Gas Expense

2 9 00

Repairs Expense

5 9 0 00

Telephone Expense

2 3 6 00

Advertising Expense

1 4 0 0 00

Miscellaneous Expense

3 4 0 00

Rent Expense

1 0 0 0 00

Office Supplies Expense

6 6 0 00

Depreciation Expense, Office Equipment

1 0 0 00

Depreciation Expense, Automobile

2 0 0 00

Total Operating Expenses

5 2 5 5 00 $1 0 7 4 5 0 0

Net Income

SULLIVAN REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 20XX $3 4 2 4 3 0 0

John Sullivan, Capital, July 1, 20XX Net Income for July

$1 0 7 4 5 0 0

Less Withdrawals

1 8 0 0 00

Increase in Capital John Sullivan, Capital, July 31, 20XX

8 9 4 5 00 $4 3 1 8 8 0 0

5-83

MINI PRACTICE SET: SULLIVAN REALTY, Cont. SULLIVAN REALTY BALANCE SHEET JULY 31, 20XX ASSETS

LIABILITIES & OWNER’S EQUITY

Assets

Liabilities

Cash

$2 4 3 9 8 0 0

Accounts Receivable

2 4 0 0 00

Prepaid Rent

1 0 0 0 00

Office Supplies Office Equipment Less Accumulated Depreciation Automobile Less Accumulated Depreciation

9 0 00

Accounts Payable

$2 1 0 0 0 0

Owner’s Equity

$4 0 0 0 0 0 2 0 0 00

3 8 0 0 00

John Sullivan, Capital

43 1 8 8 00

14 0 0 0 00 4 0 0 00

13 6 0 0 00

Total Liabilities and Total Assets

5-84

$4 5 2 8 8 0 0

Owner’s Equity

$4 5 2 8 8 0 0

6 Special Journals and Subsidiary Ledgers Sales and Cash Receipts Journals

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Records reductions of sales caused by returns or discounts taken. 2. Dr. Balance. 3. Sales Discounts and Sales Returns and Allowances are contra-revenue accounts. 4. A discount period is a short period within which a business receives a discount if it pays its bill. This encourages early payment. A credit period, which is longer than a discount period, represents the total time allowed to pay the full amount due on an invoice. 5. 2/10, n/30:2 percent off the bill if paid within 10 days or total bill due within 30 days. n/10, EOM: Full amount of bill is due not later than 10 days after the end of the month. 6. A general journal records Returns and Allowances from Debit or Credit Memoranda. 7. The sum of the accounts receivable ledger at the end of the month should equal the balance in the controlling account in the general ledger. 8. Net sales is calculated as follows: Sales—Sales Returns and Allowances—Sales Discounts. 9. By placing the accounts receivable ledger in alphabetical order, it is easier to locate specific companies or persons so that the balance can be updated. 10. An invoice is a bill for a sale on account. It is used as a source document to update the sales journal of the seller and the purchases journal of the buyer. 11. Sales Returns and Allowances, Accounts Receivable, and the accounts receivable ledger account. 12. A schedule of accounts receivable is a list of who owes money and how much. The sum of the schedule should equal the balance in the controlling account in the general ledger at the end of the month. 13. The question is whether Amy should ask the accountant to put the first two weeks of sales in January back into the previous December. Although Amy wants to improve sales production, this is not the way to go about it. It is extremely unethical for Amy to ask the accountant to switch the sales production. I would advise Amy not to behave in this manner. Remember, a sale is recorded when it is earned, whether or not cash is received.

6-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.

CDE2.

CDE3.

Sales

Revenue

Sales Returns and Allowances

Revenue (Contra)

Cr. Dr.

Temp. Temp.

Sales Discount

Revenue (Contra)

Dr.

Temp.

Inventory

Asset

Cost of Goods Sold

Expense

Cr. Dr.

Temp.

Gross sales

$30

− SRA

−8

− SD = Net sales

−2 $20

a. 6 b. 1,2,3 c. 2,4,5

CDE4. SALES JOURNAL

Date 20XX May 4 7 13 22 25 30

Sales Invoice No. 801 802 803 804 805 806

Page 5

Post

Terms 2/10, n30 2/10, n30 2/10, n30 2/10, n30 2/10, n30 2/10, n30

Account Debited Francine Company Joshua Enterprises Charlize Company Francine Company Kirkhouse Consulting Charlize Company

Ref.

Accounts Receivable - Dr. Sales - Cr. 2 0 0 00 3 0 0 00 1 0 0 00 3 5 0 00 4 0 0 00 2 5 0 00 1 6 0 0 00 (120)

(400)

Cost of Goods sold Dr. Inventory Cr. 1 5 0 00 2 2 5 00 7 5 00 2 6 2 50 3 0 0 00 1 8 7 50 1 2 0 0 00 (502)

(115)

CDE5. KAREN’S DELIVERY SERVICE CASH RECEIPTS JOURNAL Date 20XX May

5 12 20 27

Cash Dr. 10 0 0 0 0 0 1 9 6 00 9 8 00 3 0 0 00 10 5 9 4 0 0 (1 00 0)

6-2

Accounts Receivable Cr. 2 1 3 6

0 0 0 0

(1 20 0)

00 00 00 00

Sales Cr.

Sales Discounts Dr. 4 00 2 00 6 00 (4 50 0)

Description of Receipt Karen Good, Capital Francine Company Charlize Company Joshua Enterprises

Page 1

Ref.

Sundry Cr.

3000

10 0 0 0 0 0

Post

✓ ✓ ✓

10 0 0 0 0 0

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, cont. CDE6.

a. Net sales revenue = Sales − Sales Returns and Allowances − Sales Discounts Net sales revenue = $1,600 − $6 = $1,594 b. Gross Profit = Net Sales − Cost of Goods Sold Gross Profit = $1,594 − $1,200 = $394

CDE7.

AVE CO. SCHEDULE OF ACCOUNTS RECEIVABLE MAY 31, 20XX

Bliss Co.

$ 3 0 00

Rowe Co.

6 0 00 $ 9 0 00

CDE8. 1. The difference between sales and cost of goods sold is called gross profit. 2. The credit period is the time period that can pass before a customer’s payment is due. 3. The journal that is used to record only sales made on account is the sales journal. 4. A(n) subsidiary ledger is a ledger that contains accounts of a single type. 5. A(n) sales discount is a cash discount granted to customers for payments made within a specific period of time. 6. When an inventory system keeps a continuous record of inventory and cost of goods sold, the system is called the perpetual inventory system. 7. The special journal that records all transactions involving the receipt of cash from any source is the cash receipts journal. 8. The Sales Returns and Allowances account is the contra-account that records price adjustments and allowances granted on merchandise. 9. Cost of goods sold represents the total cost of merchandise that is sold. 10. A(n) Accounts Receivable Subsidiary Ledger is a book or file that contains the individual records of amounts owed by various credit customers.

SOLUTIONS TO EXERCISES SET A E6-1A. Kevin Stone Co. 4/18 SJ1 600

Accounts Receivable 4/30 SJ1 1,500

Bill Valley Co. 4/19 SJ1 900

Sales

112

Inventory

412 1,500 SJ1 4/30

115 1,125 SJ1 4/30

Cost of Goods Sold 4/30 SJ11,125

502

E6-2A. SALES JOURNAL Date 20XX June 3 3 17

Account Debited Boston Co. Gary Co. Boston Co.

Terms 2/10, n/30 2/10, n/30 2/10, n/30

Invoice No. 218 219 220

Page 1

Post Ref.

Dr. - Accounts Receivable Cr. - Sales 1

7 1 6

0 0 0

00 00 00

✓ ✓

Dr. Cost of Goods Sold Cr. Inventory

✓

(113)

(411)

5 8 4 1 8

2 5 00 2 5 00 5 0 00 0 0 00

(502)

(115)

6-3

SOLUTIONS TO EXERCISES—SET A, Cont. E6-2A, Cont. CASH RECEIPTS JOURNAL Date 20XX

Cash Dr.

Sales Discounts Dr.

Accounts Receivable Cr.

Sales Cr.

Cost of Goods sold Dr.

Page 1 Inventory Cr.

Description Post of Receipt Ref. E. Cares, Capital

June 2 5 0 0 0 0 0 6 10 16

2 0 0 00 4 9 0 00 4 0 0 00

1 0 00

6 0 9 0 00

1 0 00

(1 11)

( 41 3)

311

June 9

1 5 0 00

4 0 0 00

3 0 0 00

1 5 0 0 0 Cash Sales X Boston Co. ✓ 3 0 0 0 0 Cash Sale X

5 0 0 00

6 0 0 00

4 5 0 00

5 0 0 0 00

( 11 3)

( 41 1)

( 50 2)

( 11 5)

(X)

5 0 0 00

Account Titles and Description Sales Returns and Allowances Accounts Receivable, Boston Co. Issued Credit Memo #24 Inventory Cost of Goods Sold Record Return of Inventory

ACCOUNTS RECEIVABLE LEDGER 6/03 SJ1 700 6/17 SJ1 600

Page 1 Post Ref.

Dr.

412

2 0 0 00

Cr. 2 0 0 00

113/✓ 115

1 5 0 00 1 5 0 00

PARTIAL GENERAL LEDGER

Boston Co. 200 GJ1 6/09 500 CRJ1 6/10

Cash 6/30 CRJ1 6,090

Gary Co.

Accounts Receivable 6/30 SJ1 2,400

113 200 GJ1 6/09 500 CRJ1 6/30

Inventory 6/09 GJ1 150

115 1,800 SJ1 6/30 450 CRJ1 6/30

6/03 SJ1 1,100 Cost of Goods Sold 502 1,800 SJ1 6/30 150 GJ1 6/09 450 CRJ1 6/30

EDNA CO. SCHEDULE OF ACCOUNTS RECEIVABLE JUNE 30, 20XX Boston Co. $ 600 1,100 Gary Co. $ 1.700 Total Accounts Receivable

6-4

5 0 0 0 00

2 0 0 00

GENERAL JOURNAL Date 20XX

Sundry Amount Dr.

111

Edna Cares, Capital

311 5,000 CRJ1 6/02

Sales

411 2,400 SJ1 6/30 600 CRJ1 6/30

Sales Returns & Allowances 6/9 GJ1 200

412

Sales Discount 6/30 CRJ1 10

413

SOLUTIONS TO EXERCISES—SET A, Cont. E6-3A. Discount = ($3,200 − $400) × 0.03 = $84 Payment required = $3,200 − $400 − $84 = $2,716 BLUE CO. GENERAL JOURNAL Date 20XX Mar

Account Title and Description 7

Sales Returns and Allowances Accounts Receivable, Frost Foundation Issued Credit Memorandum #103

Page 15 Post Ref.

Dr.

Cr.

4 0 000 4 0 0 00

E6-4A. 1. Art’s Clothing Company sold inventory valued at $4,950.00 during April. It is the total found in the “Cost of Goods Sold Dr., Inventory Cr.” column of the Sales Journal. This column totals all sales of inventory. 2. The total amount posted to the Sales revenue account is $6,500.00 3. Hal’s Clothing Company owes Art’s Clothing Company a total of $800.00. This amount can be found in the Accounts Receivable Subsidiary Ledger under Hal’s Clothing Company. 4. Art’s Clothing Company hopes to collect a total of $6,500.00. This is found in the Accounts Receivable Control Account.

6-5

SOLUTIONS TO EXERCISES—SET A, Cont. E6-5A. Use the following abbreviations to indicate the journal in which you would record transactions a through f: GJ = General Journal

SJ = Sales Journal

CRJ= Cash Receipts Journal

Transactions: a. ____CRJ______Cash sale of inventory b. ____CRJ______Collection of Accounts Receivable c. ____SJ______Sale of Inventory on Account d. ____GJ______Return of Merchandise e. ____GJ______Depreciation of Computer Equipment f. ____GJ______Interest accrued on note payable

E6-6A. a

$ 210,000

$ 165,000

$ 75,000

$ 466,000

$ 282,000

Cost of Goods Sold

101,000

103,000

42,000

303,000

206,000

Gross Profit from Sales

109,000

62,000

33,000

163,000

76,000

Operating Expenses

92,000

93,000

38,500

106,000

104,000

Net Income

17,000

−31,000

−5,500

57,000

−28,000

Sales

SOLUTIONS TO EXERCISES—SET B E6-1B. Agarwal Co. 4/18 SJ1 800

Accounts Receivable 4/30 SJ1 1,500

Green Valley Co. 4/19 SJ1 700

Sales

112

412 1,500 SJ1 4/30

Inventory

115 1,125 SJ1 4/30

Cost of Goods Sold 4/30 SJ1 1,125

502

E6-2B. SALES JOURNAL Date 20XX June 3 3 17

6-6

Account Debited Boston Co. Wei Co. Boston Co.

Terms 2/10, n/30 2/10, n/30 2/10, n/30

Invoice No. 218 219 220

Page 1 Post Ref.

✓ ✓ ✓

Accounts Receivable - Dr. Sales - Cr.

Cost of Goods Sold - Dr. Inventory - Cr.

8 0 0 00 1 2 0 0 00 7 0 0 00

6 0 0 00

2 7 0 0 00

2 0 2 5 00

(11 3) (41 1)

(5 02 ) (11 5)

9 0 0 00 5 2 5 00

SOLUTIONS TO EXERCISES—SET B, Cont. E6-2B., Cont. CASH RECEIPTS JOURNAL Date 20XX

Cash Dr.

June 2

6 0 0 0 00

6 10 16

3 0 0 00 6 3 7 00 5 0 0 00 7 4 3 7 00 (1 1 1)

Sales Discounts Dr.

1 3 00

Accounts Receivable Cr.

Sales Cr.

Cost of Goods sold Dr.

3 0 0 00

2 2 5 00

5 0 0 00

3 7 5 00 6 0 0 00

6 5 0 00

1 3 00

6 5 0 00

8 0 0 00

( 41 3)

( 11 3)

( 41 1)

(5 02 )

Page 1 Inventory Cr.

Account Post Names Ref. Yakeru G. 311 Capital 2 2 5 0 0 Cash Sale X Boston Co. ✓ 3 7 5 0 0 Cash Sale X

June

Account Titles and Description 9

Sales Returns and Allowances Accounts Receivable, Boston Co. Issued Credit Memo #24 Inventory Cost of Goods Sold Record Return of Inventory

6 0 000 0

6 0 0 00

6 0 000 0

(1 15 )

(X)

GENERAL JOURNAL Date 20XX

Sundry Account Dr.

Page 1 Post Ref. 412

Dr. 1 5 0 00

1 5 0 00

113/✓ 115 502

Cr.

1 1 2 50 1 1 2 50

6-7

SOLUTIONS TO EXERCISES—SET B, Cont. E6-2B., Cont. ACCOUNTS RECEIVABLE LEDGER 6/03 SJ1 800 6/17 SJ1 700

Boston Co. 150 GJ1 6/09 650 CRJ1 6/10

PARTIAL GENERAL LEDGER Cash 6/30 CRJ1 7,437

111

Gary Co. 6/03 SJ1 1,200

Accounts Receivable 6/30 SJ1 2,700

113 150 GJ1 6/09 650 CRJ1 6/30

Cost of Goods Sold 502 2,025 SJ1 6/30 6/09 GJ1 112.50 600 CJ1 6/30

Inventory 6/09 GJ1 112.50

115 2,025 SJ1 6/30 600 CJ1 6/30

YAKERU CO. SCHEDULE OF ACCOUNTS RECEIVABLE JUNE 30, 20XX Boston Co. $ 700 1,200 Gary Co. Total Accounts Receivable $ 1.900

Yakeru G. Capital

311 6,000 CRJ1 6/02

Sales

411 2,700 SJ1 6/30 800 CRJ1 6/30

Sales Returns & Allowances 6/9 GJ1 150

412

Sales Discount 6/30 CRJ1 13

413

E6-3B. Discount = ($4,600 − $500) ×0 .03 = $123 Payment required = $4,600 − $500 − $123 = $3,977 BLUE CO. GENERAL JOURNAL Date 20XX Mar

6-8

Account Title and Description

7 Sales Returns and Allowances

Accounts Receivable, Frost Foundation Issued Credit Memo #103

Page 15 Post Ref.

Dr.

Cr.

5 0 0 00 5 0 0 00

SOLUTIONS TO EXERCISES—SET B, Cont. E6-4B. 1. The total cash receipts were $14,324.00 2. Art’s Clothing Company collected $3,724.00 from its customers. Total discounts taken by customers were $76.00. Accounts receivable decreased by $3,800 ($3,724 + $76). 3. Cash sales were $2,100.00 during April.

E6-5B. Identify all the journals in which the following accounts would be debited or credited. Use SJ for sales journal, CRJ for cash receipts journal and GJ for general journal. Some accounts may be used in more than one journal.

1. 2. 3. 4. 5. 6.

Cost of Goods Sold Depreciation Expense Cash Sales Revenue Sales Returns & Allow. Inventory

SJ,CRJ GJ CRJ SJ,CRJ GJ SJ,CRJ

E6-6B. a

$ 155,000 105,000

$ 205,000 55,000

$ 150,000 86,500

$ 451,000 355,000

$ 313,500 255,000

Gross Profit from Sales

50,000

150,000

63,500

96,000

58,500

Operating Expenses

62,000

125,000

75,000

39,000

86,500

Net Income

−12,000

25,000

−11,500

57,000

−28,000

Sales Cost of Goods Sold

6-9

GROUP A PROBLEMS P6-1A. Mitsui Corporation is a major distributor of portables. All sales are terms 1/10, n15. During July, the following select transactions occurred. For each transaction, identify into which special journal it should be journalized. Also indicate if the Accounts Receivable subledger is affected. Use the list of codes to label our answers. Special Journals Sales Cash Receipts General Journal

SJ CRJ GJ

Date

Transaction

Special Journal

Affect Subledger

July 1

Sold merchandise on account Defective merchandise sold on July 1 was returned by the customer due to incorrect color

SJ GJ

Yes Yes

July 5 July 14 July 22 July 31

Received payment regarding the July 1 sale Sold merchandise for cash Sold old equipment for cash Record accrued salaries for the month

CRJ CRJ CRJ GJ

Yes

July 31

Accrued utilities for the month of July

July 2

6-10

GROUP A PROBLEMS, Cont. P6-2A. FOOD ON THE GO SALES JOURNAL Date 20XX June

1 4 8 15 18 25

Invoice No. 702 703 704 705 706 707

Customer’s Name Joe Kase Co. Sue Moore Co. Long Co. Sue Moore Co. Long Co. Joe Kase Co.

Page 1 Post Ref.

✓ ✓ ✓ ✓ ✓ ✓

Sales Cr.

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

3 3 8 0 00

3 3 8 0 00 2 3 6 6 00 (4 10 )

(1 12 )

FOOD ON THE GO. GENERAL JOURNAL Date Account Title and Description 20XX June 11 Sales Returns and Allowances Accounts Receivable, Joe Kase Co. Issued Credit Memo #34 11 Inventory Cost of Goods Sold Record Return of Inventory

Cost of Goods ` Sold Dr. Inventory Cr.

Accounts Receivable Dr.

2 8 0 4 2 0 4 9 0 1 2 6 2 1 0 8 4 0

00 00 00 00 00 00

(502) (115)

Page 1 Post Ref. 412

Dr. 1 5 0 00

1 5 0 00

112/✓ 115 502

Cr.

1 0 5 00 1 0 5 00

6-11

GROUP A PROBLEMS, Cont. P6-2A., Cont. NAME

JOE KASE CO.

Date 20XX June

Explanation

1 11 25

NAME

June

Post Ref. SJ1

Debit

Dr. Balance

1 5 0 00

4 0 0 00 2 5 0 00 1 4 5 0 00

Credit

Dr. Balance

4 0 0 00

GJ1 SJ1

Credit

1 2 0 0 00

LONG CO.

Date 20XX

Explanation

8 16

NAME

Post Ref.

SJ1 SJ1

Debit 7 0 0 00 3 0 0 00

7 0 0 00 1 0 0 0 00

SUE MOORE CO.

Date 20XX June

FOOD ON THE GO ACCOUNTS RECEIVABLE LEDGER

Explanation

4 15

Post Ref. SJ1 SJ1

Debit 6 0 0 00 1 8 0 00

Credit

Dr. Balance 6 0 0 00 7 8 0 00

FOOD ON THE GO SCHEDULE OF ACCOUNTS RECEIVABLE JUNE 30, 20XX Joe Kase Co. Long Co. Sue Moore Co. Total Accounts Receivable

6-12

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

GROUP A PROBLEMS, Cont. P6-3A. CHAN’S IMPORTED TECHNOLOGY SALES JOURNAL Date 20XX Aug

2 4 5 10 13 17 22 26 28 30 31

Explanation

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2/10, n30 3/15, n45 2/10, n30 2/10, n30 2/10, n30 2/10, n30 3/15, n45 3/15, n45 2/10, n30 2/10, n30

JIW Enterprises Case-5 Electronics Advanced Technologies in Motion Manfred Communications JIW Enterprises Advanced Technologies in Motion WMJ Sales Case-5 Electronics Manfred Communications Advanced Technologies in Motion Monthly Totals

Post Ref

HW PJ PJ HW HW PJ HW PJ HW PJ

Post Ref

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Page 1 Accounts Receivable Debit Dr. 9 5 0 7 4 0 4 1 0 9 4 5 5 7 5 3 4 3 9 3 0 6 2 0 8 7 3 5 5 3

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

Cost of Goods Sold Debit Inventory Credit Cr.

Sales Credit Cr. 9 5 7 4 4 1 9 5 7 3 4 9 3 6 2 8 7 5 5

0 0 0 4 5 3 0 0 3 3

0 0 0 5 0 0 0 0 0 0

00 00 00 00 00 00 00 00 00 00

7 5 3 7 4 2 6 4 6 4

1 5 0 0 3 5 9 6 5 1

2 5 7 8 1 7 7 5 4 4

5 0 5 7 2 2 5 0 7 7

00 00 00 50 50 50 00 00 50 50

69 3 9 0 0 0

69 3 9 0 00

52 0 4 2 5 0

( 13 00 )

( 41 00)

(50 00) (1 50 0)

6-13

GROUP A PROBLEMS, Cont. P6-3A., Cont. CHAN’S IMPORTED TECHNOLOGY GENERAL JOURNAL Date 20XX Aug

1300/✓

20 Sales Returns and Allowances Accounts Receivable, Manfred Communications Issued Credit Memorandum No. 102

1300/✓

4500

Dr.

Cr.

1 5 000 1 5 0 00

7 500

4500

7 5 00

CHAN’S IMPORTED TECHNOLOGY ACCOUNTS RECEIVABLE LEDGER ADVANCED TECHNOLOGIES IN MOTION Explanation

5 17 30

NAME

Post Ref. SJ1 SJ1 SJ1

Debit

Credit

4 1 0 0 00 3 4 3 0 00 5 5 3 0 00

Dr. Balance 4 1 0 0 00 7 5 3 0 00 13 0 6 0 0 0

CASE-5 ELECTRONICS

Date 20XX

6-14

Ref.

6 Sales Returns and Allowances Accounts Receivable, JIW Enterprises Issued Credit Memorandum No. 101

Date 20XX

Aug

Post

Account Title and Description

NAME

Aug

Page 1

Explanation

4 26

Post Ref. SJ1 SJ1

Debit 7 4 0 0 00 6 2 0 0 00

Credit

Dr. Balance 7 4 0 0 00 13 6 0 0 0 0

GROUP A PROBLEMS, Cont. P6-3A., Cont. CHAN’S IMPORTED TECHNOLOGY ACCOUNTS RECEIVABLE LEDGER JIW ENTERPRISES

NAME Date 20XX Aug

2 6 13

NAME

Post Ref. SJ1

Debit

Dr. Balance

1 5 0 00

9 5 0 0 00 9 3 5 0 00 15 1 0 0 0 0

Credit

Dr. Balance

9 5 0 0 00

GJ1 SJ1

Credit

5 7 5 0 00

MANFRED COMMUNICATIONS

Date 20XX Aug

Explanation

10 20 28

NAME

Post Ref. SJ1

Debit 9 4 5 0 00

7 5 00

GJ1 SJ1

8 7 3 0 00

9 4 5 0 00 9 3 7 5 00 18 1 0 5 0 0

WMJ SALES

Date 20XX Aug

Explanation

Post Ref. SJ1

Debit 9 3 0 0 00

Credit

Dr. Balance 9 3 0 0 00

CHAN’S IMPORTED TECHNOLOGY SCHEDULE OF ACCOUNTS RECEIVABLE AUGUST 31, 20XX Advanced Technologies in Motion Case-5 Electronics JIW Enterprises Manfred Communications WMJ Sales

$ 13 0 6 0 13 6 0 0 15 1 0 0 18 1 0 5 9 3 0 0

00 00 00 00 00

$ 69 1 6 5 0 0

6-15

GROUP A PROBLEMS, Cont. P6-4A. CHAN’S IMPORTED TECHNOLOGY CASH RECEIPTS JOURNAL Date 20XX

Cash Dr.

Aug

3 50 0 0 0 0 0 11 9 1 6 3 0 0 14 4 0 1 8 0 0 18 7 1 7 8 0 0 21 9 1 8 7 5 0 23 5 6 3 5 0 0 26 3 3 6 1 4 0 31 4 5 1 0 5 0

Accounts Receivable Cr.

Sales Discounts Dr.

Sales Cr.

Page 1 Sundry Account

Owner, W. Chan JIW Enterprises Advanced Tech. Case-5 Electronics Manfred Comm. JIW Enterprises Advanced Tech. WM J Sales

Post Ref. 3000

Amount Cr. 50 0 0 0 0 0

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

1 8 7 00 8 2 00 2 2 2 00 1 8 7 50 1 1 5 00 6 8 60 1 3 9 50

93 0 5 3 4 0 44 0 5 5 0 0

1 0 0 1 60

50 0 0 0 0 0

(4 55 0)

(X)

(1 10 0)

(1 30 0)

✓ ✓ ✓ ✓ ✓ ✓ ✓

94,055.00 = 94,055.00

CHAN’S IMPORTED TECHNOLOGY ACCOUNTS RECEIVABLE LEDGER ADVANCED TECHNOLOGIES IN MOTION

NAME Date 20XX Aug

5 14 17 26 30

Date 20XX

6-16

Post Ref. SJ1

Debit 4 1 0 0 00

4 1 0 0 00

CRJ1 SJ1

3 4 3 0 00 3 4 3 0 00

CRJ1 SJ1

Credit

5 5 3 0 00

Dr. Balance 4 1 0 0 00 0 3 4 3 0 00 0 5 5 3 0 00

CHAN’S IMPORTED TECHNOLOGY ACCOUNTS RECEIVABLE LEDGER CASE-5 ELECTRONICS

NAME

Aug

Explanation

4 18 26

Post Ref. SJ1

Debit 7 4 0 0 00 6 2 0 0 00

Dr. Balance 7 4 0 0 00

7 4 0 0 00

CRJ1 SJ1

Credit

6 2 0 0 00

GROUP A PROBLEMS, Cont. P6-4A., Cont. NAME

JIW ENTERPRISES

Date 20XX Aug

2 6 11 13 23

NAME

Ref. SJ1

Debit

GJ1 SJ1

Credit

9 5 0 0 00

CRJ1

5 7 5 0 00

CRJ1

Explanation

10 20 21 28

NAME

Dr. Balance

5 7 5 0 00

9 5 0 0 00 9 3 5 0 00 0 5 7 5 0 00 0

Credit

Dr. Balance

1 5 0 00 9 3 5 0 00

Post Ref. SJ1

Debit 9 4 5 0 00

7 5 00 9 3 7 5 00

GJ1 CRJ1 SJ1

8 7 3 0 00

9 4 5 0 00 9 3 7 5 00 0 8 7 3 0 00

WMJ SALES

Date 20XX Aug

Post

MANFRED COMMUN1CATIONS

Date 20XX Aug

Explanation

22 31

Post Ref. SJ1

Debit

Credit

Dr. Balance

4 6 5 0 00

9 3 0 0 00 4 6 5 0 00

9 3 0 0 00

CRJ1

CHAN’S IMPORTED TECHNOLOGY SCHEDULE OF ACCOUNTS RECEIVABLE AUGUST 31, 20XX Advanced Technologies in Motion Case-5 Electronics Manfred Communications WMJ Sales

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

00 00 00 00

$25 1 1 0 0 0

6-17

GROUP A PROBLEMS, Cont. P6-4A., Cont. NAME:

CASH

Date 20XX Aug

Explanation

NAME:

Explanation

Post Ref.

Debit

SJ1

1 5 0 00 7 5 00 69 3 9 0 0 0 44 0 5 5 0 0

CRJ1

Post Ref.

Debit

SJ1

Explanation 3

NAME:

93 0 5 3 4 0

Post Ref.

Debit

CRJ1

Balance

CR CR DR DR

1 5 0 00 2 2 5 00 69 1 6 5 0 0 25 1 1 0 0 0

Post Ref. SJ1

Debit

1500

Credit

DR CR

Balance

52 0 4 2 5 0

CR.

52 0 4 2 5 0

3000

Credit

DR CR

Balance

50 0 0 0 0 0

ACCOUNT NO. Explanation

1300

DR CR

ACCOUNT NO.

SALES

Date 20XX

Balance

ACCOUNT NO.

OWNER’S EQUITY, W. CHAN

Aug

Credit

1100

DR CR

ACCOUNT NO.

GJ1

Explanation

Date 20XX

Credit

93 0 5 3 4 0

GJ1

NAME:

6-18

Debit

INVENTORY

Date 20XX

Aug

Ref. CRJ1

6 20 31 31

NAME:

Aug

Post

ACCOUNTS RECEIVABLE

Date 20XX Aug

CHAN’S IMPORTED TECHNOLOGY PARTIAL GENERAL LEDGER ACCOUNT NO.

4100

Credit

DR CR

Balance

69 3 9 0 0 0

GROUP A PROBLEMS, Cont. P6-4A., Cont. NAME:

SALES RETURNS AND ALLOWANCES

Date 20XX Aug

Explanation

6 20

NAME:

Debit

Ref.

Credit

1 5 0 00 7 5 00

GJ1

SALES DISCOUNTS Explanation

NAME:

Post

Debit

Ref. CRJ1

C 1 R

Credit

0 0 1 60

COST OF GOODS SOLD

Date 20XX

Explanation

Balance

DR DR

1 5 0 00 2 2 5 00

Debit

Ref. SJ1

Credit

C 52 0 4 2 0 0

4550

DR CR

Balance

1 0 0 1 60

ACCOUNT NO. Post

4500

DR CR

ACCOUNT NO.

Aug

Post GJ1

Date 20XX Aug

ACCOUNT NO.

5000

DR CR

Balance

52 0 4 2 5 0

P6-5A. Net Sales = Sales – Sales Returns and Allowances – Sales Discounts Net Sales = $69,390 – $225 – $1,001.60 = $68,163.40 Gross Profit = Net Sales – Cost of Goods Sold Gross Profit = $68,163.40 – $52,042.50 = $16,120.90

GROUP B PROBLEMS P6-1B. FOOD ON THE GO SALES JOURNAL Date 20XX June

3 4 7 14 18

Invoice No. 1 2 3 4 5

Customer’s Name Joe Kase Co. Sue Machado Co. Long Co. Sue Machado Co. Long Co.

Page 1 Post Ref.

Accounts Receivable Dr.

✓

8 0 0 00 5 5 0 00 9 0 0 00 7 0 0 00 2 5 0 00

6 0 0 00 4 1 2 00 6 7 5 00 5 2 5 00 1 8 7 50

3 2 0 0 00

2 4 0 0 00

(1 12 )

(4 10 )

✓ ✓ ✓ ✓

Sales Cr.

Cost of Goods Sold Dr Inventory Cr.

(502) (115)

6-19

GROUP B PROBLEMS, Cont. P6-1B., Cont. FOOD ON THE GO GENERAL JOURNAL Date 20XX

Post

Account Title and Description

Ref.

June 11 Sales Returns and Allowances Accounts Receivable, Joe Kase Co. Issued Credit Memo #1 11 Inventory Cost of Goods Sold

NAME

JOE KASE CO.

Date 20XX June

1 6 000

412

1 6 0 00

112/✓

1 2 000

115

1 2 0 00

502

Post

Debit

Ref. SJ1

Credit

8 0 0 00 1 6 0 00

GJ1

Dr. Balance 8 0 0 00 6 4 0 00

Explanation

Post

Debit

Ref. SJ1

SJ1

Credit

9 0 0 00 2 5 0 00

Dr. Balance 9 0 0 00 1 1 5 0 00

SUE MACHADO CO.

Date 20XX

6-20

Explanation

7 18

NAME

June

Cr.

LONG CO.

Date 20XX June

Dr.

FOOD ON THE GO ACCOUNTS RECEIVABLE LEDGER

1 11

NAME

Page 1

Explanation

4 14

Post

Debit

Ref. SJ1 SJ1

C R

5 5 0 00 7 0 0 00

Credit

Dr. Balance 5 5 0 00 1 2 5 0 00

GROUP B PROBLEMS, Cont. P6-1B., Cont. FOOD ON THE GO PARTIAL GENERAL LEDGER NAME:

ACCOUNTS RECEIVABLE

Date 20XX June 11 30

NAME:

C R

3 2 0 0 00

Post

Debit

Ref. GJ1 SJ1

C R

1 2 0 00 2 4 0 0 00

Post

Debit

Ref. SJ1

C R

SALES RETURNS AND ALLOWANCES Explanation

Post

Debit

Ref. GJ1

C R

12 31

Explanation

Ref. GJ1 SJ1

C R

Dr Cr

1 2 0 00 2 2 8 0 00

410

DR CR

Balance

3 2 0 0 00

Credit

Credit 1 2 0 00

2 4 0 0 00

1 6 0 00 3 0 4 0 00

Credit

1 6 0 00

Debit

Balance

412

DR CR

Balance

1 6 0 00

ACCOUNT NO. Post

112

DR CR

ACCOUNT NO.

COST OF GOODS SOLD

Date 20XX

Credit

ACCOUNT NO.

NAME:

DR CR Cr Dr

ACCOUNT NO.

Explanation

Date 20XX

Credit 1 6 0 00

SALES

NAME:

Jul

SJ1

Explanation

Date 20XX

June

Debit

Ref. GJ1

12 31

NAME:

June

Post

INVENTORY

Date 20XX June

Explanation

ACCOUNT NO.

DR CR

Balance

Cr Dr

1 2 0 00 2 2 8 0 00

6-21

GROUP B PROBLEMS, Cont. P6-1B., Cont.

FOOD ON THE GO SCHEDULE OF ACCOUNTS RECEIVABLE JUNE 30, 20XX $ 6 4 0 00 1 1 5 0 00 1 2 5 0 00

Joe Kase Co. Long Co. Sue Moore Co.

$3 0 4 0 0 0

Total Accounts Receivable

P6-2B. PEAKER’S SNEAKER SHOP SALES JOURNAL Date 20XX May

3 4 8 18 29

Sales Invoice No.

Terms

60 61 62 63 64

1/10, n/30 1/10, n/30 1/10, n/30 1/10, n/30 1/10, n/30

Account Debited

Page 5 Post Ref.

B. Dale Ron Lester Jim Zon Pam Pry Ron Lester

Dr.—Acct. Receivable Cr.—Sales

Cost of goods Sold Dr. Inventory Cr.

2 0 0 0 00 9 0 0 00 6 0 0 00 4 0 0 0 00 6 0 0 0 00 13 5 0 0 0 0

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

✓ ✓ ✓ ✓ ✓

( 12 ) ( 40 )

PEAKER’S SNEAKER SHOP GENERAL JOURNAL Date 20XX May

6-22

Account Title and Description

(5 0) (1 5)

Page 1 Post Ref.

25 Sales Returns and Allowances Accounts Receivable, Pam Pry Issued Credit Memo #1

12/✓

31 Sales Returns and Allowances Accounts Receivable, Ron Lester Issued Credit Memo #2

12/✓

00 00 00 00 00 00

Dr.

Cr.

5 0 000 5 0 0 00

8 0 000 8 0 0 00

GROUP B PROBLEMS, Cont. P6-2B., Cont. PEAKER’S SNEAKER SHOP CASH RECEIPTS JOURNAL

Date Cash 20XX Dr. May 1 14 0 0 0 0 0 11 1 9 8 0 0 0 21 9 0 0 00 22 6 0 0 0 0 0 25 3 4 6 5 0 0 28 12 0 0 0 0 0 28 2 0 0 00 38 5 4 5 0 0 ( 10 )

Sales Discounts Dr.

Accounts Receivable Cr.

2 0 00 2 0 0 0 00 9 0 0 00

Sales Cr.

Page 2

Cost of Goods sold Dr.

Inventory Cr.

6 0 0 0 00 4 5 0 000 4 5 0 0 00

3 5 00 3 5 0 0 00 12 0 0 0 0 0 9 0 0 0 0 0 9 0 0 0 0 0 6 5 0 0 6 4 0 0 0 0 18 0 0 0 0 0 13 5 0 0 0 0 13 5 0 0 0 0 ( 42 )

( 12 )

( 40 )

( 50 )

(1 5)

Account Names Mark Peaker, Capital B. Dale Ron Lester Cash Sales Pam Pry Cash Sales Sneaker Rack Equipment

Post Ref. 30

Sundry Account Cr. 14 0 0 0 0 0

✓ ✓ X X X 14

2 0 0 00 14 2 0 0 0 0 (X)

6-23

GROUP B PROBLEMS, Cont. P6-2B., Cont.

NAME

PEAKER’S SNEAKER SHOP ACCOUNTS RECEIVABLE LEDGER B. DALE

Date 20XX May

Explanation

1 3 11

NAME

2 0 0 0 00

4 0 0 00 2 4 0 0 00 4 0 0 00

Credit

Dr. Balance

9 0 0 00 8 0 0 00

8 0 0 1 7 0 0 8 0 0 6 8 0 0 6 0 0 0

Credit

Dr. Balance

5 0 0 00 3 5 0 0 00

6 0 0 4 6 0 0 4 1 0 0 6 0 0

Credit

Dr. Balance

2 0 0 0 00

CRJ2

Explanation

1 4 21 29 31

Post

Debit

Ref.

Balance

9 0 0 00

SJ5 CRJ2

6 0 0 0 00

SJ5 GJ1

00 00 00 00 00

PAM PRY Explanation

1 18 25 25

NAME

Post

Debit

Ref.

Balance

4 0 0 0 00

SJ5 GJ1 CRJ2

00 00 00 00

JIM ZON

Date 20XX

6-24

Dr. Balance

C SJ5

Date 20XX

May

Credit

RON LESTER

NAME

May

Debit

Ref.

Balance

Date 20XX May

Post

Explanation 1 8

Post

Balance

Debit

Ref. SJ5

6 0 0 00

4 0 0 00 1 0 0 0 00

GROUP B PROBLEMS, Cont. P6-2B., Cont. PEAKER’S SNEAKER SHOP PARTIAL GENERAL LEDGER NAME: CASH Date 20XX May 1 31

ACCOUNT NO. Explanation

Post

Debit

Ref.

Balance CRJ2

C R

38 5 4 5 0 0

NAME: ACCOUNTS RECEIVABLE Date 20XX May 1 25 31 31 31

Explanation

Post

Debit

Ref. GJ1

C R

13 5 0 0 0 0

SJ5

6 4 0 0 00

CRJ2

DR CR Dr Dr Dr Dr Dr

ACCOUNT NO. Explanation

Post

Debit

Ref. SJ5 CRJ2

C R

Explanation

DR CR Cr Cr

ACCOUNT NO. Post

Debit

Ref.

Balance CRJ2

C R

Credit 2 0 0 00

NAME: MARK PEAKER, CAPITAL Explanation

Credit 10 1 2 5 0 0 13 5 0 0 0 0

NAME: SNEAKER RACK EQUIPMENT

Date 20XX May 1 1

Credit 5 0 0 00 8 0 0 00

GJ1

NAME: INVENTORY

Date 20XX May 1 28

DR CR Dr Dr

ACCOUNT NO.

Balance

Date 20XX May 31 31

Credit

DR CR Dr Dr

ACCOUNT NO. Post

Debit

Ref.

Balance CRJ2

C R

Credit 14 0 0 0 0 0

DR CR Cr Cr

10 Balance 15 5 0 0 0 0 54 0 4 5 0 0

12 Balance 2 2 0 0 00 1 7 0 0 00 9 0 0 00 14 4 0 0 0 0 8 0 0 0 00

15 Balance 10 1 2 5 0 0 23 6 2 5 0 0

14 Balance 1 0 0 0 00 8 0 0 00

30 Balance 40 0 0 0 0 0 54 0 0 0 0 0

6-25

GROUP B PROBLEMS, Cont. P6-2B., Cont. NAME: SALES Date 20XX May 1 31 31

ACCOUNT NO. Post

Explanation

Debit

Ref.

Balance SJ5

C R

Credit 13 5 0 0 0 0 18 0 0 0 0 0

CRJ2

DR CR Cr Cr Cr

40 Balance 2 2 0 0 00 15 7 0 0 0 0 33 7 0 0 0 0

PEAKER’S SNEAKER SHOP PARTIAL GENERAL LEDGER NAME: SALES DISCOUNTS Date 20XX May

ACCOUNT NO.

Explanation

Post

Debit

Ref. CRJ2 C R

Credit

5 5 00

NAME: SALES RETURNS AND ALLOWANCES Date 20XX May 25 31

Explanation

ACCOUNT NO. Post

Debit

Ref. GJ1 GJ1

C R

Credit

5 0 0 00 8 0 0 00

NAME: COST OF GOODS SOLD Date 20XX Jul 12 31

DR CR

DR CR Dr Dr

ACCOUNT NO.

Explanation

Post

Debit

Ref. SJ5 CRJ2

Credit

C 10 R

1 2 5 00 13 5 0 0 0 0

DR CR Dr Dr

42 Balance 5 5 00

44 Balance 5 0 0 00 1 3 0 0 00

50 Balance 10 1 2 5 0 0 23 6 2 5 0 0

PEAKER’S SNEAKER SHOP SCHEDULE OF ACCOUNTS RECEIVABLE MAY 31, 20XX B. Dale Ron Lester Pam Pry Jim Zon Total Accounts Receivable

6-26

$ 4 0 0 6 0 0 0 6 0 0 1 0 0 0

00 00 00 00

$8 0 0 0 0 0

GROUP B PROBLEMS, Cont.

P6-3B.

HENDERSON’S HOME IMPROVEMENT SHOP SALES JOURNAL Date 20XX May

Page 5

Sales Invoice No.

Terms

4 4 8

160 161 162

1/10, n/30 1/10, n/30 1/10, n/30

B. Dale Ron Lester Jim Zon

✓

163

1/10, n/30

Pam Pry

✓

164

1/10, n/30

Ron Lester

✓

Account Debited

Post Ref.

Dr. - Acct. Receivable Cr. - Sales

Cost of Goods Sold Dr Inventory Cr.

9 0 0 00 5 0 0 00 2 0 0 00

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

3 0 0 0 00 4 0 0 0 00 8 6 0 0 00

2 2 5 0 00

( 12 ) ( 40 )

(50) (15)

✓ ✓

HENDERSON HOME IMPROVEMENT SHOP GENERAL JOURNAL Date Account Title and Description 20XX May 25 Sales Returns and Allowances Accounts Receivable, Pam Pry Issued Credit Memo #31 25 Inventory Cost of Goods Sold Record return of inventory 31 Sales Returns and Allowances Accounts Receivable, Ron Lester Issued Credit Memo #32

Post Ref. 44

Page 1 Dr.

2 0 0 0 00

1 5 0000 1 5 0 0 00

44 12/✓

Cr.

2 0 0000

12/✓

3 0 0 0 00 6 4 5 0 00

7 0000 7 0 0 00

6-27

GROUP B PROBLEMS, Cont. P6-3B., Cont. HENDERSON’S HOME IMPROVEMENT SHOP CASH RECEIPTS JOURNAL

Date 20XX May

Cash Dr.

Sales Discounts Dr.

11 22 22 25 28

8 9 1 00 5 0 0 00 3 0 0 0 00 7 0 0 0 00 9 9 0 00

3 0 0 00

(1 1 1)

NAME

9 00

Sales Cr.

NAME

9 0 0 00 5 0 0 00 3 0 0 0 00 7 0 0 0 00

2 2 5 000 5 2 5 000

1 0 00 1 0 0 0 00

Account Names

Inventory Cr.

1 9 00 2 4 0 0 00 1 0 0 0 0 00 (4 1 3)

(1 1 3)

(4 1 1)

7 5 0 000

Post Ref.

Kylie Hender30 son. Capital B. Dale ✓ Ron Lester ✓ 2 2 5 0 0 0 Cash Sales X 5 2 5 0 0 0 Cash Sales X Pam Pry ✓ Home Improvement Equipment

Sundry Account Dr. 12 0 0 0 0 0

300 00

75 0 000

12 3 0 0 0 0

(1 1 5)

(X)

(5 0 2)

HENDERSON HOME IMPROVEMENT SHOP ACCOUNTS RECEIVABLE LEDGER

B. DALE

Date 20XX May 1 4 11

Explanation

Post

Debit

Ref.

Balance

Credit

Dr. Balance

9 0 0 00

4 0 0 00 1 3 0 0 00 4 0 0 00

Credit

Dr. Balance

5 0 0 00

8 1 3 8 4 8 4 1

C 9 0 0 00

SJ5 CRJ2

RON LESTER

Date 20XX

6-28

Cost of Goods sold Dr.

1 12 0 0 0 0 0

24 6 8 1 0 0

May

Accounts Receivable Cr.

Page 2

Explanation 1 4 22 29 31

Post

Balance

Debit

Ref. SJ5

C R

5 0 0 00

CRJ2 SJ5 GJ1

4 0 0 0 00 7 0 0 00

0 0 0 0 0

00 00 00 00 00

GROUP B PROBLEMS, Cont. P6-3B., Cont. NAME

PAM PRY

Date 20XX May

Explanation

1 21 25 28

NAME

Debit

Ref.

Credit

Dr. Balance

2 0 0 0 00 1 0 0 0 00

6 0 0 3 6 0 0 1 6 0 0 6 0 0

Credit

Dr. Balance

Balance

3 0 0 0 00

SJ5 GJ1 CRJ2

00 00 00 00

JIM ZON

Date 20XX May

Post

Explanation 1 8

Post

Debit

Ref.

Balance SJ5

2 0 0 00

4 0 0 00 6 0 0 00

HENDERSON’S HOME IMPROVEMENT SHOP SCHEDULE OF ACCOUNTS RECEIVABLE MAY 31, 20XX B. Dale Ron Lester Pam Pry Jim Zon Total Accounts Receivable

$ 4 0 0 4 1 0 0 6 0 0 6 0 0

00 00 00 00

$5 7 0 0 0 0

6-29

GROUP B PROBLEMS, Cont. P6-4B.

CASH RECEIPTS JOURNAL

Date 20XX Dec 1 5 5 19 29 31

Sales Discounts Dr.

Cash Dr. $6 0 0 0 0 0 $5 1 0 0 0 0 $1 7 0 0 0 0 $ 3 0 0 00 $3 8 0 0 0 0 $ 3 0 0 00 $17 2 0 0 0 0

Accounts Receivable Cr.

Lipstick Sales Cr.

Eye Shadow Sales Cr.

Page 1 Cost of Goods sold Dr.

Inventory Cr.

Description of Receipt

F. Nilsson, Capital $3 8 2 5 0 0 $3 8 2 5 0 0 Cash Sale $1 7 0 0 0 0 $1 2 7 5 0 0 $1 2 7 5 0 0 Cash Sale $ 3 0 0 00 D. Sabin $ 9 0 0 0 0 $2 9 0 0 0 0 $2 8 5 0 0 0 $2 8 5 0 0 0 Cash Sale $ 3 0 0 00 D. Sabin $ 6 0 0 0 0 $6 0 0 0 0 0 $4 6 0 0 0 0 $7 9 5 0 0 0 $7 9 5 0 0 0

Post Ref.

Sundry Account Cr. $6 0 0 0 0 0

$5 1 0 0 0 0

$−

(1 0)

( 12 )

(5 0 2)

✓ ✓

$6 0 0 0 0 0

( 15 )

(X)

SALES JOURNAL Date Dec.

6-30

8 9 21 24 29

Invoice Number 1 2 3 4 5

Customer Name A. Kozlosky Co. D. Sabin Co Shimmer Co. E. Wease Co D. Sabin Co

Post Ref.

✓ ✓ ✓ ✓ ✓

Accounts Receivable Dr. Accounts Receivable Dr. Lipstick Sales Cr Eye Shadow Sales Cr. $ 2 0 0 00 $ 6 0 0 00 3 5 0 00 5 5 0 00 1 0 0 0 00 3 0 0 00 $ 8 5 0 00 $2 1 5 0 0 0 (1 2) (4 0) ( 12 ) (4 1)

Cost of Goods sold Dr. Merchandise Inventory Cr. $ 1 5 0 00 4 5 0 00 2 6 2 50 7 5 0 00 2 2 5 00 $1 8 3 7 5 0 (1 5) (50 2)

GROUP B PROBLEMS, Cont. P6-4B., Cont. FREJA’S COSMETIC MARKET GENERAL JOURNAL Date 20XX Dec. 15

Account Titles and Description Sales Returns and Allowances Accounts Receivable, Alex Kozslosky Issued Credit Memo #1

Page 1 PR

Dr.

1 0 0 00

Cr. 1 0 0 00

12/√

Inventory Cost of Goods Sold Return of inventory

15 50

7 5 00

Sales Returns and Allowances Accounts Receivable, Shimmer Co. Issued Credit Memo #2

42 12/√

2 5 0 00

Inventory Cost of Goods Sold Return of inventory

15 50

1 8 7 50

7 5 00

2 5 0 00

1 8 7 50

6-31

GROUP B PROBLEMS, Cont. P6-4B., Cont. ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME

ALEX KOZLOSKY CO.

Date 20XX Dec.

Explanation 8 15

NAME

9 19 29 31

Credit

2 0 0 00

Dr. Balance

1 0 0 00

2 0 0 00 1 0 0 00

Post

Debit

Ref.

Credit

Debit Balance

SJ1

6 0 0 00

3 0 0 00

6 0 0 3 0 0 6 0 0 3 0 0

Credit

Debit Balance

2 5 0 00

3 5 0 00 1 0 0 00

3 0 0 00

CRJ1

3 0 0 00

SJ2 CRJ1

00 00 00 00

SHIMMER CO.

Date 20XX

6-32

SJ1 GJ1

Explanation

NAME

Dec.

Debit

Ref.

SABIN CO.

Date 20XX Dec.

Post

Explanation 21 25

Post

Debit

Ref. SJ1 GJ1

3 5 0 00

GROUP B PROBLEMS, Cont. P6-4B., Cont. ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME

EDWARD WEASE CO.

Date 20XX Dec.

Post

Explanation

Debit

Ref.

SJ1

Credit

Dr. Balance

0 0 0 00

FREJA’S COSMETIC MARKET GENERAL LEDGER NAME:

CASH

Date 20XX Dec.

Explanation

NAME:

Post

Debit

Ref. CRJ1

15 25 31 31 31

Explanation

Credit

17 2 0 0 0 0

ACCOUNTS RECEIVABLE

Date 20XX Dec.

ACCOUNT NO. DR CR

Balance

17 2 0 0 0 0

ACCOUNT NO. Post

Debit

Ref.

1 0 0 00 2 5 0 00 6 0 0 00

GJ1 GJ1 CRJ1 SJ1 SJ1

Credit

8 5 0 00 6 0 0 00

DR CR CR CR CR CR DR

12 Balance 1 0 0 00 3 5 0 00 9 5 0 00 1 0 0 00 1 5 0 0 00

6-33

GROUP B PROBLEMS, Cont. P6-4B., Cont. NAME:

INVENTORY

Date 20XX Dec.

Explanation

15 25 31 31

NAME:

Dec.

Debit

Credit

7 5 00 1 8 7 50 7 1

CRJ1 SJ1

Post Ref.

Debit

Credit 6

CRJ1

Explanation

31 31

Post Ref.

Debit

Credit 6

CRJ1 SJ1

Explanation

31 31

NAME:

Post Ref.

Debit

SJ1

15 25

Post Ref. CRJ1 SJ1

Credit 4 2

CRJ1

Explanation

0 0 0 00 8 5 0 00

DR CR CR CR

ACCOUNT NO.

SALES RETURNS AND ALLOWANCES

Date 20XX

0 0 0 00

DR CR CR

ACCOUNT NO.

Eye Shadow Sales

Date 20XX

9 5 0 00 8 3 7 50

DR CR DR DR CR CR

ACCOUNT NO.

LIPSTICK SALES

NAME:

6-34

GJ1

Explanation

Date 20XX

Dec.

Ref. GJ1

NAME:

Dec.

Post

FREJA NILSSON CAPITAL

Date 20XX

Dec.

ACCOUNT NO.

6 0 0 00 1 5 0 00

DR CR CR CR

ACCOUNT NO. Debit 1 0 0 00 2 5 0 00

Credit

DR CR DR DR

15 Balance

7 9

7 5 00 2 6 2 50 6 8 7 50 5 2 5 00

30 Balance 6 0 0 0 00

40 Balance 6 0 0 0 00 6 8 5 0 00

41 Balance 4 6 0 0 00 6 7 5 0 00

42 Balance 1 0 0 00 3 5 0 00

GROUP B PROBLEMS, Cont. P6-4B., Cont. NAME:

COST OF GOODS SOLD

Date 20XX Dec.

ACCOUNT NO.

Explanation

15 25 31 31

Post

Debit

Ref.

7 5 00 1 8 7 50

GJ1 GJ1 CRJ1 SJ1

Credit

7 1

9 5 0 00 8 3 7 50

DR CR CR CR DR DR

Balance

7 9

7 5 00 2 6 2 50 6 8 7 50 5 2 5 00

(2) FREJA’S COSMETIC MARKET SCHEDULE OF ACCOUNTS RECEIVABLE DECEMBER 31, 20XX Alexander Kozlosky Co. Douglas Sabin Co. Shimmer Co. Edward Wease Co. Total Accounts Receivable

$ 1 0 0 00 3 0 0 00 1 0 0 00 1 0 0 0 00 $1 5 0 0 0 0

P6-5B. Net Sales = Sales – Sales Returns and Allowances – Sales Discounts Net Sales = $6,850 + $6,750 – $350 = $13,250 Gross Profit = Net Sales – Cost of Goods Sold Gross Profit = $13,250 – $9,525 = $3,725

6-35

GROUP C PROBLEMS P6-1C. LODGE CO. SALES JOURNAL Date 20XX July

Invoice No.

2 5 9 15 19 23

115 116 117 118 119 120

Customer’s Name

Page 3

6 0 0 00 8 2 5 00 9 5 0 00 9 2 5 00 9 3 0 00 0 2 5 00

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

Cost of Goods Sold Dr. Inventory Cr. 1 1 2 0 00 5 7 7 50 1 3 6 5 00 6 4 7 50 6 5 1 00 1 4 1 7 50

2 5 5 00

8 2 5 5 00

5 7 7 8 50

Ref.

Accounts Receivable Dr.

✓

Post

Joan Timkins Co. Chris Cowan Co. Cross & Co. Chris Cowan Co. Cross & Co. Joan Timkins Co.

✓ ✓

✓ ✓ ✓

( 12 )

Sales Cr.

( 40 )

LODGE CO. GENERAL JOURNAL Date 20XX

Page 2 Post

Account Title and Description

Ref.

12 Sales Returns and Allowances Accounts Receivable, Joan Timkins Co. Issued Credit Memo #1 12 Inventory Cost of Goods Sold Record Return of Inventory

July

( 50 ) ( 15)

Dr. 4 0 000

4 0 0 00

12/✓ 15

Cr.

2 8 000 2 8 0 00

LODGE CO. ACCOUNTS RECEIVABLE LEDGER NAME

CHRIS COWAN CO.

Date 20XX July

6-36

Explanation

5 15

Post Ref. SJ3 SJ3

Debit 8 2 5 00 9 2 5 00

Credit

Dr. Balance 8 2 5 00 1 7 5 0 00

GROUP C PROBLEMS, Cont. P6-1C., Cont. NAME

CROSS & CO.

Date 20XX July

9 19

NAME

Post Ref. SJ3 SJ3

Debit

Credit

1 9 5 0 00 9 3 0 00

Dr. Balance 1 9 5 0 00 2 8 8 0 00

JOAN TIMKINS CO.

Date 20XX July

Explanation

2 12 23

Explanation

Post Ref. SJ3

Debit

Dr. Balance

4 0 0 00

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

1 6 0 0 00

GJ2 SJ3

Credit

2 0 2 5 00

6-37

GROUP C PROBLEMS, Cont. P6-1C., Cont. LODGE CO. PARTIAL GENERAL LEDGER NAME: ACCOUNTS RECEIVABLE Date 20XX July

Explanation

12 31

ACCOUNT NO. Post

Debit

Ref. GJ2

4 0 0 00 8 2 5 5 00

SJ3

NAME: INVENTORY Date 20XX July

Explanation

Post

Debit

Ref. GJ2

5 7 7 8 50

SJ3

Explanation

Post Ref.

Debit

SJ3

NAME: SALES RETURNS AND ALLOWANCES

July

Explanation

July

6-38

Cr Dr

4 0 0 00 7 8 5 5 00

Post Ref. GJ2

Debit

Explanation

Balance

Dr Cr

2 8 0 00 5 4 9 8 50

12 31

DR CR

Balance

8 2 5 5 00

Credit

4 0 0 00

Ref.

Debit

SJ3

Credit 2 8 0 00

GJ2

5 7 7 8 50

Credit

DR CR

Balance

4 0 0 00

ACCOUNT NO. Post

DR CR

ACCOUNT NO.

NAME: COST OF GOODS SOLD Date 20XX

Balance

ACCOUNT NO.

Date 20XX

Credit

2 8 0 00

NAME: SALES

July

DR CR

ACCOUNT NO.

12 31

Date 20XX

Credit

DR CR

Balance

Cr Dr

2 8 0 00 5 4 9 8 50

GROUP C PROBLEMS, Cont. P6-1C., Cont. LODGE COMPANY SCHEDULE OF ACCOUNTS RECEIVABLE JULY 31, 20XX Chris Cowan Co.

$1 7 5 0 0 0

Cross & Co. Joan Timkins Co.

2 8 8 0 00 3 2 2 5 00

Total Accounts Receivable

$7 8 5 5 0 0

P6-2C. BEDFORD SAUSAGE SUPPLY CO. SALES JOURNAL Date 20XX Sept.

3 5 8 19 29

Sales Invoice No.

Terms

460 461 462 463 464

1/10, n/30 1/10, n/30 1/10, n/30 1/10, n/30 1/10, n/30

Account Debited Petra’s Meat Market Chapman’s Deli Valemont Variety Meats Discount Meats Chapman’s Deli

Page 5 Post Ref.

Dr. Cost of Dr. - Acct. Receivable Goods Sold Cr. Cr. - Sales Inventory

✓ ✓ ✓ ✓ ✓

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

1 1

3 8 7 6 1 8 6 9 7 1 2 5 2 1 5

6 7 2 5 00

0 4 3 75

(12 5) (4 00 )

BEDFORD SAUSAGE SUPPLY CO. GENERAL JOURNAL Date 20XX Sept.

Account Title and Description 23 Sales Returns and Allowances Accounts Receivable, Discount Meats Issued Credit Memo #101 23 Inventory Cost of Goods Sold Record Return of Inventory

50 75 50 00 00

( 13 0) (4 15)

Page 7 Post Ref. 404

Dr. 3 0 000

3 0 0 00

125/✓

130

2 2 500 2 2 5 00

415

30 Sales Returns and Allowances Accounts Receivable, Chapman’s Deli Issued Credit Memo #102

125/✓

30 Inventory Cost of Goods Sold Record Return of Inventory

130

404

415

Cr.

4 2 000 4 2 0 00

3 1 500 3 1 5 00

6-39

GROUP C PROBLEMS, Cont. SOLUTION TO P6-2C., Cont. BEDFORD SAUSAGE SUPPLY CO. CASH RECEIPTS JOURNAL Date Cash 20XX Dr. Sept 2 15 0 0 0 0 0 12 1 8 3 1 5 0 22 8 2 5 00 23 6 3 8 00 25 1 1 8 8 0 0 25 8 1 3 00 26 9 0 0 00 21 1 9 5 5 0 (1 10 )

6-40

Sales Discounts Dr.

Accounts Receivable Cr.

Sales Cr.

Page 2

Cost of Goods sold Dr.

Inventory Cr.

4 7 8 50

Karen Blum, Capital Petra’s Meat Market Chapman’s Deli 4 7 8 5 0 Cash Sales Discount Meats 6 0 9 7 5 Cash Sales Meat Cooling Equipment

1 8 50 1 8 5 0 00 8 2 5 00 6 3 8 00 1 2 00 1 2 0 0 00 8 1 3 00

6 0 9 75

3 0 50 3 8 7 5 00 1 4 5 1 00 1 0 8 8 25 1 0 8 8 25 (4 02 )

(1 25 )

(4 00 )

(4 15 )

(1 30 )

Account Names

Ref.

Sundry Account Cr.

300

15 0 0 0 0 0

Post

✓ ✓ X ✓ X 140

9 0 0 00 15 9 0 0 0 0 (X)

GROUP C PROBLEMS, Cont. P6-2C., Cont. BEDFORD SAUSAGE SUPPLY CO. ACCOUNTS RECEIVABLE LEDGER NAME

CHAPMAN’S DELI

Date 20XX Sept

1 5 22 29 30

NAME

Explanation

SJ5

Credit

Dr. Balance

8 2 5 00 4 2 0 00

7 1 5 7 2 3 1 9

Credit

Dr. Balance

8 2 5 00

CRJ2 SJ5

1 6 2 0 00

GJ7

1 19 23 25

Explanation

Post Ref.

Debit

Balance SJ5

1 5 0 0 00 3 0 0 00 1 2 0 0 00

GJ7 CRJ2

6 8 6 8 6

4 00 9 00 4 00 4 00 4 00

1 3 2 1

5 0 7 5

6 6 6 6

8 00 8 00 8 00 8 00

PETRA’S MEAT MARKET

Date 20XX 1 3 12

NAME

Explanation

Post Ref.

Debit

Credit

Dr. Balance

1 8 5 0 00

1 2 3 5 00 3 0 8 5 00 1 2 3 5 00

Credit

Dr. Balance

Balance SJ5

1 8 5 0 00

CRJ2

VALEMONT VARIETY MEATS

Date 20XX Sept

Debit

DISCOUNT MEATS

NAME

Sept

Ref.

Balance

Date 20XX Sept

Post

Explanation 1 8

Post Ref.

Debit

Balance SJ5

9 3 0 00

3 8 7 60 1 3 1 7 60

6-41

GROUP C PROBLEMS, Cont. P6-2C., Cont. BEDFORD SAUSAGE SUPPLY CO. PARTIAL GENERAL LEDGER NAME: CASH Date 20XX Sept 1 30

ACCOUNT NO. Explanation

Post Ref.

Debit

Balance CRJ2

21 1 9 5 5 0

NAME: ACCOUNTS RECEIVABLE Date 20XX Sept 1 23 30 30 30

Credit

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

Balance 3 0 0 00 4 2 0 00

CJ7 CJ7 SJ5

6 7 2 5 00 3 8 7 5 00

CRJ2

NAME: INVENTORY Date 20XX

Explanation

23 30 30 30

Post Ref.

Debit

GJ7

Credit

GJ7

2 2 5 00 3 1 5 00 5 0 4 3 75 1 0 8 8 25

SJ5 CRJ5

NAME: MEAT COOLING EQUIPMENT Date 20XX Sept 1 26

Explanation

Post Ref.

Debit

6-42

Credit

Balance 9 0 0 00

CRJ2

Explanation

DR CR Dr Dr

ACCOUNT NO. Post Ref.

Debit

Credit

Balance

DR CR Dr Dr Dr Dr Dr

ACCOUNT NO.

NAME: KAREN BLUM, CAPITAL Date 20XX 1 Sept 2

DR CR Dr Dr Dr Dr Dr

ACCOUNT NO.

Balance Sept

DR CR Dr Dr

CRJ2

15 0 0 0 0 0

DR CR Cr Cr

110 Balance 8 7 6 2 37 29 9 5 7 8 7

125 Balance 3 9 5 4 60 3 6 5 4 60 3 2 3 4 60 9 9 5 9 60 6 0 8 4 60

130

Balance 7 5 0 0 00 7 7 2 5 00 8 0 4 0 00 2 9 9 6 00 1 9 0 8 00 140 Balance 9 1 2 5 00 8 2 2 5 00

300 Balance 50 0 0 0 0 0 65 0 0 0 0 0

GROUP C PROBLEMS, Cont. P6-2C., Cont. NAME: SALES Date 20XX Sept 1 30 30

ACCOUNT NO. Post

Explanation

Ref.

Debit

Credit

Balance 6 7 2 5 00 1 4 5 1 00

SJ5 CRJ2

DR CR Cr Cr Cr

400 Balance 41 7 4 5 8 2 48 4 7 0 8 2 49 9 2 1 8 2

BEDFORD SAUSAGE SUPPLY CO. PARTIAL GENERAL LEDGER NAME: SALES DISCOUNTS Date 20XX Sept

Explanation

ACCOUNT NO. Post Ref. CRJ2

Debit

Sept

Explanation

23 30

ACCOUNT NO. Post Ref. GJ7 GJ7

Debit

Explanation

Credit

3 0 0 00 4 2 0 00

NAME: COST OF GOODS SOLD Date 20XX Sept 1 23 30 30 30

DR CR Dr

3 0 50

NAME: SALES RETURNS AND ALLOWANCES Date 20XX

Credit

Ref.

Debit

Credit

Balance 2 2 5 00 3 1 5 00

GJ7 GJ7 SJ5 CRJ5

5 0 4 3 75 1 0 8 8 25

Balance 3 0 50

404

DR CR

Balance

Dr Dr

3 0 0 00 7 2 0 00

ACCOUNT NO. Post

402

DR CR Dr Dr Dr Dr Dr

415 Balance 31 3 0 8 7 5 31 0 8 3 7 5 30 7 6 8 7 5 35 8 1 2 5 0 36 9 0 0 7 5

6-43

GROUP C PROBLEMS, Cont. P6-2C., Cont. BEDFORD SAUSAGE SUPPLY CO. SCHEDULE OF ACCOUNTS RECEIVABLE SEPTEMBER 31, 20XX Chapman’s Deli Discount Meats Petra’s Meat Market Valemont Variety Meats

$1 9 6 4 1 5 6 8 1 2 3 5 1 3 1 7

Total Accounts Receivable

00 00 00 60

$6 0 8 4 6 0

P6-3C. 1. The Accounts Receivable ledger account will be overstated, and, when bills are sent to customers, the mistake will surface. 2. The Schedule of Accounts Receivable will not match the controlling account. 3. The Schedule of Accounts Receivable will not match the controlling account. 4. The Schedule of Accounts Receivable will not match the controlling account. 5. If this is a multicolumn Sales Journal, then cross-footing should indicate an error. If it is a one-column Sales Journal, the Schedule of Accounts Receivable will not match the balance in the controlling account. 6. The trial balance will not balance.

SOLUTIONS TO ETHICAL CONSIDERATIONS EC6-1. Answers will vary, but the memo should include some of the points below: There is a lot of skepticism about offering products at a discount. But this business strategy as a short term and occasional tactic to boost sales can do more good than harm to small businesses. The issues involved are business issues rather than ethical issues. Customers are inherently drawn towards items on sale. Given two products that are practically similar in terms of features, consumers would almost always choose the item that costs less. Here are the many reasons why small business owners should not be afraid of offering discounts: • • • •

Increased Traffic Offering discounts for a limited time will attract customers into your store and most likely draw them into buying these items right away. Increased Sales Increased traffic usually comes with increased sales. Drawing customers inside your store and influencing them to buy is not only confined to items on sale but also to regular-priced items. Shoppers are likely to walk around your store and see other items that may not be discounted but are willing to buy those because they have already saved on other items on sale. Stronger Client Relationships Giving your customers great value for good quality products can greatly improve their loyalty to your store. This is especially true for first time buyers who were influenced to try your products because of your sale offer. Once consumers have tested your products, this can lead to repeat business and also generate positive word of mouth. Monetized Inventory Discounting items allows you to dispose of old inventory and even items that you don’t plan on selling anymore. Place these items in front of your store to make them more visible to your customers and offer them at a bigger discount. Providing a short term incentive to your customers will not hurt your bottom line. In fact, these occasional discounts can help strengthen your customer loyalty and widen your market.

Credit terms set the time limits for your customers’ payment on the merchandise or services received. Credit terms are simply the time limits you set for your customers’ promise to pay for their merchandise or services received. But for many small business owners, establishing credit terms can be cumbersome. When customers purchase your merchandise or services, you expect them to pay within a specific period of time (generally, 30 days). As a result of this promise, you agree to give up an immediate cash inflow until a later date. The credit terms of most businesses are either 30, 60, or 90 days. However, some businesses may have credit terms as short as 7 or 10 days. Often a business’s credit terms are dictated by an industry standard, or by its competition. •

Offering trade discounts may help speed up your cash inflows from accounts receivable, and help reduce a cash flow shortage created by extended credit terms.

6-44

Considering the Advantages The main advantage of offering trade discounts is that it shortens the collection period. Shortening the average collection period for accounts receivable is one of the biggest hurdles in accelerating your cash inflows. Weighing the Disadvantages The primary disadvantage of offering trade discounts is the cost to your bottom line profit associated with the lost revenues. The cost of trade discounts must be weighed against the improved cash flow expected. Another possible disadvantage is the increase in time necessary for billing and accounts receivable processing. In order to take full advantage of trade discounts, billing should take place as early as possible, which is generally the shipping date. For some small businesses, this may require outsourcing some of your billing work.

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS6-1. Analysis of Financial Statements—Roots Corporation 1. January 30, 2021 Direct-toConsumer Sales Cost of goods sold Gross profit

(1)

$ 208,230 80,968 127,262

February 1, 2020

Partners and Other

Total

Direct-toConsumer

Partners and Other

Total

$ 32,276 $ 240,506 19,799 100,767 12,477 139,739

$ 287,762 125,972 161,790

$ 42,103 27,704 14,399

$329,865 153,676 176,189

2. Revenue includes sales to customers through retail stores operated by the Company and through eCommerce. Sales to customers through retail stores are recognized at the time of purchase, net of a provision for returns. eCommerce sales to customers are recognized at the time of delivery, net of a provision for returns. The provision for returns is estimated based on the last 12 months’ return rate for retail stores and eCommerce sales, respectively. Revenue also includes sales to the Company’s international partner and other corporate customers, which are recognized at the time of shipment or receipt, depending on the specific contractual terms with each customer. Contractually, the Company’s international partner and wholesale partners are unable to return goods purchased from the Company. Royalty revenue is included in sales and is recognized on an accrual basis in accordance with the various contractual agreements, based on the financial results as reported by the Company’s international partner and other third-party licensees, and when collectability is reasonably determined. The Company sells gift cards to customers and recognizes revenue as gift cards are redeemed. The Company also recognizes gift card breakage if the likelihood of gift card redemption by the customer is considered to be remote. The liability associated to gift cards is recorded as deferred revenue on the consolidated statement of financial position. January 30, 2021 Direct-toPartners Consumer and Other $ 208,230 $ 32,276 80,968 19,799 (1) 127,262 12,477

Sales Cost of goods sold Gross profit 3. 2021

Total $ 240,506 100,767 139,739

February 1, 2020 Direct-toConsumer $ 287,762 125,972 161,790

Partners and Other Total $ 42,103 $ 329,865 27,704 153,676 14,399 176,189

2020

Gross profit 139,739 176,189 – Gross profit decreased by 36,450 Inventories The cost of merchandise inventories recognized as an expense and included in cost of goods sold for the period ended January 30, 2021 was $95,058 (period ended February 1, 2020 – $144,214). Cost of inventories includes the cost of merchandise and all costs incurred to deliver inventory to the Company’s distribution centre and stores including freight, import taxes and duties. During the period ended January 30, 2021, the Company recorded a $1,037 provision for inventories with net realizable values below cost (period ended February 1, 2020 – $1,607).

6-45

ROOTS CORPORATION Consolidated Statement of Net Income (Loss) (in thousands or Canadian dollars, except per share amounts) For the 52-week periods ended January 30, 2021 and February 1, 2020 Note Sales Cost of goods sold Gross profit Selling, general and administrative expenses Goodwill Impairment Gain from deconsolidation of RTS USA Corp. Income (loss) before Interest expense and Income taxes expense (recovery)

5 20 7 19

January 30, 2021 $ 240,506 100,767 139,739 114,807 4,774

February 1, 2020 $ 329,865 153,676 176,189 188,308 44,799 -

29,706

(56,918)

Yes, Roots had 139,739 to cover Selling and Admin Expenses AFS6-2. Analysis of Financial Statements—Company of Your Choice Answers will vary depending on the company selected.

CONTINUING PROBLEM PRECISION COMPUTER CENTRE SALES JOURNAL Date 20X1 Sept.

Account Debited

Terms

Invoice No.

Page 1 Post Ref.

Dr. ,4cc. Receivable Cr. Sales

Dr. Cost of Goods Sold Cr. Inventory

3 10 23

Taylor Golf Anthony Pitale Vita Needle

2/10, n/30 2/10, n/30 4/10, n/30

12680 12681 12682

7 0 0 00 3 0 0 0 00 4 0 0 0 00

4 9 0 00 2 1 0 0 00 2 8 0 0 00

Anthony Pitale

2/10, n/30

12683

1 6 0 0 00

1 1 2 0 00

9 3 0 0 00

6 5 1 0 00

(1020)

6-46

(4 010) (50 00 ) (10 40)

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE CASH RECEIPTS JOURNAL Date 20X1

Cash Dr.

Sept. 9 2 5 0 0 00 10 12 0 0 0 0 0 17 2 9 4 0 0 0 30 3 8 4 0 0 0 30 21 2 8 0 0 0 (1 00 0)

Sales Disc. Dr.

Sales Cr.

Acc. Rec. Cr.

Page 1

Dr Cost of Goods Sold Cr Inventory

2 5 0 0 00

Sundry Account

6 0 00 3 0 0 0 00 1 6 0 00 4 0 0 0 00

Anthony Pitale Vita Needle

2 2 0 0 0 9 5 0 0 0 0 12 0 0 0 0 0 8 4 0 0 0 0 (4 03 0)

(1 02 0)

(4 01 0)

(50 00 ) ( 10 40)

ACCU PAC, INC.

Sept.

Ref.

NAME

4 0 0 00

1020/✓

Post Ref.

Debit

Credit

Explanation Balance

Dr. Balance 0

CARSON ENGINEERING CORP.

Cr.

4 0 000

Balance

Date 20X1 Sept.

4020

Dr.

PRECISION COMPUTER CENTRE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER AC101

Explanation 1

Page 3 Post

27 Sales Returns and Allowances Accounts Receivable—Taylor Golf Return by Taylor Golf re Invoice #12680

Date 20X1

Amount Cr.

Taylor Golf

Account Title and Description

NAME

Ref.

12 0 0 0 0 0 8 4 0 0 0 0

PRECISION COMPUTER CENTRE GENERAL JOURNAL Date 20X1

Post

CA101 Post Ref.

Debit

Credit

Dr. Balance 6 2 4 0 00

6-47

CONTINUING PROBLEM, Cont. NAME

ANTHONY J. PITALE

Date 20X1 Sept.

Explanation

1 10 17 30

NAME

Post Ref. SJ1 SJ1

3 0 0 0 00 1 6 0 0 00

Dr. Balance 0 3 0 0 0 00 0 1 6 0 0 00

TA101

Explanation 1 3 9 27

Credit

3 0 0 0 00

CRJ1

TAYLOR GOLF

Sept.

Debit

Balance

Date 20X1

Post Ref.

Debit

Credit

Balance SJ1

7 0 0 00 2 5 0 0 00 4 0 0 00

CRJ1 GJ9

Dr. Balance 2 5 0 0 3 2 0 0 7 0 0 3 0 0

00 00 00 00

PRECISION COMPUTER CENTRE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER VITA NEEDLE COMPANY VI101

NAME Date 20X1 Sept.

P1101

1 23 30

Explanation

Post Ref.

Debit

Credit

Dr. Balance

4 0 0 0 00

0 4 0 0 0 00 0

Balance SJ1

4 0 0 0 00

CRJ1

PRECISION COMPUTER CENTRE SCHEDULE OF ACCOUNTS RECEIVABLE SEPTEMBER 30, 20X1 Carson Engineering Corp. Anthony J. Pitale Taylor Golf

$6 2 4 0 0 0 1 6 0 0 00 3 0 0 00 $8 1 4 0 0 0

6-48

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE PARTIAL GENERAL LEDGER NAME: CASH Date 20X1 Sept.

ACCOUNT NO. Explanation

1 30

Post

Debit

Ref.

Balance CRJ1

21 2 8 0 0 0

NAME: ACCOUNTS RECEIVABLE Date 20X1 Sept.

Explanation

1 27 30 30

Credit

DR CR

Balance

Dr Dr

1 1 9 5 00 22 4 7 5 0 0

ACCOUNT NO. Post

Debit

Ref.

Balance GJ9 SJ1

Credit 4 0 0 00

9 3 0 0 00 9 5 0 0 00

CRJ

1000

1020

DR CR

Balance

Dr Dr Dr Dr

8 7 4 0 00 8 3 4 0 00 17 6 4 0 0 0 8 1 4 0 00

PRECISION COMPUTER CENTRE PARTIAL GENERAL LEDGER NAME: PREPAID RENT Date 20X1 Sept.

Explanation 1

ACCOUNT NO. Post Ref.

Debit

Balance

NAME: SUPPLIES Date 20X1 Sept.

Balance

DR CR

Balance

ACCOUNT NO. Explanation

Credit

Post Ref.

Debit

Credit

1025

1030

DR CR

Balance

4 5 0 00

6-49

CONTINUING PROBLEM, Cont. NAME: INVENTORY Date 20X1

ACCOUNT NO. Post

Explanation

Ref.

Debit

Credit

Balance Sept.

30 30

6 5 1 0 00 8 4 0 0 00

SJ1 CRJ1

NAME: ACCOUNTS PAYABLE Date 20X1 Sept.

Post Ref.

Debit

Credit

Balance

NAME: OTHER AMOUNTS PAYABLE Date 20X1 Sept.

Ref.

Debit

Credit

Balance

NAME: SALES Date 20X1 Sept.

Balance

Dr Dr Dr

15 1 0 0 0 0 8 5 9 0 00 1 9 0 00

Balance

1 0 4 1 00

Post Ref.

30 30

Balance

1 8 1 0 18

SJ1

4010

Credit

DR CR

Balance

9 3 0 0 00 12 0 0 0 0 0

Cr Cr

9 3 0 0 00 21 3 0 0 0 0

Debit

CRJ1

2030

DR CR

ACCOUNT NO. Explanation

2000

DR CR

ACCOUNT NO. Post

Explanation 1

DR CR

ACCOUNT NO.

Explanation

1040

PRECISION COMPUTER CENTRE PARTIAL GENERAL LEDGER NAME: SALES RETURNS AND ALLOWANCES Date 20X1 Sept.

6-50

Explanation

ACCOUNT NO. Post Ref. GJ9

Debit 4 0 0 00

Credit

4020

DR CR

Balance

4 0 0 00

CONTINUING PROBLEM, Cont. NAME: SALES DISCOUNTS Date 20X1 Sept.

Explanation

ACCOUNT NO. Post Ref. CRJ1

Debit 2 2 0 00

NAME: COST OF GOODS SOLD Date 20X1 Sept.

Explanation

30 30

Post Ref. SJ1

Debit

Sept.

Post Ref.

Debit

Explanation 1

Credit

Balance

Date 20X1 Balance

Balance

2 2 0 00

Balance

Dr Dr

6 5 1 0 00 14 9 1 0 0 0

Ref.

Debit

Credit

5020

DR CR

Balance

4 0 0 00

ACCOUNT NO. Post

5000

DR CR

ACCOUNT NO.

NAME: UTILITIES EXPENSE

Sept.

Credit

6 5 1 0 00 8 4 0 0 00

NAME: RENT EXPENSE Explanation

DR CR

ACCOUNT NO.

CRJ1

Date 20X1

Credit

4030

DR CR Dr

5030 Balance 9 5 00

6-51

7 Special Journals and Subsidiary Ledgers Purchases and Cash Payments Journals

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. A discount period is a short period within which a business receives a discount if it pays its bill. This encourages early payment. A credit period, which is longer than a discount period, represents the total time allowed to pay the full amount due on an invoice. 2. 2/10, n/30: 2 percent off the bill if paid within 10 days or total bill due within 30 days. n/10, EOM: Full amount of bill is due at the end of the month. 3. A general journal records items that are not shown in the special journals. Such as Returns and Allowances from Debit or Credit Memorandum. 4. The sum of the accounts payable ledger at the end of the month should equal the balance in the controlling account in the general ledger. 5. By placing the accounts payable ledger in alphabetical order, it is easier to locate specific companies or persons so that the balance can be updated. 6. A purchases journal is used to record the buying of merchandise or other items on account. 7. An invoice is a bill for a sale on account. It is used as a source document to update the sales journal of the seller and the purchases journal of the buyer. 8. F.O.B. shipping point means the buyer pays the cost of shipping; F.O.B. destination means the seller is responsible for the cost of shipping. 9. The purchase requisition is a document that initiates the request to prepare a purchase order. 10. Inventory, Accounts Payable, and the accounts payable ledger account. 11. The cash receipts journal records inward flow of cash from any source while the cash payments journal records outward flow of cash. 12. When the transaction is entered. 13. To show that the purchaser does not owe as much because the item is being reduced in price or returned. 14. A schedule of accounts payable is a list of who the company owes and how much. The sum of the schedule should equal the balance in the controlling account in the general ledger at the end of the month.

7-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.

1. $9,000 – $1,200 = $7,800 $7,800 × 0.02 = $156 2. Inventory 3. Purchase of inventory = $9,000; Return = $1,200; Discount = $156. Inventory balance = $9,000 – $1,200 – $156 = $7,644

CDE2. a. 1, 2, 3

CDE3. a. 5

b. 1, 2, 3 c. 4, 5

b. 3 c. 3 d. 2 e. 4 f. 5

CDE4.

AHMAD CO. SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Bloss Co.

$40

Rowe Co. Total Accounts Payable

60 $100

CDE5. LONG CO.—GENERAL JOURNAL Inventory

Page 10 3 0 0 00

Accounts Payable

3 0 0 00

JUAN CO.—GENERAL JOURNAL

Page 5

Accounts Receivable

3 0 0 00

Sales Cost of Goods Sold Inventory

2 2 5 00

3 0 0 00

CDE6. Supplier A = $20,000 – (2% of $20,000) = $19,600; $19,600 / 100 units = $196.00 per unit Supplier B = $19,500 – (1% of $19,500) + $400 = $19,705; $19,705 /100 units = $197.05 per unit Supplier A’s offer yields a lower price per unit. CDE7. 1. CPJ 2. PJ 3. SJ 4. GJ 5. CPJ 6. GJ 7. CRJ 8. GJ 9. GJ 10. CRJ

7-2

2 2 5 00

CDE8.

1. A receiving report is a business form used to notify the purchasing and accounting departments of the ordered goods received. 2. FOB destination refers to when the seller pays or is responsible for the cost of freight. 3. The Purchases Journal is a multicolumn special journal that records the buying of merchandise or other items on account. 4. A purchase order is a form used in business to place an order to buy goods from a seller. 5. FOB shipping point refers to when the purchaser pays or is responsible for the shipping costs. 6. A purchase requisition is a form used within a business by the requesting department asking the purchasing department of the business to buy specific goods. 7. A ledger that contains accounts of a single type is called a subsidiary ledger. 8. A debit memorandum is issued by a purchaser to a seller, indicating that some purchases returns and allowances have occurred. 9. The special journal that records all transactions involving payment by cheque is a cash disbursements journal. 10. The account in the general ledger that summarizes or controls a subsidiary is called a controlling account.

7-3

SOLUTIONS TO EXERCISES—SET A E7-1A. ACCOUNTS PAYABLE SUBSIDIARY LEDGER

PARTIAL GENERAL LEDGER

Corrine AxelI Co. 700.00 04/14 PJ1

Inventory PJ1 04/30 1200.00

115

Mill Village Co. 500.00 04/21 PJ1

Accounts Payable

222 1200.00 04/30 PJ1

E7-2A. EDNA CO. PURCHASES JOURNAL Date 20XX June 2 3 4 13

Date Account of lnv. Terms Credited Inv. No. Regina Co. 743 2%10, n30 Barstow Co. 3118 n30 Garry Co. 819 3%15, n45 Regina Co. 784 2%10, n30

Post Ref.

✔ ✔ ✔ ✔

Accounts Payable Cr. 8 0 0 00 7 0 0 00 1 4 0 0 00 1 2 0 0 00 4 1 0 0 00 ( 21 1)

Page 1

Inventory Dr. 8 0 0 00 7 0 0 00 1 4 0 0 00 1 2 0 0 00 4 1 0 0 00 ( 11 5)

Sundry Account Post Amount Name Ref. Dr.

EDNA CO. GENERAL JOURNAL Date 20XX June

7-4

Page 1

Account Title and Description

Post Ref.

Dr.

Accounts Payable (Regina Co.) Inventory Debit memo No. 101 re invoice No. 743. Accounts Payable (Barstow Co.) Inventory Debit memo No. 102 re invoice 3118. Accounts Payable (Garry Co.) Inventory Debit memo Nov. 103 re invoice No. 819.

211/✔

2 0 0 00

115 211/✔

1 0 0 00 1 0 0 00

115 211/✔ 115

Cr.

3 0 0 00 3 0 0 00

SOLUTIONS TO EXERCISES—SET A, Cont. E7-2A., Cont. EDNA CO. CASH PAYMENTS JOURNAL

20XX June 10 17

Chq. No. 831 832

Accounts Debited Regina Co. Garry Co.

Post Ref.

Sundry Accounts Dr.

✔ ✔

Page 1

Accounts Payable Dr. 6 0 0 00 1 1 0 0 00

Inventory Cr. 1 2 00 3 3 00

Cash Cr. 5 8 8 00 1 0 6 7 00

1 7 0 0 00

4 5 00

1 6 5 5 00

( 21 1)

ACCOUNTS PAYABLE SUBSIDIARY LEDGER

(1 11 )

PARTIAL GENERAL LEDGER

Barstow Co. GJ1 06/09 100.00

( 11 5)

Cash

111

700.00 06/03 PJ1

Inventory

1655.00 06/30 CPJ1

115

4100 06/30 PJ1 200.00 06/060GJ1 100.00 06/09 GJ1

600.00

300.00 06/14 GJ1 45.00 06/30 CPJ1 3,455.00

Garry Co. GJ1 06/14 300.00 CPJ1 06/17 1100.00

1400.00 06/04 PJ1 0.00

Accounts Payable GJ1 06/06 200.00 GJ1 06/09 100.00 GJ1 06/14 300.00 CPJ1 06/30 1 1700.00

211 4100.00 06/30 PJ1

1800.00

Regina Co. GJ1 06/06 200.00

800.00 06/02 PJ1

CPJ1 06/10 600.00

1200.00 06/13 PJ1 1200.00 EDNA CO. SCHEDULE OF ACCOUNTS PAYABLE JUNE 30, 20XX

Barstow Co. Regina Co.

$ 6 0 0 00 1 2 0 0 00 $1 8 0 0 0 0

7-5

SOLUTIONS TO EXERCISES-SET A, Cont. E7-3A. $3,000.00 −200.00 2,800.00 × 0.02 = 56.00 $2,800 − 56.00 = $2,744 paid April 13.

E7-4A. Merchandise Inventory $ 70,000 372,000 2,200 3,800 $76,600 End Bal

Cost of Goods Sold $360,000

$360,000 8,200 3,200

$2,200 $357,800 End Bal

E7-5A. ART’S CLOTHING COMPANY CASH PAYMENTS JOURNAL Date 20XX April 2 9 16

Chq. No. 20 21 22

Accounts Debited A. James Company Flott Advertising B. Foss

Post Ref.

Sundry Accounts Dr.

✔ 610

1 0 0 00

✔

1 0 0 0 0 (X )

7-6

Page 2

Accounts Payable Dr. 1 0 0 0 00

Inventory Cr. 2 0 00

4 0 0 00 1 4 0 0 00

2 0 00

( 21 0)

( 11 5)

Cash Cr. 9 8 0 1 0 0 4 0 0 1 4 8 0 ( 11 0)

00 00 00 00

SOLUTIONS TO EXERCISES-SET A, Cont. E7-5A., Cont. ACCOUNTS PAYABLE SUBSIDIARY LEDGER B. Foss CPJ2 04/16 400

PARTIAL GENERAL LEDGER Cash 400

3,000

110 1,480 04/30 CPJ2

1,520 A. James CPJ2 04/02 1,000

Inventory 1,000

Accounts Payable CPJ2 04/30 1,400

J. Ranch 900

115 20 04/30 CPJ2

210 2,500 1,100

Advertising Expense

B. Swanson

610

CPJ2 04/09 100

200

E7-6A. Art’s Clothing Company SCHEDULE OF ACCOUNTS PAYABLE APRIL 30, 20XX J. Ranch B. Swanson

$ 9 0 0 00 2 0 0 00 $1 1 0 0 0 0

E7-7A. 1. Art’s Clothing Company had total inventory purchases of $7,430.00 in April. 2. Art’s Clothing Company owes its suppliers a total of $11,930.00 on April 30. The journal entry to record payment on May 31 would be: Dr Accounts Payable Cr Cash

11,930.00

Art’s Clothing Company would not be able to take advantage of the discounts offered by the suppliers since it is paying 31 days after April 30, which is not within the discount period.

7-7

SOLUTIONS TO EXERCISES, Set B E7-1B. ACCOUNTS PAYABLE SUBSIDIARY LEDGER

PARTIAL GENERAL LEDGER

Conine Axell Co. 900.00 04/12 PJ1

115

Inventory PJ1 04/30 1600.00

Mill Village Co. 700.00 04/25 PJ1

Accounts Payable

222 1600.00 04/30 PJ1

E7-2B. EDNA CO. PURCHASES JOURNAL Date 20XX June 2 3 5 12

Account Credited Regina Co. Barstow Co. Garry Co. Regina Co.

Date of Inv. Inv. No. Terms 743 2%10, n30 3118 n30 819 3%15, n45 784 2%10

Post Ref.

✔ ✔ ✔ ✔

Accounts Payable Cr. 9 0 0 00 1 0 0 0 00 1 6 0 0 00 1 5 0 0 00 5 0 0 0 00 (2 11 )

Page 1 Sundry Inventory Dr. 9 0 0 00 1 0 0 0 00 1 6 0 0 00 1 5 0 0 00 5 0 0 0 00 (1 15 )

Account Name

Post Ref.

EDNA CO. GENERAL JOURNAL Date 20XX June

Account Title and Description 6

Accounts Payable (Regina Co.) Inventory Debit memo No. 101 re invoice No. 743.

Accounts Payable (Barstow Co.) Inventory Debit memo No. 102 re invoice 3118.

Accounts Payable (Garry Co.) Inventory Debit memo Nov. 103 re invoice No. 819.

7-8

Amount Dr.

Page 1 Post Ref. 211/✔

Dr. 3 0 0 00

3 0 0 00

115 211/✔

2 0 0 00 2 0 0 00

115 211/✔ 115

Cr.

4 0 0 00 4 0 0 00

SOLUTIONS TO EXERCISES—SET B, Cont. E7-2B., Cont. EDNA CO. CASH PAYMENTS JOURNAL Date 20XX June 10 17

Chq. No. 831 832

Accounts Debited Regina Co. Garry Co.

Post Ref.

Sundry Accounts Dr.

✔ ✔

Page 1 Accounts Payable Dr. 6 0 0 00 1 2 0 0 00

Inventory Cr. 1 2 00 3 6 00

Cash Cr. 5 8 8 00 1 1 6 4 00

1 8 0 0 00

4 8 00

1 7 5 2 00

(2 11 )

ACCOUNTS PAYABLE SUBSIDIARY LEDGER

(1 11 )

PARTIAL GENERAL LEDGER Cash

Barstow Co. GJ1 06/08 200.00

(1 15 )

111

1752.00 06/30 CPJ1

1000.00 06/03 PJ1

800.00 Inventory

Garry Co. GJ1 06/13 400.00

1600.00 06/05 PJ1

CPJ1 06/17 1200.00

PJ1 06/30 5000.00

400.00 06/13 GJ1 4052.00 Accounts Payable

GJ1 06/06 300.00

900.00 06/02 PJ1

GJ1 06/06 300.00

CPJ1 06/10 600.00

1500.00 06/12 PJ1

GJ1 06/08 200.00

1500.00

300.00 06/06 GJ1 200.00 06/08 GJ1

0.00

Regina Co.

115

GJ1 06/13 400.00 CPJ1 06/30 1800.00

48.00 06/30 CPJ1 211 5000.00 06/30 PJ1

2300.00

EDNA CO. SCHEDULE OF ACCOUNTS PAYABLE JUNE 30, 20XX Barstow Co. Regina Co.

$ 8 0 0 00 1 5 0 0 00 $2 3 0 0 0 0

7-9

SOLUTIONS TO EXERCISES—SET B, Cont. E7-3B. $5,000.00 −$400.00 $4,600.00 × 0.02 = $92.00 $4,600 − 92 = $4,508 paid April 13.

E7-4B. Merchandise Inventory $ 17,500 93,000 550 950 $19,150 End Bal

$90,000 2,050 800

Cost of Goods Sold $90,000 $550 $89,450 End Bal

E7-5B. ART’S CLOTHING COMPANY PAYMENTS JOURNAL Date 20XX April

3 10 17

Chq. No. Accounts Debited 201 202 203

A. James Company Flott Advertising B. Foss

Post Ref.

Sundry Accounts Dr.

1 3 0 0 00

✔ 610

1 8 0 0 00 (2 11 )

Cash Cr.

2 6 00

1 2 7 4 00 1 0 0 00 5 0 0 00

2 6 00

1 8 7 4 00

5 0 0 00 (X)

Inventory Cr.

1 0 0 00

✔

1 0 0 00

7-10

Accounts Payable Dr.

Page 2

(1 15 )

(1 11 )

SOLUTIONS TO EXERCISES—SET B, Cont. E7-5B., Cont. ACCOUNTS PAYABLE SUBSIDIARY LEDGER B. Foss CP J2 04/17 500 500

PARTIAL GENERAL LEDGER Cash

5,000

110 1,874 04/30 CPJ2

3,126 A. James CPJ2 04/03 1,300 1,300

J. Ranch 800

Inventory

Accounts Payable CPJ2 04/30 1,800

115 26 04/30 CPJ2

2,900

210 1,100

B. Swanson 300

Advertising Expense CPJ2 04/10 100

610

E7-6B. ART’S CLOTHING COMPANY SCHEDULE OF ACCOUNTS PAYABLE APRIL 30, 20XX J. Ranch B. Swanson

$ 8 0 0 00 3 0 0 00 $1 1 0 0 0 0

E7-7B. 1. The total cash payments on accounts payable were $4,600.00. 2. Art’s Clothing Company owes Joe Francis Company a total of $0.00. As of April 30, Art’s Clothing Company owes a total of $7,130.00, the balance in the Accounts Payable account in Figure 7-6.

7-11

GROUP A PROBLEMS P7-1A. ELY GOLDMAN’S SPECIALTY FOODS PURCHASES JOURNAL

Date 20XX June 3 4 8 14

7-12

Account Credited Bennet Co. Frank Co. Beamer Co. Bennet Co.

Date of Invoice 06/03 06/04 06/07 06/13

Inv. Terms No. 7041 2/10, n30 672 3710 2/10, n/30 7186

Post Ref.

✔ ✔

Accounts Payable Cr. 1 6 4 0 00 2 9 6 0 00 1 4 7 0 00 9 5 0 00 7 0 2 0 00 (2 10 )

Page 1 Sundry Dr.

Inventory Dr. 1 6 4 0 00 1 4 7 0 00 3 1 1 0 00 (1 15 )

Account

Post Ref.

Amount

Store Equipment

151

2 9 6 0 00

Store Supplies

130

9 5 0 00 3 9 1 0 00 (X)

GROUP A PROBLEMS, Cont. P7-1A., Cont.

ELY GOLDMAN SPECIALTY FOODS ACCOUNTS PAYABLE LEDGER

NAME

BEAMER CO.

Date 20XX June

NAME

Debit

PJ1

Explanation

3 14

NAME

Credit

Cr. Balance

1 4 7 0 00

Post Ref.

Debit

Credit

Cr. Balance

PJ1 PJ1

1 6 4 0 00 9 5 0 00

1 6 4 0 00 2 5 9 0 00

Credit

Cr. Balance

2 9 6 0 00

FRANK CO.

Date 20XX June

Post Ref.

BENNET CO.

Date 20XX June

Explanation

Post Ref. PJ1

Debit

7-13

GROUP A PROBLEMS, Cont. P7-1A., Cont.

ELY GOLDMAN SPECIALTY FOODS PARTIAL GENERAL LEDGER

NAME: Date 20XX June 30

NAME: Date 20XX June 14

NAME: Date 20XX June 4

NAME: Date 20XX June 30

7-14

INVENTORY

ACCOUNT NO. Explanation

Post Ref.

Debit

PJ1

3 1 1 0 00

STORE SUPPLIES Explanation

Post Ref.

Debit

PJ1

9 5 0 00

Balance

3 1 1 0 00

Credit

130 DR CR

Balance

9 5 0 00

ACCOUNT NO. Post Ref.

Debit

PJ1

2 9 6 0 00

ACCOUNTS PAYABLE Explanation

DR CR

ACCOUNT NO.

STORE EQUIPMENT Explanation

Credit

115

Credit

151 DR CR

Balance

2 9 6 0 00

ACCOUNT NO. Post Ref. PJ1

Debit

210

Credit

DR CR

Balance

7 0 2 0 00

GROUP A PROBLEMS, Cont. P7-2A. ODAWA’S CUPCAKES PURCHASES JOURNAL

Date 20XX May 8 11 14 18 24

Date of Inv. 05/06 05/11 05/13 05/18 05/23

Account Credited Stanton Co. Kenn Co. Nakoda Co. King Co. Nakoda Co.

Inv. No. 1416 618 741 1110 780

Terms 2/10, n60 2/10, n60

2/10, n30

Post Ref.

✔ ✔ ✔ ✔ ✔

Accounts Payable Cr. 9 0 0 00 1 5 4 0 00 1 0 5 0 00 1 8 3 7 00 9 4 0 00

Page 10 Sundry

Inventory Dr. 9 0 0 00 1 5 4 0 00

Store Supplies Dr.

Account Name

Post Ref.

Amount Dr.

Office Equipment

120

1 8 3 7 00

1 0 5 0 00 9 4 0 00

6 2 6 7 00

2 4 4 0 00

1 9 9 0 00

1 8 3 7 00

(2 10 )

(1 15 )

(1 10 )

(X)

OKAWA’S CUPCAKES GENERAL JOURNAL Date 20XX May

Account Title and Description Accounts Payable (Stanton Co.) Inventory Debit memo No. 5 re invoice 1475.

Page 2 Post Ref.

Dr.

210/✔

3 0 0 00

115

Cr. 3 0 0 00

7-15

GROUP A PROBLEMS, Cont. P7-2A., Cont. ODAWA’S CUPCAKES ACCOUNTS PAYABLE LEDGER NAME:

KENN CO.

Date 20XX May

1 11

NAME:

Explanation

PJ10

1 18

Explanation

1 5 4 0 00

1 2 4 0 00 2 7 8 0 00

Post Ref.

Debit

Credit

Cr. Balance

PJ10

1 8 3 7 00

8 4 5 00 2 6 8 2 00

Credit

Cr. Balance

1 0 5 0 00 9 4 0 00

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

Credit

Cr. Balance

9 0 0 00

7 9 0 00 1 6 9 0 00 1 3 9 0 00

NAKODA CO.

1 14 24

NAME:

Explanation

Post Ref.

Debit

Balance PJ10 PJ10

STANTON CO.

Date 20XX

7-16

Cr. Balance

Balance

Date 20XX

May

Credit

KING CO.

NAME:

May

Debit

Balance

Date 20XX May

Post Ref.

1 8 15

Explanation

Post Ref.

Debit

Balance

PJ10 GJ2

3 0 0 00

GROUP A PROBLEMS, Cont. P7-2A., Cont.

ODAWA’S CUPCAKES PARTIAL GENERAL LEDGER

NAME: Date 20XX May 1 15 31

NAME: Date 20XX May 1 31

NAME:

INVENTORY Explanation

Date 20XX May 1 15 31

Post Ref.

Debit

Credit

Balance

21 4 1 0 0 0 21 1 1 0 0 0 $ 23 5 5 0 0 0

3 0 0 00

GJ2 PJ10

2 4 4 0 00

STORE SUPPLIES

115

DR CR

Balance

Dr Dr

ACCOUNT NO.

Explanation

Post Ref.

Debit

PJ10

1 9 9 0 00

Credit

Balance

OFFICE EQUIPMENT

Date 20XX May 18

NAME:

ACCOUNT NO.

110 DR CR

Balance

7 2 0 00 2 7 1 0 00

ACCOUNT NO.

Explanation

Post Ref.

Debit

PJ10

1 8 3 7 00

ACCOUNTS PAYABLE

Credit

120 DR CR

Balance

1 8 3 7 00

ACCOUNT NO.

Explanation

Post Ref.

Debit

Credit

Balance GJ2

3 0 0 00

PJ10

120 DR CR

Balance

5 4 9 0 00 5 1 9 0 00 11 4 5 7 0 0

6 2 6 7 00

ODAWA’S CUPCAKES SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Kenn Co. King Co. Nakoda Co. Stanton Co.

$2 7 8 0 00 2 6 8 2 00 4 6 0 5 00 1 3 9 0 00 $11 4 5 7 0 0

7-17

GROUP A PROBLEMS, Cont. P7-3A.

PETER DALY PHOTO PRINTING CASH PAYMENTS JOURNAL

Date 20XX May 3 3 7 18 24 27 28 31

7-18

Chq. No. 211 212 213 214 215 216 217 218

Account Debited Marrk Co. Ring Motors Co. Dart Co. Tack Co. P. Mark Co. Downtown Realty Trust City Utility Co. JNS Co.

Post Ref.

Sundry Dr.

✔ 150

Accounts Payable Dr. 5 5 0 00

Page 5 Inventory Dr.

Inventory Cr. 1 1 00

8 0 0 0 00 3 9 0 0 00 1 8 0 0 00 2 5 0 0 00

✔ 610 620

1 8 0 0 00 4 0 0 00 10 2 0 0 0 0

3 5 0 00 3 4 0 0 00

5 7 0 0 00

(X)

(2 10 )

(1 15 )

✔

1 1 00 (1 15 )

Cash Cr. 5 3 9 8 0 0 0 3 9 0 0 1 8 0 0 2 5 0 0 1 8 0 0 4 0 0 3 5 0 19 2 8 9 (1 10 )

00 00 00 00 00 00 00 00 00

GROUP A PROBLEMS, Cont. P7-3A., Cont.

PETER DALY PHOTO PRINTING ACCOUNTS PAYABLE LEDGER

NAME:

CHEDD CO.

Date 20XX May

Credit

Cr. Balance 2 4 0 0 00

JNS CO.

Date 20XX 1 31

Post Ref.

Explanation

Debit

Credit

Cr. Balance

Balance

NAME:

CPJ5

3 5 0 00

Post Ref.

Debit

CPJ5

5 5 0 00

7 0 0 00 3 5 0 00

MARRK CO.

Date 20XX May

Debit

Balance

NAME:

May

Post Ref.

Explanation

1 3

Explanation

Cr. Balance

Balance

NAME: Date 20XX May 1 24

Credit

1 1 0 0 00 5 5 0 00

P. MARK CO. Post

Explanation

Debit

Ref.

Credit

Cr. Balance

Balance CPJ5

2 5 0 0 00 0

2 5 0 0 00

PARTIAL GENERAL LEDGER NAME: Date 20XX May 1 31

CASH

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

Balance CPJ5

19 2 8 9 0 0

110 DR CR

Balance

17 0 0 0 0 0 2 2 8 9 00

7-19

GROUP A PROBLEMS, Cont. P7-3A., Cont. PARTIAL GENERAL LEDGER NAME:

INVENTORY

Date 20XX May 31 31 NAME:

Explanation

Date 20XX May 1 31

NAME: Date 20XX May 27

NAME: Date 20XX May 28

7-20

Post Ref.

Debit

CPJ5

5 7 0 0 00

DELIVERY TRUCK Explanation

Post Ref.

Debit

CPJ5

8 0 0 0 00

Credit

Post Ref.

Debit

CPJ5

3 4 0 0 00

RENT EXPENSE

Balance

5 7 0 0 00 5 5 9 0 00

150 DR CR

Balance

8 0 0 0 00

Credit

210 DR CR

Balance

6 7 0 0 00 3 3 0 0 00

ACCOUNT NO. Post Ref.

Debit

CPJ5

1 8 0 0 00

UTILITIES EXPENSE Explanation

DR CR

ACCOUNT NO.

Balance

Explanation

115

ACCOUNT NO.

ACCOUNTS PAYABLE Explanation

Credit 1 1 0 00

CPJ5

Date 20XX May 3

NAME:

ACCOUNT NO.

Credit

610 DR CR

Balance

1 8 0 0 00

ACCOUNT NO. Post Ref.

Debit

CPJ5

4 0 0 00

Credit

620 DR CR

Balance

4 0 0 00

GROUP A PROBLEMS, Cont. P7-3A., Cont. PETER DALY PHOTO PRINTING SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Chedd Co. JNS Co. Marrk Co.

$2 4 0 0 00 3 5 0 00 5 5 0 00 $3 3 0 0 0 0

7-21

GROUP A PROBLEMS, Cont. P7-4A. BATARA CO GIFTS PURCHASES JOURNAL

Date 20XX Mar 2 5 9 17

7-22

Account Credited Whalen Co. Mega Gifts Co. Kelsey Co. Whalen Co.

Date of Invoice 03/02 03/04 03/08 03/16

Inv. No. Terms 6092 2/10, n30 672 3710 2/10, n/30 6136

Post Ref.

✔ ✔ ✔ ✔

Accounts Payable Cr. 1 8 3 2 00 2 3 5 5 00 1 2 8 9 00 1 6 4 5 00

Page 1 Sundry Dr. Inventory Dr. 1 8 3 2 00

Account

Post Ref.

Amount

Store Equipment

150

2 3 5 5 00

Store Supplies

124

1 6 4 5 00

1 2 8 9 00

7 1 2 1 00

3 1 2 1 00

4 0 0 0 00

(2 11 )

(1 30 )

(X)

GROUP A PROBLEMS, Cont. P7-4A., Cont.

NAME: Date 20XX May 9

NAME: Date 20XX May 5

NAME: Date 20XX May 2 17

BATARA CO GIFTS ACCOUNTS PAYABLE LEDGER KELSEY CO. Explanation

Post Ref.

Debit

PJ1

Credit

Cr. Balance

1 2 8 9 00

Credit

Cr. Balance

2 3 5 5 00

Credit

Cr. Balance

1 8 3 2 00 1 6 4 5 00

1 8 3 2 00 3 4 7 7 00

MEGA GIFTS CO. Explanation

Post Ref.

Debit

PJ1

WHALEN CO. Explanation

Post Ref. PJ1 PJ1

Debit

7-23

GROUP A PROBLEMS, Cont. P7-4A., Cont. BATARA CO GIFTS PARTIAL GENERAL LEDGER NAME: Date 20XX May 31

NAME: Date 20XX May 17

NAME: Date 20XX May 5

NAME: Date 20XX May 31

7-24

INVENTORY

ACCOUNT NO. Explanation

Post Ref.

Debit

PJ1

3 1 2 1 00

STORE SUPPLIES Explanation

Post Ref.

Debit

PJ1

1 6 4 5 00

Balance

3 1 2 1 00

Credit

Post Ref.

Debit

PJ1

2 3 5 5 00

Credit

Balance

1 6 4 5 00

PJ1

Debit

150

DR CR

Balance

2 3 5 5 00

ACCOUNT NO. Post Ref.

124

DR CR

ACCOUNT NO.

ACCOUNTS PAYABLE Explanation

DR CR

ACCOUNT NO.

STORE EQUIPMENT Explanation

Credit

115

211

Credit

DR CR

Balance

7 1 2 1 00

GROUP B PROBLEMS P7-1B. ELY GOLDMAN’S SPECIALTY FOODS PURCHASES JOURNAL

Date 20XX June

Account Credited 2 4 7 15

Beamer Co. Frank Co. Bennet Co. Beamer Co.

Date of Invoice

Inv. No.

06/02 06/04 06/07 06/13

3683 653 7089 3721

Terms

Post Ref.

2/10, n30

✔

2/10, n/30

✔

Sundry Dr.

Accounts Payable Cr. 2 8 3 1 1 9 7

4 2 8 5

5 5 0 0

Page 1

Inventory Dr.

Post Ref.

Amount

Store Equipment

151

3 1 2 5 00

Store Supplies

130

7 5 0 00

Account

00 0 0 00 00

2 8 4 5 00

8 7 0 0 00

4 8 2 5 00

3 8 7 5 00

( 21 0)

( 11 5)

(X)

1 9 8 0 00

7-25

GROUP B PROBLEMS, Cont. P7-1B., Cont.

NAME

BEAMER CO.

Date 20XX June 2 15

NAME

Explanation

Post Ref.

Debit

PJ1 PJ1

Credit

Cr. Balance

2 8 4 5 00 7 5 0 00

2 8 4 5 00 3 5 9 5 00

Credit

Cr. Balance

1 9 8 0 00

Credit

Cr. Balance

3 1 2 5 00

BENNET CO.

Date 20XX June 7

NAME

Explanation

Post Ref.

Debit

PJ1

FRANK CO.

Date 20XX June 4

7-26

ELY GOLDMAN SPECIALTY FOODS ACCOUNTS PAYABLE LEDGER

Explanation

Post Ref. PJ1

Debit

GROUP B PROBLEMS, Cont. P7-1B., Cont. ELY GOLDMAN SPECIALTY FOODS PARTIAL GENERAL LEDGER NAME: Date 20XX June 30

NAME: Date 20XX June 15

NAME: Date 20XX June 4

NAME: Date 20XX June 30

INVENTORY

ACCOUNT NO. Explanation

Post Ref.

Debit

PJ1

4 8 2 5 00

STORE SUPPLIES Explanation

Post Ref.

Debit

PJ1

7 5 0 00

Balance

4 8 2 5 00

Credit

Post Ref.

Debit

PJ1

3 1 2 5 00

Credit

Balance

7 5 0 00

PJ1

Debit

151

DR CR

Balance

3 1 2 5 00

ACCOUNT NO. Post Ref.

130

DR CR

ACCOUNT NO.

ACCOUNTS PAYABLE Explanation

DR CR

ACCOUNT NO.

STORE EQUIPMENT Explanation

Credit

115

210

Credit

DR CR

Balance

8 7 0 0 00

7-27

GROUP B PROBLEMS, Cont. P7-2B. ODAWA’S CUPCAKES PURCHASES JOURNAL

Date 20XX May 7 10 14 19 23

Account Credited Kenn Co. Stanton Co. Nakoda Co. King Co. Nakoda Co.

Date of Inv. Inv. No. Terms 05/07 589 2/10, n60 05/10 1475 2/10, n60 05/13 713 05/18 1160 05/23 786 2/10, n30

Post Ref.

✔ ✔ ✔ ✔ ✔

Accounts Payable Cr. 7 5 0 00 1 0 5 0 00 1 1 4 5 00 2 5 6 9 00 8 7 5 00

Inventory Dr. 7 5 0 00 1 0 5 0 00

Page 10 Sundry

Store Supplies Dr.

Account Name

Post Ref.

Amount Dr.

Office Equipment

120

2 5 6 9 00

1 1 4 5 00 8 7 5 00

6 3 8 9 00

1 8 0 0 00

2 0 2 0 00

2 5 6 9 00

( 21 0)

( 11 5)

( 11 0)

( X)

ODAWA’S CUPCAKES GENERAL JOURNAL Date 20XX May

7-28

Account Title and Description Accounts Payable (Stanton Co.) Inventory Debit memo No. 5 re invoice 1475.

Page 2 Post Ref. 210/✔ 115

Dr.

Cr.

2 5 0 00 2 5 0 00

GROUP B PROBLEMS, Cont. P7-2B., Cont.

NAME: Date 20XX May 1 7

NAME: Date 20XX May 1 19

NAME: Date 20XX May 1 14 23

NAME: Date 20XX May 1 10 15

ODAWA’S CUPCAKES ACCOUNTS PAYABLE LEDGER KENN CO. Explanation

Post Ref.

Debit

Credit

Cr. Balance

7 5 0 00

1 2 4 0 00 1 9 9 0 00

Credit

Cr. Balance

2 5 6 9 00

8 4 5 00 3 4 1 4 00

Credit

Cr. Balance

1 1 4 5 00 8 7 5 00

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

Credit

Cr. Balance

1 0 5 0 00

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

Balance PJ10

KING CO. Explanation

Post Ref.

Debit

Balance PJ10

NAKODA CO. Explanation

Post Ref.

Debit

Balance PJ10 PJ10

STANTON CO. Explanation

Post Ref.

Debit

Balance PJ10 GJ2

2 5 0 00

7-29

GROUP B PROBLEMS, Cont. P7-2B., Cont.

NAME: Date 20XX May 1 31

NAME: Date 20XX May 1 15 31

NAME:

STORE SUPPLIES

Date 20XX May 1 15 31

ACCOUNT NO.

Explanation

Post Ref.

Debit

Credit

Balance PJ10

2 0 2 0 00

INVENTORY Post Ref.

Debit

Balance

7 2 0 00 2 7 4 0 00

Credit

Balance 2 5 0 00

GJ1 PJ1O

1 8 0 0 00

OFFICE EQUIPMENT Post Ref. PJ10

Debit

Balance

21 4 1 0 0 0 21 1 6 0 0 0 22 9 6 0 0 0

Dr Dr

Credit

2 5 6 9 00

ACCOUNTS PAYABLE

DR CR Dr

ACCOUNT NO.

Explanation

Post Ref.

Debit

Credit

Balance GJ2

2 5 0 00

PJ10

120 Balance 2 5 6 9 00

210

DR CR

Balance

5 4 9 0 00 5 2 4 0 00 11 6 2 9 0 0

6 3 8 9 00

115

DR CR

ACCOUNT NO.

Explanation

110

DR CR

ACCOUNT NO. Explanation

Date 20XX May 19

NAME:

ODAWA’S CUPCAKES PARTIAL GENERAL LEDGER

ODAWA’S CUPCAKES SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Kenn Co. King Co. Nakoda Co. Stanton Co.

$1 9 9 0 00 3 4 1 4 00 4 6 3 5 00 1 5 9 0 00 $11 6 2 9 0 0

7-30

GROUP B PROBLEMS, Cont. P7-3B. PETER DALY PHOTO PRINTING CASH PAYMENTS JOURNAL Chq. Date 20XX No. May 3 721 3 722 7 723 18 724 24 725 27 726 28 727 31 728

Account Debited Ring Motors Co. Marrk Co. Dart Co. Tack Co. P. Mark Co. Downtown Realty Trust JNS Co. City Utility Co.

Post Ref. 150

Sundry Dr. 8 5 0 0 00

Accounts Payable Dr.

Page 5 Inventory Dr.

5 5 0 00

✔

Inventory Cr. 1 6 50

2 7 8 0 00 5 0 0 00 2 5 0 0 00

✔ 610

3 5 0 00

✔ 620

7 5 00

1 5 0 0 00 3 2 5 00 10 3 2 5 0 0

3 4 0 0 00

3 2 8 0 00

(X )

( 21 0)

( 11 5)

9 1 50 ( 11 5)

Cash Cr. 8 5 0 0 00 5 3 3 50 2 7 8 0 00 5 0 0 00 2 4 2 5 00 1 5 0 0 00 3 5 0 00 3 2 5 00 16 9 1 3 5 0 ( 11 0)

7-31

GROUP B PROBLEMS, Cont. P7-3B., Cont. PETER DALY PHOTO PRINTING ACCOUNTS PAYABLE LEDGER NAME:

CHEDD CO.

Date 20XX May 1

Post Ref.

Explanation

Debit

Credit

Cr. Balance

Balance

NAME:

2 4 0 0 00

JNS CO.

Date 20XX May 1 28

Explanation

Post Ref.

Debit

CPJ5

3 5 0 00

Post Ref.

Debit

Credit

Cr. Balance

Balance

NAME:

7 0 0 00 3 5 0 00

MARRK CO.

Date 20XX May 1 3

Explanation

Credit

Cr. Balance

Balance

NAME:

CPJ5

5 5 0 00

Post Ref.

Debit

CPJ5

2 5 0 0 00

1 1 0 0 00 5 5 0 00

P. MARK CO.

Date 20XX May 1 24

Explanation

Credit

Cr. Balance

Balance

2 5 0 0 00 0

PARTIAL GENERAL LEDGER NAME: Date 20XX May 1 31

7-32

CASH

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

Balance

CPJ5

16 9 1 3 5 0

110

DR CR

Balance

17 0 0 0 0 0 8 6 50

GROUP B PROBLEMS, Cont. P7-3B., Cont. PARTIAL GENERAL LEDGER NAME:

INVENTORY

Date 20XX May 31 31 NAME:

Explanation

CPJ5

3 2 8 0 00

Credit 9 1 50

Post Ref.

Debit

CPJ5

8 5 0 0 00

ACCOUNTS PAYABLE

Credit

Post Ref.

Debit

CPJ5

3 4 0 0 00

Credit

Balance

RENT EXPENSE

3 2 8 0 00 3 1 8 8 50

Post Ref.

Debit

Balance

8 5 0 0 00

CPJ5

1 5 0 0 00

UTILITIES EXPENSE

Balance

6 7 0 0 00 3 3 0 0 00

Post Ref.

Debit

CPJ5

3 2 5 00

Credit

610

DR CR

Balance

1 5 0 0 00

ACCOUNT NO.

Explanation

210

DR CR Cr

Credit

150

DR CR

ACCOUNT NO.

Explanation

Date 20XX May 28

Balance

ACCOUNT NO.

Explanation

115

DR CR

ACCOUNT NO.

Explanation

Date 20XX May 27

NAME:

Debit

DELIVERY TRUCK

Date 20XX May 1 31

NAME:

Post Ref. CPJ5

Date 20XX May 3

NAME:

ACCOUNT NO.

620

DR CR

Balance

3 2 5 00

PETER DALY PHOTO PRINTING SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Chedd Co. JNS Co. Marrk Co.

$2 4 0 0 0 0 3 5 0 00 5 5 0 00 $3 3 0 0 0 0

7-33

GROUP B PROBLEMS, Cont. P7-4B. SUPER SWEETS PURCHASES JOURNAL

Date 20XX Aug 5 9 12 19 25

Account Credited Bakker Co. Holmes Co. Genesis Co. Well-Equip Co. Genesis Co.

Date of Inv. Inv. No. Terms 08/04 2467 2/10, n60 08/08 1438 2/10, n60 08/12 5031 08/18 42784 08/13 5182 2/10, n30

Post Ref.

✔ ✔ ✔ ✔ ✔

Accounts Payable Cr. 1 6 3 7 45 1 7 8 4 30 1 4 7 8 25 1 7 5 4 50 7 4 3 30

Inventory Dr. 1 6 3 7 45 1 7 8 4 30

Page 15 Sundry

Store Supplies Dr.

Account Name

Post Ref.

Amount Dr.

Display Equipment

120

1 7 5 4 50

1 4 7 8 25 7 4 3 30

7 3 9 7 80

3 4 2 1 75

2 2 2 1 55

1 7 5 4 50

(2 10)

( 11 5)

( 11 0)

(X)

SUPER SWEETS GENERAL JOURNAL Date 20XX Aug 16

Account Title and Description Accounts Payable (Bakker Co.) Purchase Inventory Debit memo No. 5 re invoice No. 2467.

7-34

Page 3 Post Ref. 210/✔ 115

Dr.

Cr.

2 4 5 00 2 4 5 00

GROUP B PROBLEMS, Cont. P7-4B., Cont. SUPER SWEETS ACCOUNTS PAYABLE LEDGER NAME: Date 20XX Aug 1 5 16 NAME: Date 20XX Aug 1 12 25 NAME: Date 20XX Aug 1 9

NAME: Date 20XX Aug 1 19

BARKER CO. Explanation

Post Ref.

Debit

Credit

Cr. Balance

1 6 3 7 45

1 4 6 9 40 3 1 0 6 85 2 8 6 1 85

Credit

Cr. Balance

1 4 7 8 25 7 4 3 30

1 4 6 8 37 2 9 4 6 62 3 6 8 9 92

Credit

Cr. Balance

1 7 8 4 30

2 7 0 5 15 4 4 8 9 45

Credit

Cr. Balance

1 7 5 4 50

4 1 5 85 2 1 7 0 35

Balance PJ15 GJ3

2 4 5 00

Post Ref.

Debit

GENESIS CO. Explanation Balance PJ15 PJ15

HOLMES CO. Explanation

Post Ref.

Debit

Balance PJ15

WELL-EQUIP CO Explanation

Post Ref.

Debit

Balance PJ15

7-35

GROUP B PROBLEMS, Cont. P7-4B., Cont. SUPER SWEETS PARTIAL GENERAL LEDGER NAME: Date 20XX Aug 1 31

NAME: Date 20XX Aug 1 15 31 NAME: Date 20XX Aug 1 19 NAME: Date 20XX Aug 1 16 31

STORE SUPPLIES

ACCOUNT NO.

Explanation

Post Ref.

Debit

Credit

Balance PJ15

2 2 2 1 55

INVENTORY

DR CR

Balance

2 0 6 6 20 4 2 8 7 75

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

Balance 2 4 5 00

GJ3 PJ15

3 4 2 1 75

DISPLAY EQUIPMENT Post Ref.

Debit

Balance

74 2 9 4 3 0 74 0 4 9 3 0 77 4 7 1 0 5

Dr Dr

PJ15

1 7 5 4 50

Credit

Balance

ACCOUNTS PAYABLE Post Ref.

Debit

Balance

4 3 8 0 00 6 1 3 4 50

Credit

Balance GJ3

2 4 5 00

PJ15

210

DR CR

Balance

6 0 5 8 77 5 8 1 3 77 13 2 1 1 5 7

7 3 9 7 80

120

DR CR

ACCOUNT NO.

Explanation

115

DR CR

ACCOUNT NO.

Explanation

110

SUPER SWEETS SCHEDULE OF ACCOUNTS PAYABLE AUGUST 31, 20XX Bakker Co. Genesis Co. Holmes Co. Well-Equip Co.

$2 8 6 1 85 3 6 8 9 92 4 4 8 9 45 2 1 7 0 35 $13 2 1 1 5 7

7-36

GROUP C PROBLEMS P7-1C. MARY’S CARD HOUSE SALES JOURNAL Date 20XX Mar

2 6 9 16 22 23 31

Invoice No.

Customer’s Name

Terms

601 602 603 604 605 606 607

Jas Investors Paton Lee Jas Investors Gayle Herbert Jas Investors Gayle Herbert Youville Company

2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30

Post Ref.

✔ ✔ ✔ ✔ ✔ ✔ ✔

Accounts Receivable Dr.

Page 1 Cost of Goods Sold Dr.

Sates Cr.

1 8 0 0 00 1 8 0 0 00 7 0 0 00 7 0 0 00 9 0 0 00 9 0 0 00 4 0 0 0 00 4 0 0 0 00 9 0 0 00 9 0 0 00 1 1 0 0 00 1 1 0 0 00 3 0 0 0 00 3 0 0 0 00 12 4 0 0 0 0 12 4 0 0 0 0 (1 20 0)

( 41 00 )

1 3 5 6 3 0 6 8 2 2 9 3

5 2 7 0 7 2 5 0

0 00 5 00 5 00 0 00 5 00 5 00 0 00 0 00

(5 10 0)

MARY’S CARD HOUSE GENERAL JOURNAL Date 20XX Mar

Account Title and Description Sales Returns and Allowances Accounts Receivable (Paton Lee)

Inventory Cr. 1 3 5 6 3 0 6 8 2 2 9 3

5 2 7 0 7 2 5 0

0 5 5 0 5 5 0 0

00 00 00 00 00 00 00 00

(15 00)

Page 1 Post Ref. 4120

Dr.

Cr.

3 0 0 00

1200/✔

3 0 0

2 2 5

1 0 0 0

Credit memo No. 1 re invoice No. 602. 12

Inventory Cost of Goods Sold

1500

2 2 5 00

5100

Record return of inventory 15

Accounts Payable (Kaelynn Imports) Inventory Debit memo No. 1 re invoice No. 311

2100/✔ 1500

1 0 0 0 00

7-37

GROUP C PROBLEMS, Cont. P7-1C., Cont. MARY’S CARD HOUSE PURCHASES JOURNAL Date 20XX Mar 1 8 12 19 26 29

7-38

Account Credited X-Card Company X-Card Company Kaelynn Imports Halifax Auto Benson & McIntyre X-Card Company

Date of Invoice Mar 1 Mar 7 Mar 12 Mar 19 Mar 26 Mar 26

Inv. No. 710 716 311 1471 211 736

Terms 2/10, n30 2/10, n30 1/15, n60

Post Ref.

✔ ✔ ✔ ✔ ✔

2/10, n30

✔

Page 1

Accounts Payable Cr. 5 0 0 0 00 1 5 0 0 00 4 0 0 0 00 14 0 0 0 0 0 4 8 0 0 00 1 4 0 0 00 30 7 0 0 0 0

4 8 0 0 00 1 4 0 0 00 16 7 0 0 0 0

14 0 0 0 0 0

(2 10 0)

(1 50 0)

(X)

Inventory Dr. 5 0 0 0 00 1 5 0 0 00 4 0 0 0 00

Sundry Dr. Account

Delivery Truck

Amount

1620

14 0 0 0 0 0

GROUP C PROBLEMS, Cont. P7-1C., Cont. MARY’S CARD HOUSE CASH RECEIPTS JOURNAL Date 20XX Mar 1 13 14 16 16 16 26 27

Accounts Receivable Cr.

Card Sales Cr.

Cash Dr. 15 0 0 0 0 0 20 0 0 0 0 0 1 3 0 0 00 4 0 0 0 00 3 9 2 00 1 8 0 0 00 8 8 2 00 1 0 7 8 00

4 1 8 9 1 1

44 4 5 2 0 0

4 2 0 0 00 5 3 0 0 00

(1 10 0)

Sales Discounts Dr.

8 00

0 00 0 00 0 00 0 00

(1 20 0)

Inventory Cr.

9 7 5 00 9 7 5 00 3 0 0 0 00 3 0 0 0 00

1 3 0 0 00 4 0 0 0 00 0 0 0 0

Cost of Goods sold Dr.

Page 1

Paton Lee Jas Investors Jas Investors Gayle Herbert

1 8 00 2 2 00 (4 10 0)

4 8 00 (4 13 0)

Description of Receipt Mary James, Capital Royal Bank Bank Loan

3 9 7 5 00 3 9 7 5 00 (5 10 0)

(1 50 0)

Post Ref 3000 2200

Sundry Cr. 15 0 0 0 0 0 20 0 0 0 0 0

✔ ✔ ✔ ✔

35 0 0 0 0 0 (X)

7-39

GROUP C PROBLEMS, Cont. P7-1C., Cont. ACCOUNTS RECEIVABLE LEDGER NAME

GAYLE HERBERT

Date 20XX Mar 16 23 27

NAME

Explanation

Post Ref.

Debit

SJ1

4 0 0 0 00 1 1 0 0 00

SJ1 CRJ1

Credit

Dr. Balance

1 1 0 0 00

4 0 0 0 00 5 1 0 0 00 4 0 0 0 00

Credit

Dr. Balance

1 8 0 0 00 9 0 0 00

1 8 0 0 00 2 7 0 0 00 9 0 0 00 1 8 0 0 00 9 0 0 00

Credit

Dr. Balance

JAS INVESTORS

Date 20XX Mar 2 9 16 22 26 NAME

Explanation

Post Ref.

Debit

SJ1

1 8 0 0 00 9 0 0 00

SJ1 CRJ1 SJ1

9 0 0 00

CRJ1

PATON LEE

Date 20XX Mar 6 12 16

NAME

Explanation

Post Ref.

Debit

SJ1

7 0 0 00 3 0 0 00 4 0 0 00

GJ1 CRJ1

7 0 0 00 4 0 0 00 0

YOUVILLE COMPANY

Date 20XX Mar 31

Explanation

Post Ref.

Debit

SJ1

3 0 0 0 00

Credit

Dr. Balance 3 0 0 0 00

MARY’S CARD HOUSE SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 20XX Gayle Herbert Jas Investors Youville Company

$4 0 0 0 0 0 9 0 0 00 3 0 0 0 00 $7 9 0 0 0 0

7-40

GROUP C PROBLEMS, Cont. P7-1C., Cont. MARY’S CARD HOUSE CASH PAYMENTS JOURNAL Date 20XX Mar 1 9 11 15 23 24 30

Chq. No. 1001 1002 1003 1004 1005 1006 1007

Account Debited Harbour Realty Able Cleaning Service X-Card Company Salaries Kaelynn Imports AMR Supplies Halifax Auto

Post Ref. 1450 6150

Sundry Dr. 2 7 0 0 00 3 6 0 00

Inventory Dr.

5 0 0 0 00

✔ 6100

Accounts Payable Dr.

Page 1 Inventory Cr.

1 0 0 00

6 0 0 00 3 0 0 0 00

✔

3 0 00 6 0 0 00

7 0 0 0 00

✔

Cash Cr. 2 7 0 0 3 6 0 4 9 0 0 6 0 0 2 9 7 0 6 0 0 7 0 0 0

00 00 00 00 00 00 00

3 6 6 0 00

15 0 0 0 0 0

6 0 0 00

1 3 0 00

19 1 3 0 0 0

(X)

(2 10 0)

( 11 15 )

( 15 00 )

(1 10 0)

7-41

GROUP C PROBLEMS, Cont. P7-1C., Cont.

MARY’S CARD HOUSE ACCOUNTS PAYABLE LEDGER

NAME:

BENSON AND MCINTYRE

Date 20XX Mar 26

NAME:

Explanation

Post Ref.

Debit

PJ1

Credit

Cr. Balance

4 8 0 0 00

Credit

Cr. Balance

14 0 0 0 0 0

14 0 0 0 0 0 7 0 0 0 00

Credit

Cr. Balance

4 0 0 0 00

4 0 0 0 00 3 0 0 0 00 0

Credit

Cr. Balance

5 0 0 0 00 1 5 0 0 00

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

HALIFAX AUTO

Date 20XX Mar 19 30

NAME:

Explanation

Post Ref.

Debit

PJ1 CPJ1

7 0 0 0 00

Post Ref.

Debit

KAELYNN IMPORTS

Date 20XX Mar 12 15 23 NAME:

Explanation

PJ1 GJ1 CPJ1

1 0 0 0 00 3 0 0 0 00

X-CARD COMPANY

Date 20XX Mar 1 8 11 29

Explanation

Post Ref.

Debit

PJ1 PJ1 CPJ1

5 0 0 0 00

PJ1

1 4 0 0 00

MARY’S CARD HOUSE SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 20XX Benson and Mcintyre Halifax Auto X-Card Company

$4 8 0 0 00 7 0 0 0 00 2 9 0 0 00 $14 7 0 0 0 0

7-42

GROUP C PROBLEMS, Cont. P7-1C., Cont. MARY’S CARD HOUSE—PARTIAL GENERAL LEDGER NAME:

CASH

Date 20XX Mar 31 31

NAME:

Explanation

Date 20XX Mar 12 15 31 31 31 31

NAME: Date 20XX Mar 19

Debit

CRJ1

44 4 5 2 00

Explanation

Post Ref.

Debit

SJ1

Balance

44 4 5 2 0 0 25 3 2 2 0 0

DR CR

Balance

3 0 0 00

3 0 0 00 12 1 0 0 0 0 7 9 0 0 00

4 2 0 0 00

PREPAID RENT

ACCOUNT NO. Post Ref.

Debit

CPJ1

2 7 0 0 00

INVENTORY

Credit

Post Ref.

Debit

GJ1

2 2 5 00 1 0 0 0 00

GJ1 PJ1 CPJ1

16 7 0 0 0 0 6 0 0 00

Balance

2 7 0 0 00

SJ1

DELIVERY TRUCK

Balance

2 2 5 00 7 7 5 00 15 9 2 5 0 0 16 5 2 5 0 0 16 3 9 5 0 0 7 0 9 5 00

Cr Dr Dr Dr

ACCOUNT NO. Post Ref.

Debit

PJ1

14 0 0 0 0 0

Credit

1500

DR CR

1 3 0 00 9 3 0 0 00

CPJ1

Explanation

Credit

1450

DR CR

ACCOUNT NO. Explanation

1200

Credit

12 4 0 0 0 0

CPJ1

1100

DR CR

ACCOUNT NO.

GJ1

Explanation

Credit 19 1 3 0 0 0

ACCOUNTS RECEIVABLE

Date 20XX Mar 1

NAME:

Post Ref. CPJ1

Date 20XX Mar 12 31 31

NAME:

ACCOUNT NO.

1620

DR CR

Balance

14 0 0 0 0 0

7-43

GROUP C PROBLEMS, Cont. P7-1C., Cont. MARY’S CARD HOUSE—PARTIAL GENERAL LEDGER NAME:

ACCOUNTS PAYABLE

Date 20XX Mar 15 31 31

NAME:

Explanation

Date 20XX Mar 31 31

NAME: Date 20XX Mar 12

NAME: Date 20XX Mar 31

7-44

Debit

GJ1

1 0 0 0 00

CPJ1

Explanation

30 7 0 0 0 0

Post Ref.

Debit

M. JAMES, CAPITAL

Balance

1 0 0 0 00 29 7 0 0 0 0 14 7 0 0 0 0

Cr Cr

Debit

CRJ1

CARD SALES

DR CR

Balance

20 0 0 0 0 0

Post Ref.

Debit

SJ1 CRJ1

SALES RETURNS AND ALLOWANCES Explanation

DR CR

Balance

15 0 0 0 0 0

Debit

GJ1

3 0 0 00

SALES DISCOUNTS Explanation

DR CR

Balance

12 4 0 0 0 0 5 3 0 0 00

12 4 0 0 0 0 17 7 0 0 0 0

Credit

CRJ1

Debit 4 8 00

Credit

4120

DR CR

Balance

Dr.

3 0 0 00

ACCOUNT NO. Post Ref.

4100

Credit

ACCOUNT NO. Post Ref.

3000

Credit

ACCOUNT NO. Explanation

2200

Credit

ACCOUNT NO. Post Ref.

2100

DR CR

ACCOUNT NO.

CRJ1

Explanation

Credit

15 0 0 0 0 0

BANK LOAN PAYABLE

Date 20XX Mar 1

NAME:

Post Ref.

P PJ1

Date 20XX Mar 13

NAME:

ACCOUNT NO.

DR CR Dr

4130 Balance 4 8 00

GROUP C PROBLEMS, Cont. P7-1C., Cont. MARY’S CARD HOUSE—PARTIAL GENERAL LEDGER NAME: Date 20XX Mar 12 31

NAME: Date 20XX Mar 15

NAME: Date 20XX Mar 9

COST OF GOODS SOLD Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1 SJ1

Explanation

DR CR

Balance

2 2 5 00

2 2 5 00 9 0 7 5 00

ACCOUNT NO. Post Ref.

Debit

CPJ1

6 0 0 00

CLEANING EXPENSE Explanation

Credit

9 3 0 0 00

SALARIES EXPENSE

Credit

Debit

CPJ1

3 6 0 00

Credit

6100

DR CR

Balance

6 0 0 00

ACCOUNT NO. Post Ref.

5100

6150

DR CR

Balance

3 6 0 00

7-45

GROUP C PROBLEMS, Cont. P7-2C. MARY’S CARD HOUSE SALES JOURNAL Date 20XX

Invoice No.

Customer’s Name

Terms

Post Ref.

Mar 3 6 9 16 22 23 31

401 402 403 404 405 406 407

Jas Investors Paton Lee Jas Investors Gayle Herbert Jas Investors Gayle Herbert Youville Company

2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30

✔ ✔ ✔ ✔ ✔ ✔ ✔

Page 1

Accounts Receivable Dr.

Card Sales Cr.

Cost of Goods Sold Dr.

2 0 0 000 9 0 000 1 1 0 000 3 6 0 000 1 1 0 000 1 3 0 000 3 2 0 000

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

Inventory Cr. 5 6 8 7 8 9 4

0 7 2 0 2 7 0

0 5 5 0 5 5 0

00 00 00 00 00 00 00

13 2 0 0 0 0 13 2 0 0 0 0 9 9 0 0 0 0 9 9 0 0 0 0 (1 20 0)

(4 10 0)

(5 10 0)

MARY’S CARD HOUSE GENERAL JOURNAL Date 20XX Mar 11

7-46

Account Title and Description Sales Returns and Allowances Accounts Receivable (Paton Lee) Credit memo No. 1 re invoice No. 402. Inventory Cost of Goods Sold Accounts Payable (Kaelynn Imports) Inventory Debit memo No. 1 re invoice No. 411.

(15 00)

Page 1 Post Ref. 4120

Dr. 2 0 0 00

2 0 0 00

1200./✔

1500

1 5 0 00 1 5 0 00

5100 1200/✔ 1500

Cr.

1 2 0 0 00 1 2 0 0 00

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE PURCHASES JOURNAL Date 20XX Mar

2 8 13 19 26 29

Account Credited X-Card Company X-Card Company Kaelynn Imports Halifax Auto Benson & McIntyre X-Card Company

Date of Invoice

Inv. No.

Mar 1 Mar 7 Mar 12 Mar 19 Mar 26 Mar 26

810 816 411 3211 311 836

Terms 2/10, n30 2/10, n30 1/15, n60

Post Ref.

✔ ✔ ✔ ✔ ✔

2/10, n30

✔

Accounts Payable Cr. 3 5 1 7 4 2 13 5 5 0 1 6

0 5 0 0 0 0

Page 1 Inventory Dr.

Sundry Dr. Account

Amount

1620

13 5 0 0 0 0

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

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

29 5 5 0 0 0

16 0 5 0 0 0

13 5 0 0 0 0

(2 10 0)

(1 50 0)

( X)

Delivery Truck 5 0 0 0 00 1 6 0 0 00

7-47

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE CASH RECEIPTS JOURNAL Date 20XX Mar 1 13 14 16 16 16 26 26

Cash Dr. 12 0 0 0 15 0 0 0 1 5 0 0 4 2 0 0 6 8 6 2 0 0 0 1 0 7 8 1 2 7 4

Accounts Receivable Cr. 00 00 00 00 00 7 0 00 2 0 0 00 1 1 0 00 1 3 0

7-48

0 0 0 0

(1 20 0)

Sales Discounts Dr.

1 5 0 0 00 4 2 0 0 00 00 00 00 00

37 7 3 8 0 0 5 1 0 0 0 0 (1 10 0)

Card Sales Cr.

Page 1

Cost of Goods Sold Dr.

Inventory Cr.

Ref. 3000 2200

Sundry Cr. 12 0 0 0 0 0 15 0 0 0 0 0

3 1 5 0 00 Paton Lee Jas Investors Jas Investors Gayle Herbert

2 2 00 2 6 00 (4 10 0)

Post

1 1 2 5 00 1 4 00

5 7 0 0 00

Description of Receipt Mary James, Capital Royal Bank Bank Loan

6 2 00 4 2 7 5 00 4 2 7 5 00 (4 13 0)

(5 10 0)

(1 50 0)

✔ ✔ ✔ ✔

27 0 0 0 0 0 (X)

GROUP C PROBLEMS, Cont. P7-2C., Cont. ACCOUNTS RECEIVABLE LEDGER NAME

GAYLE HERBERT

Date 20XX Mar 16 23 26

NAME

Explanation

SJ1

3 6 0 0 00 1 3 0 0 00

CRJ1

Credit

Dr. Balance

1 3 0 0 00

3 6 0 0 00 4 9 0 0 00 3 6 0 0 00

Credit

Dr. Balance

2 0 0 0 00 1 1 0 0 00

2 0 0 0 00 3 1 0 0 00 1 1 0 0 00 2 2 0 0 00 1 1 0 0 00

Credit

Dr. Balance

JAS INVESTORS Explanation

Post Ref.

Debit

SJ1

2 0 0 0 00 1 1 0 0 00

SJ1 CRJ1 SJ1

1 1 0 0 00

CRJ1

PATON LEE

Date 20XX Mar 6 11 16

NAME

Debit

SJ1

Date 20XX Mar 3 9 16 22 26 NAME

Post Ref.

Explanation

Post Ref.

Debit

SJ1

9 0 0 00 2 0 0 00 7 0 0 00

SJ1

9 0 0 00 7 0 0 00 0

YOUVILLE COMPANY

Date 20XX Mar 31

Explanation

Post Ref.

Debit

SJ1

3 2 0 0 00

Credit

Dr. Balance 3 2 0 0 00

MARY’S CARD HOUSE SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 20XX Gayle Herbert Jas Investors Youville Company

$3 6 0 0 0 0 1 1 0 0 00 3 2 0 0 00 $7 9 0 0 0 0

7-49

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE CASH PAYMENTS JOURNAL Date 20XX Mar 1 9 12 15 23 24 30

7-50

Chq. No. 1201 1202 1203 1204 1205 1206 1207

Account Debited Harbour Realty Able Cleaning Service X-Card Company Salaries Kaelynn Imports AMR Supplies Halifax Auto

Post Ref. 1450 6150

Sundry Dr. 1 8 0 0 00 4 2 5 00

Inventory Dr.

3 5 0 0 00

✔ 6100

Accounts Payable Dr.

Page 1 Inventory Cr.

7 0 00

8 0 0 00 3 0 0 0 00

✔

3 0 00 5 0 0 00

6 7 5 0 00

✔

3 0 2 5 00

13 2 5 0 0 0

(X)

(2 10 0)

5 0 0 00

1 0 0 00

(1 50 0)

Cash Cr. 1 8 0 0 00 4 2 5 00 3 4 3 0 00 8 0 0 00 2 9 7 0 00 5 0 0 00 6 7 5 0 00 16 6 7 5 0 0 (1 10 0)

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE ACCOUNTS PAYABLE LEDGER NAME:

BENSON AND MCINTYRE

Date 20XX Mar 26

NAME:

Explanation

Credit

Cr. Balance

5 0 0 0 00

Credit

Cr. Balance

13 5 0 0 0 0

13 5 0 0 0 0 6 7 5 0 00

Credit

Cr. Balance

4 2 0 0 00

4 2 0 0 00 3 0 0 0 00 0

Credit

Cr. Balance

3 5 0 0 00 1 7 5 0 00

3 5 0 0 00 5 2 5 0 00 1 7 5 0 00 3 3 5 0 00

HALIFAX AUTO Explanation

Post Ref.

Debit

PJ1 CPJ1

6 7 5 0 00

Post Ref.

Debit

KAELYNN IMPORTS

Date 20XX Mar 13 15 23 NAME:

Debit

PJ1

Date 20XX Mar 19 30

NAME:

Post Ref.

Explanation

PJ1 GJ1 CPJ1

1 2 0 0 00 3 0 0 0 00

X-CARD COMPANY

Date 20XX Mar 2 8 12 29

Explanation

Post Ref.

Debit

PJ1 PJ1 CPJ1

3 5 0 0 00

PJ1

1 6 0 0 00

MARY’S CARD HOUSE SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 20XX Benson and Mcintyre Halifax Auto X-Card Company

$5 0 0 0 00 6 7 5 0 00 3 3 5 0 00 $15 1 0 0 0 0

7-51

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE—PARTIAL GENERAL LEDGER NAME:

CASH

Date 20XX Mar 31 31

NAME:

Explanation

Date 20XX Mar 11 15 31 31 31 31 31

NAME: 20XX

Explanation

CRJ1

37 7 3 8 0 0

Post Ref.

Debit

SJ1

Balance

37 7 3 8 0 0 21 0 6 3 0 0

DR CR

Balance

2 0 0 00

2 0 0 00 13 0 0 0 0 0 7 9 0 0 00

5 1 0 0 00

ACCOUNT NO. Post Ref.

Debit

CPJ1

1 8 0 0 00

INVENTORY

Credit

Post Ref.

Debit

GJ1

1 5 0 00 1 2 0 0 00

GJ1 PJ1 CPJ1

16 0 5 0 0 0 5 0 0 00

Balance

1 8 0 0 00

SJ1 CRJ1

DELIVERY TRUCK

Balance

1 5 0 00 1 0 5 0 00 1 5 0 00 15 5 0 0 0 0 15 4 0 0 0 0 5 5 0 0 00 1 2 2 5 00

Cr Dr Dr Dr Dr

ACCOUNT NO. Post Ref.

Debit

PJ1

13 5 0 0 0 0

Credit

1500

DR CR

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

CPJ1

Explanation

Credit

1450

DR CR

ACCOUNT NO. Explanation

1200

Credit

13 2 0 0 0 0

PREPAID RENT

1100

DR CR

ACCOUNT NO.

CPJ1

Explanation

Credit 16 6 7 5 0 0

GJ1

Mar 19

7-52

Debit

ACCOUNTS RECEIVABLE

Date 20XX Mar 1

NAME:

Post Ref. CPJ1

Date 20XX Mar 11 31 31

NAME:

ACCOUNT NO.

1620

DR CR

Balance

13 5 0 0 0 0

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE—PARTIAL GENERAL LEDGER NAME:

ACCOUNTS PAYABLE

Date 20XX Mar 15 31 31

NAME:

Explanation

Date 20XX Mar 31 31

NAME: Date 20XX Mar 11

NAME: Date 20XX Mar 31

Debit

GJ1

1 2 0 0 00 13 2 5 0 0 0

BANK LOAN PAYABLE Explanation

Post Ref.

Debit

M. JAMES, CAPITAL

Balance

1 2 0 0 00 28 3 5 0 0 0 15 1 0 0 0 0

Cr Cr

Debit

CRJ1

CARD SALES

DR CR

Balance

15 0 0 0 0 0

Post Ref.

Debit

SJ1 CRJ1

SALES RETURNS AND ALLOWANCES Explanation

DR CR

Balance

12 0 0 0 0 0

Debit

GJ1

2 0 0 00

SALES DISCOUNTS Explanation

DR CR

Balance

13 2 0 0 0 0 5 7 0 0 00

13 2 0 0 0 0 18 9 0 0 0 0

Credit

CRJ1

Debit 6 2 00

Credit

4120

DR CR

Balance

2 0 0 00

ACCOUNT NO. Post Ref.

4100

Credit

ACCOUNT NO. Post Ref.

3000

Credit

ACCOUNT NO. Explanation

2200

Credit

ACCOUNT NO. Post Ref.

2100

DR CR

ACCOUNT NO.

CRJ1

Explanation

Credit 29 5 5 0 0 0

PJ1

Date 20XX Mar 1

NAME:

Post Ref.

CPJ1

Date 20XX Mar 13

NAME:

ACCOUNT NO.

DR CR Dr

4130 Balance 6 2 00

7-53

GROUP C PROBLEMS, Cont. P7-2C., Cont. MARY’S CARD HOUSE—PARTIAL GENERAL LEDGER NAME: Date 20XX Mar 11 31 31

NAME: Date 20XX Mar 15

NAME: Date 20XX Mar 9

7-54

COST OF GOODS SOLD Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1 SJ1 CRJ1

Explanation

DR CR

Balance

1 5 0 00

Cr.

1 5 0 00 9 7 5 0 00 14 0 2 5 0 0

Dr. Dr.

ACCOUNT NO. Post Ref.

Debit

CPJ1

8 0 0 00

CLEANING EXPENSE Explanation

Credit

9 9 0 0 00 4 2 7 5 00

SALARIES EXPENSE

Credit

Debit

CPJ1

4 2 5 00

Credit

6100

DR CR

Balance

8 0 0 00

ACCOUNT NO. Post Ref.

5100

6150

DR CR

Balance

4 2 5 00

GROUP C PROBLEMS, Cont. P7-3C. FANCY WRITING SUPPLY CO. SALES JOURNAL Date 20XX

Invoice No.

Customer’s Name

Terms

May 3 6 9 18 22 23 31

801 802 803 804 805 806 807

Dr. M. LaPeierre Hon. N. Maracliee Fern Michaels, LLB B. Kirk, CA Dr. M. LaPeierre B. Kirk, CA Moncton Hospital

2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30 2/10, n/30

Accounts Receivable Dr.

Writing Supplies Sales Cr.

1 2 2 4 1 2 2 7 1 1 7 3 6

Post Ref.

✔ ✔ ✔ ✔ ✔ ✔ ✔

Page 1

5 0 00 5 7 50 5 0 00 6 5 50 4 5 00 2 4 65 5 0 00

Cost of Goods Sold Dr

5 0 00 9 3 7 50 5 7 50 1 8 4 3 15 5 0 00 9 3 7 50 6 5 50 2 0 7 4 15 4 5 00 8 5 8 75 2 4 65 5 4 3 50 5 0 00 2 7 3 7 50

13 2 4 2 6 5 13 2 4 2 6 5 9 9 3 2 0 5 (1 10 0)

(4 00 0)

( 15 00)

FANCY WRITING SUPPLY CO. GENERAL JOURNAL Date 20XX May

Account Title and Description 1

9 1 8 9 2 0 8 5 2 7

3 4 3 7 5 4 3

9 9 3

7 3 7 4 8 3 7

50 15 50 15 75 50 50

2 05

(51 00)

Page 1 Post Ref.

Dr.

Cash Printing Press E. Ames, Capital

1000 25 0 0 0 0 0 1800 30 0 0 0 0 0 3000

Sales Returns and Allowances

4020

Accounts Receivable (Dr. M. LaPeierre)

Inventory Cr.

Cr.

55 0 0 0 0 0

1 7 5 00

1100/✔

1 7 5 00

Credit memo No. 101 re invoice No. 801. 12

Inventory Cost of Goods Sold

1500

1 3 1 25

5100

1 3 1 25

Record return of inventory 15

Accounts Payable (Markham Inks) Inventory Debit memo No. 25 re invoice No. 931.

2150/✔ 1500

2 3 5 00 2 3 5 00

7-55

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO. PURCHASES JOURNAL Date 20XX May 2 8 12 19 26 29

7-56

Account Credited Gant Paper Co. Gant Paper Co. Markham Inks Maritime Equip Sales Findlay and Fortune Gant Paper Co.

Date of Invoice May I May 7 May 12 May 19 May 26 May 26

Inv. No. 24388 24451 931 30275 6289 24722

Terms 2/10, n30 2/10, n30 3/15, n60 2/10, n30 2/10, n30

Post Ref.

✔ ✔ ✔ ✔ ✔ ✔

Accounts Payable Cr. 5 2 4 7 25 1 5 0 0 00 9 8 5 25 21 5 0 0 0 0 3 6 0 0 00 3 4 7 5 80 36 3 0 8 3 0 (2 15 0)

Page 1 Inventory Dr. 5 2 4 7 25 1 5 0 0 00 9 8 5 25

3 6 0 0 00 3 4 7 5 80 14 8 0 8 3 0 (1 50 0)

Sundiy Dr. Account

Printing Press

Amount

1800

21 5 0 0 0 0 21 5 0 0 0 0 (X)

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO. CASH RECEIPTS JOURNAL Date 20XX May 13 14 16 16 16 26 26

Accounts Receivable Cr.

Writing Supplies Sales Cr.

Cash Dr. 10 0 0 0 0 0 5 8 5 00 1 5 0 0 00 2 4 0 8 35 1 0 7 5 00 1 1 2 2 10 2 7 1 0 19

2 4 5 7 50 1 0 7 5 00 1 1 4 5 00 2 7 6 5 50

19 4 0 0 6 4

7 4 4 3 00

2 0 8 5 00

(1 00 0)

(1 10 0)

(4 00 0)

Sales Discounts Dr.

5 8 5 00 1 5 0 0 00

Page 1

Cost of Goods Sold Dr 4 3 1 1 2

8 5

Inventory Cr

Hon. N. Marachee Dr. M. LaPeierre Dr. M. LaPeierre B. Kirk, CA

2 2 90 5 5 31 (4 02 5)

Post Ref. 2400

Sundry Cr. 10 0 0 0 0 0

75 4 3 8 75 00 1 1 2 5 00

4 9 15

1 2 7 36 1 5 6

Description of Receipt Royal Bank Bank Loan

75 1 5 6 3 75

✔ ✔ ✔ ✔

10 0 0 0 0 0 (X)

7-57

GROUP C PROBLEMS, Cont. P7-3C., Cont. ACCOUNTS RECEIVABLE LEDGER NAME

B. KIRK, CPA

Date 20XX May 18 23 26

NAME

Explanation

Post Ref.

Debit

SJ1

2 7 6 5 50 7 2 4 65

SJ1 CRJ1

Credit

Dr. Balance

2 7 6 5 50

2 7 6 5 50 3 4 9 0 15 7 2 4 65

Credit

Dr. Balance

DR. M. LAPEIERRE

Date 20XX May 3 12 16 22 26 NAME

Explanation

Post Ref.

Debit

SJ1

1 2 5 0 00

CRJ1 SJ1

1 1 4 5 00

1 2 5 0 00 1 0 7 5 00 0 1 1 4 5 00 0

Credit

Dr. Balance

2 4 5 7 50

2 4 5 7 50 0

Credit

Dr. Balance

1 7 5 00 1 0 7 5 00

GJ1

1 1 4 5 00

CRJ1

HON. N. MARACHEE

Date 20XX May 6 16 NAME

Explanation

Post Ref.

Debit

SJ1

2 4 5 7 50

CRJ1

FERN MICHAELS, LLB

Date 20XX May 9 NAME

Explanation

Post Ref.

Debit

SJ1

1 2 5 0 00

Post Ref.

Debit

SJ1

3 6 5 0 00

1 2 5 0 00

MONCTON HOSPITAL

Date 20XX May 31

Explanation

Credit

Dr. Balance 3 6 5 0 00

FANCY WRITING SUPPLY CO. SCHEDULE OF ACCOUNTS RECEIVABLE MAY 31, 20XX B. Kirk, CPA Fern Michaels, LLB Moncton Hospital

$ 7 2 4 65 1 2 5 0 00 3 6 5 0 00 $5 6 2 4 65

7-58

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO. CASH PAYMENTS JOURNAL Date 20XX May 1 10 11 15 23 24 30

Chq. No. 3001 3002 3003 3004 3005 3006 3007

Account Debited Riverfront Realty Jenkins Cleaning Service Gant Paper Co. D. Lee - Casual Salary Markham Inks MDS Supplies Maritime Equipment Sales

Post Ref. 1350 6140

Sundry Dr. 2 1 0 0 00 2 8 7 50

✔ 6800

Purchases Dr.

Inventory Cr.

5 2 4 7 25

1 0 4 95

7 5 0 25

2 2 51

9 7 0 00

✔ 6500

Accounts Payable Dr.

Page 1

3 8 7 50 10 7 5 0 0 0

✔

3 7 4 5 00

16 7 4 7 5 0

(X)

(2 15 0)

1 2 7 46 (1 50 0)

Cash Cr. 2 1 0 0 2 8 7 5 1 4 2 9 7 0 7 2 7 3 8 7 10 7 5 0

00 50 30 00 74 50 00

20 3 6 5

(1 00 0)

7-59

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO. ACCOUNTS PAYABLE LEDGER NAME:

FINDLAY AND FORTUNE

Date 20XX May 26

NAME:

Explanation

Post Ref.

Debit

PJ1

Credit

Cr. Balance

3 6 0 0 00

Credit

Cr. Balance

5 2 4 7 25 1 5 0 0 00 3 4 7 5 80

5 2 4 7 25 6 7 4 7 25 1 5 0 0 00 4 9 7 5 80

Credit

Cr. Balance

21 5 0 0 0 0

21 5 0 0 0 0 10 7 5 0 0 0

Credit

Cr. Balance

GANT PAPER CO.

Date 20XX May 2 8 11 29 NAME:

Explanation

Post Ref.

Debit

PJ1 PJ1 CPJ1

5 2 4 7 25

PJ1

MARITIME EQUIPMENT SALES

Date 20XX May 19 30

NAME:

Explanation

Post Ref.

Debit

PJ1 CPJ1

10 7 5 0 0 0

Post Ref.

Debit

MARKHAM INKS

Date 20XX May 12 15 23

Explanation

9 8 5 25

PJ1 GJ1 CPJ1

2 3 5 00 7 5 0 25

9 8 5 25 7 5 0 25 0

FANCY WRITING SUPPLY CO. SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Findlay and Fortune Gant Paper Co. Maritime Equipment Sales

$3 6 0 0 00 4 9 7 5 80 10 7 5 0 0 0 $19 3 2 5 8 0

7-60

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO.—PARTIAL GENERAL LEDGER NAME:

CASH

Date 20XX May 1 31 31 NAME:

Explanation

Date 20XX May 12 15 31 31 31 31

NAME: Date 20XX May 1 19

Debit

GJ1

25 0 0 0 0 0 19 4 0 0 6 4

ACCOUNTS RECEIVABLE Explanation

Post Ref.

Debit

SJ1

Balance

25 0 0 0 0 0 44 4 0 0 6 4 24 0 3 5 6 0

Dr Dr

DR CR

Balance

1 7 5 00

1 7 5 00 13 0 6 7 6 5 5 6 2 4 65

7 4 4 3 00

PREPAID RENT

ACCOUNT NO. Post Ref.

Debit

CPJ1

2 1 0 0 00

INVENTORY

Credit

Post Ref.

Debit

GJ1

1 3 1 25 2 3 5 00

GJ1 PJ1

14 8 0 8 3 0

Balance

2 1 0 0 00

CPJ1

PRINTING PRESS

Balance

1 3 1 25 1 0 3 75 14 7 0 4 5 5 4 7 7 2 50 3 2 0 8 75 3 0 8 1 29

Cr Dr Dr Dr

ACCOUNT NO. Post Ref.

Debit

GJ1

30 0 0 0 0 0 21 5 0 0 0 0

PJ1

Credit

1500

DR CR

9 9 3 2 05 1 5 6 3 75 1 2 7 46

SJ1 CRJ1

Explanation

Credit

1350

DR CR

ACCOUNT NO. Explanation

1100

Credit

13 2 4 2 6 5

CPJ1

1000

DR CR

ACCOUNT NO.

GJ1

Explanation

Credit

20 3 6 5 0 4

CPJ1

Date 20XX May 1

NAME:

Post Ref. CRJ1

Date 20XX May 12 31 31

NAME:

ACCOUNT NO.

1800

DR CR

Balance

30 0 0 0 0 0 51 5 0 0 0 0

7-61

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO.—PARTIAL GENERAL LEDGER NAME: Date 20XX May 15 31 31

NAME: Date 20XX May 13

NAME: Date 20XX May 1

NAME: Date 20XX May 31 31

NAME: Date 20XX May 12

NAME: Date 20XX May 31

7-62

ACCOUNTS PAYABLE Explanation

ACCOUNT NO. Post Ref.

Debit

GJ1

2 3 5 00 36 3 0 8 3 0

PJ1 CPJ1

16 7 4 7 5 0

BANK LOAN PAYABLE Explanation

Post Ref.

Debit

E. AMES, CAPITAL Post Ref.

Debit

WRITING SUPPLIES SALES Post Ref.

Debit

SJ1

SALES RETURNS AND ALLOWANCES

2 3 5 00 36 0 7 3 3 0 19 3 2 5 8 0

Cr Cr

Post Ref.

Debit

GJ1

1 7 5 00

DR CR

Balance

10 0 0 0 0 0

Debit

CRJ1

1 2 7 36

3000

Credit

DR CR

Balance

55 0 0 0 0 0

4000

Credit

DR CR

Balance

13 2 4 2 6 5 2 0 8 5 00

13 2 4 2 6 5 15 3 2 7 6 5

Credit

4020

DR CR

Balance

1 7 5 00

ACCOUNT NO. Post Ref.

2400

Credit

ACCOUNT NO.

SALES DISCOUNTS Explanation

ACCOUNT NO.

CRJ1

Explanation

Balance

ACCOUNT NO.

CRJ1

Explanation

DR CR

ACCOUNT NO.

CRJ1

Explanation

Credit

2150

4025

DR CR

Balance

1 2 7 36

GROUP C PROBLEMS, Cont. P7-3C., Cont. FANCY WRITING SUPPLY CO.—PARTIAL GENERAL LEDGER NAME: Date 20XX May 12 31 31

NAME: Date 20XX May 10

NAME: Date 20XX May 24

NAME: Date

NAME: Date 20XX May 15

COST OF GOODS SOLD Explanation

ACCOUNT NO. Post Ref.

Debit

1 3 1 25

GJ1 SJ1 CRJ1

9 9 3 2 05 1 5 6 3 75

CLEANING EXPENSE Explanation

Post Ref.

Debit

CPJ1

2 8 7 50

Post Ref.

Debit

1 3 1 25 9 8 0 0 80 11 3 6 4 5 5

Dr Dr

Credit

3 8 7 50

PRINTING SUPPLIES EXPENSE Post Ref.

Debit

Balance

2 8 7 50

DR CR Dr

Credit

DR CR

ACCOUNT NO. Post Ref.

Debit

CPJ1

9 7 0 00

Credit

6140

DR CR

ACCOUNT NO.

SALARIES EXPENSE Explanation

Balance

ACCOUNT NO.

CPJ1

Explanation

DR CR

ACCOUNT NO.

DISPLAY SUPPLIES EXPENSE Explanation

Credit

5100

6200 Balance 3 8 7 50

6500 Balance

6800

DR CR

Balance

9 7 0 00

7-63

GROUP C PROBLEMS, Cont. P7-4C. PARTIAL GENERAL LEDGER Cash CRJ39,400

Sales 12,060 CPJ

16,800 SJ 9,600 CRJ

Accounts Receivable

Sales Discounts

SJ 16,800

CRJ 200

1,600 GJ 10,000 CRJ

Notes Payable 20,000 CRJ

Sales Returns and Allowances

GJ 800 CPJ 7,000

18,000 PJ

SJ 12600 CRJ 7200

1200 GJ

Salaries Expense CPJ 2,600 CPJ 2,600

GJ1,600

Accounts Payable

Cost of Goods sold

Inventory PJ 18,000 GJ 1200

140 CPJ 800 GJ 12600 SJ 7200 CRJ

ACCOUNTS RECEIVABLE LEDGER Blue Co. SJ 4,800

4,800 CRJ

Jon Co. SJ 5,600

1,600 GJ 2,000 CRJ

Roff Co. SJ 6,400

3,200 CRJ

ACCOUNTS PAYABLE LEDGER Ralph Co. 4,000 PJ

Sos Co. CPJ 3,600

6,000 PJ

Jingle Co. GJ 800 CPJ 4,000

8,000 PJ

A computer system is programmed to post from the journal to both the general and subsidiary ledgers automatically and quickly. Errors are very rare in this process and much efficiency is found in this part of the bookkeeping cycle (if a computer system is used).

7-64

SOLUTIONS TO ETHICAL CONSIDERATIONS EC7-1. Purchase Discounts Solutions may vary, but here are some valid points. The ethical principle underlying any contract is trust. And trust comes from fairness, honesty, and mutual benefit. A reputation for trustworthiness can provide sustainable competitive advantage – it enables the organization to attract and retain top talent and establish effective business partnerships and a loyal customer base. But when the customer abuses a contract by late paying of invoices or changing payment terms, trust is quickly broken. In reality, suppliers, especially small businesses, are rarely in a position to challenge their customers for fear of damaging the business relationship. Small businesses are often unable to walk away and look for another customer, especially if an existing one owes them significant money; and charging interest on the outstanding balance rarely works. Customers are paying their suppliers late to ease their own cash flow problems, pushing the financial risks onto their suppliers, which is unfair and an abuse of trust. There is a natural tension between a customer and a supplier that can result in the emergence of innovative solutions and mutual benefits. It is far better for customers and suppliers to work together, to share the risk, to be truthful and honourable in their undertakings. Paying suppliers late reflects the leadership and prevailing culture in the organization. When it comes to business ethics, companies focus on employees potentially doing “bad” things – fraud, bribery, corruption. In reality, it is the seemingly little things that show the true colours of a company's culture. Strategic decisions such as changing contractual terms, not paying on time, “losing invoices,” or not passing invoices for payment or actioning requests for purchase orders, may seem to be “victimless crimes”. But during the 2008 recession it is estimated that 4,000 businesses failed as a direct result of late payments. The decision to not pay promptly begins at company board level where the strategy is set, and ripples throughout an organization until it reaches the accounts staff who press the payment button. A culture of late payments is an example of how rotten corporate ethics can erode company culture from the inside. Because if suppliers are not treated with respect, then other stakeholders – customers, employees, investors, society at large – are not likely to be either. An organization with an ethical approach to business practice will consider prompt payment of suppliers as an essential element of doing business ethically. To do so shows respect for the supplier relationship and is an example of the company's fairness.

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS7-1. Analysis of Financial Statements—Roots Corporation Gross Profit Gross profit is sales less cost of goods sold. Cost of goods sold includes the cost of purchasing products from manufacturers, including direct purchase costs, freight costs, and duty and nonrefundable taxes. For select leather products manufactured by us in-house, cost of goods sold includes the cost of manufacturing our products, including raw materials, direct labour and overhead, plus freight costs. Cost of goods sold also includes variable distribution centre costs incurred to prepare our inventory for sale. Commencing in Q3 2019, as a result of our transition to a single Roots-operated distribution centre in connection with the DC Relocation Project, cost of goods sold also includes variable distribution centre costs incurred to fulfill our eCommerce orders. Previously, eCommerce order fulfillment costs, incurred through our third-party online order fulfillment and distribution facility, were recorded in SG&A expenses. The CEWS received associated with our distribution centre and leather factory employee compensation has been recorded as an increase to gross profit in respect of F2020. Gross margin measures our gross profit as a percentage of sales. The primary driver of our cost of goods sold is the cost of purchased products from our manufacturers, which is predominantly sourced in U.S. dollars. The Company utilizes a hedging program to manage its foreign currency risk related to U.S. dollar inventory purchases. See “Financial Instruments”. Inventory valuation Merchandise inventories are valued at the lower of average cost, using the retail method, and net realizable value, which requires the Company to utilize estimates related to fluctuations in shrinkage, future retail prices, future sell-through of units, seasonality and costs necessary to sell the inventory. The Company records a write-down to reflect management’s best estimate of the net realizable value of inventory based on the above factors. Finished goods are comprised of merchandise inventories which are valued at the lower of average cost using the retail method and net realizable value. For inventories purchased from third party vendors, cost includes the cost of purchase, freight, import taxes and duties that are directly incurred to bring inventories to their present location and condition. AFS7-2. Analysis of Financial Statements—Company of Your Choice Solution: Answers will vary depending on the company selected

7-65

CONTINUING PROBLEM PRECISION COMPUTER CENTRE PURCHASES JOURNAL

Date 20X1 Sept. 5 6 10 13

Account Credited Multi Systems, 3/10, n/30 Staples, n/30 Computer Connect, 1/30 n/60 West Bell

Accounts Payable Cr. 4 5 0 00 2 5 0 00 5 0 0 00 7 0 00

Post Ref. M1 S1 C3 W1

Page 1 Sundry

Inventory Dr. 4 5 0 00

Account Name

Post Ref.

Amount Dr.

Supplies

1030

2 5 0 00

Phone

5040

7 0 00

5 0 0 00

1 2 7 0 00

9 5 0 00

3 2 0 00

(2 00 0)

( 10 40 )

(X)

PRECISION COMPUTER CENTRE CASH PAYMENTS JOURNAL Date 20X1 Sept 5 13 13 16 17 23 25 27

Chq. No. 242 243 244 245 246 247 248 249

Account Debited Staples Multi Systems City Electric Automated Payroll Services Computer Connection Alpha Office Co. Supplies Able Holdings Inc.

Post Ref. S1 M1 5030 2030

1025

Date 20X1 Sept 17

7-66

250 251

Automated Payroll Service West Bell Canada

5110

Accounts Payable-Computer Connection Inventory

1 3 50

4 00

5 0 00 8 0 0 00 4 0 0 00 3 7 4 0 20

6 8 8 0 38

1 5 8 6 00

(X)

(2 00 0)

(1 04 0)

Dr.

Cr.

Post Ref. 2000/C3 1040

1 7 50

1 0 0 00 1 0 0 00

Cash Cr. 1 0 0 00 4 3 6 50 8 0 00 8 1 0 18 3 9 6 00 4 2 0 00 5 0 00 2 0 0 00

7 4 0 20 2 1 6 00

4 4 8 88

2 1 6 00

Account Title

Inventory Cr.

1 4 0 0 00 4 2 0 00

A1 1030

Accounts Payable Dr. 1 0 0 00 4 5 0 00

8 0 00 1 8 1 0 18

5020

30 30

Sundry Dr.

Page 1

(1 00 0)

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME: Date 20X1 Sept. 1 23

NAME: Date 20X1 Sept. 1

NAME: Date 20X1 Sept. 1 10 17 17 NAME: Date 20X1 Sept. 1 5 13

ALPHA OFFICE CO. Explanation

A1 Post Ref.

Debit

Credit

Balance

CITY NEWSPAPER Explanation

4 2 0 00 0

4 2 0 00

CPJ1

Cr. Balance

C2 Post Ref.

Debit

Credit

Balance

Cr. Balance 3 7 5 00

COMPUTER CONNECTION Explanation

C3 Post Ref.

Debit

Credit

Balance PJ1

1 0 0 00 4 0 0 00

GJ10 CPJ1

MULTI SYSTEMS, INC. Explanation

5 0 0 00

Cr. Balance 0 5 0 0 00 4 0 0 00 0

M1 Post Ref.

Debit

Credit

Balance PJ1 CPJ1

4 5 0 00

Cr. Balance 0 4 5 0 00 0

7-67

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME

STAPLES

Date 20X1 Sept. 1 5 6

S1 Explanation

Post Ref.

Debit

CPJ1

1 0 0 00

Balance PJ1

NAME

WEST BELL CANADA

Date 20X1 Sept. 1 13 30

Credit

Explanation

2 5 0 00

Cr. Balance 1 0 0 00 0 2 5 0 00

W1 Post Ref.

Debit

Credit

Balance PJ1 CPJ1

2 1 6 00

7 0 00

Cr. Balance 1 4 6 00 2 1 6 00 0

PRECISION COMPUTER CENTRE SCHEDULE OF ACCOUNTS PAYABLE SEPTEMBER 30, 20X1 City Newspaper Staples

$ 3 7 5 00 2 5 0 00 $ 6 2 5 00

7-68

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE PARTIAL GENERAL LEDGER NAME: Date 20X1 Sept. 1 30

NAME: Date 20X1 Sept. 1 27

NAME:

CASH Explanation

Post Ref.

Debit

Credit

Balance 8 4 4 8 88

CPJ1

PREPAID RENT Explanation

Post Ref.

Debit

Credit

CPJ1

8 0 0 00

SUPPLIES

Balance

NAME:

INVENTORY

Balance

22 4 7 5 0 0 14 0 2 6 1 2

Post Ref. PJ1 CPJ1

Debit

Balance

0 8 0 0 00

Credit

2 5 0 00 5 0 00

Post Ref.

Debit

Balance

4 5 0 00 7 0 0 00 7 5 0 00

Dr Dr

Credit

Balance 1 0 0 00

GJ1 PJ1 CPJ1

9 5 0 00

1040

DR CR

Balance

1 9 0 00 9 0 00 1 0 40 00 1 0 22 50

Dr Dr

1 7 50

1030

DR CR

ACCOUNT NO. Explanation

1025

DR CR

ACCOUNT NO. Explanation

1000

DR CR

ACCOUNT NO.

Balance

Date 20X1 Sept. 1 6 25

Date 20X1 Sep. 17 30 30

ACCOUNT NO.

7-69

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE PARTIAL GENERAL LEDGER NAME:

ACCOUNTS PAYABLE

Date 20X1 Sept.

1 17 30 30

NAME: Date 20X1 Sept. 1 16

NAME: Date 20X1 Sept. 27

NAME: Date 20X1 Sept. 30

7-70

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ10

1 0 0 00

Credit

Balance

DR CR

ACCOUNT NO.

2030

1 5 8 6 00

OTHER AMOUNTS PAYABLE Explanation

Post Ref.

1 2 7 0 00

PJ1

Debit

Credit

Balance CPJ1

Explanation

Post Ref.

Debit

GJ9

4 0 0 00

Credit

Balance

1 8 1 0 18 0

Debit

CRJ1

2 2 0 00

Credit

4020

DR CR

Balance

4 0 0 00

ACCOUNT NO. Post Ref.

00 00 00 00

DR CR

ACCOUNT NO.

SALES DISCOUNTS Explanation

1 8 1 0 18

SALES RETURNS AND ALLOWANCES

Balance 1 0 4 1 9 4 1 2 2 1 1 6 2 5

CPJ1

2000

4030

DR CR

Balance

2 2 0 00

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE PARTIAL GENERAL LEDGER NAME: Date 20X1 Sept. 1 27

NAME: Date 20X1 Sept. 1 13

NAME: Date 20X1 Sept. 1 30

RENT EXPENSE Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

Balance PJ1

4 0 0 00

UTILITIES EXPENSE Explanation

PJ1

Debit

Credit

8 0 00

PHONE EXPENSE

4 0 0 00 8 0 0 00

Balance

9 5 00 1 7 5 00

ACCOUNT NO. Post Ref.

Debit

Credit

PJ1

7 0 00

WAGES EXPENSE Debit

Balance

1 4 6 00 2 1 6 00

Balance CPJ1

3 7 4 0 20

Credit

5040

DR CR

ACCOUNT NO. Post Ref.

5030

DR CR Dr

Balance

Explanation

Balance

Explanation

DR CR

ACCOUNT NO. Post Ref.

5020

5110

DR CR

Balance

5 0 2 0 00 8 7 6 0 20

7-71

8 Completion of the Accounting Cycle for a Merchandising Company ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Typcially if a company has a large variety of merchandise with low unit prices, they would use this system. However, a car lot or jewellery store could also use this system as the number of items they sell is typically low. 2. Businesses with large inventories can have current information about inventory on hand and the actual cost of goods sold. Most such companies use computers to keep track of their inventory records. 3. Reject. The perpetual system is used. However car dealerships, jewelery stores would fit this category and use periodic. 4. Unearned revenue is cash received before the service is performed or goods sold and represents a liability until service is performed. 5. Calculates the cost of ending inventory, and indicates whether or not you have shrinkage of your inventory. 6. If a portion of the revenue has been earned, the liability will have to be reduced and the earned revenue increased. 7. Beginning Inventory + Net Purchases + Freight-In – Ending Inventory = Cost of Goods Sold 8. Costs can be categorized by department. For instance in most small businesses you would have selling costs and you would also have administrative costs. 9. Time period it takes a company to buy and sell merchandise and then collect accounts receivable. 10. To bring the ledger up to date. 11. a) Close all the balances on the income statement credit column of the worksheet (except Income Summary) by debits, and credit the total to the Income Summary account. b) Close balance of accounts in the income statement debit column of the worksheet (except Income Summary) by credits, and debit the total to the Income Summary account. In a merchandising business different accounts will need to be closed, but we follow the same process. c) Transfer the balance of Income Summary to Owner’s Capital. d) Transfer the balance of Owner’s Withdrawals to Owner’s Capital account. 12. Not mandatory. Reversing entries helps avoid potential errors involving specified adjusting entries. Done usually on the first day of the new fiscal year after adjusting and closing entries have been completed. 13. The question in this case is whether Janet should show only the income statement to the Canadian National Bank. I feel that, when a company applies for a loan, the bank should be able to know the overall financial stability of the company. In this case, Janet’s action is obstructing the bank from making a reasonable assessment of the company. Thus, it seems unethical for Janet to only report the income statement and not the balance sheet to the bank. In any event, you can be sure that the bank loan officer will insist that Janet supply all relevant statements, so her failure to supply the balance sheet may in fact be self-defeating.

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. Date

GENERAL JOURNAL Account Title and Description Cost of Goods Sold Merchandise Inventory To adjust Inventory account to balance to physical count

Page 1 Post Ref. 513 114

Dr. 5 0 0 00

Cr. 5 0 0 00

8-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE2. a. GENERAL JOURNAL Date 20XX Dec. 31

Page 1

Account Title and Description Unearned Dog Walking Fees Earned Dog Walking Fees Transfer fees earned

Post Ref.

Dr.

900

2 1 0 00

Cr. 2 1 0 00

441

b. Liability CDE3.

a. 1

b. 4

CDE4.

Gross Sales − Sales Returns & Allowances − Sales Discounts = Net Sales $180 − $5 − $2 = $173

CDE5.

Net Sales − Cost of Goods Sold = Gross Profit − Operating Expenses = Net Income

CDE7.

Date 20XX Jan

c. 2

$173 −100 $73 (a) −15 $58 (b)

Account Title and Description 1

Accrued Salaries Payable Salaries Expense To reverse adjusting entry Salary Expense Cash To record salaries paid

b. $600 CDE8. Here is the list of the words and terms for this chapter: Periodic Inventory Current Assets Operating Cycle Reversing entry Long-Term Liabilities

8-2

d. 3

Unearned Revenue Interest Expense Capital Assets Current Liabilities Perpetual Inventory

e. 3

CDE6. 1. a 2. c 3. a 4. c 5. b 6. d 7. c 8. b 9. c 10. a

Post Ref.

Debit

Credit

3 0 0 00 3 0 0 00 9 0 0 00 9 0 0 00

Fill in the blank with the correct word or term from the list: 1. Obligations that will come due or payable for a long time from now, usually longer than one year, are called long-term liabilities. 2. A liability account that records receipt of payment for goods or services in advance of delivery is called Unearned Revenue. 3. An inventory system that, at the end of each accounting period calculates the cost of the unsold goods on hand, is called a periodic inventory system. 4. A perpetual inventory system refers to an inventory system that keeps continual track of each type of inventory. 5. Capital assets are long lived assets, such as buildings or land. 6. Assets that can be converted to cash or used within one year are called current assets. 7. A reversing entry is a year-end optional technique in which certain adjusting entries are reversed. 8. The average time it takes to buy and sell merchandise and then collect accounts receivable is called the operating cycle. 9. Current liabilities are obligations that will come due within one year or within the operating cycle. 10. An example of a non-operating expense that is categorized as a miscellaneous expense is Interest Expense.

SOLUTIONS TO EXERCISES, Set A E8-1A. a. Net Sales: Sales − Sales R & A − Sales Disc. $22,000

− $250

−

$500

= Net Sales = $21,250

b. Gross Profit: Net Sales − Cost of Goods Sold = Gross Profit $21,250 −

13,200.00

$8,050

c. Net Income: Gross Profit − Operating Expenses = Net Income $8050

−

$3,600

$4450

E8-2A. Accounts Affected

Category

Rules

Unearned Janitorial Services

Liability

Dr. $400

Janitorial Service Revenue

Revenue

Cr. $400

8-3

SOLUTIONS TO EXERCISES-SET A, Cont. E8-3A. MOORE CO. WORKSHEET FOR YEAR ENDED DECEMBER 31, 20XX

Account Titles Cash Accounts Receivable Merchandise Inventory Store Supplies Store Equipment Acc. Depreciation, Store Equipment Accounts Payable J. Moore, Capital Sales Sales Returns and Allowances Cost of Goods Sold Salaries Expense Advertising Expense

Store Supplies Expense Depreciation Expense, Equipment Accrued Salaries Payable

Trial Balance Dr.

Adjustments Cr.

8 00 5 00 1 1 00 1 0 00 2 0 00

Dr.

(a)

Cr.

2 00

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

(d)

2 00

(b) (c)

6 00 4 00

8-4

6 00

(c)

4 00

(a)

2 00

(d)

2 00

1 0 9 00

1 4 00 Net Loss

(b)

1 4 00

SOLUTIONS TO EXERCISES-SET A, Cont. E8-3A. Cont. MOORE CO. WORKSHEET FOR YEAR ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 8 00 5 00 1 3 00 4 00 2 0 00 1 0 00 5 00 3 4 00 6 4 00 9 00 2 1 00 1 2 00 1 3 00 6 00 4 00

Income Statement Dr.

Balance Sheet

Cr.

Dr.

Cr.

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

2 00 1 1 5 00

1 1 5 00

2 00 6 5 00 6 5 00

6 4 00

5 0 00

1 00

6 5 00

5 1 00

5 1 00 5 1 00

8-5

E8-4A. MOORE CO. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20XX Revenue: Sales Less: Sales Returns and Allowances

$ 6 4 00 9 00

Net Sales Cost of Goods Sold

5 5 00 2 1 00

Gross Profit

3 4 00

Operating Expenses: Salaries Expense Advertising Expense Store Supplies Expense Depreciation Expense, Equipment

$ 1 2 00 1 3 00 6 00 4 00

Total Operating Expenses Net Loss

8-6

3 5 00 $

1 00

SOLUTIONS TO EXERCISES-SET A, Cont. E8-5A.

NASRIN CO.

20XX

GENERAL JOURNAL

Dec

31 31

Sales

Page 8 5 5 2 0 00

Income Summary Income Summary Sales Returns and Allowances Sales Discounts Cost of Goods Sold Salaries Expense Insurance Expense Utilities Expense Plumbing Expense Advertising Expense Depreciation Expense, Office Equipment Income Summary A. Nasrin, Capital

E8-6A.

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

00 00 00 00 00 00 00 00 00

7 1 7 00 7 1 7 00

NASRIN CO. PARTIAL BALANCE SHEET DECEMBER 31, 20XX

Current Assets Cash Inventory Prepaid Advertising Prepaid Insurance

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

Total Current Assets Capital Assets Office Equipment Less: Accumulated Depreciation, Office Equipment

$1 1 4 6 0 0 1 0 8 0 00 2 1 0 00

Total Capital Assets

8 7 0 00

Total Assets

$2 0 1 6 0 0

E8-7A. 20X1 Dec

Salaries Expense

3 0 0 00

Accrued Salaries Payable To record accrued salaries Salaries Expense 26,000 300

3 0 0 00

Accrued Salaries Payable 300

8-7

SOLUTIONS TO EXERCISES—SET A, Cont. E8-7A Cont. 20X2 Jan

Accrued Salaries Payable

3 0 0 00

Salaries Expense To reverse adjusting entry

3 0 0 00

Salaries Expense 300

Accrued Salaries Payable 300 300

20X2 Feb

Salaries Expense

6 0 0 0 00

Cash To record salaries paid

6 0 0 0 00

Salaries Expense 6,000 300

15,000

Cash

SOLUTIONS TO EXERCISES, Set B E8-1B. a. Net Sales: Sales

− Sales R&A − Sales Disc. = Net Sales

$35,000 −

$5,000

−

$800

= $29,200

b. Gross Profit: Net Sales − Cost of Goods Sold = Gross Profit $29,200 −

$13,700

$15,500

c. Net Income: Gross Profit − Operating Expenses = Net Income $15,500

−

$4,900

$10,600

E8-2B.

8-8

Accounts Affected

Category

Rules

Unearned Janitorial Services

Liability

Dr. $500

Janitorial Service Revenue

Revenue

Cr. $500

6,000

SOLUTIONS TO EXERCISES—SET B, Cont. E8-3B. NAJJAT CO. WORKSHEET FOR YEAR ENDED DECEMBER 31, 20XX Account Titles Cash Accounts Receivable Inventory Store Supplies Store Equipment Acc. Depreciation, Store Equipment Accounts Payable J. Najjat, Capital Sales Sales Returns and Allowances Cost of Goods Sold Salaries Expense Advertising Expense

Trial Balance Dr.

Adjustments Cr.

Dr.

Cr.

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

(a) (d)

1 00 3 00

Store Supplies Expense

(b)

4 00

Depreciation Expense, Equipment Accrued Salaries Payable

(c)

7 00

1 1 8 00

(a) (b)

1 00 4 00

(c)

7 00

(d)

3 00

1 1 8 00

1 5 00

Net Loss

8-9

SOLUTIONS TO EXERCISES—SET B, Cont. E8-3B., Cont. NAJJAT CO. WORKSHEET FOR YEAR ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 9 00 8 00 1 1 00 5 00 2 4 00 1 4 00 6 00 3 8 00 6 7 00 7 00 2 7 00 1 5 00 1 1 00 4 00 7 00

Income Statement Dr. Cr.

Balance Sheet Dr.

9 00 8 00 1 1 00 5 00 2 4 00

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

3 00 1 2 8 00

Cr.

1 2 8 00

3 00 7 1 00 7 1 00

6 7 00

5 7 00

4 00

7 1 00

6 1 00

6 1 00 6 1 00

E8-4B. NAJJAT CO. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20XX Revenue: Sales Less: Sales Returns and Allowances

$ 6 7 00 7 00

Net Sales Cost of Goods Sold

6 0 00 2 7 00

Gross Profit

3 3 00

Operating Expenses: Salaries Expense Advertising Expense Store Supplies Expense Depreciation Expense, Equipment Total Operating Expenses Net Loss

$ 1 5 00 1 1 00 4 00 7 00 3 7 00 $ 4 00

8-11

SOLUTIONS TO EXERCISES—SET B, Cont. E8-5B.

A. SLOW CO. GENERAL JOURNAL

20XX Dec

31 31

Sales

Page 8 7 7 2 0 00

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

E8-6B. A. SLOW COMPANY PARTIAL BALANCE SHEET DECEMBER 31, 20XX Current Assets Cash Inventory Prepaid Advertising Prepaid Insurance Total Current Assets Capital Assets Office Equipment Less: Accumulated Amortization, Office Equipment Total Capital Assets Total Assets

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

SOLUTIONS TO EXERCISES—SET B, Cont.

E8-7B 20X1 Dec

Salaries Expense

7 0 0 00

Accrued Salaries Payable To record accrued salaries Salaries Expense 29,000 700

7 0 0 00

Accrued Salaries Payable 700

20X2 Jan

Accrued Salaries Payable

7 0 0 00

Salaries Expense To reverse adjusting entry Salaries Expense 700

7 0 0 00

Accrued Salaries Payable 700 700

20X2 Feb

Salaries Expense

7 5 0 0 00

Cash To record salaries paid Salaries Expense 7,500 700

7 5 0 0 00

Cash 16,000

7,500

8-13

GROUP A PROBLEMS P8-1A. JIM’S HARDWARE WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Account Titles Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Store Equipment Acc. Depreciation, Store Equipment Accounts Payable Jim Spool, Capital Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Wages Expense Rent Expense Telephone Expense Miscellaneous Expense

Trial Balance Dr. Cr. 7 8 6 00 1 1 5 2 00 6 0 0 00 (a) 6 8 4 00 2 1 6 0 00 6 6 0 00 5 1 6 00 1 6 3 2 00 11 0 4 0 0 0 5 4 6 00 2 1 6 00 4 9 8 6 00 1 7 1 6 00 (d) 7 9 2 00 1 1 4 00 9 6 00 13 8 4 8 00

Insurance Expense Depreciatio. Exp., Store Equipment Accrued Wages Payable

Adjustments Dr. Cr.

1 5 00

8-14

1 5 0 00

(c)

6 0 00

(a)

1 5 00

(d)

9 0 00

13 8 4 8 00 (b) (c)

1 5 0 00 6 0 00 3 1 5 00

Net Income

(b)

3 1 5 00

GROUP A PROBLEMS, Cont. P8-1A., Cont. JIM’S HARDWARE WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 7 8 6 00 1 1 5 2 00 6 1 5 00 5 3 4 00 2 1 6 0 00 7 2 0 00 5 1 6 00 1 6 3 2 00 11 0 4 0 0 0 5 4 6 00 2 1 6 00 4 9 7 1 00 1 8 0 6 00 7 9 2 00 1 1 4 00 9 6 00

1 5 0 00 6 0 00 13 9 9 8 00

9 0 00 13 9 9 8 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 7 8 6 00 1 1 5 2 00 6 1 5 00 5 3 4 00 2 1 6 0 00 7 2 0 00 5 1 6 00 1 6 3 2 00

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

1 5 0 00 6 0 00

9 0 00

8 7 5 1 00

11 0 4 0 0 0

5 2 4 7 00

2 9 5 8 00

2 2 8 9 00 11 0 4 0 0 0

11 0 4 0 0 0

5 2 4 7 00

2 2 8 9 00 5 2 4 7 00

8-15

GROUP A PROBLEMS, Cont. P8-2A. WALTZ COMPANY WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Account Titles Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Rent Office Supplies Office Equipment Acc. Depreciation, Office Equipment Accounts Payable K. Waltz, Capital K. Waltz, Withdrawals Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Office Salaries Expense Insurance Expense Advertising Expense Utilities Expense

Trial Balance Dr. Cr. 5 4 0 8 00 2 4 0 00 2 5 1 2 00 5 0 9 2 00 6 1 6 00 9 4 4 00 9 2 8 0 00 7 6 0 0 00 5 9 6 4 00 5 4 7 6 00 4 8 0 0 00 52 4 8 4 00 9 6 00 2 4 0 0 00 28 9 5 2 00 (a) 7 4 0 8 00 (e) 2 4 0 0 00 8 0 0 00 5 7 6 00 71 5 2 4 0 0

Office Supplies Expense Rent Expense Depreciation Exp., Office Equipment Accrued Office Salaries Payable

Adjustments Dr.

8-16

(a) (c) (b)

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

(d)

5 5 0 00

(e)

3 1 0 00

2 8 7 00 3 1 0 00

81 5 2 4 0 0 (b) (c) (d)

2 1 0 00 1 9 5 00 5 5 0 00 1 5 5 2 00

Net Income

Cr.

1 5 5 2 00

GROUP A PROBLEMS, Cont. P8-2A., Cont. WALTZ COMPANY WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 5 4 0 8 00 2 4 0 00 2 5 1 2 00 4 8 0 5 00 4 2 1 00 7 3 4 00 9 2 8 0 00 8 1 5 0 00 5 9 6 4 00 5 4 7 6 00 4 8 0 0 00 52 4 8 4 00 9 6 00 2 4 0 0 00 29 2 3 9 00 7 7 1 8 00 2 4 0 0 00 8 0 0 00 5 7 6 00

2 1 0 00 1 9 5 00 5 5 0 00 72 3 8 4 00

3 1 0 00 72 3 8 4 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 5 4 0 8 00 2 4 0 00 2 5 1 2 00 4 8 0 5 00 4 2 1 00 7 3 4 00 9 2 8 0 00 8 1 5 0 00 5 9 6 4 00 5 4 7 6 00 4 8 0 0 00

52 4 8 4 00 9 6 00 2 4 0 0 00 29 2 3 9 00 7 7 1 8 00 2 4 0 0 00 8 0 0 00 5 7 6 00

2 1 0 00 1 9 5 00 5 5 0 00 44 1 8 4 00

3 1 0 00 52 4 8 4 00

28 2 0 0 00

8 3 0 0 00 52 4 8 4 00

19 9 0 0 00 8 3 0 0 00

52 4 8 4 00

28 2 0 0 00

8-17

GROUP A PROBLEMS, Cont. P8-3A. MALORIE’S DENTAL CO. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20XX Revenue: Gross Sales Less: Sales Returns and Allowances Sales Discounts

$2 8 0 0 0 0 $ 1 1 9 00 6 4 00

Net Sales

2 6 1 7 00

Cost of Goods Sold

6 7 6 00

Gross Profit Operating Expenses: Salaries Expense Insurance Expense Advertising Expense Rent Expense Depreciation Expense, Store Equipment Total Operating Expenses

1 8 3 00

1 9 4 1 00

3 0 0 00 2 0 0 00 1 5 5 00 2 1 5 00 2 0 0 00 1 0 7 0 00

Net Income from Operations

8 7 1 00

Other Income: Rental Income

2 0 0 00

Net Income

8-18

$1 0 7 1 0 0

GROUP A PROBLEMS, Cont. P8-4A. GOODS COMPANY STATEMENT OF OWNER’S EQUITY FOR THE YEAR ENDED DECEMBER 31, 20XX A. Good, Capital, January 1, 20XX Less: Net Loss Less: Withdrawals

$7 4 0 0 0 0 $3 7 1 0 0 0 1 0 0 00

Decrease in Capital

3 8 1 0 00

A. Good, Capital, December 31, 20XX

$3 5 9 0 0 0

8-19

GROUP A PROBLEMS, Cont. P8-4A., Cont. GOODS COMPANY BALANCE SHEET DECEMBER 31, 20XX Assets Current Assets: Cash Petty Cash Accounts Receivable Inventory Supplies Prepaid Insurance

$8 5 0 0 0 0 9 0 00 1 3 5 0 00 4 0 0 0 00 3 2 5 00 5 0 0 00

Total Current Assets

$14 7 6 5 0 0

Capital Assets Store Equipment Less: Accumulated Depreciation, Store Equipment Automobile Less: Accumulated Depreciation, Auto

$2 8 0 0 0 0 7 0 0 00

2 1 0 0 00

1 7 0 0 00 2 2 5 00

1 4 7 5 00

Total Assets

3 5 7 5 00 $18 3 4 0 0 0

Liabilities Current Liabilities: Accounts Payable Accrued Salaries Payable Taxes Payable Unearned Rent Mortgage Payable Total Current Liabilities Long-Term Liabilities: Mortgage Payable

$2 8 0 0 0 0 6 0 0 00 2 4 0 0 00 8 5 0 0 00 2 0 0 00 $14 5 0 0 0 0

2 5 0 00

Total Liabilities

$14 7 5 0 0 0 Owner’s Equity

A. Good, Capital Total Liabilities and Owner’s Equity

8-20

3 5 9 0 00 $18 3 4 0 0 0

GROUP A PROBLEMS, Cont. P8-5A. MEYER LUMBER WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20X1 Account Titles Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Acc. Depreciation, Lumber Equipment Accounts Payable L. Meyer, Capital L. Meyer, Withdrawals Sales Sales Returns and Allowances Cost of Goods Sold Wages Expense Advertising Expense Rent Expense

Trial Balance Cr. Dr. 1 6 8 0 00 9 6 0 00 4 5 5 0 00 2 6 9 00 2 1 8 00 3 0 0 0 00 4 9 0 00 1 1 6 0 00 7 3 5 2 00 3 0 0 0 00 22 8 0 0 00 2 0 0 00 14 2 1 5 00 (A) 2 4 8 0 00 (E) 4 0 0 00 8 3 0 00 31 8 0 2 0 0

Lumber Supplies Expense Insurance Expense Depreciation Expense, Lumber Equipment Accrued Wages Payable

Adjustments Dr.

Cr.

(A) (B) (C)

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

(D)

3 0 0 00

(E)

1 2 5 00

1 0 0 00 1 2 5 00

31 8 0 2 00 (B) (C) (D)

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

8 3 4 00

Net Income

8-21

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER WORKSHEET—CONTINUED FOR THE YEAR ENDED DECEMBER 31, 20X1 Adjusted Trial Balance Dr. Cr. 1 6 8 0 00 9 6 0 00 4 4 2 0 00 1 1 0 00 9 8 00 3 0 0 0 00 7 9 0 00 1 1 6 0 00 7 3 5 2 00 3 0 0 0 00 22 8 0 0 00 2 0 0 00 14 3 4 5 00 2 6 0 5 00 4 0 0 00 8 3 0 00 1 5 9 00 1 2 0 00 3 0 0 00 32 2 2 7 00

1 2 5 00 32 2 2 7 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 1 6 8 0 00 9 6 0 00 4 4 2 0 00 1 1 0 00 9 8 00 3 0 0 0 00 7 9 0 00 1 1 6 0 00 7 3 5 2 00 3 0 0 0 00

22 8 0 0 00 2 0 0 00 14 3 4 5 00 2 6 0 5 00 4 0 0 00 8 3 0 00 1 5 9 00 1 2 0 00 3 0 0 00 18 9 5 9 00

1 2 5 00 22 8 0 0 00

13 2 6 8 00

3 8 4 1 00 22 8 0 0 00

8-22

9 4 2 7 00 3 8 4 1 00

22 8 0 0 00

13 2 6 8 00

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20X1 Revenue: Gross Sales Less: Sales Returns and Allowances

$2 2 8 0 0 0 0 2 0 0 00 22 6 0 0 00

Net Sales Cost of Goods Sold: Cost of Goods Sold

14 3 4 5 00 8 2 5 5 00

Gross Profit Operating Expenses: Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Insurance Expense Depreciation Expense, Equipment Total Operating Expenses Net Income from Operations

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

8-23

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER STATEMENT OF OWNER’S EQUITY FOR THE YEAR ENDED DECEMBER 31, 20X1 L. Meyer, Capital, January 1, 20X1 Net Income

$3 8 4 1 0 0

Less Withdrawals

3 0 0 0 00

Increase in Capital L. Meyer, Capital, December 31, 20X1

8-24

$7 3 5 2 0 0

8 4 1 00 $8 1 9 3 0 0

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER BALANCE SHEET DECEMBER 31, 20X1 Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance

$1 6 8 0 0 0 9 6 0 00 4 4 2 0 00 1 1 0 00 9 8 00

Total Current Assets Capital Assets: Lumber Equipment Less: Accumulated Depreciation, Lumber Equipment Total Assets

$7 2 6 8 0 0

3 0 0 0 00 7 9 0 00

2 2 1 0 00 $9 4 7 8 0 0

Liabilities Current Liabilities: Accounts Payable

$1 1 6 0 0 0

Accrued Wages Payable Total Current Liabilities

1 2 5 00 $1 2 8 5 0 0

Owner’s Equity L. Meyer, Capital

8 1 9 3 00

Total Liabilities and Owner’s Equity

$9 4 7 8 0 0

8-25

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER GENERAL JOURNAL Date 20X1 Dec

31 31 31 31 31

31 31

31 31 20X2 Jan 1

8-26

Account Title and Description Adjusting Entries Cost of Goods Sold Merchandise Inventory Lumber Supplies Expense Lumber Supplies Insurance Expense Prepaid Insurance Depreciation Expense, Lumber Equipment Accumulated Depreciation, Lumber Equipment Wages Expense Accrued Wages Payable Closing Entries Sales Income Summary Income Summary Sales Returns and Allowances Cost of Goods Sold Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Insurance Expense Depreciation Expense, Lumber Equipment Income Summary L. Meyer, Capital L. Meyer, Capital L. Meyer, Withdrawals Reversing Entry Accrued Wages Payable Wages Expense

Page 2 Post Ref. 550

Dr. 1 3 0 00

1 3 0 00

112 664

1 5 9 00 1 5 9 00

113 665

1 2 0 00 1 2 0 00

114 663

3 0 0 00 3 0 0 00

122 660

1 2 5 00 1 2 5 00

221 440

22 8 0 0 00 22 8 0 0 00

332 332

18 9 5 9 00 2 0 0 14 3 4 5 2 6 0 5 4 0 0 8 3 0 1 5 9 1 2 0 3 0 0

441 550 660 661 662 664 665 663 332

00 00 00 00 00 00 00 00

3 8 4 1 00 3 8 4 1 00

330 330

Cr.

3 0 0 0 00 3 0 0 0 00

331

1 2 5 00 1 2 5 00

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER GENERAL LEDGER NAME:

CASH

ACCOUNT NO.

Date 20X1 Dec 31

Balance

NAME:

ACCOUNTS RECEIVABLE

Explanation

Balance

NAME:

MERCHANDISE INVENTORY

Explanation

Debit

Credit

ACCOUNT NO. Post Ref.

Debit

Credit

Balance Adjusting

NAME:

LUMBER SUPPLIES

Explanation

ACCOUNT NO. Post Ref.

Debit

CR Dr

1 3 0 00

GJ2

Date 20X1 Dec 31 31

Balance Adjusting

NAME:

PREPAID INSURANCE

Explanation

ACCOUNT NO. Post Ref.

Debit

CR Dr

1 5 9 00

GJ2

Date 20X1 Dec 31 31

Balance Adjusting

NAME:

LUMBER EQUIPMENT

Explanation

ACCOUNT NO. Post Ref.

Debit

CR Dr

1 2 0 00

GJ2

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

9 6 0 00

Balance 4 5 5 0 00 4 4 2 0 00

Balance 2 6 9 00 1 1 0 00

114 DR

Credit

Balance

113 DR

Credit

1 6 8 0 00

112 DR

Credit

Balance

111

Date 20X1 Dec 31 31

Balance

Ref.

Date 20X1 Dec 31

Post

110

Balance 2 1 8 00 9 8 00

121 DR CR Dr

Balance 3 0 0 0 00

8-27

GROUP A PROBLEMS, Cont. P8-5A., Cont. NAME:

ACCUMULATED DEPRECIATION, LUMBER EQUIPMENT

Date 20X1 Dec 31 31

Balance Adjusting

NAME:

ACCOUNTS PAYABLE

Explanation

Debit

Credit 3 0 0 00

GJ2

Balance

NAME:

ACCRUED WAGES PAYABLE

Explanation

DR CR Cr

ACCOUNT NO. Post Ref.

Debit

Credit

Balance

NAME:

L. MEYER, CAPITAL

Explanation

DR CR

ACCOUNT NO. Post Ref.

Debit

1 2 5 00

GJ2

Date 20X1 Dec 31 31 31

Balance Closing Closing

NAME:

L. MEYER, WITHDRAWALS

Explanation

Credit

Ref.

Debit

Credit

DR CR Cr

GJ2

Date 20X1 Dec 31 31

Balance Closing

NAME:

INCOME SUMMARY

Explanation

3 0 0 0 00

DR CR Cr Cr

ACCOUNT NO. Post Ref.

Debit

Credit

Explanation Closing Closing Closing

Post Ref.

Debit

GJ2 GJ2

18 9 5 9 0 0 3 8 4 1 00

Balance 1 2 5 00

Balance 7 3 5 2 00 11 1 9 3 0 0 8 1 9 3 00

DR CR

Balance

3 0 0 0 00

3 0 0 0 00 O

ACCOUNT NO.

332

Credit 22 8 0 0 0 0

GJ2

1 1 6 0 00

331

Dr GJ2

Balance

330

3 8 4 1 00

GJ2

4 9 0 00 7 9 0 00

221

ACCOUNT NO. Post

Balance

220

Date 20X1 Dec 31

8-28

Ref.

122

Date 20X1 Dec 31

Date 20X1 Dec 31 31 31

Post

ACCOUNT NO.

DR CR Cr Cr Cr

Balance 22 8 0 0 0 0 3 8 4 1 00 O

GROUP A PROBLEMS, Cont. P8-5A., Cont. NAME:

SALES

ACCOUNT NO.

Date 20X1 Dec 31 31

Balance Closing

NAME:

SALES RETURNS AND ALLOWANCES

Explanation

GJ2

Balance Closing

NAME:

COST OF GOODS SOLD

Explanation

Debit

Credit

22 8 0 0 0 0

ACCOUNT NO. Post Ref.

Debit

Credit

CR Dr

Balance Adjustment Closing

NAME:

WAGES EXPENSE

Explanation

ACCOUNT NO. Post Ref.

Debit

Date 20X1 Dec 31 31 31

Balance Adjusting Closing

NAME:

ADVERTISING EXPENSE

Explanation

Post Ref.

Debit

660 DR

Credit

Explanation

Post Ref.

Debit

2 6 0 5 00

ACCOUNT NO.

661

Credit

CR Dr

GJ2

Balance 2 4 8 0 00 2 6 0 5 00 O

1 2 5 00

GJ2

Balance

ACCOUNT NO.

Dr GJ2

2 0 0 00 O

14 3 4 5 0 0

1 3 0 00

GJ2

Balance

14 2 1 5 0 0 14 3 4 5 0 0 0

Dr GJ2

22 8 0 0 0 0 O

550 DR

Credit

Balance

441

2 0 0 00

GJ2

Date 20X1 Dec 31 31 31

Balance Closing

Ref.

Date 20X1 Dec 31 31

Post

440

4 0 0 00

Balance 4 0 0 00 O

8-29

GROUP A PROBLEMS, Cont. P8-5A., Cont. NAME:

RENT EXPENSE

ACCOUNT NO.

Date 20X1 Dec 31 31

Balance Closing

NAME:

DEPRECIATION EXPENSE, LUMBER EQUIPMENT

Explanation

Credit

DR CR

8 3 0 00

GJ2

Adjusting Closing

NAME:

LUMBER SUPPLIES EXPENSE

Explanation

Post Ref. GJ2

ACCOUNT NO. Debit

Adjusting Closing

NAME:

INSURANCE EXPENSE

Explanation

Post Ref.

CR Dr

Credit

1 5 9 00

DR CR Dr

ACCOUNT NO. Post Ref. GJ2 GJ2

Debit

Credit

1 2 0 00

Balance 3 0 0 00 O

Balance 1 5 9 00 O

665 DR CR Dr

1 2 0 00

8 3 0 00 O

664

1 5 9 00

GJ2

Adjusting Closing

3 0 0 00

Debit

Balance

663

ACCOUNT NO.

GJ2

Explanation

Credit

3 0 0 00

GJ2

Date 20X1 Dec 31 31

8-30

Debit

Ref.

Date 20X1 Dec 31 31

Post

662

Balance 1 2 0 00 O

GROUP A PROBLEMS, Cont. P8-5A., Cont. MEYER LUMBER POST-CLOSING TRIAL BALANCE DECEMBER 31, 20X1 Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Accumulated Depreciation, Lumber Equipment Accounts Payable

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

Accrued Wages Payable L. Meyer, Capital

8 1 9 3 00 10 2 6 8 0 0

10 2 6 8 0 0

8-31

GROUP B PROBLEMS P8-1B. KAROK’S HARDWARE WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Account Titles Cash Accounts Receivable Inventory Prepaid Insurance Store Equipment Acc. Depreciation, Store Equipment Accounts Payable J. Karok, Capital Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Wages Expense Rent Expense Telephone Expense Miscellaneous Expense

Trial Balance Dr. Cr. 9 6 0 00 1 6 0 0 00 7 3 6 00 (a) 1 1 1 2 00 3 2 0 0 00 1 6 8 0 00 1 4 0 8 00 2 5 7 6 00 14 8 0 0 00 7 2 8 00 6 8 8 00 6 6 0 0 00 2 3 0 4 00 (d) 1 8 4 0 00 5 5 2 00 1 4 4 00 20 4 6 4 00

Insurance Expense Depreciation Expense, Store Equipment Accrued Wages

Adjustments Dr.

1 0 0 00

8-32

(b)

1 1 2 00

(c)

9 0 00

(a)

1 0 0 00

(d)

1 5 0 00

20 4 6 4 00 (b) (c)

1 1 2 00 9 0 00 4 5 2 00

Net Income

Cr.

4 5 2 00

GROUP B PROBLEMS, Cont. P8-1B., Cont. KAROK’S HARDWARE WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 9 6 0 00 1 6 0 0 00 8 3 6 00 1 0 0 0 00 3 2 0 0 00 1 7 7 0 00 1 4 0 8 00 2 5 7 6 00 14 8 0 0 00 7 2 8 00 6 8 8 00 6 5 0 0 00 2 4 5 4 00 1 8 4 0 00 5 5 2 00 1 4 4 00

1 1 2 00 9 0 00 20 7 0 4 00

1 5 0 00 20 7 0 4 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 9 6 0 00 1 6 0 0 00 8 3 6 00 1 0 0 0 00 3 2 0 0 00 1 7 7 0 00 1 4 0 8 00 2 5 7 6 00

14 8 0 0 00 7 2 8 00 6 8 8 00 6 5 0 0 00 2 4 5 4 00 1 8 4 0 00 5 5 2 00 1 4 4 00

1 1 2 00 9 0 00 13 1 0 8 00

1 5 0 00 14 8 0 0 00

7 5 9 6 00

1 6 9 2 00 14 8 0 0 00

5 9 0 4 00 1 6 9 2 00

14 8 0 0 00

7 5 9 6 00

8-33

GROUP B PROBLEMS, Cont. P8-2B. TONKAWA COMPANY WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Account Titles Cash Petty Cash Accounts Receivable Inventory Prepaid Rent Office Supplies Office Equipment Acc. Depreciation, Office Equipment Accounts Payable K. Tonkawa, Capital K. Tonkawa, Withdrawals Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Office Salaries Expense Insurance Expense Advertising Expense Utilities Expense

Trial Balance Dr. Cr. 3 8 0 0 00 1 0 0 00 3 4 0 0 00 5 2 0 4 00 1 2 0 0 00 1 3 6 0 00 9 6 8 0 00 4 0 4 0 00 7 9 6 4 00 5 4 7 6 00 5 0 0 0 00 52 4 6 2 00 1 1 6 00 2 2 0 0 00 (a) 26 7 3 8 00 (e) 7 4 0 8 00 2 2 0 0 00 8 0 0 00 7 3 6 00 69 9 4 2 00

Office Supplies Expense Rent Expense Depreciation Exp., Office Equipment Accrued Office Salaries Payable

Adjustments Dr.

8-34

(a) (c) (b)

2 0 4 00 6 0 0 00 8 9 0 00

(d)

2 5 0 00

(e)

1 8 0 00

2 0 4 00 1 8 0 00

69 9 4 2 00 (b) (c) (d)

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

Net Income

Cr.

2 1 2 4 00

GROUP B PROBLEMS, Cont. P8-2B., Cont., TONKAWA COMPANY WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20XX Adjusted Trial Balance Dr. Cr. 3 8 0 0 00 1 0 0 00 3 4 0 0 00 5 0 0 0 00 6 0 0 00 4 7 0 00 9 6 8 0 00 4 2 9 0 00 7 9 6 4 00 5 4 7 6 00 5 0 0 0 00 52 4 6 2 00 1 1 6 00 2 2 0 0 00 26 9 4 2 00 7 5 8 8 00 2 2 0 0 00 8 0 0 00 7 3 6 00

8 9 0 00 6 0 0 00 2 5 0 00 70 3 7 2 00

1 8 0 00 70 3 7 2 00

Income Statement Dr. Cr.

Balance Sheet Dr. Cr. 3 8 0 0 00 1 0 0 00 3 4 0 0 00 5 0 0 0 00 6 0 0 00 4 7 0 00 9 6 8 0 00 4 2 9 0 00 7 9 6 4 00 5 4 7 6 00 5 0 0 0 00

52 4 6 2 00 1 1 6 00 2 2 0 0 00 26 9 4 2 00 7 5 8 8 00 2 2 0 0 00 8 0 0 00 7 3 6 00

8 9 0 00 6 0 0 00 2 5 0 00 42 3 2 2 00

1 8 0 00 52 4 6 2 00

28 0 5 0 00

10 1 4 0 00 52 4 6 2 00

17 9 1 0 00 10 1 4 0 00

52 4 6 2 00

28 0 5 0 00

8-35

GROUP B PROBLEMS, Cont. P8-3B. JUAN’S TRACTOR SERVICE INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20XX Revenue: Gross Sales Less: Sales Returns and Allowances Sales Discounts

$4 1 0 0 0 0 $ 1 4 5 00 1 7 5 00

Net Sales

3 7 8 0 00

Cost of Goods Sold: Cost of Goods Sold

1 7 9 0 00

Gross Profit Operating Expenses: Salaries Expense Insurance Expense Advertising Expense Rent Expense Depreciation Expense, Store Equipment Total Operating Expenses

3 2 0 00

1 9 9 0 00

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

Net Income from Operations

8 5 0 00

Other Income: Rental Income

2 3 0 00

Net Income

8-36

$1 0 8 0 0 0

GROUP B PROBLEMS, Cont. P8-4B. MURRAY COMPANY STATEMENT OF OWNER’S EQUITY FOR THE YEAR ENDED DECEMBER 31, 20XX A. Murray, Capital, January 1, 20XX Less: Net Loss Withdrawals

$1 0 5 0 0 0 0 $2 8 5 6 0 0 4 0 0 0 00

Decrease in Capital

6 8 5 6 00

A. Murray, Capital, December 31, 20XX

$3 6 4 4 0 0

8-37

GROUP B PROBLEMS, Cont. P8-4B., Cont. MURRAY COMPANY BALANCE SHEET DECEMBER 31, 20XX Assets Current Assets: Cash Petty Cash Accounts Receivable Merchandise Inventory Supplies

$2 5 0 0 0 0 5 0 00 1 3 0 0 00 4 2 5 0 00 3 4 4 00

Prepaid Insurance Total Current Assets Capital Assets: Store Equipment

6 0 0 00 $9 0 4 4 0 0

$1 8 0 0 0 0 0

Less: Accumulated Depreciation, Store Equipment Automobile Less: Accumulated Depreciation, Auto

7 5 0 00 2 5 0 0 00

17 2 5 0 00

5 0 0 00

2 0 0 0 00

Total Assets

19 2 5 0 00 $2 8 2 9 4 0 0

Liabilities Current Liabilities: Accounts Payable Accrued Salaries Payable Taxes Payable Unearned Rent Mortgage Payable Total Current Liabilities

$3 4 5 0 0 0 1 0 0 00 2 1 0 0 00 11 0 0 0 00 3 0 0 0 00 $1 9 6 5 0 0 0

Long-Term Liabilities: Mortgage Payable Total Liabilities

5 0 0 0 00 24 6 5 0 00 Owner’s Equity

A. Murray, Capital Total Liabilities and Owner’s Equity

8-38

3 6 4 4 00 $2 8 2 9 4 0 0

GROUP B PROBLEMS, Cont. P8-5B. CALLAHAN LUMBER WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20X1 Account Titles Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Acc. Depreciation, Lumber Equipment Accounts Payable J. Callahan, Capital J. Callahan, Withdrawals Sales Sales Returns and Allowances Cost of Goods Sold Wages Expense Advertising Expense Rent Expense

Trial Balance Dr. Cr. 1 1 4 0 00 1 2 7 0 00 5 6 0 0 00 2 6 0 00 1 1 7 00 2 6 0 0 00 3 4 0 00 1 3 3 0 00 7 5 6 2 00 3 5 0 0 00 23 0 0 0 00 4 0 0 00 13 7 1 5 00 (A) 2 3 9 0 00 (E) 4 0 0 00 8 4 0 00 32 2 3 2 00

Lumber Supplies Expense Insurance Expense Depreciation Expense, Lumber Equipment Accrued Wages Payable

Adjustments Dr.

Cr.

(A) (B) (C)

9 0 0 00 1 8 0 00 7 0 00

(D)

4 6 0 00

(E)

1 6 5 00

9 0 0 00 1 6 5 00

32 2 3 2 00 (B) (C) (D)

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

1 7 7 5 00

Net Income

8-39

GROUP B PROBLEMS, Cont. P8-5B., Cont. CALLAHAN LUMBER WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 20X1 Adjusted Trial Balance Dr. Cr. 1 1 4 0 00 1 2 7 0 00 4 7 0 0 00 8 0 00 4 7 00 2 6 0 0 00 8 0 0 00 1 3 3 0 00 7 5 6 2 00 3 5 0 0 00 23 0 0 0 00 4 0 0 00 14 6 1 5 00 2 5 5 5 00 4 0 0 00 8 4 0 00 1 8 0 00 7 0 00 4 6 0 00

Income Statement Dr. Cr.

Balance Sheet Dr. 1 1 4 0 00 1 2 7 0 00 4 7 0 0 00 8 0 00 4 7 00 2 6 0 0 00

8 0 0 00 1 3 3 0 00 7 5 6 2 00 3 5 0 0 00 23 0 0 0 00 4 0 0 00 14 6 1 5 00 2 5 5 5 00 4 0 0 00 8 4 0 00 1 8 0 00 7 0 00 4 6 0 00

1 6 5 00 32 8 5 7 00

32 8 5 7 00

1 6 5 00 19 5 2 0 00

23 0 0 0 00

13 3 3 7 00

3 4 8 0 00 23 0 0 0 00

8-40

Cr.

9 8 5 7 00 3 4 8 0 00

23 0 0 0 00

13 3 3 7 00

GROUP B PROBLEMS, Cont. P8-5B., Cont. CALLAHAN LUMBER INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20X1 Revenue: Gross Sales Less: Sales Returns and Allowances Net Sales

$2 3 0 0 0 0 0 4 0 0 00 22 6 0 0 00

Cost of Goods Sold: Cost of Goods Sold

14 6 1 5 00

7 9 8 5 00

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

8-41

GROUP B PROBLEMS, Cont. P8-5B., Cont. CALLAHAN LUMBER STATEMENT OF OWNER’S EQUITY FOR THE YEAR ENDED DECEMBER 31, 20X1 J. Callahan, Capital, January 1, 20X1 Net Income Less Withdrawals Decrease in Capital J. Callahan, Capital, December 31, 20X1

8-42

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

GROUP B PROBLEMS, Cont. P8-5B., Cont. CALLAHAN LUMBER BALANCE SHEET DECEMBER 31, 20X1 Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance

$1 1 4 0 0 0 1 2 7 0 00 4 7 0 0 00 8 0 00 4 7 00

Total Current Assets

$7 2 3 7 0 0

Capital Assets: Lumber Equipment Less: Accumulated Depreciation, Lumber Equipment

2 6 0 0 00 8 0 0 00

Total Assets

1 8 0 0 00 $9 0 3 7 0 0

Liabilities Current Liabilities: Accounts Payable Accrued Wages Payable Total Current Liabilities

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

Owner’s Equity J. Callahan, Capital

7 5 4 2 00

Total Liabilities and Owner’s Equity

$9 0 3 7 0 0

8-43

GROUP B PROBLEMS, Cont. P8-5B., Cont. CALLAHAN LUMBER GENERAL JOURNAL Date 20X1 Dec

Account Title and Description 31 31 31 31 31

31 31

31 31 20X2 Jan 1

8-44

Adjusting Entries Cost of Goods Sold Merchandise Inventory Lumber Supplies Expense Lumber Supplies Insurance Expense Prepaid Insurance Depreciation Expense, Lumber Equipment Accumulated Depreciation, Lumber Equipment Wages Expense Accrued Wages Payable Closing Entries Sales Income Summary Income Summary Sales Returns and Allowances Cost of Goods Sold Wages Expense Advertising Expense Rent Expense Lumber Supplies Expense Insurance Expense Depreciation Expense Income Summary J. Callahan, Capital J. Callahan, Capital J. Callahan, Withdrawals Reversing Entry Accrued Wages Payable Wages Expense

Page 2 Post Ref.

Dr.

550

9 0 0 00 9 0 0 00

112 664

1 8 0 00 1 8 0 00

113 665

7 0 00 7 0 00

114 663

4 6 0 00 4 6 0 00

122 660

1 6 5 00 1 6 5 00

221 440

23 0 0 0 00 23 0 0 0 00

332 332

19 5 2 0 00 4 0 0 14 6 1 5 2 5 5 5 4 0 0 8 4 0 1 8 0 7 0 4 6 0

441 550 660 661 662 664 665 663 332

00 00 00 00 00 00 00 00

3 4 8 0 00 3 4 8 0 00

330 330

Cr.

3 5 0 0 00 3 5 0 0 00

331

1 6 5 00 1 6 5 00

GROUP B PROBLEMS, Cont. P8-5B., Cont. CALLAHAN LUMBER GENERAL LEDGER NAME:

CASH

ACCOUNT NO.

Date 20X1 Dec 31

Balance

NAME:

ACCOUNTS RECEIVABLE

Explanation

Date 20X1 Dec 31

Balance

NAME:

MERCHANDISE INVENTORY

Explanation

Date 20X1 Dec

31 31

NAME:

Explanation Balance Adjusting

Debit

Post Ref.

Debit

Balance Adjusting

NAME:

PREPAID INSURANCE

Post Ref.

Debit

Balance Adjusting

NAME:

LUMBER EQUIPMENT

Explanation

Debit

Credit

Balance

1 1 4 0 00

111 DR CR

Balance

1 2 7 0 00

112

DR CR

Balance

9 0 0 00

5 6 0 0 00 4 7 0 0 00

ACCOUNT NO.

113

Credit

Credit 1 8 0 00

DR CR

Balance

2 6 0 00 8 0 00

ACCOUNT NO. Post Ref.

Debit

Credit 7 0 00

GJ2

Explanation Balance

Post Ref.

GJ2

Date 20X1 Dec 31 31

DR CR

ACCOUNT NO.

LUMBER SUPPLIES Explanation

Credit

ACCOUNT NO.

GJ2

Date 20X1 Dec 31 31

Date 20X1 Dec 31

Post Ref.

110

114 DR CR

Balance

1 1 7 00 4 7 00

ACCOUNT NO. Post Ref.

Debit

Credit

121 DR CR

Balance

2 6 0 0 00

8-45

GROUP B PROBLEMS, Cont. P8-5B., Cont. NAME:

ACCUMULATED DEPRECIATION, LUMBER EQUIPMENT

Date 20X1 Dec 31 31

Balance Adjusting

NAME:

ACCOUNTS PAYABLE

Explanation

Balance

NAME:

ACCRUED WAGES PAYABLE

Explanation

Date 20X1 Dec 31

Adjusting

NAME:

J. CALLAHAN, CAPITAL

Explanation

Balance Closing Closing

NAME:

J. CALLAHAN, WITHDRAWALS

Explanation

Post Ref.

Balance Closing

NAME:

INCOME SUMMARY

Debit

Post Ref.

Debit

Closing Closing Closing

Balance

3 4 0 00 8 0 0 00

Credit

220 DR CR

Balance

1 3 3 0 00

221

Credit

DR CR

Balance

1 6 5 00

ACCOUNT NO. Post Ref.

Debit

Credit 3 4 8 0 00

3 5 0 0 00

330 DR CR

Balance

7 5 6 2 00 11 0 4 2 0 0 7 5 4 2 00

Cr Cr

ACCOUNT NO. Post Ref.

Debit

GJ2

Explanation

DR CR

ACCOUNT NO.

GJ2

Explanation

122

ACCOUNT NO.

GJ2

Date 20X1 Dec 31 31

Credit 4 6 0 0 00

GJ2

Date 20X1 Dec 31 31 31

8-46

Debit

GJ2

Date 20X1 Dec 31

Date 20X1 Dec 31 31 31

Post Ref.

ACCOUNT NO.

Post Ref.

Debit

GJ2 GJ2 GJ2

19 5 2 0 0 0 3 4 8 0 00

331 DR CR

Balance

3 5 0 0 00

3 5 0 0 00 O

ACCOUNT NO.

332

Credit

23 0 0 0 0 0

CR Cr Cr

Balance 23 0 0 0 0 0 3 4 8 0 00 O

GROUP B PROBLEMS, Cont. P8-5B., Cont. NAME:

SALES

ACCOUNT NO.

Date 20X1 Dec 31 31

Balance Closing

NAME:

SALES RETURNS AND ALLOWANCES

Explanation

Debit

Credit

CR Cr

Balance Closing

NAME:

COST OF GOODS SOLD

Explanation

23 0 0 0 0 0

ACCOUNT NO. Post Ref.

Debit

Balance Adjustment Closing

NAME:

WAGES EXPENSE

Explanation

Post Ref.

Debit

Balance Adjusting Closing

NAME:

ADVERTISING EXPENSE

Explanation

Post Ref. GJ2

Debit

Balance Closing

NAME:

RENT EXPENSE

Post Ref.

Debit

550

14 6 1 5 0 0

13 7 1 5 0 0 14 6 1 5 0 0 0

ACCOUNT NO.

660

DR CR

Balance

2 5 5 5 00

2 3 9 0 00 2 5 5 5 00 O

ACCOUNT NO.

661

Credit

✓

DR CR

Balance

4 0 0 00 O

4 0 0 00

GJ2

Explanation

4 0 0 00 O

1 6 0 00

GJ2

Explanation

Balance

✓

Date 20X1 Dec 31 31

Balance

DR CR

Credit

9 0 0 00

GJ2

ACCOUNT NO. Post Ref. GJ2

Debit

23 0 0 0 0 0 O

DR CR

ACCOUNT NO.

GJ2

Date 20X1 Dec 31 31 31

Credit

Balance

441

4 0 0 00

GJ2

Date 20X1 Dec 31 31 31

Balance Closing

Ref. GJ2

Date 20X1 Dec 31 31

Post

440

Credit 8 4 0 00

662 DR CR

Balance

8 4 0 00 O

8-47

GROUP B PROBLEMS, Cont. P8-5B., Cont. NAME:

DEPRECIATION EXPENSE, LUMBER EQUIPMENT

Date 20X1 Dec 31 31

Adjusting Closing

NAME:

LUMBER SUPPLIES EXPENSE

Explanation

Post Ref.

Debit

GJ2

4 6 0 00

Adjusting Closing

NAME:

INSURANCE EXPENSE

Explanation

Credit

663 DR CR

Balance

4 6 0 00 O

4 6 0 00

GJ2

Date 20X1 Dec 31 31

ACCOUNT NO.

ACCOUNT NO. Post Ref.

Debit

GJ2

1 8 0 00

Credit

664 DR CR

Balance

1 8 0 00 O

1 8 0 00

GJ2

ACCOUNT NO.

Explanation Adjusting Closing

Post Ref. GJ2

Debit

Credit

7 0 00

GJ2

665 DR CR Dr

7 0 00

Balance 7 0 00 O

CALLAHAN LUMBER POST-CLOSING TRIAL BALANCE DECEMBER 31, 20X1 Cash Accounts Receivable Merchandise Inventory Lumber Supplies Prepaid Insurance Lumber Equipment Accumulated Depreciation, Lumber Equipment Accounts Payable Accrued Wages Payable J. Callahan, Capital

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

8-48

00 00 00 00

9 8 3 7 00

GROUP C PROBLEMS P8-1C. a. Net Sales: Sales − SRA − SD $13,730 − $208 − $424 = $13,098 b. Cost of Goods Sold: Beg Bal. − Adjustment $6,214 − $270 = $5,944 c. Gross Profit: Net Sales − COGS $13,098 − $5944 = $7,154 d. Net Income: Gross Profit − Operating Expenses $7,154 − $1,150 = $6004

P8-2C. Cash Professional Fees + Increase for Accrued Fees + Reduction in Unearned Fees Total Professional Fees on an Accrual Basis

$50,000 1,100 $51,100 1,950 $53,050

8-49

GROUP C PROBLEMS, Cont. P8-3C. SERENA’S PIE AND KITE SHOP INCOME STATEMENT FOR THE YEAR ENDED SEPTEMBER 30, 20XX Revenue: Gross Sales Less: Sales Returns and Allowances Sales Discounts

$5 3 5 6 8 2 5 $ 8 3 4 50 3 4 4 75

Net Sales

52 3 8 9 00

Cost of Goods Sold: Cost of Goods Sold

21 1 3 2 86

Gross Profit Operating Expenses: Advertising Expense Cleaning Expense Depreciation Expense, Equipment Insurance Expense Rent Expense Salaries Expense Utilities Expense Total Operating Expenses

1 1 7 9 25

31 2 5 6 14

1 3 5 2 50 2 4 0 0 00 8 7 5 00 3 6 8 75 7 2 0 0 00 11 4 5 8 60 2 5 4 2 60 26 1 9 7 45

Net Income from Operations

5 0 5 8 69

Other Income: Rental Income

1 8 0 0 00

Net Income

$6 8 5 8 6 9

8-50

GROUP C PROBLEMS, Cont. P8-4C. CARLOS COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20XX Revenue: Gross Sales Less: Sales Returns and Allowances Sales Discounts

$5 5 4 2 0 0 $ 1 4 0 00 3 0 00

Net Sales

5 3 7 2 00

Cost of Goods Sold: Cost of Goods Sold

2 1 8 0 00

Gross Profit Operating Expenses: Delivery Expense Salaries Expense Rent Expense Office Supplies Expense Advertising Expense Depreciation Expense, Store Equipment

1 7 0 00

3 1 9 2 00

9 0 00 8 4 0 00 3 0 00 5 0 00 1 0 00 4 0 00

Total Operating Expenses

1 0 6 0 00

Net Income From Operations

$2 1 3 2 0 0

8-51

GROUP C PROBLEMS, Cont. P8-5C. LAWRENCE COMPANY BALANCE SHEET DECEMBER 31, 20XX Assets Current Assets: Cash Accounts Receivable Inventory Office Supplies Prepaid Insurance

$11 0 0 0 0 0 38 0 0 0 00 70 0 0 0 00 6 0 0 00 7 5 0 00

Total Current Assets Capital Assets: Building Less: Accumulated Depreciation, Building Land

$1 2 0 3 5 0 0 0

$5 0 0 0 0 0 0 12 0 0 0 00

38 0 0 0 00 17 5 0 0 00

Total Assets

55 5 0 0 00 $1 7 5 8 5 0 0 0

Liabilities Current Liabilities: Notes Payable Accounts Payable

$4 0 0 0 0 0 0 30 0 0 0 00

Total Current Liabilities

$7 0 0 0 0 0 0

Owner’s Equity S. Lawrence, Capital Total Liabilities and Owner’s Equity

8-52

105 8 5 0 00 $1 7 5 8 5 0 0 0

9 Banking Procedures and Control of Cash ANSWERS TO DISCUSSION QUESTIONS 1. Internal control helps develop control over a company’s assets and monitor its operations to ensure efficient operations and provide reasonable assurance that assets are safeguarded. 2. So one doesn’t forget to reduce the chequebook balance. Cheque stubs aid in updating special journals. 3. False. Usually once a month. 4. After a bank reconciliation, the adjusted chequebook balance is equal to the adjusted bank balance and the proper journal entries have been made. 5. Outstanding cheques are subtracted from the bank balance because the bank has no idea they have been written, since they have not yet been processed. On the chequebook side, the written cheques have already reduced the chequebook balance. 6. Disagree. A debit memorandum reduces the bank account by the amount of the NSF cheque. 7. To cause the balance in the cash account in the ledger to equal the adjusted balance of cash in the chequebook. 8. Electronic Funds Transfer (EFT) transfers funds among parties electronically without the use of paper cheques. 9. Advantages: convenience, availability, transactions speed(money is placed in your account quicker), efficiency, effective. Disadvantages: startup may take time, learning curve, bank website changes, trusting that it works, thieves accessing bank account. 10. Reject. Petty Cash is an asset. 11. Debiting totals of individual expenses updates the ledger to record where cash was used. After replenishment, the cash is back to a certain level, and the old expenses have been updated in the ledger. 12. The change fund, an asset, aids in making change to customers who pay cash. 13. When the account Cash Short and Over has a larger amount of shortages than overage, its balance is a miscellaneous expense shown on the income statement. Keep in mind Cash Short and Over would normally be recorded in the cash receipts journal. 14. Next month the bank will most likely spot and correct the error. But Niko Ray should go back to his supervisor and remind him/her that being honest with the bank is important—it is illegal to keep money that does not belong to you, and pointing out this mistake will show the integrity and honesty of the company.

9-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. a. 4 b. 1 c. 4 d. 3 e. 3 f. 2 CDE2. a, c, d, e CDE3.

CAHYA CO. BANK RECONCILIATION MAY 31, 20XX Cahya Co. G/L Cash Balance Bank Service Charge NSF Cheque

$1,869.60 −13.80 −61.20

Reconciled Book Balance

$1,794.60

Bank Balance Deposits in Transit Cheques Outstanding Reconciled Bank Balance

$1,951.20 271.20 2,222.40 −427.80 $1,794.60

CDE4. Identify whether each of the following items affects the bank or book side of the reconciliation and indicate whether the amount represents an addition or a subtraction a. b. c. d. e. f. CDE5. a.

Outstanding cheques EFT Payments Bank service charges Deposits in transit NSF cheques Interest received on bank balance

Bank or Book Bank Book Book Bank Book

+ or − − − − + −

Book

1, 2, 4

1, 2

3, 4

1, 2

1, 2, 4

CDE6. 20XX Date July 12

July

9-2

ACCOUNT TITLE AND EXPLANATION Cash Credit Card Expense Revenue Cost of Goods Sold Inventory Accounts Receivable, Steven Co. Revenue Cost of Goods Sold Inventory Cash Debit Card Expense Revenue Cost of Goods Sold Inventory

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

Credit 5 0 0 00 3 5 0 00 1 0 0 0 00 7 5 0 00

7 5 0 00 6 0 0 00

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE7. Dr. 5 00 6 00 1 00

Bandages Expense Stamp Expense Cash Short and Over Cash CDE8.

Cr.

1 2 00

1. A petty cash fund allows payment of small cash amounts without writing a cheque for each payment. 2. Outstanding cheques are cheques written by a company or a person that were not received by the bank before the bank statement was prepared. 3. The bank provides a deposit slip to use in recording deposits of money or cheques into a bank account. 4. A signature card is a form signed by a bank customer that the bank uses to verify signature authenticity on all cheques. 5. A bank reconciliation is the process of reconciling the chequebook balance with the bank balance given on the bank statement. 6. The account that records cash shortages and overages is the Cash Short and Over account. 7. Deposits in transit are deposits that are made by customers of a bank but were not processed by the bank before the bank statement was prepared. 8. NSF (not sufficient funds) indicates that a cheque has been written on an account that lacks sufficient funds to pay it. 9. EFT (electronic funds transfer) is an electronic system that transfers funds without the use of paper cheques. 10. Internal control systems are systems of procedures and methods to control a firm’s assets as well as monitor its operations.

SOLUTIONS TO EXERCISES—Set A E9-1A. SIAN’S FASHION INC. BANK RECONCILIATION JULY 31, 20XX G/L CASH ACCOUNT BALANCE Ending Cash Balance Add: Direct Deposits Bank Interest Subtotal Deduct: Service charge NSF Cheque Reconciled balance

$4,000 $3,850 20 40 640

3,870 7,870 680 $7,190

BALANCE PER BANK

Ending Bank Balance Add: Deposits in Transit

$3,000

Reconciled Balance

$7,190

4,190

9-3

SOLUTIONS TO EXERCISES-SET A, Cont. E9-1A., cont. 20XX Date July

Account Title and Explanation 31

Cash Accounts Receivable Record deposits received from customers

Debit

Credit

3 85 0 00 3 8 5 0 00

Cash Bank Interest Record interest from bank

2 0 00

Bank charges Cash Record bank charges

4 0 00

Accounts Receivable Cash Record NSF cheque

64 0 00

2 0 00

4 0 00

6 4 0 00

E9-2A. 20XX July

9-4

Petty Cash Cash Establishment of Petty Cash fund Donations Expense Postage Expense Office Supplies Expense Miscellaneous Expense Cash To record Petty Cash expenses and replenishment

1 0 0 00 1 0 0 00 2 0 00 1 8 00 2 5 00 2 5 00 8 8 00

SOLUTIONS TO EXERCISES—Set A, Cont. E9-3A. 20XX July

Donations Expense

2 0 00

Postage Expense Office Supplies Expense Miscellaneous Expense Cash Short and Over Cash To record Petty Cash expenses and replenishment

1 8 00 2 5 00 2 5 00 1 00

Donations Expense

2 0 00

Postage Expense Office Supplies Expense Miscellaneous Expense Cash Short and Over Cash To record Petty Cash expenses and replenishment

1 8 00 2 5 00 2 5 00

8 9 00

E9-4A. 20XX July

1 00 8 7 00

E9-5A. Beg. Change Fund

+ Cash Register Total

+ 1,200

= Cash should have on hand

30 1,230

− Counted Cash

− 1,156

= Cash Shortage

Cash Cash Short and Over Sales To record day’s takings and shortage

74 1 1 2 6 00 7 4 00 1 2 0 0 00

9-5

SOLUTIONS TO EXERCISES-SET A, Cont. E9-6A. Date Feb

Feb

Account Title and Explanation 1

Cash Credit Card Expense Revenue Cost of Goods Sold Inventory

73 1 2 5 0 0 1 87 5 00

Cash Revenue Cost of Goods Sold Inventory

25 0 0 0 0 0

Cash Debit Card Expense Revenue Cost of Goods Sold Inventory

14 3 1 8 7 5 18 1 25

Cash Revenue Cost of Goods Sold Inventory

4 00 0 00

E9-7A. a. 4. Subtraction from the general ledger b. 4. Subtraction from the general ledger c. 4. Subtraction from the general ledger d. 1. Addition to the bank statement e. 2. Subtraction from the bank statement f. 3. Addition to the general ledger g. 4. Subtraction from the general ledger h. 3. Addition to the general ledger

9-6

Debit

Credit

75 0 0 0 0 0 61 5 0 0 0 0 61 5 0 0 0 0

25 0 0 0 0 0 17 5 0 0 0 0 17 5 0 0 0 0

14 5 0 0 0 0 7 10 0 00 7 1 0 0 00

4 0 0 0 00 2 70 0 00 2 7 0 0 00

SOLUTIONS TO EXERCISES—Set B E9-1B. BANG CO.

BANK RECONCILIATION FEBRUARY 28, 20XX CHEQUEBOOK BALANCE Chequebook Balance

$ 1,314

Subtotal Deduct: NSF Cheque Bank Service Charge

$ 1,314

Reconciled Balance

$53 65 118 $ 1,196

BALANCE PER BANK

Balance per Bank Add: Deposits in Transit Subtotal Deduct: Outstanding Cheques

$ 1,050

Reconciled Balance

$ 1,196

800 1,850 654

20XX Feb. 28

Service Charge Expense Accounts Receivable Cash

6 5 00 5 3 00

Petty Cash Cash Establishment of Petty Cash fund Donations Expense Postage Expense Office Supplies Expense Miscellaneous Expense Cash To record Petty Cash expenses & replenishment

1 0 4 00

Donations Expense Postage Expense Office Supplies Expense Miscellaneous Expense Cash Short and Over Cash To record Petty Cash expenses & replenishment

2 1 00 1 8 00 2 9 00 1 5 00 4 00

1 1 8 00

E9-2B. 20XX July

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

E9-3B. 20XX July

8 7 00

9-7

SOLUTIONS TO EXERCISES—Set B, Cont. E9-4B. 20XX July

Donations Expense Postage Expense Office Supplies Expense Miscellaneous Expense Cash Short and Over Cash To record Petty Cash expenses & replenishment

2 1 00 1 8 00 2 9 00 1 5 00 8 00 7 5 00

E9-5B. Beg. Change Fund + Cash Register Total = Cash should have on hand − Counted Cash = Cash Short

Cash Cash Short and Over Sales To record day’s takings and shortage

9-8

$ 29 + 1,196 1,225 − 1,156 $ 69

1 1 2 7 00 6 9 00 1 1 9 6 00

E9-6B. Bank Balance Add Deduct 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Book Balance Add Deduct X

Must Adjust Cr.

Not Shown on the Reconciliation

X X

Cr. Dr.

Cr.

X X X X

X X

Dr.

9-9

GROUP A PROBLEMS P9-1A. KAELEN’S SPA BANK RECONCILIATION AS OF AUGUST 31, 20XX G/L CASH ACCOUNT BALANCE

BALANCE PER BANK

Ending Cash Balance Add Interest Earned

$19 8 3 5 0 0 3 0 00

Ending Bank Statement $8 5 9 0 0 0 Add: Deposits in Transit 10 0 0 0 0 0

Add back error on cheque # 303

1 0 0 0 00

Add error made by bank chq # 1234

Subtotal

$20 8 6 5 0 0

Deduct: EFT Rent

8 0 0 00

NSF Cheque

5 0 0 00

NSF charge Service charge

1 0 00 5 5 00

3 0 0 0 00

Subtotal

$21 5 9 0 0 0

Deduct: Outstanding cheques: Chq # 304

2 0 9 0 00

Reconciled Balance

$19 5 0 0 0 0

1 3 6 5 00 Reconciled Balance

9-10

$19 5 0 0 0 0

GROUP A PROBLEMS, Cont. P9-1A., Cont. 20XX Date Aug

ACCOUNT TITLE AND EXPLANATION

Debit

Rent Expense Cash Record ETF – monthly rent

8 0 0 00

Accounts Receivable Cash Record NSF cheque returned by bank

5 0 0 00

Bank charges Cash Record bank charges for NSF cheque

1 0 00

Cash Spa supplies Correct error on cheque # 303

Bank charges Cash Record service charges for the month of Aug

5 5 00

Cash Interest Revenue Record interest earned for the month of Aug

3 0 00

1 0 0 0 00

Credit 8 0 0 00

5 0 0 00

1 0 00

1 0 0 0 00

5 5 00

3 0 00

P9-2A. BANK OF SASKATCHEWAN MAIN BRANCH REGINA, SASKATCHEWAN This form is provided to help you balance your bank statement. If no errors are reported to the bank within 30 days, the account will be considered correct. Please notify us of any change in address. Cheques outstanding (not charged to account)

Cheque No.

Amount

111

$600

119

1,200

121

330

Total

$2,130

Sort the cheques numerically or by date issued. Check off the stubs of your chequebook with each cheque paid by bank. List the numbers and amounts of cheques still outstanding in the space provided at the left. Verify the deposits in your chequebook with deposits credited on this statement. Bank balance shown on this statement Plus: deposits not credited on this statement Subtotal Less: Cheques outstanding Balance If your chequebook does not agree, enter any necessary adjustment: Less: NSF $300 SC 30 Correct chequebook balance

5,400

2,000 7,400 2,130 5,270

5,600

300 5,270

9-11

GROUP A PROBLEMS, Cont. P9-2A., Cont. JELISA’S DELI GENERAL JOURNAL Date 20XX Feb

Account Title and Description

Post Ref.

Accounts Receivable, Jim Rice

Dr.

Cr.

3 0 0 00

Cash 28

3 0 0 00

Service Charge

3 0 00

Cash

3 0 00

P9-3A. MARCEL’S DELI GENERAL JOURNAL Date 20XX April

Account Title and Description 1

Petty Cash

Page 2 Post Ref.

Dr.

Cr.

1 0 0 00

Cash

1 0 0 00

To establish petty cash fund, Chq. 14 29

Office Equipment

7 0 0 00

Cash

7 0 0 00

Purchased office equipment from Roy Kloon, Chq. 15 30

Postage Expense

2 9 00

Office Supplies Expense

3 8 00

Miscellaneous Expense

9 00

Cash To replenish petty cash fund, Chq. 16

9-12

7 6 00

GROUP A PROBLEMS, Cont. P9-3A., Cont. MARCEL’S DELI AUXILIARY PETTY CASH RECORD Date 20XX April 1 5 8 16 23 26

Category of Payment

Voucher No.

1 2 3 4 5

Description

Receipts

Establishment Postage Office Supplies Office Supplies Postage Miscellaneous

1 0 0 00

Totals

1 0 0 00

Ending Balance

Payments

Postage Expense

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

1 5 00

7 6 00

2 9 00

Office Supplies Expense

Sundry Account

Amount

2 0 00 1 8 00 1 4 00 Misc. 3 8 00

9 00 9 00

2 4 00 1 0 0 00

Ending Balance Replenishment

2 4 00 7 6 00

Balance (New)

1 0 0 00

9-13

GROUP A PROBLEMS, Cont. P9-4A. GAKERE CO. AUXILIARY PETTY CASH RECORD Date 20XX Oct

Category of Payment

Voucher No.

Description

Receipts

Payments

1 5 9 12 15 16

1 2 3 4 5

Establishment Postage Delivery Miscellaneous Postage Delivery

Computer Supplies

2 5 00

Postage

1 4 00

Delivery Expense

2 4 00 1 2 00 1 0 00 9 00 1 8 00

Account

Amount

2 4 00 1 2 00

3 00 1 1 5 00 3 5 00

1 5 0 00 30 30

Balance Replenishment

3 5 00 1 1 5 00

Balance (New)

1 5 0 00

Misc.

1 0 00

Computer Supplies

2 5 00

9 00 1 8 00

1 4 00 Cash Short and Over

Fund Shortage

Sundry

1 5 0 00

9-14

Postage Expense

4 7 00

3 0 00

3 00 3 8 00

GROUP A PROBLEMS, Cont. P9-4A., Cont. GAKERE CO. GENERAL JOURNAL Date 20XX Oct

Post Ref.

Account Title and Description 1

Page 33 Dr.

Petty Cash Cash To establish petty cash fund, Chq. 444

1 5 0 00

Postage Expense Delivery Expense Computer Supplies Expense Miscellaneous Expense Cash Short and Over Cash To replenish petty cash fund, Chq. 618

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

Cr. 1 5 0 00

1 1 5 00

P9-5A. BALLANTYNE COMPANY BANK RECONCILIATION JUNE 30, 20XX G/L BALANCE

BALANCE PER BANK

Cash Balance Add: Error on cheque #585

$9 7 4 9 2 0

Subtotal Deduct: NSF Cheque Bank NSF charge Bank Service charge

9 7 6 9 40

2 0 20

2 5 5 45 1 5 00 4 5 50

Balance per Bank Add: Deposits in Transit

$12 8 8 2 4 5

Subtotal Deduct: Outstanding Cheques: # 583 $1,100 # 584 $1,132.50 # 588 $654.35 # 589 $237.65 # 590 $2,650.00

15 2 2 7 9 5

2 3 4 5 50

5 7 7 4 50 Reconciled Balance

$9 4 5 3 4 5

Reconciled Balance

$9 4 5 3 4 5

9-15

GROUP B PROBLEMS P9-1B. FAIZAH COMPANY BANK RECONCILIATION JULY 31, 20XX G/L CASH ACCOUNT BALANCE July

Cash Account Balance Add: Proceeds of a Note less Bank Collection Charge Error re Rent Deduct: Bank Service Charge NSF Cheque

BALANCE PER BANK STATEMENT

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

July 31

$8 1 7 9 0 0

Ending Bank Statement Balance Add: Deposits in Transit Error by Bank Deduct: Cheque No. 111 Cheque No. 1115

5 4 9 00

$5 8 2 0 0 0 2 8 7 5 00 5 6 0 00

$9 2 5 5 0 0

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

$7 6 3 0 00

Reconciled Balance

$7 6 3 0 00

FAIZAH COMPANY GENERAL JOURNAL Date 20XX July 31

31 31 31

9-16

Account Title and Description Cash Collection Charge Notes Receivable Cash Accounts Payable (re Rent) Service Charge Expense Cash Accounts Receivable (re NSF Cheque) Cash

Post

Dr.

Cr.

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

GROUP B PROBLEMS, Cont. P9-2B. RJ’S TAX SERVICE BANK RECONCILIATION September 30, 20XX Book Balance Add: Interest earned On bank account Error on Cheque # 674 Deduct: NSF Cheque Service Charge

$4 6 3 6 0 0

Adjusted book balance

$4 4 4 1 0 0

5 0 00 9 0 00 3 0 0 00 3 5 00

Bank Balance Add: Error made by Bank Deposit In Transit Deduct: Outstanding Cheques: # 670 # 672 # 673 # 675

$4 3 6 5 0 0

Adjusted bank Balance

$4 4 4 1 0 0

4 0 0 00 5 0 0 00

5 4 9 3 0 0 7 0 0 2 7 5

00 00 00 00

PREPARE THE NECESSARY JOURNAL ENTRIES Date Sept

ACCOUNT TITLE AND EXPLANATION 30

Debit

Cash Interest Revenue Record interest earned on bank account

5 0 00

Cash Insurance Expense Record error on Cheque #674

9 0 00

Accounts Receivable Cash Record NSF cheque returned by bank Bank charges Cash Record service charges for the month of September

Credit 5 0 00

9 0 00

1 0 0 0 00 1 0 0 0 00

3 5 00 3 5 00

9-17

GROUP B PROBLEMS, Cont. P9-3B. YOUSEF BOOKKEEPING SERVICE GENERAL JOURNAL Date Mar

Account Title and Explanation 31

9-18

Page 2 Debit

Petty Cash Cash Record establishment of Petty cash fund

2 5 0 00

Office Expense Postage Expense Cleaning Expense Donation Expense Miscellaneous Expense Cash Short./Over Cash Record entry to replenish Petty cash fund

6 3 50 4 5 00 7 5 00 4 0 00 5 75 4 50

Credit 2 5 0 00

2 3 3 75

GROUP B PROBLEMS, Cont. P9-4B. SANTINO CO. AUXILIARY PETTY CASH RECORD Date 20XX Oct

Category of Payment

Voucher No.

Description

1 5 9 15 15 16

1 2 3 4 5

Establishment Postage Delivery Miscellaneous Postage Delivery

Computer Supplies

Postage

Receipts

Payments

Postage Expense

Sundry

Delivery Expense

Account

Amount

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

Fund Shortage

1 8 00 1 2 00

7 3 00

1 0 00

Computer Supplies

7 00

Cash Short and Over

3 00

1 4 00 5 00

4 00

3 00 1 0 0 00

Misc.

3 6 00

1 7 00

2 0 00

2 7 00 1 0 0 00 30 30

Balance Replenishment

2 7 00

Balance (New)

1 0 0 00

7 3 00

9-19

GROUP B PROBLEMS, Cont. P9-4B., Cont. SANTINO CO. GENERAL JOURNAL Date 20XX Oct

Account Title and Description 1

Petty Cash

Page 33 Post Ref.

Dr.

Cr.

1 0 0 00

Cash

1 0 0 00

To establish petty cash fund, Chq. 444 30

Postage Expense

3 6 00

Delivery Expense

1 7 00

Computer Supplies Expense Miscellaneous Expense

1 0 00

Cash Short and Over

3 00

Cash To replenish petty cash fund, Chq. 618

9-20

7 00

7 3 00

P9-5B. ABC Company Bank Reconciliation March 29, 20XX Cheque book Balance

$ 11 5 9 5 5 5 3

Less

$ 11 5 2 3 1 5 3

Balance Per Bank

1 5 0 0 00

Add: Deposits in Transit

Service Charge Error on cheque #14

1 9 00 3 6 0 00

11 6 7 3 1 5 3

Subtotal Less: Outstanding cheques # 13 # 15 # 16

Reconciled Balance

$ 11 5 5 7 6 5 3

4 6 0 00 1 2 0 00 5 7 5 00 $ 11 5 5 7 6 5 3

Reconciled Balance

PREPARE THE NECESSARY JOURNAL ENTRIES Date 20XX Mar

ACCOUNT TITLE AND EXPLANATION Service Charge Expense Cash Record service charge Office Supplies Expense Cash Recording error on cheque #14.

Debit

Credit

1 9 00 1 9 00

3 6 0 00 3 6 0 00

9-21

GROUP C PROBLEMS P9-1C. GENERAL JOURNAL Date 20XX Apr. 1

9-22

Account Titles and Description

Dr.

Petty Cash Cash Establishment, Cheque 14

1 2 0 00

Accounts Payable Cash Paid Upright Corp., Cheque 15

1 6 0 00

Accounts Payable Cash Paid Barrett Corp., Cheque 16

6 7 5 00

Office Equipment Cash Bought Equipment from Jay Loon, Cheque 17

6 2 5 00

Postage Expense Office Supplies Expense Miscellaneous Expense Cash Replenishment, Cheque 18

Cr. 1 2 0 00

1 6 0 00

6 7 5 00

6 2 5 00

2 9 00 3 6 00 1 2 00 7 7 00

GROUP C PROBLEMS, Cont. P9-1C., Cont. SILVA’S DESIGNS AUXILIARY PETTY CASH RECORD Category of Payment Date 20XX Apr.

Voucher No. 1 5

8 17 24

2 3 4

Description Establishment Postage Office Supplies Office Supplies Postage Donations Totals

Receipts 1 2 0 00

1 2 0 00

1 0 00 1 9 00 1 7 0 0 1 9 00 1 2 00 7 7 00

1 2 0 00

4 3 00 1 2 0 00

Ending Balance

30 30

Ending Balance Replenishment Balance (New)

Payment

Postage Expense

Office Supplies Expense

Sundry Account Amount

1 0 00

1 9 00

1 1

9 00 7 00 Misc. Exp.

2 9 00

6 00

1 2 00 1 2 00

4 3 00 7 7 00 1 2 0 00

9-23

GROUP C PROBLEMS, Cont. P9-2C. CASING SUPPLIERS LTD. BANK RECONCILIATION MARCH 31, 20XX G/L CASH ACCOUNT BALANCE Ending Cash Account Add: Interest Earned Subtotal Deduct: Bank Service Charge NSF Cheque NSF Service Charge

BALANCE PER BANK

$3 8 6 1 3 1 8 6 20

Ending Bank Statement Balance Add: Deposits in Transit $3 9 4 7 5 1

4 2 75 6 4 8 00 2 0 00

Subtotal:

$7 9 1 2 3 0 2 8 6 6 38

Subtotal Deduct: Outstanding Cheques Chq # 3496 Chq # 3539

5 3 18 3 6 5 00

Chq # 3547 Chq # 3554

1 2 5 00 6 7 4 5 14

Chq # 3556

2 5 3 60

7 1 0 75

$10 7 7 8 6 8

7 Reconciled Balance

$3 2 3 6 7 6

Reconciled Balance

5 4 1 92

$3 2 3 6 76

P9-3C. KAEN & CO. GENERAL JOURNAL Date 20XX Mar

9-24

Account Title and Description 1

Petty Cash Cash To establish petty cash fund, Chq. 314

Office Equipment Cash Purchased office equipment from Klondike Office Equipment, Chq. 315

Postage Expense Office Supplies Expense Miscellaneous Expense Cash To replenish petty cash fund, Chq. 316

Page 2 Post Ref

Dr.

Cr.

2 0 0 00 2 0 0 00

1 8 9 0 00

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

GROUP C PROBLEMS, Cont. P9-3C., Cont. KAEN & CO. AUXILIARY PETTY CASH RECORD Date 20XX Mar

Category of Payment

Voucher No. 1

Description Establishment

Receipts

Payments

Postage Expense

Office Supplies Expense

Account

Amount

2 0 0 00

Postage Expense

4 5 00

Office Supplies Expense

3 9 00

Office Supplies Expense

2 7 00

Postage Expense

4 7 00

Miscellaneous Expense

2 0 00

Totals

Sundry

2 0 0 00

Ending Balance

1 7 8 00

4 5 00

4 7 00 Misc. 9 2 00

6 6 00

2 0 00 2 0 00

2 2 00 2 0 0 00

Ending Balance

2 2 00

Replenishment

1 7 8 00

Balance (New)

2 0 0 00

9-25

GROUP C PROBLEMS, Cont. P9-4C. HOOP CO. GENERAL JOURNAL Date 20XX

Account Title and Description

Nov 25

Petty Cash

Page 13 Post Ref.

Dr.

Cr.

5 0 00

Cash

5 0 00

To establish petty cash fund Dec

Delivery Expense

8 50

Office Supplies Expense

1 2 00

Postage Expense

1 5 00

Petty Cash

5 0 00

Cash

8 5 50

To replenish petty cash fund and increase to $100 The Petty Cash Account is too low only if it often doesn’t cover the normal level of cash expenses. This could have been a one-time problem. However, as $35.50 was paid out in a week, Ali was probably correct in increasing the fund.

9-26

GROUP C PROBLEMS, Cont. P9-5C. AMAL COMPANY BANK RECONCILIATION Balance per Bank Statement Add: Deposits in transit

$4 4 4 0 5 0 6 1 1 00

G/L Cash Account Balance Add: Collection on Notes Rec

5 0 5 1 50

Less Collection Fee

Less: Outstanding Cheques # 621 # 942 # 947

$ 5 0 0

Error in recording Chq # 899 $ 1 5 2 50 7 1 50 2 0 6 50

4 3 0 50

Less: NSF Chq A. Ellen Service Charges

Reconciled Balance

$4 6 2 1 00

$ 1 3 0

Reconciled Balance

$4 2 0 9

4 9 4

5 4

4 7 5 7

1 3 6

$4 6 2 1

$17 5 7 5

4 3 7

$17 1 3 7

Suggestion to Bill: Always wait until the usual bank reconciliation is completed before concluding that the bank has made an error.

P9-6C. BERGEN CARPET CO. BANK RECONCILIATION FEBRUARY 28, 20XX Balance per Bank Statement Add: Outstanding Deposit

$19 5 2 8 5 3 1 7 8 6 90 21 3 1 5 4 3

Less: Outstanding Cheques # 417 # 443

$ 2 8 30 9 0 9 50

# 447 # 448

1 9 5 0 90 1 2 1 3 20 7 6 15

# 449 Reconciled Balance

Balance per General Ledger Less: NSF Cheque Returned NSF Service Charge Service Charges

$ 4 0 4 1 5 1 8

46 00 45

4 1 7 8 05 $17 1 3 7 3 8

Reconciled Balance

9-27

SOLUTIONS TO ETHICAL CONSIDERATIONS EC9-1. Bank Reconciliations 1. As a result of this fraud, the company’s book balance reports more cash than the company actually has in the bank. This is especially serious if the company shows its financial statements to outside parties because the cash balance is overstated. The bank balance is correct. 2. To detect this fraud, a manager or small-business owner should prepare the bank reconciliation on a surprise basis to ensure the reconciliation is accurate. When the reconciliation does not balance, the clerk will have to explain the difference and the fraud will be detected. To prevent a fraud like this from happening in the first place, let all staff know that the bank reconciliations will be checked periodically, on an irregular basis. When someone knows their work will be checked, they may be less likely to commit a fraud like this. This is especially important in small businesses where a small number of people are responsible for a large number of tasks, so segregation of duties is not possible. SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS9-1. Analysis of Financial Statements—Roots Corporation a. From the annual report: INTERNAL CONTROLS OVER FINANCIAL REPORTING Internal controls over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. Management is responsible for establishing adequate internal controls over financial reporting for the Company. As required by NI 52-109, the CEO and the CFO have caused the effectiveness of the internal controls over financial reporting to be evaluated using the framework and criteria established in “Internal Control – Integrated Framework’ published by The Committee of Sponsoring Organizations of the Treadway Commission, 2013”. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the Company’s internal controls over financial reporting, as defined by NI 52-109, were effective as at January 30, 2021. In designing such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect misstatements. Additionally, management is required to use judgement in evaluating controls and procedures. Therefore, even when determined to be designed effectively, disclosure controls and internal control over financial reporting can provide only reasonable assurance with respect to disclosure, reporting and financial statement preparation.

Cash in 2020: 9,166 thousand Cash in 2019: 949 thousand Cash balance decreased by $8,217 thousand

Cash flows were down from 2019 in all categories of activities, although cash generated from operating activities was the source of the greatest inflow of cash in 2020. The greatest decrease in cash flows from 2019 to 2020 was from financing activities.

9-28

Cash Flows The following table presents our cash flows for each of the periods presented: CAD$000s Net cash generated from operating activities .......... Net cash used in financing activities.................. Net cash used in investing activities.................. Change in cash and bank indebtedness ............

Q4 2020 33,838 (35,468) (497) (2,127)

Q4 2019 44,834 (46,908) (2,847) (4,921)

F2020 50,922 (31,515) (3,964) 15,443

F2019 40,044 (13,583) (22,320) 4,141

9-29

Analysis of Cash Flows for Q4 2020 and F2020 compared to Q4 2019 and F2019 Cash Flows from Operating Activities For Q4 2020 and F2020, cash flows from operating activities totalled $33,838 and $50,922, respectively, compared to $44,834 and $40,044 in Q4 2019 and F2019, respectively. The year- over-year decrease in cash flows from operating activities in Q4 2020 is attributable to the decline in sales in Q4 2020 due to store closures leading to lower sell through of inventory. In addition, cash flows from operating activities further decreased in Q4 2020 as a result of timing shifts of income tax payments. The improvement in cash flows from operating activities in F2020 compared to F2019 is attributable to higher operating income generated year-over-year. The Company has continued to negotiate extended payment terms with vendors and partners during the COVID-19 pandemic, which has improved the Company’s working capital. In addition, cash flows from operating activities were further improved by $3,503 of income tax refunds received in Q1 2020, in relation to taxable losses from the prior tax year.

Cash Flows used in Financing Activities For Q4 2020 and F2020, cash flows used in financing activities amounted to $35,468 and $31,515, respectively, compared to $46,908 and $13,583 in Q4 2019 and F2019, respectively. The year-over-year decrease in cash flows used in financing activities in Q4 2020 was largely driven by lower incremental draws on our Revolving Credit Facility in Q4 2020, as a result of higher operating income and lower capital expenditures. The year-over-year increase in cash flows used in financing activities in F2020 is largely driven by greater repayments on our Revolving Credit Facility. In F2020, we made $4,984 of repayments on our Term Credit Facility (F2019 - $4,984) and $14,000 of net repayments on our Revolving Credit Facility (F2019 – net draws of $9,000). As at the end of F2020, the Company had a total amount outstanding under its Credit Facilities of $72,232 (F2019 – $91,216). Cash Flows used in Investing Activities For Q4 2020 and F2020, cash flows used in investing activities amounted to $497 and $3,964, respectively, compared to $2,847 and $22,320 in Q4 2019 and F2019, respectively. The decrease is primarily due to fewer capital projects undertaken as compared to F2019, including the completion of capital expenditures related to our DC Relocation Project in Q3 2019.

AFS9-2. Analysis of Financial Statements—Company of Your Choice Answers will vary depending on the company selected.

9-30

CONTINUING PROBLEM PRECISION COMPUTER CENTRE SALES JOURNAL Date 20X1

Account Debited

Oct. 22

Taylor Golf

Page 2

Terms

Invoice No.

2/10, n/30

12685

Post. Ref

Dr. Acc. Receivable Cr. Sales 4 4

2 0 0 2 0 0

00 00

(1020/4000)

PRECISION COMPUTER CENTRE CASH RECEIPTS JOURNAL

Date 20X1

Cash Dr.

Oct. 4 4

Sales Disc. Dr.

Sundry

Sales Cr.

Acc. Rec. Cr.

Page 2

Account

Post. Ref.

Amount Cr.

3 6 0 0 00 1 6 0 0 00

Cash customer Anthony Pitale,

4000 4000

3 6 0 0 00 1 6 0 0 00

5 2 0 0 00

Invoice 12684

(1000)

(X)

PRECISION COMPUTER CENTRE CASH PAYMENTS JOURNAL Date 20X1 Oct.

Chq. No. 1 252

4 8 15 15 29

253 254 255 256 257

5 2 0 0 00

Account Debited

Post Ref

Cleaning 1023 Cleaning 5015 Petty Cash Fund 1010 T. Freedman 3010 West Bell Canada 5040 City Electric 5030 Postage 5070 Supplies 1030 Miscellaneous 5100 T. Freedman, Withdrawals 3010

Sundry Dr. 6 0 0 00 3 0 0 00 1 0 0 00 2 0 0 0 00 6 5 00 9 5 00 2 5 00 4 2 00 1 0 00 1 5 00

Accounts Payable Dr.

Page 2 Purchases Discounts Cr.

Cash Cr. 9 0 0 00 1 0 0 00 2 0 0 0 00 6 5 00 9 5 00 9 2 00

3 2 5 2 00

(X)

(1000)

9-31

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE AUXILIARY PETTY CASH RECORD Date 20X1 Oct.

4 8 9 11 25 28

Category of Payment

Voucher No.

101 102 103 104 105

Description

Receipts

Establishment Stamps Supplies Newspaper Supplies Lunch

1 0 0 00

Total

1 0 0 00

Balance Replenishment

8 00 9 2 00 1 0 0 00

Payments

Postage Expense

2 5 00 2 2 00 1 0 00 2 0 00 1 5 00

2 5 00

9 2 00

2 5 00

Supplies Expense

Sundry Account

Amount

2 2 00 Misc.

1 0 00

W/D

1 5 00

2 0 00 4 2 00

2 5 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME: CASH Date 20X1 Oct.

ACCOUNT NO. Explanation

1 31 31

Post Ref.

Debit

Date 20X1

Post Ref.

Debit

CPJ2

1 0 0 00

Explanation

Credit

Post Ref.

SJ2

Explanation 1

Debit

Balance

1 0 0 00

Credit

Balance

8 1 4 0 00 12 3 4 0 0 0

ACCOUNT NO. Post Ref.

Debit

CPJ2

6 0 0 00

Credit

1023

DR CR

Balance

6 0 0 00

ACCOUNT NO. Explanation

Balance

1020

DR CR

4 2 0 0 00

NAME: PREPAID RENT Date 20X1

1010

DR CR

Balance

Date 20X1

ACCOUNT NO.

NAME: PREPAID CLEANING

Oct.

14 0 2 6 12 10 7 7 4 12 15 9 7 4 12

5 2 0 0 00

NAME: ACCOUNTS RECEIVABLE

Oct.

ACCOUNT NO. Explanation

1 31

Balance

3 2 5 2 00

CPJ2 CRJ2

Date 20X1

Oct.

DR CR

Balance

NAME: PETTY CASH

Oct.

Credit

1000

Post Ref.

Debit

Credit

1025

DR CR

Balance

8 0 0 00

9-33

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME: SUPPLIES Date 20X1 Oct.

ACCOUNT NO. Explanation

1 29

Post Ref.

Debit

CPJ2

Date 20X1

Post Ref.

Debit

Explanation

Post Ref.

Debit

Explanation

Post Ref.

Debit

Date 20X1

Post Ref.

Debit

Explanation

Post Ref.

Debit

Date 20X1

9-34

Balance

3 8 0 0 00

ACCOUNT NO. Credit

1081

DR CR

Credit

Balance

1 0 5 0 00 1091

DR CR

Balance

ACCOUNT NO. Post Ref.

Debit

Credit

9 9 00

DR CR

ACCOUNT NO. Credit

Balance

1090

Explanation 1

1080

DR CR

Balance

NAME: ACCOUNTS PAYABLE

Oct.

Credit

Balance

Date 20X1 1

1 0 2 2 50

ACCOUNT NO.

NAME: ACCUMULATED AMORTIZATION, OFFICE EQUIPMENT

Oct.

Explanation 1

Balance

NAME: OFFICE EQUIPMENT

Oct.

DR CR

Balance

Date 20X1 1

Credit

1040

ACCOUNT NO.

NAME: ACCUMULATED AMORTIZATION, COMPUTER SHOP EQUIP.

Oct.

7 5 0 00 7 9 2 00

Balance

Date 20X1 1

4 2 00

NAME: COMPUTER SHOP EQUIPMENT

Oct.

Balance

ACCOUNT NO. Explanation

DR CR

Balance

NAME: INVENTORY

Oct.

Credit

1030

Balance 2 0 00

2000

DR CR

Balance

6 2 5 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME: T. FREEDMAN, CAPITAL Date 20X1 Oct.

Explanation 1

ACCOUNT NO. Post Ref.

Debit

Date 20X1

Explanation

1 8 29

Post Ref.

Debit

CPJ2 CPJ2

Explanation

2 0 0 0 00 1 5 00

Post Ref.

Debit

SJ2

Post Ref.

Debit

28 1 4 9 8 2 31 7 4 9 8 2 35 9 4 8 8 2

Cr Cr

SJ2

1 6 0 0 00

ACCOUNT NO. Post Ref.

Debit

Credit

Explanation Balance

Debit

Credit

21 3 0 0 0 0 22 9 0 0 0 0

4020 Balance

4 0 0 00

ACCOUNT NO. Post Ref.

Balance

DR CR

Balance

Date 20X1

4010

Explanation

Balance

DR CR

Credit

2 0 1 5 00 4 0 1 5 00 4 0 3 0 00

DR CR

Balance

NAME: SALES DISCOUNTS

Oct.

Credit

Balance

4000

ACCOUNT NO. Explanation

3 6 0 0 00 4 2 0 0 00

NAME: SALES RETURNS AND ALLOWANCES

Oct.

ACCOUNT NO.

CRJ2

Date 20X1

3010

DR CR

Credit

Balance

Date 20X1 1 4

7 4 0 6 00

NAME: SALES

Oct.

Balance

Date 20X1 1 4 31

Balance

ACCOUNT NO.

NAME: SERVICE REVENUE

Oct.

DR CR

Balance

NAME: T. FREEDMAN, WITHDRAWALS

Oct.

Credit

3000

4030

DR CR

Balance

2 2 0 00

9-35

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME: COST OF GOODS SOLD Date 20X1 Oct.

Explanation 1

ACCOUNT NO. Post Ref.

Debit

Date 20X1

Explanation 1

Post Ref.

Debit

Date 20X1

Post Ref.

Debit

CPJ2

3 0 0 00

Explanation

Post Ref.

Debit

Explanation

9-36

4 8 0 00

Credit

5015

DR CR

Balance

3 0 0 00

Credit

Post Ref.

CPJ2

Explanation

Debit

Balance

8 0 0 00

Credit

5030

DR CR

Balance

1 7 5 00 2 7 0 00

9 5 00

ACCOUNT NO. Post Ref.

Debit

Balance

5020

DR CR

Balance

Date 20X1 1 15

Balance

ACCOUNT NO.

NAME: PHONE EXPENSE

Oct.

DR CR

Balance

Date 20X1 1 15

Credit

5010

ACCOUNT NO.

NAME: UTILITIES EXPENSE

Oct.

14 9 1 0 0 0

ACCOUNT NO.

NAME: RENT EXPENSE

Balance

Date 20X1

Oct.

Balance

ACCOUNT NO.

NAME: CLEANING EXPENSE

Oct.

DR CR

Balance

NAME: ADVERTISING EXPENSE

Oct.

Credit

5000

Credit

5040

DR CR Dr

CPJ2

6 5 00

Balance 2 1 6 00 2 8 1 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME: POSTAGE EXPENSE Date 20X1 Oct.

Explanation

1 29

ACCOUNT NO. Post Ref.

Debit

Dr CPJ2

Date 20X1

Explanation

1 29

2 5 00

Post Ref.

Debit

Credit

Dr CPJ2

1 0 00

Explanation Balance

ACCOUNT NO. Post Ref.

Debit

Credit

Balance 2 5 00 5 0 00

5100

DR CR

Balance

Date 20X1 1

ACCOUNT NO.

NAME: WAGES EXPENSE

Oct.

DR CR

Balance

NAME: MISCELLANEOUS EXPENSE

Oct.

Credit

5070

Balance 1 0 00 2 0 00

5110

DR CR

Balance

8 7 6 0 20

9-37

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE TRIAL BALANCE OCTOBER 31, 20X1 Cash

15 9 7 4 12

Petty Cash Accounts Receivable Prepaid Cleaning Prepaid Rent Supplies Merchandise Inventory Computer Shop Equipment Accumulated Amortization, Computer Shop Equipment Office Equipment Accumulated Amortization, Office Equipment Accounts Payable T. Freedman, Capital T. Freedman, Withdrawals Service Revenue Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Advertising Expense Cleaning Expense Rent Expense Utilities Expense Phone Expense Postage Expense Miscellaneous Expense Wages Expense

1 0 0 00 12 3 4 0 00 6 0 0 00 8 0 0 00 7 9 2 00 1 0 2 2 50 3 8 0 0 00

9-38

9 9 00 1 0 5 0 00 2 0 00 6 2 5 00 7 4 0 6 00 4 0 3 0 00 35 9 4 9 8 2 22 9 0 0 0 0 4 0 0 00 2 2 0 00 14 9 1 0 0 0 4 8 0 00 3 0 0 00 8 0 0 00 2 7 0 00 2 8 1 00 5 0 00 2 0 00 8 7 6 0 20 66 9 9 9 8 2

66 9 9 9 8 2

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE BANK RECONCILIATION JULY 31, 20X1 G/L CASH ACCOUNT BALANCE Ending Cash Account Add Subtotal Deduct: Subtotal Reconciled Balance

$1 6 4 5

0 00 1 6 4 5

0 00 0 $1 6 4 5

00 00

BALANCE PER BANK Ending Bank Statement Balance Add Deposit in Transit Subtotal Deduct: Cheque # 212 Cheque # 213 Subtotal Reconciled Balance

$2 9 0 5 0 0 $ 1 4 0 00

1 4 0 00 3 0 4 5 00

2 0 0 00 1 2 0 0 00 1 4 0 0 00 $1 6 4 5 0 0

9-39

10 Payroll Procedures: The Employees’ Perspective

ANSWERS TO DISCUSSION QUESTIONS 1. Overtime is the number of overtime hours worked over the maximum set out in the provincial minimum wage law and usually multiplied by one and a half, or sometimes multiplied by 2. 2. True. Claiming more allowances results in a higher net claim code, which means less income tax is deducted. 3. False; most payroll registers provide only the data for recording and posting the payroll information. 4. CPP (or QPP) is a pension plan set up by the federal government to provide pension benefits for all contributing Canadians at retirement. 5. Disagree. The employer matches the CPP contribution of the employee. 6. Federal and provincial income tax withholdings are determined by the Payroll Deductions Online Calculator or Tables of Payroll Deductions provided by Canada Revenue Agency. 7. A calendar year is January 1 to December 31. 8. The purpose of an income tax deduction is to approximate the amount of income tax an employee will have to pay in respect of that pay period. A final determination is made when the annual income tax return is filed by the end of April of the following year. 9. The employee individual earnings record contains information about the total amount of wages paid, deductions for the calendar year, etc., which aids the employer in complying with governmental regulations and reports. It also provides information necessary for Record of Employment and T4 form preparation. 10. CPP and EI deductions are computed differently with separate rates. EI has a maximum deduction per year; CPP has a basic exemption and a maximum per year. 11.

12. Disagree. CPP has a maximum deduction per year, which would be reached by both employees. 13. Kiona should mention these points to her boss: 1. It is difficult to adjust amounts owed to CRA, because the amount owed is based on payroll details that are almost impossible to “fake.” 2. If deduction amounts are reduced, employees will certainly question the reasons for the lowered amounts. This might lead to them seeking advice from CRA and in effect notifying them that something is up.

10-1

ANSWERS TO DISCUSSION QUESTIONS, cont. 3. There is no point in reducing any Income Tax deductions, since if these amounts are reduced, the employees’ net pay will just go up by an equal amount. Plus—the amounts would have to be paid sooner, because CRA does not get paid until the 15th of the month following. 4. The penalties for failing to pay the required deductions are huge—up to 10% of a penalty—so a lot of thought must go into taking any action that would attract such a costly amount. 5. Consider talking with the company’s bank and borrowing the necessary funds. This would certainly be cheaper than suffering a penalty for failing to submit employee deductions. Plus, it is common business practice. 6. This action is probably illegal, and should therefore be avoided—especially if there are other ways to raise the necessary funds. 14. Marcy must pay the CPP and EI at her new place of employment. She will get a refund of the extra premiums when she files her income tax return in the following calendar year, but in the meantime, she is out the cash. SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE 1.

a. b.

CDE 2.

CPP =$1,200 − 67.31*= $1,132.69; $1,132.69 × 5.70% = $64.56 CPP Deduction *($3,500 exemption /52 weeks = $67.31 of weekly deductions for CPP) EI =NIL (maximum already reached)

CDE 3.

$848.19

($1,200 − ($247.25 + $64.56 + NIL + $40.00))

CDE 4.

1. 2. 3. 4. 5. 6.

a b b b b c

CDE 6.

10-2

$740 $1,320

($20.00 × 37) ($24.00 × 40) + ($36.00 × 10)

CDE 5. 1. 2. 3. 4. 5.

b, e c, d b, e b, e b, e

1. Codes used to determine the amount of federal and provincial income taxes to be withheld from earnings are called claim codes. 2. Net earnings refers to gross earnings minus all deductions for the period. 3. Gross earnings refers to earnings before any deductions are taken. 4. Forms completed by an employee upon start of their employment that set out the deductions claimed by the employee are called TD1 Forms. 5. Amounts that are required by law to be withheld from earnings are called statutory deductions. 6. A T4 Slip is prepared once a year to each employee to show earnings and deductions. 7. The Canada Revenue Agency (CRA) is the body that oversees the collections of income tax as well as CPP and EI. 8. A payroll register lists in considerable detail the income, deductions, net pay, and other information for each employee for a given pay period. 9. The deduction for Canada Pension Plan takes into consideration a $3,500 yearly deduction before a calculation is made for net pay. 10. A Record of Employment is a special form to be completed for each employee at the end of his or her employment.

SOLUTIONS FOR EXERCISES—SET A E10-1A. Jean Knott

Regular Hours 36 × $ 18.00 = $ 648.00

Overtime Hours -

Total Pay $ 648.00

Abe Janzen

40 × $ 15.00 = $ 600.00

4 × $ 22.50 = $ 90.00

$ 690.00

Mike Toth

40 × $ 16.00 = $ 640.00

6 × $ 24.00 =$144.00

$ 784.00

E10-2A.

Ben Kuruk

Gross Pay Deductions: Income Tax

May Cheung

$ 610.00 22.35 (Fed) + 17.95 (Prov) =

$ 820.00 69.65 (Fed) +

40.30

36.30 (Prov) =

105.95

CPP

30.93

42.90

9.64

12.96

80.87

161.81

529.13

658.19

Total Deductions Net Pay

E10-3A.

Account Category

Dr/Cr

Appears on which Financial Report?

CPP Payable

Liability

Cr.

Balance Sheet

Income Tax Payable

Liability

Cr.

Balance Sheet

Medical Insurance Payable

Liability

Cr.

Balance Sheet

Wages and Salaries Payable

Liability

Cr.

Balance Sheet

Office Salaries Expense

Expense

Dr.

Income Statement

Marketing Wages

Expense

Dr.

Income Statement

E10-4A. The two debits come from the last two columns of the Payroll Register, showing the total of the distribution of expense accounts. The CPP Payable, EI Payable, Income Tax Payable, and Union Dues Payable come from the total of each of these deductions. The Salaries and Wages Payable is from the total of the Net Pay Column.

10-3

SOLUTIONS TO EXERCISES-SET A, Cont. E10-5A. General Journal Date Jan

Account Title and Explanation

Debit

21 Sales Salaries Expense

53 4 5 0 0 0

Office Salaries Expense

10 5 0 0 0 0

Credit

CPP Payable

2 0 9 5 56

EI Payable

1 0 5 6 21

Income Tax Payable

12 1 8 0 0 0

Union Dues Payable

7 0 5 00

Salaries Payable To record payroll expense for week of Jan 21

10-4

Page 10

47 9 1 3 2 3

SOLUTIONS FOR EXERCISES—Set B E10-1B. Jean Lovro

Regular Hours 38 × $ 15.50 = $ 589.00

Overtime Hours -

Total Pay $ 589.00

Abe Janzen

40 × $ 16.00 = $ 640.00

2 × $ 24.00 = $ 48.00

$ 688.00

Mike Toth

40 × $ 17.50 = $ 700.00

5 × $ 26.25 = $131.25

$ 831.25

E10-2B. Gross Pay

$3,440 ($20.00 × 172 hours)

Deductions: CPP

$155.84

$64.67

Income Tax

$688.00 (3,440 × 20%)

Charitable Ded

$40.00

Net Pay

$2,491.49

E10-3B.

Account Category

Dr/Cr

Appears on which Financial Report?

EI Payable

Liability

Cr.

Balance Sheet

Income Tax Payable

Liability

Cr.

Balance Sheet

Employee Donation Payable

Liability

Cr.

Balance Sheet

Wages and Salaries Payable

Liability

Cr.

Balance Sheet

Office Salaries Expense

Expense

Dr.

Income Statement

Sales Wages Expense

Expense

Dr.

Income Statement

E10-4B. Gross Pay

$3,600

Deductions CPP

$255.00

$82.00

Income Tax

$775.00

Net Pay

$2,488.00 General Journal

Date Apr

Account Title and Explanation 30 Wages Expense

Page PR

Debit

Credit

3 6 0 0 00

CPP Payable

2 5 5 00

EI Payable

8 2 00

Income Tax Payable Salaries Payable

7 7 5 00 2 4 8 8 00

To record payroll expense for last week of April

10-5

SOLUTIONS TO EXERCISES—SET B, Cont. E10-5B. General Journal Date July

Page

Account Title and Explanation

Debit

4 Wages Expense

Credit

36 4 4 0 0 0

CPP Payable

1 7 2 5 03

EI Payable

6 8 5 10

Income Tax Payable

7 0 2 8 00

United Way Payable

3 0 0 00

Salaries Payable

26 7 0 1 8 7

To record payroll expense for week of July 4th

SOLUTIONS TO GROUP A PROBLEMS P10-1A. EMPLOYEE a. b. c. d.

HOURLY RATE

REG. HOURS

OT HOURS

GROSS EARNINGS

$22.00 23.50 24.00 28.00

40 38 40 40

5 0 3 10

$1,045.00 $893.00 $1,068.00 $1,540.00

Stephen Post Jean Nicola Maria Cardinal Tony Lee

40 × $22.00 = $880.00 5 × $33.00 =

38 × $23.50 = $893.00

40 × $28.00 = $1,120.00

165.00 $1,045.00

40 × $24.00 = $960.00 3 × $36.00 =

108.00

10 × $42.00 = 420.00

$1,068.00

$1,540.00

P10-2A. BOPHA COMPANY - PAYROLL REGISTER Employee

Net Claim Code

Weekly Salary

Jenny Quan

9 5 0 00

Frank Sloan

6 2 0 00

Alberta Nobel

9 8 0 00

Jeremy Gold

6 5 0 00 3 2 0 0 00

10-6

GROUP A PROBLEMS, Cont. P10-2A., Cont. BOPHA COMPANY—PAYROLL REGISTER Income Tax

Union Dues

Net Pay

Chq #

Office

Sales

CPP

1 2 1 60

5 0 31

1 5 02

1 2 00

$ 7 5 1 07

$ 9 5 0 00

5 5 20

3 1 50

9 80

1 2 00

5 1 1 50

6 2 0 00

1 4 3 05

5 2 02

1 5 49

1 2 00

7 5 7 44

$ 9 8 0 00

4 7 75

3 3 21

1 0 27

1 2 00

5 4 6 77

6 5 0 00

3 6 7 60

1 6 7 04

5 0 58

4 8 0 0 $2 5 6 6 7 8

$1 6 3 0 0 0

Federal Income Tax Federal Income Tax Jenny Quan Frank Sloan Alberta Nobel

$1 5 7 0 0 0

Total

$ 76.95 $ 31.05 $ 92.80

$ 44.65 $ 24.15 $ 50.25

$ 1 2 1 60 $ 5 5 20 $ 1 4 3 05

Jeremy Gold

$ 27.95

$ 19.80

Total Income Tax

$228.75

$138.85

$ 3 6 7 60

4 7 75

P10-3A. DEVON’S BASEBALL CO.—PAYROLL REGISTER

a b c

J. Stroman R. Sanchez S. Bautista

Hours Worked 40 hrs 43 hrs 43 hrs

K. Martin

50 hrs

Employee

Hourly Rate $16 17 20

Reg Hours

O/T Hours

40 40 40

3 3

Gross Earnings $ 6 4 0 00 $ 7 5 6 50 $ 8 9 0 00

8 2 5 00

$3 1 1 1 5 0 a. 40 × $16.00 = $640.00 b. 40 × $17.00 = $680.00 3 × $25.50 =

76.50 $756.50

c. 40 × $20.00 = $800.00 3 × $30.00 =

90.00 $890.00

d. 40 × $15.00 = $600.00 10 × $22.50 = 225.00 $825.00

10-7

GROUP A PROBLEMS, Cont. P10-3A., Cont. DEVON’S BASEBALL CORPORATION—PAYROLL REGISTER Deductions IT $

CPP

EI $

Union Dues

8 8 00

$ 2 0 00

8 00

1 0 1 00

3 7 00

1 4 00

1 3 2 00

4 5 00

1 7 00

9 5 00

4 1 00

$ 4 1 6 00 $ 1 4 3 00

$ 1 0 00 $

Net Pay

Expense Accounts

Chq. No.

Wages Expense $

5 1 4 00

6 4 0 00

6 0 4 50

7 5 6 50

6 8 6 00

8 9 0 00

1 6 00

6 7 3 00

8 2 5 00

$ 5 5 00

$ 2 0 0 0 $ 2 4 7 7 50

1 0 00

3 1 1 1 50

DEVON’S BASEBALL CORPORATION GENERAL JOURNAL Page

Date Nov

Account Title and Explanation 5 Wages Expense

Debit

Credit

3 1 1 1 50

Tax Payable

4 1 6 00

CPP Payable

1 4 3 00

EI Payable United Dues Payable Wages Payable To record payroll expense for last week of November

10-8

5 5 00 2 0 00 2 4 7 7 50

GROUP A PROBLEMS, Cont. P10-4A. Hours Worked 40 45 38

Employee a b c

E. VanWyk J. Stijn L. Cheung

Hourly Rate $15.00 17.50 15.25

Reg Hours

O/T Hours

40 40 38

Gross Earnings $ 6 0 0 00 $ 8 3 1 25 $ 5 7 9 50 $ 20 1 0 7 5

a. 40 × $15.00 = $600.00 b. 40 × $17.50 = $700.00 5 × $26.25 =

131.25 $831.25

c. 38 × $15.25 = $579.50

THIJS’S DJ SERVICES – PAYROLL REGISTER Deductions IT (23%)

Chq. No.

Expense Accts

CPP* (5.70%)

EI (1.58%)

6 0 0 00

$ 1 3 8 00

8 3 1 50

1 9 1 25

4 3 56

1 3 14

1 7 00

8 3 1 25

5 7 9 50

1 3 3 29

2 9 19

9 16

1 4 00

5 7 9 50

$ 2 0 1 1 00

$ 4 6 2 53

$ 1 0 3 12

$ 3 1 77 $ 4 6 00

$ 2 0 1 0 75

3 0 36

United Way

Net Pay

9 48 $ 1 5 00

Wages Expense $

6 0 0 00

*(CPP Deduction $3,500/52 weeks = $67.31)

10-9

P10-4A., Cont. THIJS’S DJ SERVICES GENERAL JOURNAL Page

Date Aug

Account Title and Explanation 20 Wages Expense

Debit

Credit

2 0 1 1 00

Tax Payable

4 6 2 53

CPP Payable

1 0 3 12

EI Payable

3 1 77

United Way Payable

4 6 00

Wages Payable To record payroll expense for last week of April

10-10

1 3 6 7 58

SOLUTIONS TO GROUP B PROBLEMS P10-1B. EMPLOYEE a. b. c. d.

Stephen Post Jean Nicola Maria Cardinal Tony Markou

HOURLY RATE

REG. HOURS

OT HOURS

GROSS EARNINGS

$18.00 24.50 16.00 19.00

40 40 36 40

6 0 0 8

$882.00 980.00 576.00 988.00

40 × $18.00 = $720.00

40 × $24.50 = $980.00

40 × $19.00 = $760.00

6 × $27.00 = 162.00 $882.00 c)

36 × $16.00 = $576.00

8 × $28.50 = 228.00 $988.00

P10-2B. NICKELS COMPANY—PAYROLL REGISTER Employee Frank Suko Alberta Nobel Jeremy Vijayan Nancy James

Net Claim Code 2 1 1 4

Weekly Salary 5 1 1 6 5

8 3 9 6

0 0 0 0

00 00 00 00

2 9 6 0 00

10-11

GROUP B PROBLEMS, Cont. P10-2B., Cont. NICKELS COMPANY—PAYROLL REGISTER Income Tax

CPP

Union Dues

Net Pay

$ 5 3 60

$ 2 9 22

1 8 5 75

$ 9 16

$ 1 4 00

$ 4 7 4 02

6 0 57

1 7 85

1 4 00

8 5 1 83

$1 1 3 0 0 0

7 8 15

3 5 49

1 0 90

1 4 00

5 5 1 46

6 9 0 00

3 1 05

2 8 08

8 85

1 4 00

4 7 8 02

5 6 0 00

$ 3 4 8 55

$ 1 5 3 36

$ 4 6 76

$ 5 6 0 0 $2 3 5 5 3 3

$1 8 2 0 0 0 $1 1 4 0 0 0

Federal Income Tax Frank Suko Alberta Nobel Jeremy Vijayan Nancy James

$ 32.50 121.95 50.75 15.70 $ 220.90

Chq #

Office

Sales $ 5 8 0 00

Provincial Income Tax

Total Tax

$ 21.10 63.80 27.40 15.35 $ 127.65

$ 53.60 185.75 78.15 31.05 $ 348.55

P10-3B. ARAPOOSH CO.—PAYROLL REGISTER Employee Mary Cardinal Bill Smith Joe Kingle Anita Tsui

Net Claim M 2 4 3 1

8 9 8 9

Daily Time T 6 10 10 7

W Th 9 10 9 10 12 8 8 10

F 8 7 9 8

Total Hrs. Rate of Earnings Pay S Reg. O/T Regular Overtime 38 3 22.00 8 3 6 00 9 9 00 39 6 18.00 7 0 2 00 1 6 2 00 40 7 25.00 1 0 0 0 0 0 2 6 2 50 39 3 16.00 6 2 4 00 7 2 00 3 1 6 2 00

10-12

5 9 5 50

Gross Earnings 9 3 5 8 6 4 1 2 6 2 6 9 6

00 00 50 00

3 7 5 7 50

GROUP B PROBLEMS, Cont. P10-3B., Cont.

ARAPOOSH CO.—PAYROLL REGISTER Deductions

IT (20%)

**CPP (5.70%)

1 8 7 00

4 7 25

1 7 2 80

4 9 25

EI (1.58%) 1 3 65

2 5 2 50

Health

Net Pay

1 2 00

6 8 8 75

1 2 00

6 1 6 30

1 2 00

9 9 8 00 4 9 4 13

1 3 9 20

3 9 67

1 1 00

1 2 00

7 5 1 50

1 3 6 17

2 4 65

4 8 00 2 7 9 7 18

Expense Accounts

Chq. No.

Office

Sales 9 3 5 00

8 6 4 00 1 2 6 2 50 6 9 6 00 1 5 6 0 00 2 1 9 7 50

*To the maximum of $3,499.80 **CPP Deduction calculation $3,5000/52 weeks = $67.31/pay deduction ARAPOOSH CO. GENERAL JOURNAL

Date Nov.

Account Title and Description 5

Post Ref.

Page 13

Dr.

Office Salaries Expense

1 5 6 0 00

Sales Salaries Expense

2 1 9 7 50

Cr.

Income Tax Payable

7 5 1 50

CPP Payable

1 3 6 17

EI Payable

2 4 65

Health Insurance Payable

4 8 00

Wages and Salaries Payable

2 7 9 7 18

To record payroll expense for the week of Nov. 5

10-13

GROUP B PROBLEMS, Cont. P10-4B.

Salary

Chq#

Cumulative CPP Before this Pay

A. Yeoman

940.00

$1,059.80

R. Bauman

975.00

2,405.25

975.00

M. Good

1,149.00

1,722.80

1,149.00

D. Shantz

1,410.00

3,437.43

Employee

Deductions IT (20%) $

CPP (5.70%)

EI (1.58%)

Net Pay

4 7 25 $ 1 4 85

9 7 5 00

1 9 5 00

5 1 74

1 5 41

1 1 4 9 00

2 2 9 80

6 1 66

1 8 15

1 4 1 0 00

2 8 2 00

7 6 53

2 2 28

940.00

Office

1,410.00

Expense Accounts

Chq. No.

9 4 0 00 $ 1 8 8 00 $

Factory

Factory $

Office

9 4 0 00 $

9 7 5 00 1 1 4 9 00

1 4 1 0 00 $ 2 3 5 0 00 $ 2 1 2 4 00

$ 4 4 7 4 00 $ 8 9 4 80 $ 2 3 7 18 $ 7 0 69 * Employees have reached their maximum contribution in this pay CPP Deduction calculation $3,500/52 weeks = $67.31/pay deduction

SMURK CO. GENERAL JOURNAL Date Sept

Account Title and Description

Debit

23 Factory Wage Expense

2 3 5 0 00

Office Wage Expense

2 1 2 4 00

Credit

IT Payable

8 9 4 80

CPP Payable

2 37

EI Payable Wages Payable To record payroll expense for week of Sept 23

10-14

Page 2

7 0 69 3 2 7 1 33

GROUP C PROBLEMS P10-1C. HOURLY RATE

REG. HOURS

OT HOURS

GROSS EARNINGS

A. Al Topping

$ 23.00

$1,058.00

B. Barb Frank

21.00

871.50

C. Amos Ng

16.00

696.00

D. Carl Holdman

18.50

934.25

EMPLOYEE

A. (40 × $23.00) + (4 × $34.50) = $1,058.00 B. (40 × $21.00) + (1 × $31.50) = $871.50 C. (39 × $16.00) + (3 × $24.00) = $696.00 D. (40 × $18.50) + (7 × $27.75) = $934.25

P10-2C. WAYLON COMPANY—PAYROLL REGISTER Week Ended: February 14 Employee Al Topping Barb Frank Amos Ng Carl Holdman

Net Claim Code

Weekly Wages

2 1 3 4

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

00 50 00 25

3 5 5 9 75

10-15

GROUP C PROBLEMS, Cont. P10-2C., Cont. WAYLON COMPANY - PAYROLL REGISTER Week Ended: February 14 Income Tax

CPP

$ 2 1 1 60 $

4 7 25

$ 1 6 72

$ 1 6 00 $

3 2 00 $

7 3 4 4 3 1424

1 7 4 30

4 5 84

1 3 77

1 6 00

4 8 00

5 7 3 5 9 1425

1 3 9 20

3 5 84

1 1 00

1 6 00

3 2 00

4 6 1 9 7 1426

1 8 6 85

4 9 42

1 4 76

1 6 00

3 2 00

6 3 5 2 2 1427

$ 7 1 1 95 $ 1 7 8 34

$ 5 6 24

10-16

Union Dues

Medical Plan

Net Pay

$ 6 4 00 $ 1 4 4 00 $2 4 0 5 22

Chq #

GROUP C PROBLEMS, Cont. P10-3C. WAYLON COMPANY GENERAL JOURNAL Date

Feb

Post

Account Title and Description

Dr.

Ref.

14 Wages Expense

Cr.

3 5 5 9 75

Income Taxes Payable

7 1 1 95

CPP Payable

1 7 8 34

EI Payable

5 6 24

Medical Plan Payable

1 4 4 00

Union Dues Payable

6 4 00

Wages Payable

2 4 0 5 22

To record wages per Payroll Summary this date

P10-4C. a.

Earnings 1. At regular rate 2. At Overtime rate 3. Total Earnings

$150,000 $60,000 $400,000

Deductions: 4. CPP 5. EI 6. Income taxes 7. Union Dues 8. Total Deductions 9. Net Amount Paid

9,900 3,400 99,600 15,700 128,600 271,400

Amounts Debited 10. Factory Wages 11. Sales Salaries 12. Office Salaries

210,000 110,000 80,000

Account Title

(210,000 − 60,000) (128,600 + 271,400)

(128,600-9,900-3,400-99,600)

(400,000-210,000-80,000)

Post Ref.

Dr.

Factory Wages Expense

210 0 0 0 0 0

Sales Salaries Expense

110 0 0 0 0 0

Office Salaries Expense

80 0 0 0 0 0

Cr.

CPP Payable

9 9 0 0 00

EI Payable

3 4 0 0 00

Income tax Payable

99 6 0 0 0 0

Union Dues Payable Cash

15 7 0 0 0 0 271 4 0 0 0 0

10-17

SOLUTIONS TO ACCOUNTING OPPORTUNITIES AO 10-1. Calculating Payroll Amounts Using the CRA online payroll calculator, the following will result: Employee’s name: John Doe Employer’s name: ABC Company Pay period frequency: Weekly (52 pay periods a year) Date the employee is paid: 2022-01-31 (YYYY-MM-DD) Province of employment: Ontario Federal amount from TD1: 14,398.00 Provincial amount from TD1: 11,141.00 Salary or wages income Total cash income Taxable income for the pay period Pensionable earnings for the pay period Insurable earnings for the pay period Federal tax deduction Provincial tax deduction Total tax deductions on income CPP deductions EI deductions Total deductions Net amount Year-to-Date Amounts Pensionable earnings CPP contributions Insurable earnings EI premiums

10-18

1 2 0 0 00 1 2 0 0 00 1 2 0 0 00 1 2 0 0 00 1 2 0 0 00 1 3 5 23 6 9 89 2 0 5 12 6 4 56 1 8 96 2 8 8 64 9 1 1 36

Inputted Value 4 5 0 5 4 5 0 5

0 5 0 0

00 00 00 00

Total for this Record 5 7 0 0 00 1 1 9 56 5 7 0 0 00 6 8 96

SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS10-1. Analysis of Financial Statements—Roots Corporation a.

From the annual report:

Wages and salaries Benefits and other incentives

January 30 February 1 2021 2020 $38,782 6,367 $45,149

$56,115 9,129 $ 65,244

b. Roots would likely hire hourly and salaried employees, with job descriptions including customer service (in-store and online), office personnel, and managers at head office and in the stores. Since Roots is a merchandiser, it would hire product buyers and in its stores would employ sales people. Since Roots also manufactures some of its own products, especially the leather items, it would hire skilled workers (cutters, sewers, machine repair people) as well as designers. Head office would employ the president, vice presidents, directors, accounting personnel, payroll personnel, and administrative staff. Roots may outsource some of these positions, but this cannot be verified by looking at the annual report.

AFS10-2. Analysis of Financial Statements—Company of Your Choice Answers will vary depending on the company selected.

10-19

CONTINUING PROBLEM PRECISION COMPUTER CENTRE SALES JOURNAL Date 20X1

Account Debited

Nov. 1 4

Page 3

Invoice No.

Terms

Post Ref.

Dr. Acc. Receivable Cr. Sales

Vita Needle

12686

6 8 0 0

Accu Pac Inc.

12687

3 9 0 0

10 7 0 0

(102 0/4 00 0)

PRECISION COMPUTER CENTRE CASH RECEIPTS JOURNAL Sales Disc. Dr.

Sundry

Date 20X1

Cash Dr.

Nov. 12

5 0 0 00

8 0 0 00

25 3

4 0 0 00

3 4 0 0 00

Taylor Golf, Inv. 12685 Taylor Golf, Inv. 12685 Vita Needle,

7 0 0 00

4 7 0 0 00

Inv. 12686

(10 00 )

10-20

Acc. Rec. Cr.

(10 20 )

Sales Cr.

Page 3

Account

Post Ref.

Amount Cr.

PRECISION COMPUTER CENTRE CASH PAYMENTS JOURNAL Date 20X1 Nov.

Chq. No.

Account Debited

Post Ref.

Sundry Dr.

Page 3

Wages Payable Dr.

Account Payable Dr.

Inventory Dr.

Cash Cr.

Inventory Cr.

258 259

2010 2010

5 6

5 2

6 51 9 23

5 6

5 2

6 9

51 23

260

2010

8 34

261 262 263

2010 2010 2010

5 4 5

2 6 1

7 42 9 25 2 88

5 4 5

2 6 1

7 9 2

42 25 88

264 265

2010 2010

5 6

5 7

6 51 2 86

5 6

5 7

6 2

51 86

3 00

0 00

( 201 0)

0 00

( 100 0)

10-21

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE—PURCHASES JOURNAL Date 20X1

Account Credited

Inv. PO Post No. Number Ref.

Nov. 5 System Design Furn 8771 4013 11 West Bell 19 Multi Systems

1794 4014

Sundry Purchases Dr.

1 4 0 0 00

Account Name

Post Ref.

Amount Dr.

Computer Equip 1080 1 4 0 0 0 0

1 5 0 00

Phone Expense

5040

1 5 0 00

4 5 0 00

Office - Fax

1090

4 5 0 00

2 0 0 0 00

(2 00 0)

( X)

PRECISION COMPUTER CENTRE—GENERAL JOURNAL

Page 4

Date 20X1 Nov. 8

Accounts Payable Cr.

Page 2

Account Title and Description Wages Expense Income Tax Payable CPP Payable EI Payable Wages Payable

Post Ref. 5110

Dr.

Cr.

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

2020 2030 2040 2010

00 66 60 74

To record Nov. 8 payroll 15 Wages Expense

5110

1 4 0 0 00

Income Tax Payable CPP Payable

2020

EI Payable

2040

2 2 12

Wages Payable To record Nov. 15 payroll

2010

1 0 2 5 76

22 Wages Expense

2 8 0 00 7 2 12

2030

5110

1 3 4 0 00

Income Tax Payable

2020

2 6 8 00

CPP Payable

2030

6 8 70

EI Payable

2040

2 1 17

Wages Payable

2010

9 8 2 13

To record Nov. 22 payroll 29 Wages Expense

5110

1 6 8 0 00

Income Tax Payable CPP Payable

2020 2030

3 3 6 00 8 8 08

EI Payable

2040

2 6 55

Wages Payable

2010

1 2 2 9 37

To record Nov. 29 payroll 29 Rent Expense Prepaid Rent Rent expired for October and November

10-22

5020 1025

8 0 0 00 8 0 0 00

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME

ACCU PAC, INC.

Date 20X1

Explanation

Nov.

Explanation 1

Post Ref.

3 9 0 0 00

Debit

Credit

Balance

Date 20X1

Dr. Balance 6 2 4 0 00

Explanation Balance

Dr. Balance

CA101

ANTHONY J. PITALE

Credit

3 9 0 0 00

CARSON ENGINEERING CORP.

NAME

Nov.

Debit

0 SJ3

Date 20X1 Nov.

Post Ref.

Balance

NAME

AC101

PI101 Post Ref.

Debit

Credit

Dr. Balance 1 6 0 0 00

10-23

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME

TAYLOR GOLF

Date 20X1

Explanation

Nov.

Post Ref.

Debit

Credit

Balance

Dr. Balance 4 5 0 0 00

CRJ3

5 0 0 00

4 0 0 0 00

CRJ3

8 0 0 00

3 2 0 0 00

Credit

Dr. Balance

NAME

VITA NEEDLE COMPANY

Date 20X1 Nov.

TA101

Explanation 1

VI101 Post Ref.

Debit

Balance

SJ3

CRJ3

6 8 0 0 00

6 8 0 0 00 3 4 0 0 00

3 4 0 0 00

PRECISION COMPUTER CENTRE SCHEDULE OF ACCOUNTS RECEIVABLE NOVEMBER 30, 20X1 Accu Pac, Inc.

$3 9 0 0 00

Carson Engineering Corp.

6 2 4 0 00

Anthony Pitale

1 6 0 0 00

Taylor Golf

3 2 0 0 00

Vita Needle

3 4 0 0 00 $1 8 3 4 0 0 0

10-24

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME

ALPHA OFFICE CO.

Date 20X1 Nov.

Explanation 1

NAME

Post Ref.

Debit

C3 Post Ref.

Debit

Cr. Balance 0

Explanation

Credit

Balance

Date 20X1

Cr. Balance 3 7 5 00

MULTI SYSTEMS, INC.

Credit

Balance

Explanation

NAME

Cr. Balance

COMPUTER CONNECTION

Credit

Explanation

Date 20X1

Nov.

Debit

CITY NEWSPAPER

NAME

Nov.

Post Ref.

Balance

Date 20X1 Nov.

M1 Post Ref.

Debit

Credit

Balance

Cr. Balance 0

PJ2

4 5 0 00

10-25

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME

STAPLES

Date 20X1 Nov.

Ref.

Debit

Cr. Balance 2 5 0 00

SYSTEM DESIGN FURNITURE Post Ref.

Explanation 5

S2 Debit

PJ2

NAME

WEST BELL CANADA

Date 20X1

Credit

Cr. Balance

1 4 0 0 00

Credit

Cr. Balance

W1 Post

Explanation 1

Credit

Balance

Date 20X1

Nov.

Post

Explanation

NAME

Nov.

Ref.

Debit

Balance

PJ2

1 5 0 00

PRECISION COMPUTER CENTRE SCHEDULE OF ACCOUNTS PAYABLE NOVEMBER 30, 20X1 City Newspaper

3 7 5 00

Multi Systems, Inc.

4 5 0 00

Staples

2 5 0 00

System Design Furniture West Bell Canada

4 0 0 00 1 5 0 00

$2 6 2 5 0 0

10-26

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

CASH

Date 20X1 Nov.

ACCOUNT NO. Explanation

Ref.

CRJ3

CPJ3

Explanation 1

NAME:

4 7 0 0 00 4 4 2 3 00

Post Ref.

Debit

Post Ref.

SJ3

CRJ3

PREPAID CLEANING

Date 20X1

Explanation 1

Balance

15 9 7 4 12

20 6 7 4 12

16 2 5 1 12

Debit

Balance

1 0 0 00

ACCOUNT NO.

1020

Credit

10 7 0 0 0 0 4

7 0 0 00

DR CR

Balance

12 3 4 0 00

23 0 4 0 00

18 3 4 0 00

ACCOUNT NO. Post Ref.

Debit

Credit

1010

DR CR

Credit

Balance

NAME:

ACCOUNT NO.

ACCOUNT RECEIVABLE Explanation

Balance

Date 20X1 Nov.

Credit

PETTY CASH

Date 20X1 Nov.

Debit

Balance

NAME:

Nov.

Post

1000

1023

DR CR

Balance

6 0 0 00

10-27

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

PREPAID CLEANING

Date 20X1

Explanation

Nov.

Ref.

Debit

Credit

MERCHANDISE INVENTORY Explanation 1

Date 20X1

Explanation

Debit

Credit

Post Ref.

Debit

Credit

PJ2

1 4 0 0 00

ACCUMULATED AMORTIZATION, COMPUTER SHOP EQUIP. Explanation 1

8 0 0 00 0

Post Ref.

Debit

7 9 2 00

ACCOUNT NO.

1040

DR CR

Balance 0 2 2 50

1080

DR CR

Balance

3 8 0 0 00

5 2 0 0 00

ACCOUNT NO. Credit

1030 Balance

ACCOUNT NO.

Balance

Date 20X1

COMPUTER SHOP EQUIPMENT

NAME:

Post Ref.

Balance

NAME:

Balance

8 0 0 00

Balance

Date 20X1

Nov.

Post

1025

DR CR

ACCOUNT NO. Explanation

NAME:

Nov.

Credit

SUPPLIES

Nov.

Debit

GJ4

Date 20X1 Nov.

Post Ref.

Balance

29 NAME:

ACCOUNT NO.

DR CR

1081 Balance

Balance

9 9 00

NAME: OFFICE EQUIPMENT

ACCOUNT NO.

1090

Date 20X1 Nov.

Explanation 1

PJ2

10-28

Credit

4 5 0 00

ACCUMULATED AMORTIZATION, OFFICE EQUIPMENT

Date 20X1 Nov.

Debit

Balance

19 NAME:

Post Ref.

Explanation 1

Balance

Post Ref.

Debit

DR CR

Balance

1 0 5 0 00

1 5 0 0 00

ACCOUNT NO. Credit

DR CR Cr

1091 Balance 2 0 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

ACCOUNTS PAYABLE

Date 20X1

Explanation

Nov.

Explanation 8

0 0 0 00

Balance

Post Ref.

Debit

5 5 6 51

CPJ3

6 2 9 23

GJ4

CPJ3

4 9 8 34

CPJ3

5 2 7 42

GJ4

CPJ3

4 6 9 25

CPJ3

5 1 2 88

GJ4

CPJ3

5 5 6 51

CPJ3

6 7 2 86

Balance

6 2 5 00

Balance

CR Cr

1 1 8 5 74

6 2 9 23

1 0 2 5 76

5 2 7 42 0

9 8 2 13

5 1 2 88 0

1 2 2 9 37

6 7 2 86 0

ACCOUNT NO. Post Ref.

Debit

2010

INCOME TAXES PAYABLE Explanation

DR CR

Credit 1 1 8 5 74

GJ4 CPJ3

Date 20X1

2000

ACCOUNT NO.

Nov.

Credit

WAGES PAYABLE

NAME:

2020

Credit

DR CR

Balance

GJ4

3 2 4 00

GJ4

2 8 0 00

6 0 4 00

GJ4

2 6 8 00

8 7 2 00

GJ4

3 3 6 00

1 2 0 8 00

NAME:

CPP PAYABLE

Date 20X1 Nov.

Debit

PJ2

Date 20X1 Nov.

Post Ref.

Balance

NAME:

ACCOUNT NO.

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

2030 Balance

GJ4

8 4 66

GJ4

7 2 12

1 5 6 78

GJ4

6 8 70

2 2 5 48

GJ4

8 8 08

3 1 3 56

10-29

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

EI PAYABLE

Date 20X1 Nov.

Explanation

Ref.

Debit

Credit

Balance

GJ4

2 5 60

GJ4

2 2 12

4 7 72

GJ4

2 1 17

6 8 89

GJ4

2 6 55

9 5 44

ACCOUNT NO.

3000

T. FREEDMAN, CAPITAL

Date 20X1 Nov.

Explanation 1

T. FREEDMAN, WITHDRAWALS

Date 20X1

Explanation

Nov.

SERVICE REVENUE

Date 20X1

Explanation 1

NAME:

Credit

Post Ref.

Debit

Credit

Post Ref.

Debit

Credit

Post Ref.

Debit

Credit

Balance

SJ3

10 7 0 0 00

SALES RETURNS AND ALLOWANCES

Date 20X1

Explanation 1

7 4 0 6 00

Balance

Post Ref.

Balance

4 0 3 0 00

Credit

4000

DR CR

Balance

31 7 4 9 8 2

4010

DR CR

Balance

27 1 0 0 00

37 8 0 0 00

ACCOUNT NO. Debit

3010

DR CR

ACCOUNT NO. Explanation

NAME:

Balance

ACCOUNT NO.

SALES

DR CR

ACCOUNT NO.

Balance

Date 20X1 Nov.

Debit

Balance

NAME:

Nov.

Post Ref.

Balance

NAME:

10-30

Post

2040

NAME:

Nov.

ACCOUNT NO.

4020

DR CR

Balance

4 0 0 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

SALES DISCOUNTS

Date 20X1 Nov.

Explanation 1

NAME:

Explanation

NAME:

Explanation

Debit

Credit

CLEANING EXPENSE

Date 20X1

Explanation 1

NAME:

Post Ref.

Debit

Credit

Post Ref.

Debit

Credit

Balance

RENT EXPENSE

Date 20X1

Explanation 1

GJ4

NAME:

UTILITIES EXPENSE

Date 20X1

Explanation 1

Post Ref.

Debit

Credit

Balance

4030

DR CR

Balance

2 2 0 00

ACCOUNT NO.

5000

DR CR

Balance

14 9 1 0 0 0

ACCOUNT NO.

Balance

NAME:

Nov.

Post Ref.

ADVERTISING EXPENSE

Nov.

Credit

Balance

Date 20X1

Nov.

Debit

COST OF GOODS SOLD

Nov.

Post Ref.

Balance

Date 20X1 Nov.

ACCOUNT NO.

8 0 0 00

DR CR

Balance

4 8 0 00

ACCOUNT NO.

5015

DR CR

Balance

3 0 0 00

ACCOUNT NO.

5020

DR CR

Balance

8 0 0 00

1 6 0 0 00

ACCOUNT NO. Post Ref.

Debit

Credit

Balance

5010

5030

DR CR

Balance

2 7 0 00

NAME:

PHONE EXPENSE

Date 20X1 Nov.

Explanation 1

ACCOUNT NO. Post Ref.

Debit

Balance PJ2

1 5 0 00

Credit

5040

DR CR

Balance

2 8 1 00

4 3 1 00

10-31

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

POSTAGE EXPENSE

Date 20X1

Explanation

Nov.

NAME:

Explanation 1

Credit

Post Ref.

Debit

Credit

Balance

WAGES EXPENSE

Date 20X1

10-32

Debit

MISCELLANEOUS EXPENSE

NAME:

Nov.

Post Ref.

Balance

Date 20X1 Nov.

ACCOUNT NO.

Explanation 1

Post Ref.

Debit

Balance

Credit

DR CR

5070 Balance

5 0 00

ACCOUNT NO.

5100

DR CR

Balance

2 0 00

ACCOUNT NO.

5110

DR CR

Balance

8 7 6 0 20

GJ4

1 6 2 0 00

10 3 8 0 2 0

GJ4

1 4 0 0 00

11 7 8 0 2 0

GJ4

1 3 4 0 00

13 1 2 0 2 0

GJ4

1 6 8 0 00

14 8 0 0 2 0

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE TRIAL BALANCE NOVEMBER 30, 20X1 Cash Petty Cash Accounts Receivable Prepaid Cleaning

16 2 5 1 12 1 0 0 00 18 3 4 0 00 6 0 0 00

Prepaid Rent Supplies

7 9 2 00

Merchandise Inventory

1 0 2 2 50

Computer Shop Equipment

5 2 0 0 00

Accumulated Amortization, Computer Shop Equipment

9 9

2 0

Accounts Payable

2 6 2 5

Income Tax Payable

1 2 0 8

CPP Payable

3 1 3

EI Payable

9 5

7 4 0 6

Service Revenue

31 7 4 9

Sales

37 8 0 0

81 3 1 6

Office Equipment

1 5 0 0 00

Accumulated Amortization, Office Equipment

T. Freedman, Capital T. Freedman, Withdrawals

4 0 3 0 00

Sales Returns and Allowances

4 0 0 00

Sales Discounts

2 2 0 00

Cost of Goods Sold

14 9 1 0 00

Advertising Expense

4 8 0 00

Cleaning Expense

3 0 0 00

Rent Expense

1 6 0 0 00

Utilities Expense

2 7 0 00

Phone Expense

4 3 1 00

Postage Expense

5 0 00

Miscellaneous Expense

2 0 00

Wages Expense

14 8 0 0 20 81 3 1 6 82

10-33

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE - PAYROLL REGISTER Total Hrs. Chq Rate of # Reg. O/T Pay

Regular

8 Lance Klumm

258

20.00

7 6 0 00

8 Aurelle Hall

259

20.00

8 0 0 00

Date 20X1 Nov

Employee

Nov 15 Lance Klumm 15 Aurelle Hall

Date 20X1

Employee Aurelle Hall

263

Nov 29 Lance Klumm 264 29

10-34

Aurelle Hall

265

Overtime 6 0 00

Deductions

Gross Earnings

IT(20%)

CPP

Net Pay

7 6 0 00

1 5 2 00

3 9 48

1 2 01

5 5 6 51

8 6 0 00

1 7 2 00

4 5 18

1 3 59

6 2 9 23

1 6 2 0 00

3 2 4 00

8 4 66

2 5 60 1 1 8 5 74

260

20.00

6 8 0 00

1 3 6 00

3 4 92

1 0 74

4 9 8 34

261

20.00

7 2 0 00

1 4 4 00

3 7 20

1 1 38

5 2 7 42

1 4 0 0 00

2 8 0 00

7 2 12

2 2 12 1 0 2 5 76

Net Total Hrs. Chq Claim Rate of # Code Reg. O/T Pay

Nov 22 Lance Klumm 262 22

Earnings

Earnings Regular

Overtime

Deductions

Gross Earnings

IT(20%)

CPP

Net Pay

20.00

6 4 0 00

1 2 8 00

3 2 64

1 0 11

4 6 9 25

20.00

7 0 0 00

1 4 0 00

3 6 06

1 1 06

5 1 2 88

1 3 4 0 00

2 6 8 00

6 8 70

2 1 17

9 8 2 13

7 6 0 00

1 5 2 00

3 9 48

1 2 01

5 5 6 51

9 2 0 00

1 8 4 00

4 8 60

1 4 54

6 7 2 86

1 6 8 0 00

3 3 6 00

8 8 08

2 6 55 1 2 2 9 37

6 0 4 0 00 1 2 0 8 00

3 1 3 56

9 5 44 4 4 2 3 00

20.00

7 6 0 00

20.00

8 0 0 00

1 2 0 00

11 The Employer’s Payroll Responsibilities ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. Employee benefits expense is made up of the employer’s share of Canada Pension Plan and Employment Insurance contributions plus all or part of the cost of other employee benefits such as health care, long-term disability or other insurance. 2. True, with the exception of certain large companies with more than $15,000 of withholdings, which must be remitted more often; very small employers who may remit quarterly; or deductions for other employee benefits such as health care, insurance, etc., which are remitted as required. 3. In addition to CPP and EI, a company is also required to pay WCB, which is a related cost required by law. An employer may also pay part or all of other costs such as health care, insurance, etc. 4. RC1 is the form used by an employer to request a remittance number for payroll withholdings. It is submitted only at the beginning of a new business or a change of ownership. 5. Failure to remit on time is costly because it frequently results in a non-deductible penalty of 10% of the amount due over $500. 6. False. The employer does not contribute to the employees’ income tax. 7. ( b ) 8. False. A PD7A is sent to the federal government once or twice monthly depending on the amount of remittance.* 9. Many employers find the task of keeping accurate payroll records time consuming and difficult, especially the Record of Employment and T4-T4A preparation. Computerized payroll software offers relief in this area. 10. False. The T4-T4A Summary forms must be filed each year by February 28, two months after the end of the calendar year. 11. False. Employer Health Tax is a mandatory requirement for all employers.

*In the case of employers remitting $50,000 or more monthly, the PD7A must be submitted by the third working day following the payroll date. (Do not count Saturdays, Sundays, or holidays as working days.)

11-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.

FISHER COMPANY—GENERAL JOURNAL Date

July

Account Title and Description

Post Ref.

24 Employee Benefits Expense CPP Payable EI Payable

Dr.

Cr.

1 3 7 40 8 7 00 5 0 40

To record employee benefits expense this date CDE2.

Income Tax—5 × $341.00 CPP—2 × (5 × $87.00) EI—2.4 × (5 × $36.00)

CDE3.

Beth Hudson:

CPP $58.86;EI=$17.38

John Wong: Ida Hastings:

CPP = $51.74; EI=$15.41 CPP =$44.61;EI=$14.28

CDE4.

Bi-Weekly: Semi Monthly:

$1,705.00 870.00 432.00 $ 3,007.00

$55,000/26 = $2,115.38 CPP = $112.90 (to a maximum of $3,499.80 ), calculated as: $3,500 exemption for bi-weekly = $3,500/26 = $134.62; ($2,115.38 − $134.62) × 5.70% = $112.90 EI = $2,115.38 × 0.0158 = $33.42 (Maximum of $952.74), calculated as: $3,500 exemption for bi-monthly = $3,500/24 = $145.83; ($2,291.67 − $145.83) × 0.057 = $33.42 $55,000/24 = $2,291.67 CPP = $$122.31(to a maximum of $$3499.80 ) EI = $2,291.67 × 0.0158 = $36.21(Maximum of $952.74)

No advantage. CDE5.

1. A provincial body that oversees the workers’ compensation program is called WSIB. 2. The form used to identify the employer and the amounts of money sent to the CRA periodically on behalf of the employees is called PD7A. 3. EHT is a payroll tax paid by employers and calculated on remuneration paid to employees and former employees. 4. A T4 Summary is a form sent to the federal government once each year showing the totals of income tax, CPP, and EI deducted from all employees during the calendar year. 5. The business number is given by the federal government to identify an employer that is required to forward deductions from employees’ remuneration.

SOLUTIONS TO EXERCISES—SET A E11-1A. Date July

11-2

Account Title and Description 9

Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense this date

Post Ref.

Dr.

Cr.

1 6 3 20 1 0 3 00 6 0 20

SOLUTIONS TO EXERCISES-SET A, Cont. E11-2A. Date April

Account Title and Description 30

Post Ref.

Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense for July

Dr.

Cr.

5 7 1 40 3 5 3 00 2 1 8 40

E11-3A. Income Tax—As deducted CPP—2 × $ 353.00 EI—2.4 × $ 156.00

$ 1,091.00 706.00 374.40 $ 2,171.40

E11-4A. & E11-5A. Date Mar

Mar

Account Title and Description

Post Ref.

14 Employee Benefits Expense CPP Payable EI Payable 28 Employee Benefits Expense CPP Payable

Dr.

Cr.

2 5 1 80 1 5 8 00 9 3 80 2 6 6 40 1 6 7 00

EI Payable

9 9 40

E11-6A. Income tax - as deducted ($535 + $560) CPP—($158 + $167) × 2 EI—($67 + $71) × 2.4

$1,095.00 650.00 331.20

Total to be remitted

$ 2,076.20

E11-7A. Part a

Part b

254,000 × 1.75 / 100 = 347,000 × 2.55 / 100 = 418,000 × 1.20 / 100 = 249,800 × 1.75 / 100 = 354,600 × 2.55 / 100 = 416,000 × 1.20 / 100 =

Cheque to be sent

$ 4,445.00 8,848.50 5,016.00 $18,309.50 $ 4,371.50 9,042.30 4,992.00

Actual premium for year Difference to be sent January

$18,405.80 $ 96.30

11-3

SOLUTIONS TO EXERCISES—SET B E11-1B. Date July

Account Title and Description

Post Ref.

9 Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense this date

Dr.

Cr.

1 8 0 80 1 1 5 00 6 5 80

E11-2B. Date

Account Title and Description

Post Ref.

August 31 Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense for August

Dr.

Cr.

6 1 0 40 3 7 8 00 2 3 2 40

E11-3B. Income Tax—As deducted CPP—2 × $ 378.00 EI—2.4 × $ 166.00

$ 1,226.00 756.00 398.40 $ 2,380.40

E11-4B. & E11-5B. Date Mar

Mar

Account Title and Description 14 Employee Benefits Expense CPP Payable EI Payable 28 Employee Benefits Expense CPP Payable EI Payable

Post Ref.

Dr.

Cr.

2 7 6 20 1 7 4 00 1 0 2 20 2 9 1 80 1 8 4 00 1 0 7 80

E11-6B.

11-4

Income tax - as deducted ($602 + $654) CPP—($174 + $184) × 2 EI—($73 + $77) × 2.4

$1,256.00 716.00 360.00

Total to be remitted

$ 2,332.00

SOLUTIONS TO EXERCISES --SET B, Cont. E11-7B. 286,000 × 1.85 / 100 = 375,000 × 2.45 / 100 = 460,000 × 1.25 / 100 =

Part a

292,000 × 1.85 / 100 = 374,000 × 2.45 / 100 = 468,000 × 1.25 / 100 =

Part b

Cheque to be sent

$ 5,291.00 9,187.50 5,750.00 $20,228.50

Actual premium for year

$ 5,402.00 9,163.00 5,850.00 $20,415.00

Difference to be sent January

$ 186.50

GROUP A PROBLEMS P11-1A. a. Apr.

RICE COMPANY GENERAL JOURNAL

Page 12 9 6 5 00

30 Employee Benefits Expense CPP Payable EI Payable

4 8 2 00 2 8 7 00

Medical Plan Payable

1 9 6 00

Cheque Date May 10 May 15 May 20

Cheque No. 495 502 531

Cheque to CRA: Income Tax CPP (× 2) EI (× 2.4)

Cheque Issued To

Cheque Amount

Union Treasurer CRA Provincial Health Care Insurance

$ 84.00 $ 2,910.00 $ 392.00

Cheque to Provincial Health Care: $ 1,454.00 964.00 492.00 $ 2,910.00

Employee’s Share Employer’s Share

$ 196.00 196.00 $ 392.00

11-5

GROUP A PROBLEMS, Cont.

P11-1A., Cont. c.

May

RICE COMPANY GENERAL JOURNAL

Page 13

10 Union Dues Payable

8 4 00

Cash To remit union dues collected

May

15 Income Tax Payable

8 4 00

CPP Payable EI Payable Cash April deductions remitted May

4 5 4 00 9 6 4 00 4 9 2 00 2

9 1 0 00

3 9 2 00

20 Medical Plan Payable Cash April payroll remittance

3 9 2 00

P11-2A. a.

GIBRALTOR CO. GENERAL JOURNAL Mar.

31 Employee Benefits Expense

Page 5 1

1 0 6 20

CPP Payable EI Payable Medical Plan Payable To record employer’s portion of deductions b.

Cheque Date

Cheque Issued To

April 15 April 20 April 30 April 30

CRA Medical Plan Union Treasurer Long-Term Disability Plan

Cheque to CRA Income Tax ($1,677.00) × 1 = CPP ($580.00) × 2 = EI ($248.00) × 2.4 =

11-6

$1,677.00 1,160.00 595.20 $3,432.20

5 8 0 00 3 4 7 20 1 7 9 00

Cheque Amount $ 3,432.20 358.00 120.00 178.00

GROUP A PROBLEMS, Cont.

P11-3A. a.

THE CANDY CO. GENERAL JOURNAL June

15 Employee Benefits Expense

Page 7 5 4 4 80

CPP Payable EI Payable Charitable Donations Payable

2 5 1 00 1 4 9 80 1 4 4 00

To record employer’s share June

5 6 2 40

Employee Benefits Expense CPP Payable EI Payable Charitable Donations Payable

2 6 3 00 1 5 5 40 1 4 4 00

To record employer’s share b. Cheque Date July 5 July 15 July 15 Cheque to CRA: Income Tax for June 15 Payroll Income Tax for June 30 Payroll CPP for June 15 Payroll (× 2) CPP for June 30 Payroll (× 2) EI for June 15 Payroll (× 2.4) EI for June 30 Payroll (× 2.4)

Cheque Issued To Save the Children Canada Union Treasurer CRA

$ 696.00 740.00 502.00 526.00 256.80 266.40 $2,987.20

Cheque Amount $ 2,592.00 112.00 2,987.20

Cheque to Save the Children Canada: Employees’ Portion to May 31 ($144×5) Employer’s Portion to May 31 ($288×5) June 15 Payroll Employees’ Portion June 15 Payroll Employer’s Portion June 30 Payroll Employees’ Portion June 30 Payroll Employer’s Portion

$ 720.00 1,440.00 72.00 144.00 72.00 144.00 $2,592.00

11-7

GROUP B PROBLEMS P11-1B. MATEO COMPANY GENERAL JOURNAL

a. Apr.

30 Employee Benefits Expense

Page 12 9 9 5 20

CPP Payable EI Payable Medical Plan Payable To record employer’s portion of deductions

5 0 1 00 2 9 8 20 1 9 6 00

b. Cheque Date

Cheque No.

May 10 May 15 May 20

681 698 713

11-8

Union Treasurer CRA Provincial Health Care Insurance

Cheque Amount $

84.00 3,128.20 392.00

Cheque to Provincial Health Care:

Cheque to CRA: Income Tax CPP (× 2) EI (× 2.4)

Cheque Issued To

$ 1,615.00 1,002.00 511.20 $ 3,128.20

Employee’s Share Employer’s Share

$ 196.00 196.00 $ 392.00

GROUP B PROBLEMS, Cont. P11-1B., Cont. c.

MATEO COMPANY GENERAL JOURNAL May

10 Union Dues Payable

Page 13 8 4 00

Cash Union dues collected for April

May

15 Income Tax Payable CPP Payable EI Payable Cash April deductions remitted

May

20 Medical Plan Payable Cash April remittance

8 4 00

1 6 1 5 00 1 0 0 2 00 5 1 1 20 3

1 2 8 20

3 9 2 00 3 9 2 00

11-9

GROUP B PROBLEMS, Cont. P11-2B. a.

THIAGO COMPANY GENERAL JOURNAL Mar.

31 Employee Benefits Expense

Page 5 1 1 7 2 00

CPP Payable EI Payable Medical Plan Payable To record employer’s portion of deductions

Cheque Date

Cheque Issued To

April 15 April 20 April 30 April 30

CRA Medical Plan Union Treasurer Long-Term Disability Plan

Cheque to CRA: Income Tax (× 1) CPP (× 2) EI (× 2.4)

11-10

$1,804.00 1,244.00 636.00 $3,684.00

6 2 2 00 3 7 1 00 1 7 9 00

Cheque Amount $ 3,684.00 358.00 120.00 178.00

GROUP B PROBLEMS, Cont. P11-3B. THE SURF GEAR CO. OF LAKE ONTARIO GENERAL JOURNAL

a. June

15 Employee Benefits Expense

Page 7 5 6 8 00

CPP Payable EI Payable Charitable Donations Payable To record employer’s portion of deductions June

30 Employee Benefits Expense

2 6 8 00 1 5 6 80 1 4 4 00

5 8 0 00

CPP Payable EI Payable Charitable Donations Payable To record employer’s portion of deductions

2 7 5 00 1 6 1 00 1 4 4 00

b. Cheque Date July 5 July 15 July 15 Cheque to CRA: Income Tax for June 15 Payroll Income Tax for June 30 Payroll CPP for June 15 Payroll (×2) CPP for June 30 Payroll (×2) EI for June 15 Payroll (×2.4) EI for June 30 Payroll (×2.4)

Cheque Issued To Save the Children Canada Union Treasurer Receiver General $ 756.00 768.00 536.00 550.00 268.80 276.00 $ 3,154.80

Cheque Amount $ 2,172.00 112.00 3,154.80

Cheque to Save the Children Canada: Employees’ Portion to May 31 Employer’s Portion to May 31 June 15 Payroll Employees’ Portion June 15 Payroll Employer’s Portion June 30 Payroll Employees’ Portion June 30 Payroll Employer’s Portion

$ 580.00 1,160.00 72.00 144.00 72.00 144.00 $ 2,172.00

11-11

GROUP C PROBLEMS P11-1C. a.

RIPCORD PARACHUTE CLUB GENERAL JOURNAL

Feb.

11-12

7 Employee Benefits Expense CPP Payable EI Payable Pension Plan Liability Medical Plan Payable To record employer’s share 14 Employee Benefits Expense CPP Payable EI Payable Pension Plan Liability Medical Plan Payable To record employer’s share 21 Employee Benefits Expense CPP Payable EI Payable Pension Plan Liability Medical Plan Payable To record employer’s share 28 Employee Benefits Expense CPP Payable EI Payable Pension Plan Liability Medical Plan Payable To record employer’s share

Income Tax Payable 423.00 450.00 450.00 537.00 1,860.00

4 0 6 60 1 1 8 00 6 8 60 1 5 6 00 6 4 00 4 2 0 40 1 2 3 00 7 1 40 1 6 2 00 6 4 00 4 2 0 40 1 2 3 00 7 1 40 1 6 2 00 6 4 00 4 5 5 40 1 3 6 00 7 8 40 1 7 7 00 6 4 00

CPP Payable 118.00 118.00 123.00 123.00 123.00 123.00 136.00 136.00 1,000.00

EI Payable 49.00 68.60 51.00 71.40 51.00 71.40 56.00 78.40 496.80

GROUP C PROBLEMS, Cont. P11-1C., Cont. LTD Payable 46.00 48.00 48.00 52.00 194.00

Pension Plan Liability 134.00 156.00 141.00 162.00 141.00 162.00 152.00 177.00 1,225.00

Employee Benefits Expense 406.60 420.40 420.40 455.40 1,702.80

Cheque Date

Cheque Payable To

Mar. 15 Mar. 15 Mar. 15 Mar. 15

CRA Pension Plan Medical Plan Long-Term Disability Plan

Medical Plan Payable 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 512.00

Wage Expense 2,600.00 2,700.00 2,700.00 2,950.00 10,950.00

Cheque Amount $3,356.80 $1,225.00 $512.00 $194.00

Cheque to CRA: TAX CPP EI

$1,860.00 1,000.00 496.80 $3,356.80

11-13

GROUP C PROBLEMS, Cont. P11-2C MUNCHKIN BAKERY CO. GENERAL JOURNAL

Page 14 Post Ref.

Date

Account Title and Description

Mar 15

Employee Benefits Expense CPP Payable EI Payable Health Care Payable To record employee benefits expenses for Mar. 15 payroll

6 7 9 80

Employee Benefits Expense CPP Payable EI Payable Health Care Payable To record employee benefits expenses for Mar. 29 payroll

6 8 8 20

Mar 29

Dr.

Cr. 3 3 9 00 1 9 8 80 1 4 2 00

3 4 6 00 2 0 0 20 1 4 2 00

Cheque Date

Cheque to be issued to:

Cheque

April 10

Provincial Health Care Organization (1)

$ 568.00

April 15

CRA (2)

$ 4,029.00

April 28

Union Treasurer (3)

79.00

Space below for calculations: 1.

Amount deducted × 2 ($142 + $142) × 2 =

Income tax ($975 + $1,000) × 1.0

$ 1,975.00

CPP ($339 + $346) × 2.0

1,370.00

EI ($142 + $143) × 2.4

684.00

11-14

Amount deducted: ($ 40 + $ 39)

$ 568.00

$ 4,029.00 $ 79.00

GROUP C PROBLEMS, Cont. P11-3C Approximate payroll tax cost to employ 50 workers directly: 4% CPP + (applicable rate × 1.4 for EI) + vacation pay 4% = Approx. 11% cost. $10 × 1.11 = $11.10, which is less than $12.00. Adding the cost of Worker’s Compensation and other benefits (if any) will probably still be less than $12.00. Non-financial considerations must also be considered. These would include the extra effort to supervise employees rather than contract workers; the cost of administering the payroll records for employees; and the possibility of obligation to employees for ongoing work. Additionally, unsuitable workers are more easily replaced, and often training costs are borne by the agency.

P11-4C. PETE’S MARKET PAYROLL REGISTER 2022

Employee

Sep 7 Fred Flynn 7 Mary Jones 7 Lilly Vron

2022

Employee

Weekly Salary

IT(20%)

CPP

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

2 3 8 00 2 5 3 00 1 8 8 00

6 3 99 MA X 4 9 74

1 8 80 MA X 1 4 85

8 6 9 21 1 0 1 2 00 6 8 7 41

3 3 9 5 00

6 7 9 00

1 1 3 73

3 3 65

2 5 6 8 62

Weekly Salary

IT(20%)

CPP

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

2 3 8 00 2 5 3 00 1 8 8 00

6 3 99 MA X 4 9 74

1 8 80 MA X 1 4 85

8 6 9 21 1 0 1 2 00 6 8 7 41

3 3 9 5 00

6 7 9 00

1 1 3 73

3 3 65

2 5 6 8 62

Weekly Salary

IT(20%)

CPP

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

2 5 3 00 2 5 3 00 1 8 8 00

6 8 27 MA X 4 9 74

1 9 99 MA X 1 4 85

9 2 3 74 1 0 1 2 00 6 8 7 41

3 4 7 0 00

6 9 4 00

1 1 8 01

3 4 84

2 6 2 3 15

Weekly Salary

IT(20%)

CPP

1 1

2 6 5 00 2 6 5 00 9 4 0 00

2 5 3 00 2 5 3 00 1 8 8 00

6 8 27 MA X 4 9 74

1 9 99 MA X 1 4 85

9 2 3 74 1 0 1 2 00 6 8 7 41

4 7 0 00

6 9 4 00

1 1 8 01

3 4 84

2 6 2 3 15

Sep Fred Flynn 14 14 Mary Jones 14 Lilly Vron

2022

Employee

Sep 21 Fred Flynn 21 Mary Jones 21 Lilly Vron

2022

Employee

Sep 28 Fred Flynn 28 Mary Jones 28 Lilly Vron

Net Pay

11-15

P11-4C cont. PETE’S MARKET GENERAL JOURNAL 2022 Sep

Account Title and Description 7 Salaries Expense Income Taxes Payable CPP Payable EI Payable Salaries Payable To record payroll for September 7, 2022 7 Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense for Sep 7 payroll 7 Payroll Bank Account* Operating Bank Account To record transfer of funds to pay net payroll this date

Page 3 Post Ref.

Dr.

Cr.

3 3 9 5 00 6 7 9 00 1 1 3 73 3 3 65 2 5 6 8 62 1 6 0 84 1 1 3 73 4 7 11 2 5 6 8 62 2 5 6 8 62

* Students should note that individual cheques will be issued from the payroll bank account to each of the three employees for their net pay, thus also reducing the Salaries Payable account to zero at the same time.

14 Salaries Expense Income Taxes Payable CPP Payable EI Payable Salaries Payable To record payroll for September 14, 2022 14 Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense for Sep 14, 2022 14 Payroll Bank Account Operating Bank Account To record transfer of funds to cover net pay for Sep 14 14 Income Taxes Payable CPP Payable EI Payable Operating Bank Account To record cheque to CRA for August payroll deductions plus employer portion

11-16

3 3 9 5 00 6 7 9 00 1 1 3 73 3 3 65 2 5 6 8 62 1 6 0 84 1 1 3 73 4 7 11 2 5 6 8 62 2 5 6 8 62 3 2 6 8 75 1 5 7 6 80 5 9 2 08 5 4 3 7 63

11-5C., cont. PETE’S MARKET GENERAL JOURNAL 2022 Sep

Account Title and Description Salaries Expense Income Taxes Payable CPP Payable EI Payable Salaries Payable To record payroll for September 21, 2022 Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense for Sep 21 payroll Payroll Bank Account Operating Bank Account To record transfer of funds to cover net pay for Sep 21 Salaries Expense Income Taxes Payable CPP Payable EI Payable Salaries Payable To record payroll for September 28, 2022 Employee Benefits Expense CPP Payable EI Payable To record employee benefits expense for Sep 28 Payroll Bank Account Operating Bank Account To record transfer of funds to cover net pay for Sep 28

Page 4 Post Ref.

Dr.

Cr.

3 4 7 0 00 6 9 4 00 1 1 8 01 3 4 84 2 6 2 3 15 1 6 6 79 1 1 8 01 4 8 78 2 6 2 3 15 2 6 2 3 15 3 4 7 0 00 6 9 4 00 1 1 8 01 3 4 84 2 6 2 3 15 1 6 6 79 1 1 8 01 4 8 78 2 6 2 3 15 2 6 2 3 15

11-17

OA11-1 Canadian Payroll Association The Canadian Payroll Association (CPA) represents over 40,000 payroll practitioners covered under individual or organization memberships, working with employers and governments to make payroll legislation and administration more efficient and effective. Remuneration is a huge expense. They provide guidance to all employers for payroll liability responsibilities. Required: Follow the link below and answer the following questions: https://www.payroll.ca/ 1.

On the website, what program are offered by CPA?(Canadian Payroll Association) Discuss in group if this is a profession you would like to try? Payroll Certification Gain a competitive edge on your own terms! Whether from home or in class, our one-of-a-kind certification programs give you the knowledge and skills employers demand. Recruiters confirm certification demonstrates your payroll expertise and can increase your earning power! Certification Information Payroll Compliance Practitioner (PCP) Qualified payroll professionals are in demand and PCP certification is the foundation. Understand legislation, keep your organization compliant, and leverage the resources and support of a community of over 43,000 members nationwide. Certified Payroll Manager (CPM) Aspire to manage? CPM certification extends your reach and elevates your career. You’ll gain comprehensive payroll compliance knowledge and management skills that will enhance your job prospects and drive career success.

Select the Resource tab on the Home page and select the file below Pay Statement Payroll Best Practices Guidelines 1. What are the suggested CPA recommended Minimums for employers? CPA Recommended Minimums The Pay Statement Guidelines Task Force identified reporting the following on pay statements as minimum. Payroll Best Practices, even when not necessarily mandated by legislation: 1. Employee Name Vacation Payments Allowances (living) 2. Employer Name Statutory/Public/General Holiday Pay/Hours 3. Other Earnings/Payments/Benefits 4. Pay Period Date Overtime Wages Gross Earnings 5. Payment Date Overtime Banked Time Taken Itemized Deductions 6. Rate/Hours Bonus Net Pay 2. What do they say about the communication plan for employers? • Communication is an essential payroll activity; to ensure a clear understanding of pay statement information it is critical to develop a comprehensive communication plan to educate employees on the various components of the pay statement and how these components impact their net pay.

11-18

GROUP C PROBLEMS, Cont. The CPA recommends the following measures: • Publish a template that will identify all elements of the pay statement including details of the earnings and deductions. • Explain how different exemption amounts and tax credits can impact net pay, be unique to each individual and change over time. • Involve payroll in the orientation of new employees and include a sample lexicon in the commencement package. • Consider the organization’s broader communication strategies utilizing their intranet, the Internet and print publications. • Prepare an annual statement of compensation and benefits. 3.

Discuss as a group the implications of an Electronic Pay statement as reported by CPA Electronic pay statements may result in cost savings for the organization and better access to information for employees, depending on the payroll service or software provider. When reviewing or preparing to launch pay statements electronically, there are other considerations beyond the legislative requirements. If your organization is providing remote access to pay statements, it is important to ensure that a secure Information Technology (IT) protocol is in place. Paper pay statements must be provided to employees who are terminated or on a leave of absence if electronic access has been revoked. In Quebec, the employee must always be given a paper statement if requested. Other considerations may include:

PRIVACY AND ACCESS Employees must have a confidential way to view and access their pay statements, for example, self-service Kiosks in the absence of a personal workstation. ABILITY TO PRINT Employees must have the ability to print their pay statements within a confidential environment at the workplace or at a remote location through a secure channel. CHOICE OF OPTING IN OR OUT It is important to consider current employees as well as new employees. To avoid legal issues, current employees should not be forced to opt for electronic pay statements; they should be asked to agree to receive their statements electronically. This can, however, be made a condition of employment for new employees or be part of a collective agreement 4. Discuss as a group the privacy issues that employers must face for payroll. By its very nature, payroll has always operated under the assumption of confidentiality and non-disclosure of employees’ personal and related information. While pay statement legislation does not have specific requirements related to privacy, there are important considerations that organizations need to make related to the information contained on the pay statement and whether the information should be included. These considerations include: Social Insurance Number The Government of Canada uses the social insurance number (SIN) to confirm that employees are eligible to work in Canada and/or receive government benefits and services. As the government does not currently accept pay statements to confirm such eligibility, the SIN should not be recorded on the pay statement nor should it be used in any way as an identification number. For example, the SIN should not be used as the employee number on the pay statement. Bank Account Information Although not legislated, a Payroll Best Practice is to not include the complete bank account information on the pay statement due to the risk of lost or misplaced pay statements. Leaving only the last four digits visible could allow the employee to confirm which account(s) the net pay was deposited while minimizing the risk of identity fraud. Distribution When physically distributed, pay statements must be properly sealed and delivered in person. For example, pay statements must not be left in an unattended workstation.

11-19

To the Instructor: There is also a Quiz on testing your knowledge, which could be assigned to your students as well. OA 11-2 Analysis of Financial Statements – Roots Corporation Roots Corporation or Roots is a publicly held Canadian brand that sells women's, men's, children's, and baby's apparel; leather bags; footwear; active athletic wear; small leather goods; and home furnishings. The company was founded in 1973 by Michael Budman and Don Green. ... Roots opened its first store on Yonge St. near the Rosedale subway station. Roots employs 1,600 people in Canada. Roots started using the beaver logo in 1985 with the launch of its athletic brand. Required: Form groups of 3 and complete the following: Go to the Roots website and find the 2020 Annual Report Required: 1. Refer to the Annual report (page 83) and review the data on wages and Benefits. Provide the data for this category January 30, 2021 February 1, 2020 Wages and salaries $ 38,782 $ 56,115 Benefits and other incentives 6,367 9,129 $ 45,149 $ 65,244 2. Discuss and describe the liabilities that could be created in the benefits category Answers could include Income Tax Payable, CPP Payable, EI Payable, Unions Dues Payable, Health Benefits Payable

OA 11-3 Analysis of Financial Statements As a team, select an industry to analyze. Select a company that interests you. Find its Annual Report on the Internet. Required: Answer the following questions about the company you chose: 1. How much did they report in wages. 2. Describe the types of liabilities that are created from the benefits category

Solutions may vary depending on the company chosen.

OA11-4 Payroll Services Many companies use payroll Services to conduct payroll for their companies. Required: Form groups of 2 or three Refer to the Internet and find different Payroll online services available to employers Select 2 different online services and present a report describing the services and the advantages and disadvantages of both. Report your recommendations. Solutions may vary depending on the company chosen

11-20

CONTINUING PROBLEM PRECISION COMPUTER CENTRE CASH RECEIPTS JOURNAL Date 20X1 Dec.

9 13 30

Cash Dr.

Sales Disc. Dr.

Sales Cr.

Acc. Rec. Cr.

3 4 0 0 00 3 9 0 0 00 5 4 9 5 00

3 4 0 0 00 3 9 0 0 00

12 7 9 5 0 0

7 3 0 0 00

(1 00 0)

( 10 20)

Page 4

Account

Sundry Post Ref.

Vita Needle, 12686 Accu Pac, 12687 Augustana, 12689

X X 4000

Date 20X1

Account Credited

Dec. 10 City Newspaper 11 West Bell 17 Alpha Office Co.

Inv. PO Post No. Number Ref.

8161

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

4015

Page 3 Sundry

Inventory Dr.

9 6 3 00 (2 00 0)

5 4 9 5 00 5 4 9 5 00

PRECISION COMPUTER CENTRE—PURCHASES JOURNAL Accounts Payable Cr.

Amount Cr.

Account Name

Post Ref.

Amount Dr.

Advertising 5010 Telephone 5040 Supplies 1030

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

(1 40 0)

(X)

11-21

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE CASH PAYMENTS JOURNAL Date 20X1 Dec.

11-22

6 6 13

Chq. No.

13 13 13 13

266 267 268 269 270 271 272

16 17 20 20 23 24 24

273 274 275 276 277 278 279

Account Debited

Post Ref.

Sundry Dr.

Wages - L. Klumm Wages - A. Hall Wages - L. Klumm Wages - A. Hall West Bell Canada Merchandise for Resale Income Tax Payable re Nov CPP Payable re Nov EI Payable re Nov System Design Furniture Multi Systems Wages - L. Klumm Wages - A. Hall City Electric Wages - L. Klumm Wages - A. Hall

2010 2010 2010 2010 X 1040 2020 2030 2040 X X 2010 2010 5030 2010 2010

6 5 1 05 4 9 8 34 5 8 5 60 6 2 9 23

Accounts Payable Dr.

1 5 0 00 37 0 0 0 0 0 1 2 0 8 00 6 27 12 2 2 9 06

Page 4 Purchases Discounts Cr.

Cash Cr. 6 5 1 05 4 9 8 34 5 8 5 60 6 2 9 23 1 5 0 00 37 0 0 0 0 0 2 0 6 4 18

1 4 0 0 00 4 5 0 00

1 4 0 0 00 4 5 0 00 4 9 8 34 5 2 7 42 4 8 6 00 4 6 9 25 5 5 6 51

43 9 6 5 9 2

2 0 0 0 00

45 9 6 5 9 2

(X)

(2 00 0)

(1 00 0)

4 9 8 34 5 2 7 42 4 8 6 00 4 6 9 25 5 5 6 51

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE—GENERAL JOURNAL Date 20X1

Account Title and Description

Post Ref.

Dr.

Nov 30 Employee Benefits Expense CPP Payable EI Payable To record employee benefits for November

5120 2030 2040

4 4 7 18

Dec

6 Wages Expense Income Tax Payable CPP Payable EI Payable Wages Payable To record wages expense week of Dec. 6

5110 2020 2030 2040 2010

1 5 7 0 00

13 Wages Expense Income Tax Payable CPP Payable EI Payable Wages Payable To record wages expense week of Dec. 13

5110 2020 2030 2040 2010

1 6 6 0 00

20 Wages Expense Income Tax Payable CPP Payable EI Payable Wages Payable To record wages expense week of Dec. 20

5110 2020 2030 2040 2010

1 4 0 0 00

24 Wages Expense Income Tax Payable CPP Payable EI Payable Wages Payable To record wages expense week of Dec. 24

5110 2020 2030 2040 2010

1 4 0 0 00

31 Employee Benefits Expense 5120 CPP Payable 2030 EI Payable 2040 To record employee benefits expense for Dec.

4 4 6 37

Page 5 Cr. 3 1 3 56 1 3 3 62

3 1 4 00 8 1 81 2 4 80 1 1 4 9 39

3 3 2 00 8 6 94 2 6 23 1 2 1 4 83

2 8 0 00 7 2 12 2 2 12 1 0 2 5 76

3 1 2 99 1 3 3 38

11-23

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME

ACCU PAC, INC.

Date 20X1

Explanation

Dec.

NAME

1 Balance 13

NAME

11-24

Debit

CRJ4

Explanation

Post Ref.

Credit

Dr. Balance

3 9 0 0 00

3 9 0 0 00 0

Credit

Dr. Balance

CA101 Debit

1 Balance

6 2 4 0 00

ANTHONY J. PITALE

Date 20X1 Dec.

Post Ref.

CARSON ENGINEERING CORP.

Date 20X1 Dec.

AC101

Explanation 1 Balance

PI101 Post Ref.

Debit

Credit

Dr. Balance 1 6 0 0 00

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME

TAYLOR GOLF

Date 20X1

Explanation

Dec.

NAME

Post Ref.

Debit

Credit

1 Balance

Dr. Balance 3 2 0 0 00

VITA NEEDLE COMPANY

Date 20X1 Dec.

TA101

Explanation 1 Balance 9

VI101 Post Ref.

Debit

CRJ4

Credit

Dr. Balance

3 4 0 0 00

3 4 0 0 00 0

PRECISION COMPUTER CENTRE SCHEDULE OF ACCOUNTS RECEIVABLE DECEMBER 31, 20X1 Carson Engineering Corp. Anthony J. Pitale Taylor Golf

$6 2 4 0 00 1 6 0 0 00 3 2 0 0 00 $11 0 4 0 0 0

11-25

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME

ALPHA OFFICE CO.

Date 20X1 Dec.

NAME

Explanation 1 Balance 17

NAME

11-26

Debit

Credit

PJ3

Explanation 1 Balance 10

3 1 8 00

Post Ref.

Debit

Credit

PJ3

Explanation 1 Balance 16

Cr. Balance 0 3 1 8 00

4 8 0 00

MULTI SYSTEMS, INC.

Date 20X1 Dec.

Post Ref.

CITY NEWSPAPER

Date 20X1 Dec.

Cr. Balance 3 7 5 00 8 5 5 00

M1 Post Ref. CPJ4

Debit 4 5 0 00

Credit

Cr. Balance 4 5 0 00 0

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME

STAPLES

Date 20X1 Dec.

Debit

Credit

Cr. Balance

1 Balance

2 5 0 00

SYSTEM DESIGN FURNITURE

Date 20X1

Explanation 1 Balance 16

NAME

S2 Post Ref.

CPJ4

Debit

Explanation 1 Balance 11 13

Credit

Cr. Balance 1 4 0 0 00 0

1 4 0 0 00

WEST BELL CANADA

Date 20X1 Dec.

Post Ref.

Explanation

NAME

Dec.

W1 Post Ref. PJ3 CPJ4

Debit

Credit

Cr. Balance 1 5 0 00 3 1 5 00 1 6 5 00

1 6 5 00 1 5 0 00

PRECISION COMPUTER CENTRE SCHEDULE OF ACCOUNTS PAYABLE DECEMBER 31, 20X1 Alpha Office Co. City Newspaper Staples West Bell Canada

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

$1 5 8 8 00

11-27

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

CASH

Date 20X1 Dec.

NAME:

Explanation 1 Balance 31 31

NAME:

11-28

Credit

12 7 9 5 00 45 9 6 5 9 2

Post Ref.

Debit

Credit

Explanation 1 Balance 31

Debit

CRJ4

Credit 7

PREPAID CLEANING Explanation

3 0 0 00

Post Ref.

Debit

PREPAID RENT

1 Balance

Dr Dr Cr

16 2 5 1 12 29 0 4 6 12 16 9 1 9 8 0

Credit

Balance

1 0 0 00

Debit

Credit

1020

DR CR

Balance

Dr Dr

18 3 4 0 00 11 0 4 0 00 1023

DR CR

Balance

6 0 0 00

ACCOUNT NO. Post Ref.

1010

DR CR

ACCOUNT NO.

1 Balance

Explanation

Balance

ACCOUNT NO. Post Ref.

1000

DR CR

ACCOUNT NO.

ACCOUNTS RECEIVABLE

Date 20X1 Dec.

Debit

1 Balance

Date 20X1 Dec.

CRJ4 CPJ4

Explanation

Date 20X1 Dec.

Post Ref.

PETTY CASH

Date 20X1 Dec.

ACCOUNT NO.

1025

DR CR

Balance

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

SUPPLIES

Date 20X1 Dec.

ACCOUNT NO. Explanation

NAME:

Explanation 1 Balance 13

NAME:

Explanation

7 9 2 00

1 1 1 0 00

Credit

37 0 0 0 00

1040

DR CR

Balance

Dr Dr

1 0 2 2 50 38 0 2 2 50

ACCOUNT NO. Post Ref.

Debit

Credit

Post Ref.

Debit

Balance

5 2 0 0 00

DR CR

Credit

ACCOUNT NO. Post Ref.

Debit

Credit

1 Balance

ACCUMULATED AMORTIZATION, OFFICE EQUIPMENT

Date 20X1

Explanation

Post Ref.

Debit

Date 20X1

Explanation 1 Balance 31

CPJ4 PJ3

Debit

9 9 00

1090 Balance

1 5 0 0 00

1091

DR CR

Balance

Credit

ACCOUNT NO. Post Ref.

Balance

DR CR

ACCOUNTS PAYABLE

1081

ACCOUNT NO.

1 Balance

NAME:

1080

DR CR

Explanation

Dec.

Debit

1 Balance

Date 20X1

Dec.

Balance

ACCUMULATED AMORTIZATION, COMPUTER SHOP EQUIPMENT ACCOUNT NO.

OFFICE EQUIPMENT

NAME:

Post Ref.

1 Balance

NAME:

Dec.

DR CR

ACCOUNT NO.

CPJ4

Explanation

Date 20X1 Dec.

Credit

3 1 8 00

COMPUTER SHOP EQUIPMENT

Date 20X1 Dec.

PJ3

MERCHANDISE INVENTORY

Date 20X1 Dec.

Debit

1 Balance 17

NAME:

Post Ref.

1030

Credit

2 0 0 0 00 9 6 3 00

2 0 00

2000

DR CR

Balance

2 6 2 5 00

Cr Cr

6 2 5 00 1 5 8 8 00

11-29

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

WAGES PAYABLE

Date 20X1 Dec.

Explanation

GJ5 CPJ4 CPJ4 GJ5 CPJ4 CPJ4 GJ5 CPJ4 CPJ4 GJ5 CPJ4

CPJ4

INCOME TAX PAYABLE

Date 20X1

Explanation

NAME:

1 Balance 6 13 13 20 24

11-30

Debit

1 Balance 2 6 13 13 20 24 24

DR CR

1 1 4 9 39

Cr Cr

1 2 1 4 83

Cr Cr

1 2 2 5 76

Cr Cr

1 0 2 5 76

Cr Cr

5 8 5 60 6 2 9 23 4 9 8 34 5 2 7 42 4 6 9 25 5 5 6 51

Post Ref.

Debit

Credit 3 1 4 00 3 3 2 00

2 0 8 00 2 8 0 00 2 8 0 00

GJ5 GJ5 GJ5 CPJ4 GJ5 GJ5 GJ5

Debit

Balance 1 1 4 9 39 4 9 8 34 0 1 2 1 4 83 6 2 9 23 0 1 0 2 5 76 5 2 7 42 0 1 0 2 5 76 5 5 6 51

Credit 3 1 3 56 8 1 81 8 6 94

6 2 7 12 7 2 12 7 2 12 3 1 2 99

2020

DR CR

Balance

Cr Cr Cr Cr Cr Cr

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

ACCOUNT NO. Post Ref.

2010

ACCOUNT NO.

GJ5 GJ5 CPJ4 GJ5 GJ5

Explanation

Credit

6 5 1 05 4 9 8 34

CPP PAYABLE

Date 20X1 Dec.

Post Ref.

6 6 6 13 13 13 20 20 20 24 24

NAME:

Dec.

ACCOUNT NO.

2030

DR CR

Balance

Cr Cr Cr Cr Cr Cr Cr Cr

3 1 3 56 6 2 7 12 7 0 8 93 7 9 5 87 1 6 8 75 2 4 0 87 3 1 2 99 6 2 5 98

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE

NAME:

EI PAYABLE

Date 20X1 Dec.

NAME:

Explanation

NAME:

GJ5 GJ5 GJ5 CPJ4 GJ5 GJ5

GJ5

NAME:

Explanation

NAME:

2 2 9 06

Post Ref.

Debit

Explanation

1 3 3 38

2 2 8 65

Credit

Debit

Credit

1 Balance

SERVICE REVENUE Explanation 1 Balance 30

Debit

CRJ4

Credit 5

SALES

4 9 5 00

Post Ref.

Debit

Credit

3000

DR CR

Balance

7 4 0 6 00

3010

DR CR

Balance

4 0 3 0 00

4000

DR CR

Balance

Cr Cr

31 7 4 9 8 2 37 2 4 4 82

ACCOUNT NO. Explanation

1 Balance

ACCOUNT NO. Post Ref.

Balance 9 5 44 2 2 9 06 2 5 3 86 2 8 0 09 5 1 03 7 3 15 9 5 27

ACCOUNT NO. Post Ref.

2040

Cr 1 3 3 62 Cr 2 4 8 0 8 Cr 1 2 6 23 Cr Cr 2 2 12 Cr 2 2 12 Cr

ACCOUNT NO.

T. FREEDMAN, WITHDRAWALS

Date 20X1 Dec.

DR CR

Credit

1 Balance

Date 20X1 Dec.

Debit

T. FREEDMAN, CAPITAL

Date 20X1 Dec.

Post Ref.

1 Balance 2 6 13 13 20 24

Date 20X1 Dec.

ACCOUNT NO.

4010

DR CR

Balance

37 8 0 0 00

11-31

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

SALES RETURNS AND ALLOWANCES

Date 20X1 Dec.

NAME:

Explanation

NAME:

SALES DISCOUNTS Explanation

Explanation 1 Balance 10

Date 20X1

Explanation

Dec.

NAME:

Explanation

11-32

Credit

Debit

Credit

4 8 0 00

Post Ref.

Debit

1 Balance 23

Post Ref.

Credit

Debit

Credit

Post Ref.

Debit 4 8 6 00

PHONE EXPENSE

1 Balance 11

Credit

Balance

2 2 0 00

Debit

PJ3

1 6 5 00

Credit

5010

DR CR

Balance

Dr Dr

4 8 0 00 9 6 0 00

5015

DR CR

Balance

3 0 0 00

5020

DR CR

Balance

1 6 0 0 00

5030

DR CR

Balance

Dr Dr

2 7 0 00 7 5 6 00

ACCOUNT NO. Post Ref.

4030

DR CR

ACCOUNT NO.

CPJ4

Explanation

4 0 0 00

ACCOUNT NO.

UTILITIES EXPENSE Explanation

ACCOUNT NO.

1 Balance

Date 20X1 Dec.

Post Ref.

RENT EXPENSE

Date 20X1 Dec.

Debit

1 Balance

Date 20X1

Balance

ACCOUNT NO.

PJ3

CLEANING EXPENSE

NAME:

Post Ref.

4020

DR CR

ACCOUNT NO.

ADVERTISING EXPENSE

NAME:

Dec.

Credit

1 Balance

Date 20X1 Dec.

Debit

1 Balance

Date 20X1 Dec.

Post Ref.

ACCOUNT NO.

5040

DR CR

Balance

Dr Dr

4 3 1 00 5 9 6 00

CONTINUING PROBLEM, Cont. GENERAL LEDGER OF PRECISION COMPUTER CENTRE NAME:

COST OF GOODS SOLD

Date 20X1

Explanation

Dec. NAME:

NAME:

Explanation

NAME:

Post Ref.

Debit

Credit

14 9 1 0 0 0

DR CR

ACCOUNT NO. Post Ref.

Debit

Credit

1 Balance

DR CR Dr

WAGES EXPENSE Explanation 1 Balance 6 13 20 24

ACCOUNT NO. Post Ref. GJ5 GJ5 GJ5 GJ5

Debit 1 1 1 1

Explanation

Credit

5 7 0 00 6 6 0 00 4 0 0 00 4 0 0 00

PAYROLL BENEFITS EXPENSE

2 31

Balance

Explanation

Debit

GJ5 GJ5

4 4 7 18 4 4 6 37

Credit

5070 Balance 5 0 00

5100 Balance 2 0 00

5110

DR CR

Balance

Dr Dr Dr Dr Dr

14 8 0 0 20 16 3 7 0 20 18 0 3 0 20 19 4 3 0 20 20 8 3 0 20

ACCOUNT NO. Post Ref.

5000

DR CR

ACCOUNT NO.

MISCELLANEOUS EXPENSE

Date 20X1 Dec.

Credit

1 Balance

Date 20X1 Dec.

Debit

POSTAGE EXPENSE

Date 20X1 Dec.

Post Ref.

1 Balance

Date 20X1 Dec.

ACCOUNT NO.

5120

DR CR

Balance

Dr Dr

4 4 7 18 8 9 3 55

11-33

CONTINUING PROBLEM, Cont. PRECISION COMPUTER CENTRE - PAYROLL REGISTER Date 20X1

Employee

Dec. 6 Lance Klumm 6 Aurelle Hall

Dec. 13 Lance Klumm 13 Aurelle Hall

Date 20X1 Employee Dec. 20 Lance Klumm 20 Aurelle Hall

Dec. 24 Lance Klumm 24 Aurelle Hall

11-34

Net Total Hrs. Rate of Claim Reg. O/T Pay 1 40 3 20.00 1 34 20.00

1 1

40 40

20.00 20.00

Net Total Hrs. Rate of Claim Reg. O/T Pay 1 34 20.00 1 36 20.00

1 1

32 38

20.00 20.00

Earnings Regular Overtime

Gross Earnings

IT(20%)

Net Pay

8 0 0 00 6 8 0 00

8 9 0 00 6 8 0 00

1 7 8 00 1 3 6 00

4 6 89 3 4 92

1 4 06 1 0 74

6 5 1 05 4 9 8 34

1 5 7 0 00

3 1 4 00

8 1 81

2 4 80 1 1 4 9 39

8 0 0 00 8 6 0 00

1 6 0 00 1 7 2 00

4 1 76 4 5 18

1 2 64 1 3 59

1 6 6 0 00

3 3 2 00

8 6 94

2 6 23 1 2 1 4 83

Gross Earnings 6 8 0 00 7 2 0 00

IT(20%) 1 3 6 00 1 4 4 00

Deductions CPP 3 4 92 3 7 20

1 4 0 0 00

2 8 0 00

7 2 12

2 2 12 1 0 2 5 76

6 4 0 00 7 6 0 00

1 2 8 00 1 5 2 00

3 2 64 3 9 48

1 0 11 1 2 01

1 4 0 0 00

2 8 0 00

7 2 12

2 2 12 1 0 2 5 76

6 0 3 0 00 1 2 0 6 00

3 1 2 99

9 5 27 4 4 1 5 74

8 0 0 00 8 0 0 00

9 0 00

6 0 00

Earnings Regular Overtime 6 8 0 00 7 2 0 00

6 4 0 00 7 6 0 00

Deductions CPP

EI 1 0 74 1 1 38

5 8 5 60 6 2 9 23

Net Pay 4 9 8 34 5 2 7 42

4 6 9 25 5 5 6 51

CONTINUING PROBLEM, Cont. Name of Employee Lance Klumm Social Insurance Number 123 456 999 Date of Birth 09/29/74 Net Week Claim Code 1 2 3 4 5 6 7 8

Earnings

Rate of Hours Pay Worked 20/h

Regular

38 34 32 38 43 40 34 32

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

Precision Computer Centre Employee Earnings Record For the Calendar Year 20X1

Overtime

Deductions CPP

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

4 3 32 3 8 76 3 6 48 4 3 32 4 6 89 4 1 76 3 4 92 3 2 64

9 0 00 5 8 5 0 00 1 1 7 0 00

3 1 8 09

9 0 00

Gross Pay

7 6 0 00 6 8 0 00 6 4 0 00 7 6 0 00 8 9 0 00 8 0 0 00 6 8 0 00 6 4 0 00

Name of Employee Aurelle Hall Social Insurance Number 893 421 777 Date of Birth 01/27/78 Week 1 2 3 4 5 6 7 8

Net Claim Code 1

Rate of Hours Pay Worked 20/h

42 36 35 44 34 42 36 38

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

Medical

Net Pay

Chq. No.

1 2 01 1 0 74 1 0 01 1 2 01 1 4 06 1 2 64 1 0 74 1 0 11

5 5 2 67 4 9 4 50 4 6 5 51 5 5 2 67 6 5 1 05 5 8 5 60 4 9 8 34 4 6 9 25

220 222 224 226 228 230 237 240

9 2 32

4 2 6 9 59

Precision Computer Centre Employee Earnings Record For the Calendar Year 20X1 Earnings

Regular

Employee Address: 11224 23B Street Edmonton, Alberta T6V 2V2

Overtime

Employee Address: 22 Fairway Lane Edmonton, Alberta T6A 1A1 Deductions

CPP

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

4 9 02 4 1 04 3 9 90 5 2 44 3 4 92 4 5 18 3 7 20 3 9 48

2 4 0 00 6 2 2 0 00 1 2 4 4 00

3 3 9 18

6 0 00

1 2 0 00 6 0 00

Charitable

Gross Pay

8 6 0 00 7 2 0 00 7 0 0 00 9 2 0 00 6 8 0 00 8 6 0 00 7 2 0 00 7 6 0 00

Medical

Charitable

Net Pay

Chq. No.

1 3 59 1 1 38 1 1 06 1 4 54 1 0 74 1 3 59 1 1 38 1 2 01

6 2 5 39 5 2 3 58 5 0 9 04 6 6 9 02 4 9 8 34 6 2 9 23 5 2 7 42 5 5 6 51

221 223 225 227 229 231 238 241

9 8 29

4 5 3 8 53

11-35

12 Accounting for Bad Debts ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The matching principle estimates the bad debts expense in the same period the sale is made, although the actual bad debt may not occur until future periods. 2. The Allowance for Doubtful Accounts accumulates estimated amounts of accounts receivable that will not be collectible. 3. Accounts Receivable -Allowance for Doubtful Accounts = Net Realizable Value 4. False. In the allowance method, Allowance for Doubtful Accounts would be debited. 5. It has the opposite balance of Accounts Receivable and is deducted from that account. 6. False. It is an adjusting entry, not a closing entry. 7. Reject. The income statement approach is based on net sales on the income statement. 8. Balance sheet approach. 9. A company would age its accounts receivable to identify uncollected amounts due from individual customers by the number of days that they are past due. This would indicate the efficiency of the collection process. 10. a. Allowance for Doubtful Accounts XXX Accounts Receivable XXX b. Accounts Receivable XXX Allowance for Doubtful Accounts XXX Cash XXX Accounts Receivable XXX 11. Both the Allowance account and Accounts Receivable are decreasing by the same amount. 12. The direct write-off method recognizes a bad debts expense when a customer is deemed uncollectible. This method doesn’t fulfill the matching principle. 13. In the direct write-off method, Bad Debts Recovered is a revenue account that is used when a bad debt is reinstated after the fiscal year in which the write-off occurred. 14. Pete could avoid bad debts by use of credit cards. It is common practice to pass on the cost of credit cards to customers. The issue of the allowance method should have minimal influence in his decision.

12-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.

a. b.

Bad Debts Expense Allowance for Doubtful Accounts Bad Debts Expense - Income Statement Allowance for Doubtul Accounts -- Balance Sheet

Expense Asset (Contra)

Debit Credit

Page 3 Date

Account Title and Description

CDE2 a.

Bad Debts Expense

Post Ref.

Dr.

Cr.

7 0 0 00

Allowance for Doubtful Accounts

7 0 0 00

To provide for doubtful accounts based on sales b.

Bad Debts Expense

3 0 0 00

Allowance for Doubtful Accounts

3 0 0 00

To provide for doubtful accounts based on receivables CDE3 #1

Allowance for Doubtful Accounts

1 0 0 00

Accounts Receivable, Mia Kaminsky

1 0 0 00

To transfer uncollectible account #2

Accounts Receivable, Mia Kaminsky

1 0 0 00

Allowance for Doubtful Accounts

1 0 0 00

To reverse entry made (date) Cash

1 0 0 00 Accounts Receivable, Mia Kaminsky

1 0 0 00

To record cash received from Mia Kaminsky CDE4 #1

Bad Debts Expense

1 0 0 00

Accounts Receivable, Mia Kaminsky

1 0 0 00

To write off uncollectible account #2

Accounts Receivable, Mia Kaminsky

1 0 0 00

Bad Debts Recovered

1 0 0 00

To record recovery of bad debt Cash

1 0 0 00 Accounts Receivable, Mia Kaminsky Cash received from Mia Kaminsky

12-2

1 0 0 00

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, cont. CDE5.

A. B. C. D.

Bad Debts Expense Allowance for Doubtful Accounts Income Statement Approach Balance Sheet Approach

CDE6. Page 3 Date

Post Ref.

Account Title and Description a.

Bad Debts Expense

Dr.

Cr.

4 0 0 00

Allowance for Doubtful Accounts

4 0 0 00

To provide for doubtful accounts based on sales b.

Bad Debts Expense

3 0 0 00

Allowance for Doubtful Accounts

3 0 0 00

To provide for doubtful accounts based on receivables CDE7. (reported in thousands of dollars) Accounts receivable

2020 $62,399

2019 $40,219

The company’s accounts receivable policy: Accounts receivable primarily arise out of duty receivables, sales to wholesale accounts, and license and supply arrangements. The allowance for doubtful accounts represents management's best estimate of probable credit losses in accounts receivable. Receivables are written off against the allowance when management believes that the amount receivable will not be recovered. As of January 31, 2021, February 2, 2020, and February 3, 2019, the Company recorded an insignificant allowance for doubtful accounts. CDE8.

1. The amount of accounts receivable that is expected to be collected is called net realizable value. 2. The procedure of classifying accounts of individual customers by age group is called aging the accounts receivable. 3. When using the direct write-off method, Bad Debts Recovered is the account used when an account receivable has been written off and is recovered in a later year than the write-off. 4. The income statement approach is a method that estimates the amount of bad debts expense based on a percentage of net credit sales. 5. The direct write-off method is a method of writing off an account receivable when it is determined that an account is uncollectible. This method does not use the Allowance for Doubtful Accounts and, thus, does not follow the matching principle. 6. The balance sheet approach is a method used to calculate the amount required in the Allowance for Doubtful Accounts to cover expected uncollectibles. This method is based on the Accounts Receivable account and the aging process. 7. Bad Debt Expense is an operating expense account that estimates the amount of credit sales in a given accounting period that are expected to be uncollectible. 8. Allowance for Doubtful Accounts is a contra-asset account that is subtracted from Accounts Receivable to calculate the amount of accounts receivable expected to be collected.

12-3

SOLUTIONS TO EXERCISES—SET A E12-1A. NAYRA CO. PARTIAL BALANCE SHEET DECEMBER 31, 20X1 Current Assets: Cash

$1 1 5 0 0 0 0 0

Petty Cash

6 0 00

Accounts Receivable

$6 0 0 0 0 0 0

Less: Allowance for Doubtful Accounts

12 0 0 0 00

48 0 0 0 00

Merchandise Inventory

18 0 0 0 00

Total Current Assets

$1 8 1 0 6 0 0 0

E12-2A. Date 20X1 Dec

Account Title and Description 31

Post Ref.

Bad Debts Expense

Dr.

Cr.

4 0 0 0 00

Allowance for Doubtful Accounts

4 0 0 0 00

To record Allowance at 4% of net sales

E12-3A. Date 20X1 Dec

Account Title and Description 31

Bad Debts Expense Allowance for Doubtful Accounts To increase Allowance to $8,000, based on aging of Accounts Receivable

12-4

Post Ref.

Dr.

Cr.

3 0 0 0 00 3 0 0 0 00

SOLUTIONS TO EXERCISES-SET A, Cont. E12-4A. a.

Page 5

Date 20X1 Dec

Account Title and Description

Post Ref.

31 Bad Debt Expense

Dr.

Cr.

12 0 0 0 00

Allowance for Doubtful Accounts

12 0 0 0 00

20X2 April

1 Allowance for Doubtful Accounts

4 0 0 0 00

Accounts Receivable, Angie Ring June

4 0 0 0 00

3 Allowance for Doubtful Accounts

3 0 0 0 00

Accounts Receivble, Mike Catuc

3 0 0 0 00

20X2 Aug

7 Accounts Receivable, Mike Catuc

5 0 0 00

Allowance for Doubtful Accounts

5 0 0 00

7 Cash

5 0 0 00

Accounts Receivable, Mike Catuc

5 0 0 00

Page 12

Date 20X2 June

Account Title and Description

Post Ref.

3 Bad Debts Expense

Dr.

Cr.

3 0 0 0 00

Accounts Receivable, Mike Catuc

3 0 0 0 00

20X3 Aug

7 Accounts Receivable, Mike Catuc

5 0 0 00

Bad Debts Recovered

5 0 0 00

7 Cash

5 0 0 00

Accounts Receivable, Mike Catuc

5 0 0 00

E12-5A. Date 20X2

Page 15 Account Title and Description

Post Ref.

Dr.

Cr.

a. Dec 31 Bad Debts Expense

1 0 0 0 00

Allowance for Doubtful Accounts

1 0 0 0 00

(.005 of net sales - $200,000) b. Dec 31 Bad Debts Expense Allowance for Doubtful Accounts

3 2 0 0 00 3 2 0 0 00

To increase Allowance to $2,200, based on aging

12-5

SOLUTIONS TO EXERCISES—SET B E12-1B. Chanlina Corporation Partial Balance Sheet 30 April 20X1 Current Assets Cash Petty Cash Accounts Receivable Less: Allowance for Doubtful Accounts Prepaid Expenses Inventory Total Current Assets

$ 11,500.00 500.00 $ 50,250.00 10,500.00

39,750.00 2,500.00 11,000.00 $ 65,250.00

E12-2B. Date

Account Title and Description

Post Ref.

Dec 31 Bad Debt Expense

Dr.

Cr.

5 5 0 0 00

Allowance for Doubtful Accounts

5 5 0 0 00

To record allowance at 5% of sales

E12-3B. Date

Account Title and Description

Post Ref.

Dec 31 Bad Debt Expense

Dr.

Cr.

6 8 0 0 00

Allowance for Doubtful Accounts

6 8 0 0 00

To increase allowance based on ageing of accounts receivable

E12-4B. Date 20X1

Account Title and Description

Post Ref.

Dr.

Cr.

a. Dec 31 Bad Debt Expense

15 5 0 0 0 0

Allowance for Doubtful Accounts

15 5 0 0 0 0

20X2 April 01

Allowance for Doubtful Accounts

3 5 0 0 00

Accounts Receivable, J Salazar Jan

Allowance for Doubtful Accounts

Accounts Receivable, T Savvy Allowance for Doubtful Accounts

12-6

5 0 0 00

0 0 0 00

5 0 0 00

4 0 0 0 00

Accounts Receivable, T Savvy Aug

1 5 0 0 00

E12-4B., Cont. Date 20X1

Account Title and Description

Post Ref.

Aug 10 Cash

Dr.

Cr.

1 5 0 0 00

Accounts Receivable, T Savvy

1 5 0 0 00

b. Jan

Bad Debt Expense

4 0 0 0 00

Accounts Receivable, T Savvy Aug

4 0 0 0 00

Accounts Receivable, T Savvy

1 5 0 0 00

Accounts Receivable, T Savvy Aug

1 5 0 0 00

Cash

1 5 0 0 00

Accounts Receivable, T Savvy

5 0 0 00

E12-5B. Date 20X1

Account Title and Description

Post Ref.

Dr.

Cr.

a. Dec 31 Bad Debt Expense

3 1 0 0 00

Allowance for Doubtful Accounts

3 1 0 0 00

1% of $310,000 b. Dec 31 Bad Debt Expense Allowance for Doubtful Accounts

6 6 5 0 00 6 6 5 0 00

To increase allowance to $4,150 based on aging

12-7

GROUP A PROBLEMS

P12-1A.

YUEN CO. GENERAL JOURNAL

Date 20X1 Dec

Account Title and Description 31 Bad Debts Expense

Page 14 Post Ref.

Dr.

Cr.

13 0 0 0 00

Allowance for Doubtful Accounts

13 0 0 0 00

To provide for doubtful accounts based on sales 20X2 Jan

7 Allowance for Doubtful Accounts

8 0 0 00

Accounts Receivable, Gene Smore

8 0 0 00

Transfer uncollectible account Mar

5 Allowance for Doubtful Accounts

6 0 0 00

Accounts Receivable, Paul Jane

6 0 0 00

Transfer uncollectible account July

9 Accounts Receivable, Paul Jane

3 0 0 00

Allowance for Doubtful Accounts

3 0 0 00

Reverse entry; now collected 9 Cash

3 0 0 00

Accounts Receivable, Paul Jane

3 0 0 00

To record cash received from Paul Jane Aug

19 Allowance for Doubtful Accounts

1 3 0 0 00

Accounts Receivable, Bob Seager

1 3 0 0 00

Transfer uncollectible account 23 Allowance for Doubtful Accounts

7 5 0 00

Accounts Receivable, Jill Neuman

7 5 0 00

Transfer uncollectible account Nov

19 Accounts Receivable, Bob Seager

4 0 0 00

Allowance for Doubtful Accounts

4 0 0 00

Reverse entry; now collected 19 Cash

4 0 0 00

Accounts Receivable, Bob Seager To record cash received from Bob Seager

12-8

4 0 0 00

GROUP A PROBLEMS, Cont.

P12-2A.

ALVIE CO. GENERAL JOURNAL

Date 20X1 a.

Dec

Account Title and Description

Page 5 Post Ref.

31 Bad Debt Expense

Dr.

Cr.

5 0 5 0 00

Allowance for Doubtful Accounts

5 0 5 0 00

($5,350 = $1,300 + $450 + $1,600 + $2,000; $5,350 − $300 = $5,050) c.

31 Bad Debts Expense

5 6 5 0 00

Allowance for Doubtful Accounts

5 6 5 0 00

($5,350 + $300)

ALVIE CO. PARTIAL BALANCE SHEET DECEMBER 31, 20X1 b.

Current Assets: Cash Accounts Receivable Less: Allowance for Doubtful Accounts

$3 0 0 0 0 0 0 $1 5 2 0 0 0 0 0 5 3 5 0 00

146 6 5 0 00

Merchandise Inventory

12 0 0 0 00

Total Current Assets

$1 8 8 6 5 0 0 0

12-9

GROUP A PROBLEMS, Cont. P12-3A.

T. J. RACK COMPANY GENERAL JOURNAL

Date 20X2 Mar

Account Title and Description 11 Bad Debts Expense

Page 4 Post Ref.

Dr.

Cr.

1 8 0 0 00

Accounts Receivable, S. Rose

1 8 0 0 00

Write off uncollectible account Apr

14 Bad Debts Expense

7 5 0 00

Accounts Receivable, P. Soy

7 5 0 00

Write off uncollectible account 20X3 Nov

6 Accounts Receivable, P. Soy

7 5 0 00

Bad Debts Recovered

7 5 0 00

Recovery of bad debt written off 6 Cash

7 5 0 00

Accounts Receivable, P. Soy

7 5 0 00

To record cash received from P. Soy Dec

8 Bad Debts Expense

2 8 5 00

Accounts Receivable, J. Miller

2 8 5 00

Write off uncollectible account Dec

11 Bad Debts Expense Accounts Receivable, D. Lovejoy Write off uncollectible account

12-10

3 7 5 00 3 7 5 00

GROUP A PROBLEMS, Cont. P12-4A.

DIM SUM COMPANY GENERAL JOURNAL

Date 20X1 Jan

Account Title and Description

Page 2 Post Ref.

8 Accounts Receivable, Ray’s Supply

Dr.

Cr.

1 5 0 0 00

Sales

1 5 0 0 00 Sale of merchandise

15 Allowance for Doubtful Accounts

114

6 0 0 00

Accounts Receivable, Pete Runnels

6 0 0 00

Transfer of uncollectible account Mar

15 Accounts Receivable, Roland Co. Allowance for Doubtful Accounts

4 0 0 00 4 0 0 00

114

To record collection of bad debt 15 Cash

4 0 0 00

Accounts Receivable, Roland Co.

4 0 0 00

Cash received from Roland Co. Apr

9 Cash

4 0 0 00

Allowance for Doubtful Accounts

114

3 6 0 0 00

Accounts Receivable, Lane Drug

4 0 0 0 00

Received portion of receivable and write off balance June

14 Accounts Receivable, Mel’s Garage Allowance for Doubtful Accounts

1 2 0 0 00 1 2 0 0 00

114

Cash

1 2 0 0 00

Accounts Receivable, Mel’s Garage

1 2 0 0 00

Reverse entry of 2010 written off account. Paid June 14 Oct

18 Allowance for Doubtful Accounts

114

1 2 0 0 00

Accounts Receivable, Jane’s Diner

2 0 0 00

Accounts Receivable, Keen Auto

4 0 0 00

Accounts Receivable, Ralph’s Hardware

6 0 0 00

Transfer of uncollectible accounts Nov

12 Accounts Receivable, J. B. Rug

1 9 0 0 00

Sales

1 9 0 0 00 Sale of merchandise

Dec

31 Bad Debts Expense Allowance for Doubtful Accounts

612

6 7 0 0 00 6 7 0 0 00

114

Provide for Doubtful Accounts based on A/R 31 Income Summary Bad Debt Expense

312 612

6 7 0 0 00 6 7 0 0 00

Closing entry

12-11

GROUP A PROBLEMS, Cont. P12-4A., Cont.

DIM SUM COMPANY PARTIAL GENERAL LEDGER

NAME: ALLOWANCE FOR DOUBTFUL ACCOUNTS Date 20X1 Jan

ACCOUNT NO.

Post Ref

Explanation

Debit

Credit

GJ2

Mar

GJ2

Apr

GJ2

Jun

GJ2

Oct

GJ2

Dec

31 Adjusting Entry

GJ2

Date 20X1

4 1 0 0 00

3 5 0 0 00

3 9 0 0 00

3 0 0 00

1 5 0 0 00

3 0 0 00

7 0 0 0 00

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

ACCOUNT NO. Post Ref

Explanation 31

Debit

Credit

Date 20X1

312

DR CR

6 7 0 0 00

GJ2

NAME: BAD DEBTS EXPENSE

Dec

Balance

6 0 0 00

NAME: INCOME SUMMARY

Dec

DR CR

1 Balance 15

114

Balance 6

ACCOUNT NO. Post

Explanation

Debit

Ref

31 Adjusting Entry

GJ2

31 Closing Entry

GJ2

Credit

612

DR CR

7 0 0 00 7 0 0 00

7 0 0 00

Balance 6

7 0 0 00 0

DIM SUM COMPANY PARTIAL BALANCE SHEET DECEMBER 31, 20X1 Current Assets: Cash Accounts Receivable Less: Allowances for Doubtful Accounts Merchandise Inventory

$1 3 0 0 0 0 0 $1 6 0 0 0 0 0 0 7 0 0 0 00

153 0 0 0 00 103 0 0 0 00

Office Supplies

2 1 1 0 00

Prepaid Rent

1 2 5 0 00

Total Current Assets

12-12

$2 7 2 3 6 0 0 0

GROUP B PROBLEMS P12-1B.

SLM COMPANY GENERAL JOURNAL

Date 20X1 Dec

Account Title and Description 31 Bad Debts Expense

Page 14 Post Ref.

Dr.

Cr.

14 8 0 0 00

Allowance for Doubtful Accounts

14 8 0 0 00

Provide for Doubtful Accounts 20X2 Jan

8 Allowance for Doubtful Accounts

1 2 0 0 00

Accounts Receivable, Woody Tree

1 2 0 0 00

Transfer of uncollectible account Mar

5 Allowance for Doubtful Accounts

6 0 0 00

Accounts Receivable, Jim Lantz

6 0 0 00

Transfer of uncollectible account July

9 Accounts Receivable, Jim Lantz

6 0 0 00

Allowance for Doubtful Accounts

6 0 0 00

Reverse entry, now collected 9 Cash

6 0 0 00

Accounts Receivable, Jim Lantz

6 0 0 00

Cash received from Jim Lantz Aug

20 Allowance for Doubtful Accounts

7 5 0 00

Accounts Receivable, Mabel Hest

7 5 0 00

Transfer of uncollectible account 23 Allowance for Doubtful Accounts

9 5 0 00

Accounts Receivable, Jim O’Reilly

9 5 0 00

Transfer of uncollectible account Nov

19 Accounts Receivable, Mable Hest

5 0 0 00

Allowance for Doubtful Accounts

5 0 0 00

Reverse entry, now collected 19 Cash

5 0 0 00

Accounts Receivable, Mable Hest

5 0 0 00

Cash received from Mable Hest

12-13

GROUP B PROBLEMS, Cont. P12-2B.

SOHO CO. GENERAL JOURNAL

Date 20X1 a.

Dec

Account Title and Description

Page 5 Post Ref.

31 Bad Debt Expense

Dr.

Cr.

6 6 0 0 00

Allowance for Doubtful Accounts

6 6 0 0 00

($7,000 = $3,000 + $600 + $1,800 + $1,600: $7,000 − $400 = $6,600) c.

31 Bad Debts Expense

7 4 0 0 00

Allowance for Doubtful Accounts

7 4 0 0 00

($7,000 + $400 = $7,400)

SOHO CO. PARTIAL BALANCE SHEET DECEMBER 31, 20X1 b.

Current Assets: Cash Accounts Receivable Less: Allowance for Doubtful Accounts

12-14

$4 2 0 0 0 0 0 $1 7 3 0 0 0 0 0 7 0 0 0 00

166 0 0 0 00

Merchandise Inventory

12 0 0 0 00

Total Current Assets

$2 2 0 0 0 0 0 0

GROUP B PROBLEMS, Cont. P12-3B.

SANJAY COMPANY GENERAL JOURNAL

Date 20X2 Mar

Account Title and Description 11 Bad Debts Expense

Page 4 Post Ref.

Dr.

Cr.

1 9 5 0 00

Accounts Receivable, Jill Diamond

1 9 5 0 00

Write off uncollectible account Apr

14 Bad Debts Expense

9 0 0 00

Accounts Receivable, Buffy Hall

9 0 0 00

Write off uncollectible account 20X3 Nov

6 Accounts Receivable, Buffy Hall

9 0 0 00

Bad Debts Recovered

9 0 0 00

Recovery of bad debt written off 6 Cash

9 0 0 00

Accounts Receivable, Buffy Hall

9 0 0 00

Cash received from Buffy Hall Dec

10 Bad Debts Expense

8 8 0 00

Accounts Receivable, Joe Francis

8 8 0 00

Write off uncollectible account Dec

15 Bad Debts Expense Accounts Receivable, Joe Martin

4 1 0 00 4 1 0 00

Write off uncollectible account

12-15

GROUP B PROBLEMS, Cont. P12-4B.

LEONARDO COMPANY GENERAL JOURNAL

Date 20X1 Jan

Account Title and Description

Page 2 Post Ref.

8 Accounts Receivable, Lowe’s Supply

Dr.

Cr.

1 9 0 0 00

Sales

1 9 0 0 00 Sale of merchandise

15 Allowance for Doubtful Accounts

114

7 0 0 00

Accounts Receivable, Kevin Reese

7 0 0 00

Transfer of uncollectible account Mar

14 Accounts Receivable, J. James Allowance for Doubtful Accounts

3 0 0 00 3 0 0 00

114

Reversing entry; now collected 14 Cash

3 0 0 00

Accounts Receivable, J. James

3 0 0 00

Cash received from J. James Apr

9 Cash

1 0 0 0 00

Allowance for Doubtful Accounts

114

4 0 0 0 00

Accounts Receivable, Long Drug

5 0 0 0 00

Received portion of receivable and write off balance June

13 Accounts Receivable, Morse’s Garage Allowance for Doubtful Accounts

3 1 0 0 00 3 1 0 0 00

114

Cash

3 1 0 0 00

Accounts Receivable, Morse’s Garage Reverse entry of 2010 written off account. Pd June 13. Oct

18 Allowance for Doubtful Accounts

3 1 0 0 00 . 114

2 9 0 0 00

Accounts Receivable, Sal’s Diner

8 0 0 00

Accounts Receivable, Ring Auto

1 3 0 0 00

Accounts Receivable, Neel’s Hardware

8 0 0 00

Transfer of uncollectible accounts Nov

12 Accounts Receivable, Able Roy

1 9 5 0 00

Sales

1 9 5 0 00

Sale of merchandise Dec

31 Bad Debts Expense Allowance for Doubtful Accounts

612

8 9 0 0 00 8 9 0 0 00

114

Provide for Doubtful Accounts based on A/R 31 Income Summary Bad Debts Expense Closing entry

12-16

312 612

8 9 0 0 00 8 9 0 0 00

GROUP B PROBLEMS, Cont. P12-4B., Cont.

LEONARDO COMPANY PARTIAL GENERAL LEDGER

NAME: ALLOWANCE FOR DOUBTFUL ACCOUNTS Date 20X1

Post Ref

Explanation

Jan

ACCOUNT NO. Debit

1 Balance 15

GJ2

Mar

GJ2

Apr

GJ2

Jun

GJ2

Oct

GJ2

Dec

31 Adjusting Entry

GJ2

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

NAME: INCOME SUMMARY Date 20X1 Dec

Credit

DR CR

Balance

3 3 0 0 00

2 6 0 0 00

2 9 0 0 00

1 1 0 0 00

2 0 0 0 00

9 0 0 00

8 0 0 0 00

ACCOUNT NO.

Explanation 31

Post Ref

Debit

GJ2

8 9 0 0 00

NAME: BAD DEBTS EXPENSE

Credit

Post Ref GJ2

31 Closing Entry

Debit

Credit

Balance

8 9 0 0 00

612

DR CR

Balance

8 9 0 0 00

GJ2

312

DR CR

ACCOUNT NO.

Date Explanation 20X1 Dec 31 Adjusting Entry

114

8 9 0 0 00

LEONARDO COMPANY PARTIAL BALANCE SHEET DECEMBER 31, 20X1 Current Assets: Cash Accounts Receivable Less: Allowances for Doubtful Accounts Merchandise Inventory

$2 4 0 0 0 0 0 $1 7 0 0 0 0 0 0 8 0 0 0 00

162 0 0 0 00 94 0 0 0 00

Office Supplies

3 0 0 0 00

Prepaid Rent

1 2 0 0 00

Total Current Assets

$2 8 4 2 0 0 0 0

12-17

GROUP C PROBLEMS P12-1C.

IBRAHIMA CO. GENERAL JOURNAL

Date 20X1 Dec

Account Title and Description 31 Bad Debts Expense

Page 5 Post Ref.

Dr.

Cr.

11 2 0 0 00

Allowance for Doubtful Accounts

11 2 0 0 00

Provide for Doubtful Accounts based on Sales 20X2 Jan

8 Allowance for Doubtful Accounts

8 5 0 00

Accounts Receivable, Helen Jamison

8 5 0 00

Transfer of uncollectible account Mar

5 Allowance for Doubtful Accounts

4 0 0 00

Accounts Receivable, Rob Hart

4 0 0 00

Transfer of uncollectible account July

9 Accounts Receivable, Rob Hart

2 0 0 00

Allowance for Doubtful Accounts

2 0 0 00

Reverse entry, now collected 9 Cash

2 0 0 00

Accounts Receivable, Rob Hart

2 0 0 00

Cash received from Rob Hart Aug

20 Allowance for Doubtful Accounts

1 6 4 0 00

Accounts Receivable, Brian Brisk

1 6 4 0 00

Transfer of uncollectible account 27 Allowance for Doubtful Accounts

5 2 5 00

Accounts Receivable, Ellen Watt

5 2 5 00

Transfer of uncollectible account Nov

19 Accounts Receivable, Brian Brisk

7 0 0 00

Allowance for Doubtful Accounts

7 0 0 00

Reverse entry, now collected 19 Cash

7 0 0 00

Accounts Receivable, Brian Brisk Cash received from Brian Brisk

12-18

7 0 0 00

GROUP C PROBLEMS, Cont. P12-2C. DOMINION COMPANY GENERAL JOURNAL Date 20XX a.

Dec

Account Title and Description

Page 8 Post Ref.

31 Bad Debts Expense

Dr.

Cr.

3 1 0 0 00

Allowance for Doubtful Accounts

3 1 0 0 00

($760 + $240 + $480 + $520 + $1,800 = $3,800; $3,800 − $700 = $3,100) c.

Dec

31 Bad Debts Expense

4 3 0 0 00

Allowance for Doubtful Accounts

4 3 0 0 00

($3,800 + $500 = $4,300)

DOMINION COMPANY PARTIAL BALANCE SHEET DECEMBER 31, 20XX b.

Current Assets: Cash Accounts Receivable Less: Allowance for Doubtful Accounts Inventory Total Current Assets

$1 6 4 0 0 0 0 $1 0 6 0 0 0 0 0 3 8 0 0 00

102 2 0 0 00 53 7 0 0 00 $1 7 2 3 0 0 0 0

12-19

GROUP C PROBLEMS, Cont. P12-3C.

HASIFA EQUIPMENT COMPANY GENERAL JOURNAL

Date 20X1 Mar

Account Title and Description 23 Bad Debt Expense

Page 9 Post Ref.

Dr.

Cr.

1 2 8 0 00

Accounts Receivable, F. Robichaud

1 2 8 0 00

Write off uncollectible account Jun

7 Bad Debts Expense

9 1 5 00

Accounts Receivable, K. Cheung

9 1 5 00

Write off uncollectible account 20X2 Aug

16 Accounts Receivable, K. Cheung

9 1 5 00

Bad Debts Recovered

9 1 5 00

Recovery of bad debt written off 16 Cash

9 1 5 00

Accounts Receivable, K. Cheung

9 1 5 00

Cash received from K. Cheung Dec

6 Bad Debts Expense

4 1 8 00

Accounts Receivable, S. Lowe

4 1 8 00

Write off uncollectible account 17 Bad Debts Expense Accounts Receivable, R. Patel Write off uncollectible account

12-20

3 1 6 00 3 1 6 00

GROUP C PROBLEMS, Cont. P12-4C.

PROSPECTING SUPPLY COMPANY GENERAL JOURNAL

Date 20XX Jan

Account Title and Description

Post Ref.

8 Accounts Receivable, May Expeditions

Page 2 Dr.

Cr.

4 1 6 0 00

Sales

4 1 6 0 00 Sale of merchandise

Feb

19 Allowance for Doubtful Accounts

1124

6 2 4 00

Accounts Receivable, Avery Fischer

6 2 4 00

Transfer of uncollectible account Mar

6 0 0 00

15 Accounts Receivable, Maximum Co. Allowance for Doubtful Accounts

6 0 0 00

1124

Reverse entry; now collected 6 0 0 00

15 Cash Accounts Receivable, Maximum Co.

6 0 0 00

Cash received from Maximum Co. Apr

5 Cash

1 6 0 0 00

Allowance for Doubtful Accounts

1124

4 8 0 0 00

Accounts Receivable, Airborne Surveys

6 4 0 0 00

Received portion of receivable and write off balance Jul

19 Accounts Receivable, Hallicrafter Explorations Allowance for Doubtful Accounts

3 0 0 0 00 3 0 0 0 00

1124

Reverse entry writing off account in 2010. Pd Jul 19. 19 Cash

3 0 0 0 00

Accounts Receivable, Hallicrafter Explorations

3 0 0 0 00

Cash received from Hallicrafter Explorations Oct

29 Allowance for Doubtful Accounts

1124

1 1 7 6 00

Accounts Receivable, Corbett Co.

2 7 5 00

Accounts Receivable, Quark Co.

6 5 4 00

Accounts Receivable, Lonely Expeditions

2 4 7 00

Transfer of uncollectible accounts Nov

14 Accounts Receivable, Partridge Surveys

4 2 8 0 00

Sales

4 2 8 0 00 Sale of merchandise

Dec

31 Bad Debts Expense Allowance for Doubtful Accounts

6125

3 7 0 0 00 3 7 0 0 00

1124

Provision of Doubtful Accounts based on A/R 31 Income Summary Bad Debts Expense

3100 6125

3 7 0 0 00 3 7 0 0 00

Closing entry

12-21

GROUP C PROBLEMS, Cont. P12-4C., Cont. PROSPECTING SUPPLY COMPANY PARTIAL GENERAL LEDGER NAME: ALLOWANCE FOR DOUBTFUL ACCOUNTS Date 20XX

Post Ref

Explanation

Jan

1 Balance Forward

Feb

GJ2

Mar

GJ2

Apr

GJ2

Jul

GJ2

Oct

GJ2

Dec

31 Adjusting Entry

GJ2

Debit

Dec

Explanation

Dec

Balance

6 1 5 0 00

5 5 2 6 00

6 1 2 6 00

1 3 2 6 00

4 3 2 6 00

3 1 5 0 00

6 8 5 0 00

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

Post Ref

Debit

GJ2

3 7 0 0 00

Post Ref

Debit

31 Adjusting Entry

GJ2

3 7 0 0 00

31 Closing Entry

GJ2

Explanation

DR CR

6 2 4 00

ACCOUNT NO.

3100

DR CR

Balance

3 7 0 0 00

Credit

NAME: BAD DEBTS EXPENSE Date 20XX

1124

Credit

NAME: INCOME SUMMARY Date 20XX

ACCOUNT NO.

6125

DR CR

Balance

3 7 0 0 00

Credit 3 7 0 0 00

PROSPECTING SUPPLY COMPANY PARTIAL BALANCE SHEET DECEMBER 31, 20XX Current Assets: Cash Accounts Receivable Less: Allowance for Doubtful Accounts Office Supplies Merchandise Inventory Prepaid Rent Total Current Assets

12-22

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

135 1 5 0 00 2 6 3 0 00 107 0 0 0 00 3 5 0 0 00 $2 6 5 0 2 2 0 0

GROUP C PROBLEMS, Cont. P12-5C. COMPANY

TODAY’S DATE

INVOICE DATE

DUE DATE

Bill Co.

31 Dec 20X1

03 Oct 20X1

02 Nov 20X1

Doe Co.

31 Dec 20X1

01 Nov 20X1

01 Dec 20X1

Doe Co.

31 Dec 20X1

17 Dec 20X1

16 Jan 20X2

Not Yet Due

Francis Co.

31 Dec 20X1

08 July 20X1

07 Aug 20X1

Francis Co.

31 Dec 20X1

15 Jul 20X1

14 Aug 20X1

146 139

Joe Co.

31 Dec 20X1

06 Sep 20X1

06 Oct 20X1

Jones Co.

31 Dec 20X1

14 May 20X1

13 Jun 20X1

201

Roger Co.

31 Dec 20X1

17 Dec 20X1

16 Jan 20X2

Not Yet Due

Ron Co.

31 Dec 20X1

20 Aug 20X1

19 Sep 20X1

103

CUSTOMER

TOTAL BALANCE

NOT YET DUE DATE

Bill Co.

$ 125

Doe Co.

2,100

Francis Co.

DAYS OVERDUE

DAYS PAST DUE 1-30

31 - 60

61- 90

125 1,200

900

600

Joe Co.

1,200

Jones Co.

1,500

Roger Co.

1,400

Ron Co.

700 $7,625

OVER 90

600 1,200 1,500 1,400 700 900

125

1,200

$2,600

0.01

$ 26

1-30

900

0.03

31-60

125

0.08

61-90

1,200

0.12

144

OVER 90

2,800

0.30

840

NOT DUE YET DAYS PAST DUE:

2,600

2,800

$1,047 − 350 Journal Entry Required

$697

12-23

OA12-1 Mirna Gaymer has just completed her first year of operations. She heard about an Allowance for Doubtful Accounts from other small business owners. Explain to Mirna how the Allowance for Doubtful accounts works and have her understand that it is necessary for her financial statements. Solutions may vary, but here is some information for consideration. Definition of Allowance for Doubtful Accounts The Allowance for Doubtful Accounts is a contra asset account that is used with the balance in Accounts Receivable to report the net realizable value of the receivables. Example of Adjusting the Allowance for Doubtful Accounts The balance in the account Allowance for Doubtful Accounts should be the estimated amount of the company's receivables that will not be turning to cash. For example, if the Allowance for Doubtful Accounts presently has a credit balance of $2,000 and you believe there is a total of $2,900 in Accounts Receivable that will not be collected, you need to enter an additional credit amount of $900 into the Allowance for Doubtful Accounts. The other part of this adjusting entry will be a debit of $900 to Bad Debts Expense. Note that some authors and companies may refer to the allowance account as Allowance for Uncollectible Expense, Allowance for Bad Debts. The related income statement account could have the title of Uncollectible Accounts Expense, Doubtful Accounts Expense, etc. When a company's Allowance for Doubtful Accounts is understated, the Credit balance in this account is too small. This indicates that the company has reported too little of Bad Debts Expense and therefore too much net income reported. Having a credit balance in the Allowance for Doubtful Accounts that is too small also means that the company is reporting too much for the following Balance sheet items: net receivables, total assets, and owner’s equity. Amount Reported as Bad Debts Expense The amount reported in the income statement account Bad Debts Expense pertains to the estimated losses from extending credit during the period shown in the heading of the income statement. The estimated amount of Bad Debts Expense could be based on: • •

A percentage of the company's credit sales during the period, or The change in the total amount needed in the Allowance for Doubtful Accounts based upon the amounts customers owe on the company's accounts receivable.

Amount Reported as Allowance for Doubtful Accounts The balance reported in the balance sheet account Allowance for Doubtful Accounts is the estimated amount of Accounts Receivable that will not be collected. The balance in Allowance for Doubtful Accounts could be based upon: • •

12-24

An aging of the detailed amounts in Accounts Receivable. The result of recording the credit part of the entries to Bad Debts Expense that were based on a percentage of credit sales.

OA12-2 Analysis of Financial Statements – Roots Corporation Roots Corporation or Roots is a publicly held Canadian brand that sells women's, men's, children's, and baby's apparel; leather bags; footwear; active athletic wear; small leather goods; and home furnishings. The company was founded in 1973 by Michael Budman and Don Green. ... Roots opened its first store on Yonge St. near the Rosedale subway station. Roots employs 1,600 people in Canada. Roots started using the beaver logo in 1985 with the launch of its athletic brand. Required: Form groups of 3 and complete the following: Go to the Roots website and find the 2020 Annual Report Required: 1. Refer to the Annual report (page 31) and review the data on Credit Risk

Credit Risk Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s financial instruments that are exposed to concentrations of credit risk are primarily cash, loan receivable and accounts receivable. The Company limits its exposure to credit risk with respect to cash by dealing primarily with large Canadian and U.S. financial institutions. The Company’s accounts receivable consist primarily of receivables from our business partners from the Partners and Other segment, which are settled in the following fiscal quarter. 2. Report the balance in the Accounts Receivable account for this year and last Accounts receivable this year = $7,165 Accounts receivable last year = $7,158, reported in 1,000s of Canadian dollars

OA 12-3 Analysis of Financial Statements As a team, select an industry to analyze. Select a company that interests you. Find its Annual Report on the Internet. Required: Answer the following questions about the company you chose: 1. Find information on Credit Risk 2. Find data relating to Net Accounts Receivable.

12-25

CONTINUING PROBLEM PRECISION COMPUTER CENTRE Allowance Calculation: Accu Pac 50% of $1,450 Balance of Accounts (21,620 - 1,450) × 5%

$ 725.00 1,008.50 $1,733.50

GENERAL JOURNAL Date 20X1 July

Account Title and Description 31 Bad Debts Expense

Post Ref. 5140

Allowance for Doubtful Accounts

Dr.

Cr.

1 7 3 3 50 1 7 3 3 50

1022

To establish necessary allowance at year-end

To write off the Accu Pac account in November would require the following entry:

GENERAL JOURNAL Date 20X1

Account Title and Description

Nov. 30 Allowance for Doubtful Accounts Accounts Receivable - Accu Pac

Post Ref. 1022

Dr. 1 4 5 0 00

1020

To write off the Accu Pac balance

There is no effect on net income for the year ending July 31, 20X2 because of this entry.

12-26

Cr. 1 4 5 0 00

13 Special Journals with Taxes

ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The PST differs from the GST/HST in that not all provinces/territories charge PST. It is sent to the province rather than the federal government. PST paid on purchases cannot be deducted from PST charged like the GST/HST. PST Payable simply accumulates the provincial sales tax to pay the provincial government. 2. Debit, it is a contra account. 3. Value-added tax means that it is added to the total of each invoice prepared for a customer and based on the total value of the goods sold. 4. The purchase requisition doesn’t usually mention the GST/PST because it is an internal form asking permission to buy specific goods. 5. Because PST does not have input tax credits, there is no need to record PST separately in a purchases journal. 6. A credit memorandum would decrease the amount of PST Payable. 7. A cash receipts journal records the receipt of cash from any source. A column for GST Payable is included for cash sales only. A cash payments journal records all payments by cheque. A column for GST Prepaid is included for all cash payments. 8. When a seller issues a credit memorandum with both PST and GST included, Sales Returns and Allowances, GST Payable and PST Payable are debited, and Accounts Receivable is credited. 9. Sales discounts should not be taken on GST or PST amounts. The federal government does not accept discounts on GST Payable. 10. In a given reporting period, it is likely that a successful business will owe some GST or HST. If the business has just purchased a huge inventory or piece of equipment, its input tax credits might exceed the GST Payable. Then the business will receive a refund. 11. To show that the purchaser does not owe as much because the item is being returned. Yes, PST would be included on the debit memorandum. 12. The purchases journal records buying merchandise or other items on account, while the cash payments journal records payment transactions including the payment of items purchased on account. A column for Prepaid GST with regard to the purchase would be included on the purchases journal. The Prepaid GST column on the cash payments journal only applies to cash purchases. 13. The GST/HST paid is deductible from the amount payable on behalf of the federal government. 14. The amount of GST/HST paid on purchases is being reduced, thereby increasing the amount due to the federal government. 15. The question in this case is whether Mel and Joanne should backdate the cheque in order to make the discount period. Although a business should try to pay bills during the discount period, they should avoid backdating a cheque. It is a questionable business practice to backdate a cheque, knowing full well that they missed the discount date. Instead of backdating their cheque, Joanne and Mel should make certain that future bills are paid within the discount period. In Canada, it is sometimes acceptable to allow up to 3 or 4 “days of grace” when dealing with discounts, so it is too strong a comment to conclude that a discount should never be taken in these circumstances.

13-1

SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.

Sales

Revenue

Cr.

Temporary

Sales Returns and

Revenue (Contra)

Dr.

Temporary

Sales Discount

Revenue (Contra)

Dr.

Temporary

PST Payable

Liability

Cr.

Permanent

HST Payable

Liability

Cr.

Permanent

Gross Sales − SRA − SD

$100.00 − 12.00 − 1.76 ($100 – 12 = $88 × 2% = $1.76)

= Net sales

$86.24

Allowances

CDE2.

PST and GST on Sales has no effect on Net Sales. CDE3.

SRA

Revenue (Contra)

Dr.

$300

GST Payable

Liability

Dr.

Accts. Rec., North Corp.

Asset

Cr.

315

CDE5. CDE4.

a. 1,3,4 b. 2,3,4 c. 2,4 d. 6,3,5

CDE6.

Sales

13-2

BLUE CO. SCHEDULE OF ACCOUNTS RECEIVABLE MAY 31, 20XX Bon Co. $105 Green Co. 84 Peke Co. 42 Total Accts. Rec. $231

1. Goods and Services Tax (GST) is a value-added tax introduced in Canada for all provinces in 1991. Presently it is 5%. 2. Credit memorandum is a document sent by the seller to a customer who has returned merchandise previously purchased on account. 3. Quick Method is a simpler way for small businesses to calculate their GST/HST owed based on rates determined by the CRA. 4. GST/HST Charged is the tax amount billed to customers and due to be sent to the federal government. 5. Prepaid GST/HST is an asset account used to accumulate the GST/HST paid or payable to suppliers on goods or services purchased. 6. A liability account in the general ledger that accumulates the amount of provincial sales tax owed is called Provincial Tax (PST). 7. This tax combines the PST and GST in some provinces and is called Harmonized Sales Tax (HST). 8. Debit Memorandum is a memo issued by a purchaser to a seller indicating that some purchase returns and allowances have occurred.

SOLUTIONS TO EXERCISES—SET A E13-1A. Kevin Stone Co 4/19 SJ1 630

Accounts Receivable 4/30 SJ1 1,575

Bill Valley Co. 4/20 SJ1 945

Inventory

112

115 1,125 SJ1 4/30

GST Payable

212 75 SJ1 4/30

Sales

412 1500 SJ1 4/30

Cost of Goods Sold 4/30 SJ1 1125

502

E13-3A. SALES JOURNAL Terms

Invoice No.

Post Ref.

May 17 Ronald Co.

2/10, n/30

147

18 Bass Co.

2/10, n/30

148

20XX

Account Debited

Page 1

✔

Acc. Receivable Dr. 1 2 6 0 00

GST Payable Cr. 6 0 00

Sales Cr. 1 2 0 0 00

Dr. Cost of Goods Sold Cr. Inventory 9 0 0 00

✔

1 9 9 5 00

9 5 00

1 9 0 0 00

1 4 2 5 00

3 2 5 5 00

1 5 5 00

3 1 0 0 00

2 3 2 5 00

(1 1 2)

(2 2 5)

(4 1 1)

(5 02 ) (11 5)

GENERAL JOURNAL May

Page 1

Sales Returns and Allowances

412

7 0 0 00

GST Payable Accounts Receivable, Bass Co. Issued Credit Memo #12

225 112/✔

3 5 00 7 3 5 00

Bass Co. 5/18 SJ1 1,995 735 GJ1 5/21

Accounts Receivable 112 5/31 SJ1 3,255 735 GJ1 5/21

GST Payable 5/21 GJ1 35

Ronald Co. 5/17 SJ1 1,260

Sales

Sales Returns & Allowances 5/21 GJ1 700

Inventory

11 5 2,325 SJ1 5/21

Cost of Goods Sold 5/21 SJ1 2,325

411 3,100 SJ1 5/31

225 155 SJ1 5/21 412

502

13-3

SOLUTIONS TO EXERCISES—SET A, Cont. E11-3A. CASH RECEIPTS JOURNAL Cash Dr.

20XX May

1 2 3 6 00

Sales Discounts Dr. 2 4 00

Accounts Receivable Cr. 1 2 6 0 00

E13-4A.

Page 1 Sales Cr.

GST Payable Cr.

Sundry Account Names

Post Ref.

Ronald Co.

✔

SALES JOURNAL

June 3

Boston Co.

2/10, n/30

218

✔

3 17

Gary Co. Boston Co.

2/10, n/30 2/10, n/30

219 220

✔ ✔

1 2 4 3 00 6 7 8 00

1 4 3 00 7 8 00

1 1 0 0 00 6 0 0 00

8 2 5 00 4 5 0 00

2 7 1 2 00

3 1 2 00

2 4 0 0 00

1 8 0 0 00

(11 3)

(2 12)

( 41 1)

(5 02 ) (1 15) (

Account Debited

Terms

Invoice Post No. Ref.

Page 1

Acc. Receivable Dr. 7 9 1 00

20XX

Amount Cr.

HST Payable Cr. 9 1 00

Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory 7 0 0 00 5 2 5 00

CASH RECEIPTS JOURNAL Cash Dr.

20XX June

2 6 10 16

5 0 0 0 00 2 2 6 00 5 5 5 00 4 5 2 00 6 2 3 3 00 (1 1 1)

13-4

Sales Discounts Dr.

1 0 00 1 0 00 (4 1 3)

Accounts Receivable Cr.

HST Payable Cr.

Page 1 Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory

2 6 00

2 0 0 00

1 5 0 00

5 2 00

4 0 0 00

3 0 0 00

6 0 0 00

4 5 0 00

5 6 5 00 5 6 5 00 (1 1 3)

(2 1 2)

(4 1 1)

Sundry Account Names

Post Ref.

Edna Cares, Capital 311 Cash Sale X ✔ Boston Co. Cash Sale X

Amount Cr. 5 0 0 0 00

5 0 0 0 00 (X)

SOLUTIONS TO EXERCISES—SET A, Cont. E13-4A., Cont. GENERAL JOURNAL Date 20XX June

Account Titles and Description Sales Returns and Allowances HST Collected Accounts Receivable/Boston Co. Issued Credit Memo #24 Inventory Cost of Goods sold

ACCOUNTS SUBSIDIARY LEDGER Boston Co. 6/03 SJ1 791 226 GJ1 6/09 6/17 SJ1 678 565 CRJ1 6/10 6/03 SJ1 1,243

Gary Co.

Inventory 6/09 GJ1 150

115 1,800 SJ1 6/30 450 CRJ1 6/30

Cost of Goods sold 6/30 SJ1 1,800 150.00 GJ1 6/09 6/30 CRJ1 450

Page 1 Post Ref.

Dr.

Cr.

412 212 113/✔

2 0 0 00 2 6 00

115 502

1 5 0 00

2 2 6 00

1 5 0 00

PARTIAL GENERAL LEDGER Cash 6/30 CRJ1 6,233

111

Accounts Receivable 113 6/30 SJ1 2,712 226 GJ1 6/09 565 CRJ1 6/30 HST Payable 6/09 GJ1 26

212 312 SJ1 6/30 78 CRJ1 6/30

Edna Cares, Capital 5,000 Sales

311 CRJ1 6/02

411 2,400 SJ1 6/30 600 CRJ1 6/30

Sales Returns & Allowances 6/9 GJ1 200

412

Sales Discounts 6/30 CRJ1 10

413

EDNA CO. SCHEDULE OF ACCOUNTS RECEIVABLE JUNE 30, 20XX Boston Co. $ 678 Gary Co. 1,243 $ 1.921 Total Accounts Receivable

13-5

SOLUTIONS TO EXERCISES—SET A, Cont. E13-5A. Barr Co. 420 PJ1 6/3 Jess Co.

Inventory 6/30 PJ1 1,200

115

Equipment 600

120

GST Prepaid 6/30 PJ1 90

125

6/9 PJ1

840 PJ1 6/6

Rey Co. 630 PJ1 6/9

Accounts Payable 210 1,890 PJ1 6/30

E13-6A. GENERAL JOURNAL Date 20XX July

Post Ref.

Account Title and Description Accounts Payable, Reel Co. Inventory Prepaid GST Debit Memo #1

Reel Co.

Page 1

211✔

Dr. 4 2 0 00

4 0 0 00 2 0 00

115 125

Inventory

115 400 7/8 GJ1

7/8 GJ1 420 Prepaid GST

125 20

Accounts Payable 7/8 GJ1 420

13-6

Cr.

7/8 GJ1 211

SOLUTIONS TO EXERCISES—SET A, Cont. E13-7A. CASH PAYMENTS JOURNAL Date 20XX April

Chq. No. 2 9

16 30

20 21 22

Post Ref.

Account Debited A. James Company Advertising Expense

✔ 610 125 ✔

B. Foss

Sundry Accounts Dr.

Accounts Payable Dr.

Inventory Cr.

1 0 5 0 00

Cash Cr.

2 0 00

1 0 3 0 00

2 0 00

1 0 5 00 4 2 0 00 1 5 5 5 00

1 0 0 00 5 00 1 0 5 00

4 2 0 00 1 4 7 0 00

(X )

( 21 0)

ACCOUNTS PAYABLE

(11 5)

(11 0)

PARTIAL GENERAL LEDGER

B. Foss 4/16 CPJ2 420

Page 2

Cash 420

110 1,555 CPJ2 4/30

3,000

A. James 4/02 CPJ2 1,050 1,050

Inventory

115 20 CPJ2 4/30

J. Ranch 945

Prepaid GST 4/09 CPJ2 5

125

B. Swanson 210

Accounts Payable 4/30 CPJ2 1,470

210 2,625

Advertising Expense 4/09 CPJ2 100

610

E13-8A. MORGAN’S CLOTHING SCHEDULE OF ACCOUNTS PAYABLE APRIL 30, 20XX J. Ranch B. Swanson

$ 945 210

Total Accounts Payable

Accounts Payable 1,470

$ 1,155

210 2,625 1,155 Balance

E13-9A. SUDBURY OUTDOOR WEAR Quick Method of Accounting for HST Sales $325,000

Quick Rate × 8.8%

To CRA $28,600.00

13-7

SOLUTIONS TO EXERCISES—SET B E13-1B. Kevin Stone Co. 4/19 SJ1 735

Accounts Receivable 4/30 SJ1 1,575

Bill Valley Co. 4/20 SJ1 840

Inventory

112

115 1,125 SJ1 4/30

GST Payable

212 75 SJ1 4/30

Sales

412 1500 SJ1 4/30

Cost of Goods sold 4/30 SJ1 1,125

502

E13-2B. SALES JOURNAL

Ronald Co.

2/10, n/30

246

✔

Bass Co.

2/10, n/30

247

✔

2 3 1 0 00 1 1 0 00

2 2 0 0 00 1 6 5 0 00

3 8 8 5 00 1 8 5 00

3 7 0 0 00 2 7 7 5 00

Account Debited

Invoice Post No. Ref.

Acc. GST Payable Sales Dr. Cost of Cr. Receivable Cr. Goods Sold Dr. Cr. Inventory 1 5 7 5 00 7 5 00 1 5 0 0 00 1 1 2 5 00

20XX May 15

Terms

Page 1

( 11 2)

( 22 5)

( 41 1)

GENERAL JOURNAL May

(5 02 ) ( 11 5) Page 1

Sales Returns and Allowances

412

4 0 0 00

GST Payable Accounts Receivable, Bass Co. Issued Credit Memo #12

225 112/✔

2 0 00 4 2 0 00

Bass Co. 5/19 SJI 2,310 420 GJI 5/23

Accounts Receivable 112 5/31 SJI 3,885 420 GJI 5/21

GST Payable 5/23 GJI 20

Ronald Co. 5/15 SJI 1,575

Sales

Sales Returns & Allowances 5/31 GJI 400

Inventory 115

Cost of Goods Sold 5/31 SJ1 2775

13-8

115 2775 SJ1 5/31

411 3,700 SJI 5/31 502

225 185 SJI 5/31 412

SOLUTIONS TO EXERCISES—SET B, Cont. E13-3B. CASH RECEIPTS JOURNAL 20XX May

Cash Dr. 1 5 4 5 00

Sales Discounts Dr. 3 0 00

E13-4B.

Accounts Receivable Cr.

Invoice No.

Post Ref.

Boston Co.

2/10, n/30

218

Gary Co.

2/10, n/30

219

17 Boston Co.

2/10, n/30

220

Sundry Account Names Ronald Co.

SALES JOURNAL Account Debited

May 3

Sales Cr.

1 5 7 5 00

Terms

20XX

GST Payable Cr.

Page 1 Post Ref.

Amount Cr.

✔

Page 1 Sales Cr.

✔

Acc. Receivable Dr. 1 0 1 7 00

HST Payable Cr. 1 1 7 00

9 0 0 00

Dr. Cost of Goods Sold Cr. Inventory 6 7 5 00

✔

1 3 5 6 00

1 5 6 00

1 2 0 0 00

9 0 0 00

✔

1 2 4 3 00

1 4 3 00

1 1 0 0 00

8 2 5 00

3 6 1 6 00

4 1 6 00

3 2 0 0 00

2 4 0 0 00

( 11 3)

(2 12 )

( 41 1)

CASH RECEIPTS JOURNAL 20XX June

2 6 10 16

Cash Dr. 00 3 3 9 00 8 3 2 50 3 9 5 50

Sales Discounts Dr.

Accounts Receivable Cr.

HST Payable Cr.

Page 1 Sales Cr.

8 0 0 0

9 5 6 7 00 (1 1 1)

1 5 00 1 5 00 (4 1 3)

8 8

(1 1 3)

Sundry Account Names

3 9 00

3 0 0 00

4 5 50

3 5 0 00

Edna Cares, Capital 2 2 5 0 0 Cash Sale Boston Co. 2 6 2 5 0 Cash Sale

4 50

6 5 0 00

4 8 7 50

4 7 50 4 7 50

Dr. Cost of Goods Sold Cr. Inventory

(2 1 2)

(4 1 1)

Post Ref.

311 X ✔ X

Amount Cr. 8 0

0 0 00

8 0

0 0 00

(X)

13-9

SOLUTIONS TO EXERCISES—SET B Cont. E11-4B., Cont. GENERAL JOURNAL Date 20XX June 9

Page 1 Post Ref.

Account Titles and Description Sales Returns and Allowances HST Collected Accounts Receivable/Boston Co. Issued Credit Memo #24 Inventory Cost of Goods Sold ACCOUNTS RECEIVABLE LEDGER

Dr.

412 212 113/✔

1 5 0 00 1 9 50

115 502

1 1 2 50

1 6 9 50

1 1 2 50

PARTIAL GENERAL LEDGER

Boston Co. 6/03 SJ1 1,017.00 169.50 GJ1 6/09 6/17 SJ1 1,243.00 847.50 CRJ1 6/10

Cash 6/30 CRJ1 9,567.00

Gary Co. 6/03 SJ1 1,356.00

Accounts Receivable 6/30 SJ1 3,616.00 Inventory 6/09 GJ1

112.50

HST Payable 6/09 GJ1 19.50 Edna Cares, Capital

111

169.50 GJ1 847.50 CRJ1

113 6/09 6/30

2,400 SJ1 487.50 CRJ1

115 6/30 6/30

416.00 SJ1 84.50 CRJ1

212 6/30 6/30

311 8,000.00 CRJ1 6/02

Sales 3,200.00 SJ1 650.00 CRJ1

EDNA CO. SCHEDULE OF ACCOUNTS RECEIVABLE JUNE 30, 20XX Boston Co. Gary Co.

$ 1,243.00 1,356.00

Total Accounts Receivable

$ 2,599.00

13-10

Cr.

411 6/30 6/30

Sales Returns & Allowances 6/9 GJ1 150.00

412

Sales Discounts 6/30 CRJ1 15.00

413

Cost of Goods Sold 6/30 SJ1 2,400 6/30 CRJ1 487.50

112.50 GJ1

502 6/09

SOLUTIONS TO EXERCISES—SET B, Cont.

E13-5B.

Barr Co.

115

525 PJ1 6/3

Inventory 6/30 PJ1 1,400

120

945 PJ1 6/6

6/9 PJ1

Equipment 400

6/30 PJ1

GST Prepaid 90

125

420 PJ1 6/9

Accounts Payable 1,890 PJ1

210 6/30

Jess Co.

Rey Co.

E13-6B. GENERAL JOURNAL Date 20XX July

Post Ref.

Account Title and Description Accounts Payable, Reel Co. Inventory Prepaid GST Debit Memo #1 (invoice #632)

Reel Co. 7/8 GJ1 262.60

Page 1

211/✔

Dr. 2 6 2 50

2 5 0 00 1 2 50

115 125

Inventory

115 250.00

Prepaid GST

Accounts Payable

7/7 GJ1 125

12.50

7/7 GJ1

Cr.

7/8 GJ1 211

262.50

13-11

SOLUTIONS TO EXERCISES—SET B, Cont. E13-7B. CASH PAYMENTS JOURNAL Date 20XX April

Account Debited

Post Ref.

200 A. James Company 201 Advertising Expense

Sundry Accounts Dr.

✔ 610 125 ✔

1 0 0 00 5 00

Chq. No. 3 8

15 202 B. Foss 30

Page 2

Accounts Payable Dr. 1 1 5 5 00

Inventory Cr. 2 2 00

1 0 5 00 6 3 0 00

6 3 00 0 1 0 5 00

1 7 8 50 0

(X )

( 21 0)

ACCOUNTS PAYABLE

2 2 00

( 11 0)

PARTIAL GENERAL LEDGER

B. Foss 4/15 CPJ2 630 630

Cash

A. James 4/03 CPJ2 1,155 1,155

Inventory

110 1,868.00 CPJ24/30

2,000.00

22.00

J. Ranch 840

Prepaid GST 4/08 CPJ2

B. Swanson 315

Accounts Payable 4/3 0 CPJ2 1,785.00

125

210 2,940.00

JACKIE’S CLOTHING SCHEDULE OF ACCOUNTS PAYABLE APRIL 30, 20XX J. Ranch B. Swanson

$ 840.00 315.00

Total Accounts Payable Accounts Payable 1,785.00

$ 1,155.00 210 2,940.00 1,155 Balance

E13-9B. SUDBURY OUTDOOR WEAR Quick Method of Accounting for HST Sales $280,000

Quick Rate 4.4% ×

115 CPJ2 4/30

5.00

E13-8B.

1 8 6 8 00

(11 5)

Advertising Expense 4/09 CPJ2 100.00

13-12

Cash Cr. 1 1 3 3 00

To CRA $12,320.00

610

GROUP A PROBLEMS P13-1A. BRITTNEY’S COSMETIC MARKET SALES JOURNAL Date 20XX April

Customer

Sales Invoice

Post Ref.

Accounts Receivable Dr.

Page 1 PST Payable Cr.

GST Payable Cr.

Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory

Alice Koy Co.

1001

✔

3 3 6 00

2 1 00

1 5 00

3 0 0 00

2 2 5 00

9 22 23

Marika Sanchez Co. Jeff Tong Co. Rusty Neal Co.

1002 1003 1004

✔ ✔ ✔

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

7 0 00 3 5 00 5 6 00

5 0 00 2 5 00 4 0 00

1 0 0 0 00 5 0 0 00 8 0 0 00

7 5 0 00 3 7 5 00 6 0 0 00

Marika Sanchez Co.

1005

✔

4 4 8 00

2 8 00

2 0 00

4 0 0 00

3 0 0 00

3 3 6 0 00

2 1 0 00

1 5 0 00

3 0 0 0 00

2 2 5 0 00

(1 2)

(2 0)

(2 2)

(4 0)

(5 0)

(1 5)

13-13

GROUP A PROBLEMS, Cont. P13-1A., Cont. BRITTNEY’S COSMETIC MARKET CASH RECEIPTS JOURNAL Date 20XX April

Cash Dr. 2

6 0 0 0 00

5 5 19 26 26 30

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

Accounts Receivable Dr.

13-14

GST Payable Cr.

3 5 0 00 2 5 0 00 1 4 0 00 1 0 0 00

Sales Cr.

5 0 0 0 00 2 0 0 0 00

5 6 0 00 7 0 00 5 0 00 2 1 0 00 1 5 0 00

1 0 0 0 00 3 0 0 0 00

Dr. Cost of Goods Sold Cr. Inventory 37 5 0 15 0 0 7 5 0 2 2 5 0

00 00 00 00

4 4 8 00

19 3 2 8 0 0 1 0 0 8 0 0 (1 0)

PST Payable Cr.

Page 1

(1 2)

7 7 0 0 0 5 5 0 0 0 11 0 0 0 0 0 (2 0)

(2 2)

(4 0)

8 2 5 0 00 (5 0)

(1 5)

Description of Receipt

Post Ref.

Sundry Cr.

Brittney Good, Capital

6 0 0 0 00

Cash Sales Cash Sales Marika Sanchez Co. Cash Sales Cash Sales Marika Sanchez Co.

X X

✔ X X

✔ 6 0 0 0 00 (X )

GROUP A PROBLEMS, Cont. P13-1A., Cont. BRITTNEY’S COSMETIC MARKET GENERAL JOURNAL Date 20XX April 12

Page 1 Post Ref.

Account Title and Description Sales Returns and Allowances, Lipstick PST Payable GST Payable Accounts Receivable, Alice Koy Co. Issued Credit Memo #10

42 20 22

Dr. 1 5 0 00 1 0 50 7 50

1 6 8 00

12/✔

Sales Returns and Allowances, Lipstick PST Payable GST Payable Accounts Receivable, Jeff Tong Co. Issued Credit Memo #11

42 20 22

2 0 0 00 1 4 00 1 0 00 2 2 4 00

12/✔

Inventory Cost of Goods Sold

Cr.

1 5 0 00 1 5 0 00

BRITTNEY’S COSMETIC MARKET ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS Date 20XX April 8 12

NAME ADDRESS Date 20XX April 23

ALICE KOY CO.

Explanation

Post Ref.

Debit

SJ1

3 3 6 00

Credit 1 6 8 00

GJ1

Dr. Balance 3 3 6 00 1 6 8 00

RUSTY NEAL CO.

Explanation

Post Ref.

Debit

SJ1

8 9 6 00

Credit

Dr. Balance 8 9 6 00

13-15

GROUP A PROBLEMS, Cont. P13-1A., Cont. BRITTNEY’S COSMETIC MARKET ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

MARIKA SANCHEZ CO.

Date 20XX April 9 19 29 30

Explanation

Post Ref.

Debit

SJ1

1 1 2 0 00

Credit

4 4 8 00

1 1 2 0 00 5 6 0 00 1 0 0 8 00 5 6 0 00

Credit

Dr. Balance

5 6 0 00

CRJ1

4 4 8 00

SJ1 CRJ1

NAME ADDRESS

Dr. Balance

JEFF TONG CO.

Date 20XX April 22 23

Explanation

Post Ref.

Debit

SJ1

5 6 0 00 2 2 4 00

5 6 0 00 3 3 6 00

ACCOUNT NO.

GJ1

BRITTNEY’S COSMETIC MARKET PARTIAL GENERAL LEDGER NAME:

CASH

Date 20XX April 30

NAME:

Explanation

Debit

CRJ

19 3 2 8 00

ACCOUNTS RECEIVABLE

Date 20XX April 12 23 30 30

NAME:

Explanation

Credit

DR CR

Balance

19 3 2 8 00

ACCOUNT NO. Post Ref.

Debit

GJ1 GJ1 SJ1

3 3 6 0 00

CRJ

INVENTORY

Date 20XX April 23 30 30

13-16

Post Ref.

Credit

DR CR

Balance

1 6 8 0 0 Cr 2 2 4 0 0 Cr Dr 1 0 0 8 0 0 Dr

1 6 8 00 3 9 2 00 2 9 6 8 00 1 9 6 0 00

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

1 5 0 00

SJ1 CRJ1

Credit

DR CR Dr

2 2 5 0 00 8 2 5 0 00

Cr. Cr.

15 Balance

1 5 0 00 2 1 0 0 00 10 3 5 0 0 0

GROUP A PROBLEMS, Cont. P13-1A., Cont. BRITTNEY’S COSMETIC MARKET PARTIAL GENERAL LEDGER NAME: PST PAYABLE Date 20XX April 12 23 30 30

ACCOUNT NO. Explanation

Post Ref. GJ1 GJ1

Debit 1 0 50 1 4 00

SJ1 CRJ1

NAME: GST PAYABLE Date 20XX

Credit

DR CR

Dr Dr 2 1 0 0 0 Cr 7 7 0 0 0 Cr

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

Balance 1 0 50 2 4 50 1 8 5 50 9 5 5 50

DR CR

Balance

April 12

GJ1

7 50

GJ1

1 0 00

1 7 50

SJ1

1 5 0 00

1 3 2 50

CRJ1

5 5 0 00

6 8 2 50

NAME: BRITTNEY GOOD, CAPITAL Date 20XX April

Explanation 2

ACCOUNT NO. Post Ref.

Debit

DR CR

6 0 0 0 00

CRJ1

NAME: SALES Date 20XX

Credit

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

Balance 6 0 0 0 00

DR CR

Balance

April 30

SJ1

3 0 0 0 00

CRJ1

11 0 0 0 0 0

14 0 0 0 0 0

NAME: SALES RETURNS AND ALLOWANCES Date 20XX

ACCOUNT NO.

Post Ref.

Debit

April 12

GJ1

1 5 0 00

GJ1

2 0 0 00

3 5 0 00

Explanation

Credit

Balance

13-17

GROUP A PROBLEMS, Cont. P13-1A., Cont. BRITTNEY’S COSMETIC MARKET PARTIAL GENERAL LEDGER NAME: COST OF GOODS SOLD Date 20XX

ACCOUNT NO. Post Ref.

Explanation

April 23

GJ1

SJ1

CRJ1

Debit

Credit 1 5 0 00

DR CR

50 Balance

Cr.

1 5 0 00

2 2 5 0 00

Dr.

2 1 0 0 00

8 2 5 0 00

Dr.

10 3 5 0 0 0

BRITTNEY’S COSMETIC MARKET SCHEDULE OF ACCOUNTS RECEIVABLE APRIL 30, 20XX Alice Koy Co.

$ 1 6 8 00

Rusty Neal Co. Marika Sanchez Co. Jeff Tong Co.

8 9 6 00 5 6 0 00 3 3 6 00

Total Accounts Receivable

$1 9 6 0 0 0

P13-2A. ALANDA’S SCUBA SHOP SALES JOURNAL Date Invoice 20XX No. Apr 3 7 8 14 28

13-18

614 615 616 617 618

Customer’s Name John Co. Diane Co. J. Fellowes Tyler Co. Lucas Meyer

Post Ref.

✔ ✔ ✔ ✔ ✔

Page 11

Accounts Receivable Dr.

HST Payable Cr.

Merchandise Sales Cr.

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

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

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

(1 2 0)

(2 2 1)

(4 0 0)

Dr. Cost of Goods Sold Cr. Inventory

(50 2)

(1 25)

GROUP A PROBLEMS, Cont. P13-2A., Cont. ALANDA’S SCUBA SHOP CASH RECEIPTS JOURNAL Date 20XX April

Accounts Receivable Cr.

Cash Dr.

1 11 15 18

15 0 0 0 0 0 5 5 5 00 1 3 3 2 00 1 8 0 8 00

5 6 5 00 1 3 5 6 00

21 22 25

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

25 7 8 4 0 0

4 5 2 0 00

(1 10 )

(1 20 )

HST Payable Cr.

Merchandise Sales Cr.

Sales Discounts Dr.

Page 12 Dr. Cost of Goods Sold Cr. Inventory

Post Ref.

Sundry Cr.

300

15 0 0 0 0 0

1 2 0 0 00

A. Murray, Capital John Co. Diane Co. Cash Sales

✔ ✔

3 0 0 0 00

Lucas Meyer Tyler Co. Cash Sales

1 0 00 2 4 00 2 0 8 00

1 6 0 0 00

9 0 4 00 6 9 5 00

3 0 00 5 2 0 00

4 0 0 0 00

7 2 8 00

(2 21 )

0 0 00

(4 00 )

4 00

(4 04 )

4 2 0 0 00 (50 2)

(1 25)

Description of Receipt

✔ ✔ X

15 0 0 0 0 0 (X)

13-19

GROUP A PROBLEMS, Cont. P13-2A., Cont. ALANDA’S SCUBA SHOP GENERAL JOURNAL Date 20XX April 18

Page 13 Post Ref.

Account Title and Description Sales Returns and Allowances HST Payable Accounts Receivable, Tyler Co. Issued Credit Memo #101

402 221

Dr. 5 0 0 00 6 5 00

5 6 5 00

120/✔

Sales Returns and Allowances HST Payable Accounts Receivable, Lucas Meyer Issued Credit Memo #102

402 221

8 0 0 00 1 0 4 00 9 0 4 00

120/✔

Inventory Cost of Goods Sold

125

Cr.

6 0 0 00 6 0 0 00

502

ALANDA’S SCUBA SHOP ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS Date 20XX April 1 21 28 29

NAME ADDRESS Date 20XX April 1 8

13-20

LUCAS MEYER

Explanation

Post Ref.

Debit

Credit

Balance

Dr. Balance 9 0 4 00

CRJ12 SJ11

9 0 4 00

5 6 5 0 00 4 7 4 6 00

Credit

Dr. Balance

5 6 5 0 00

GJ13

J. FELLOWES

Explanation

Post Ref.

Debit

Balance

SJ11

3 3 9 00

1 4 1 2 50 1 7 5 1 50

GROUP A PROBLEMS, Cont. P13-2A., Cont. ALANDA’S SCUBA SHOP ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

DIANE CO.

Date 20XX April

1 7 15

Explanation

1 3 5 6 00

Dr. Balance

0 1 3 5 6 00 1 3 5 6 00

Credit

Dr. Balance

TYLER CO.

Explanation

Post Ref.

Debit

SJ11

2 2 6 0 00

Balance 5 6 5 00 1 6 9 5 00

GJ13 CRJ1

NAME ADDRESS Date 20XX April 1 3 11

SJ11

Credit

SRJ12

Date 20XX 1 14 18 22

Debit

Balance

NAME ADDRESS

April

Post Ref.

2 2 6 0 00 1 6 9 5 00

JOHN CO.

Explanation

Post Ref.

Debit

SJ11

5 6 5 00

Credit

Dr. Balance

5 6 5 00

5 9 3 25 1 1 5 8 25 5 9 3 25

Balance CRJ1

ALANDA’S SCUBA SHOP PARTIAL GENERAL LEDGER NAME: CASH Date 20XX April 1 30

ACCOUNT NO. Explanation

Post Ref.

Debit

CRJ12

25 7 8 4 00

Balance

DR CR Dr

NAME: ACCOUNTS RECEIVABLE Date 20XX April 1 18 29 30 30

Credit

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

Balance

DR CR Dr

5 6 5 00 9 0 4 00

GJ13 GJ13 SJ11 CRJ12

10 1 7 0 00

Dr Dr Dr

4 5 2 0 00

110 Balance 1 9 5 3 56 27 7 3 7 56

120 Balance 2 9 0 9 75 2 3 4 4 75 1 4 4 0 75 11 6 1 0 7 5 7 0 9 0 75

13-21

GROUP A PROBLEMS, Cont. P13-2A., Cont. ALANDA’S SCUBA SHOP PARTIAL GENERAL LEDGER NAME: INVENTORY Date 20XX April 29 30 30

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ3

6 0 0 00

CRJ12

NAME: HST PAYABLE Explanation

Post Ref. GJ13 GJ13

Debit

Post Ref.

Debit

Post Ref.

Debit

13-22

Cr Cr

Credit 9 0 0 0 00 5 6 0 0 00

CRJ12

DR CR Cr

Debit

Balance

Credit

DR CR Cr Cr

GJ13

5 0 0 00 8 0 0 00

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

Balance 28 0 0 0 00 43 0 0 0 00

Balance 74 5 2 3 48 83 5 2 3 48 89 1 2 3 48 402

DR CR Dr

GJ13

Balance

400

ACCOUNT NO. Post Ref.

6 0 0 00 6 1 5 0 00 10 3 5 0 0 0

300

Cr SJ11

Explanation

1 18 29

ACCOUNT NO.

Balance

Date 20XX

15 0 0 0 00

CRJ12

NAME: SALES RETURNS AND ALLOWANCES

April

Credit

Balance

221

Balance

Explanation

1 30 30

Cr.

ACCOUNT NO.

NAME: MERCHANDISE SALES

April

Cr.

1 1 7 0 00 7 2 8 00

SJ11

Explanation

Credit

6 5 00 1 0 4 00

CRJ12

Date 20XX

ACCOUNT NO.

NAME: ALANDA MURRAY, CAPITAL Date 20XX April 1 1

DR Dr

6 7 5 0 00 4 2 0 0 00

SJ11

Date 20XX April 18 29 30 30

Credit

125

Dr Dr

Balance 7 5 2 50 1 2 5 2 50 2 0 5 2 50

GROUP A PROBLEMS, Cont. P13-2A., Cont. NAME: SALES DISCOUNTS Date 20XX April 30

ACCOUNT NO.

Explanation

Post Ref. CRJ12

Debit 6 4 00

NAME: COST OF GOODS SOLD Date 20XX April 29 30 30

Explanation

Credit

DR CR Dr

ACCOUNT NO. Post Ref.

Debit

6 0 0 00

GJ3 SJ11 CRJ12

Credit

6 7 5 0 00 4 2 0 0 00

DR CR Cr. Dr. Dr.

404 Balance 6 4 00

50 Balance 6 0 0 00 6 1 5 0 00 10 3 5 0 0 0

ALANDA’S SCUBA SHOP SCHEDULE OF ACCOUNTS RECEIVABLE APRIL 30, 20XX Lucas Meyer

$4 7 4 6 00

J. Fellowes John Co.

1 7 5 1 50 5 9 3 25

Total Accounts Receivable

$7 0 9 0 7 5

13-23

GROUP A PROBLEMS, Cont. P13-3A. MELANIE’S NATURAL FOOD STORE PURCHASES JOURNAL Date 20XX May

8 11 14 18 25

Account Credited

Date of Inv. Invoice No.

Aton Co. Broward Co. Midden Co. Relar Co. Midden Co.

5/7 5/11 5/11 5/18 5/22

13-24

Terms

400 2/10, n/60 120 2/10, n/60 510 810 516 2/10, n/30

Post Ref.

✔ ✔ ✔ ✔ ✔

Accounts Payable Cr.

Inventory Dr.

6 3 0 00 1 2 6 0 00 7 3 5 00 5 8 8 00 6 8 2 50

6 0 0 00 1 2 0 0 00

3 8 9 5 50

1 8 0 0 00

(2 10 )

(1 15 )

Prepaid GST Dr. 3 0 00 6 0 00 3 5 00 2 8 00 3 2 50

Page 10 Store Supplies Dr.

Sundry Dr. Account

Amount

7 0 0 00 Office Equipment 120

5 6 0 00

6 5 0 00

1 8 5 50 1 3 5 0 00

5 6 0 00

(1 12 )

(X)

(1 10 )

GROUP A PROBLEMS, Cont. P13-3A., Cont. MELANIE’S NATURAL FOOD STORE GENERAL JOURNAL Date 20XX May

Post

Account Title and Description 15

Accounts Payable, Aton Co. Prepaid GST Inventory Issued Debit Memo #8

Ref. 210/✔

Page 2 Dr.

Cr.

4 2 0 00 2 0 00 4 0 0 00

112 115

MELANIE’S NATURAL FOOD STORE ACCOUNTS PAYABLE LEDGER NAME: ADDRESS: Date 20XX May 1 8 15 NAME: ADDRESS: Date 20XX May 1 11

NAME: ADDRESS: Date 20XX May 1 14 25 NAME: ADDRESS: Date 20XX May 1 18

ATON CO.

Explanation

Post Ref.

Debit

Credit

Cr. Balance

6 3 0 00

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

Credit

Cr. Balance

1 2 6 0 00

6 3 0 00 1 8 9 0 00

Credit

Cr. Balance

7 3 5 00 6 8 2 50

1 2 6 0 00 1 9 9 5 00 2 6 7 7 50

Credit

Cr. Balance

5 8 8 00

5 2 5 00 1 1 1 3 00

Balance PJ10 GJ2

4 2 0 00

BROWARD CO.

Explanation

Post Ref.

Debit

Balance PJ10

MIDDEN CO.

Explanation

Post Ref.

Debit

Balance PJ10 PJ10

RELAR CO.

Explanation

Post Ref.

Debit

Balance PJ10

13-25

GROUP A PROBLEMS, Cont. P13-3A., Cont. MELANIE’S NATURAL FOOD STORE PARTIAL GENERAL LEDGER NAME: STORE SUPPLIES Date 20XX May 31

ACCOUNT NO.

Explanation

Post Ref.

Debit

PJ10

1 3 5 0 00

Credit

ACCOUNT NO. Post Ref.

Explanation

Debit

Credit

Balance PJ10

1 8 5 50

Dr Dr

Post Ref.

Debit

Credit

Balance

DR CR Dr

4 0 0 00

GJ2 PJ10

1 8 0 0 00

Dr Dr

NAME: OFFICE EQUIPMENT

ACCOUNT NO.

Explanation

Post Ref.

Debit

PJ10

5 6 0 00

Credit

DR CR Dr

NAME: ACCOUNTS PAYABLE Date 20XX May 1 15 31

ACCOUNT NO. Explanation

Date 20XX May 18

DR Dr

2 0 00

GJ2

NAME: INVENTORY Date 20XX May 1 15 31

CR Dr

NAME: PREPAID GST Date 20XX May 1 15 31

ACCOUNT NO. Post Ref.

Explanation

Debit

Credit

Balance GJ2 PJ10

4 2 0 00

Balance 1 3 5 0 00

112 Balance 4 7 1 00 4 5 1 00 6 3 6 50 115 Balance 16 0 0 0 00 15 6 0 0 00 17 4 0 0 00 120 Balance 5 6 0 00 210

DR CR

Balance

2 8 3 5 00 2 4 1 5 00 6 3 1 0 50

3 8 9 5 50

110

MELANIE’S NATURAL FOOD STORE SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Aton Co. Broward Co. Midden Co. Relar Co. Total Accounts Payable

13-26

$ 6 3 0 00 1 8 9 0 2 6 7 7 1 1 1 3 $6 3 1 0

00 50 00 50

GROUP A PROBLEMS, Cont. P13-4A. BROWN’S COMPUTER CENTRE CASH PAYMENTS JOURNAL

Date 20XX May

Chq. No. 3 3 7 17 24 27 28 31 31

21 22 23 24 25 26 27 28

Account Debited Jerry Co. Delivery Truck Cash Purchase Cash Purchase Ryan Co. Rent Expense Utilities Expense Evan Co.

Post Ref.

Sundry Dr.

✔ 150

Accounts Payable Dr. 3 1 5 00

8 0 0 0 00

Inventory Dr.

2 0 0 0 00 3 0 0 00

Inventory Cr. 6 00

3 9 0 0 00 8 0 0 00

1 4 7 0 00

✔ 620

Prepaid GST Dr. 4 0 0 00 1 9 5 00 4 0 00

610

Page 5

2 8 00 1 0 0 00 1 5 00

4 2 0 00

✔ 10 3 0 0 0 0

2 2 0 5 00

7 5 0 00

4 7 0 0 00

( X)

( 21 0)

( 13 2)

( 11 5)

Cash Cr. 3 0 9 00 8 4 0 0 00 4 0 9 5 00 8 4 0 00 1 4 4 2 00 2 1 0 0 00 3 1 5 00 4 2 0 00

3 4 0 0 17 9 2 1 0 0 (1 15 )

( 11 0)

13-27

GROUP A PROBLEMS, Cont. P13-4A., Cont. ACCOUNTS PAYABLE LEDGER NAME: ADDRESS: Date 20XX May 1

ADAM CO.

Cr. Balance 1 2 6 0 00

Post Ref.

Explanation

Debit

Credit

Cr. Balance

Balance CPJ5

3 1 5 00

Post Ref.

Debit

6 3 0 00 3 1 5 00

EVAN CO.

Explanation

Credit

Cr. Balance

Balance

NAME: ADDRESS: Date 20XX May 1 24

Credit

JERRY CO.

NAME: ADDRESS: Date 20XX May 1 31

Debit

Balance

NAME: ADDRESS: Date 20XX May 1 3

Post Ref.

Explanation

CPJ5

4 2 0 00

Post Ref.

Debit

8 4 0 00 4 2 0 00

RYAN CO.

Explanation

Credit

Cr. Balance

Balance

1 4 7 0 00 CPJ5

1 4 7 0 00

PARTIAL GENERAL LEDGER NAME: CASH Date 20XX May 1 31

ACCOUNT NO. Explanation

Post Ref.

Debit

Balance

13-28

DR CR Dr

17 9 2 1 00

CPJ5

NAME: INVENTORY Date 20XX May 31 31

Credit

ACCOUNT NO. Explanation

Post Ref.

Debit

CPJ5

4 7 0 0 00

CPJ5

Credit

DR CR Dr

3 4 00

110 Balance 17 0 0 0 00 9 2 1 00

115 Balance 4 7 0 0 00 4 6 6 6 00

GROUP A PROBLEMS, Cont. P13-4A., Cont. PARTIAL GENERAL LEDGER NAME: PREPAID GST Date 20XX May 1 31

Explanation

ACCOUNT NO. Post Ref.

Debit

Balance CPJ5

Date 20XX May 3

7 5 0 00

Explanation

Post Ref.

Debit

CPJ5

8 0 0 0 00

Credit

Post Ref.

Debit

Credit

Balance 2 2 0 5 00

Explanation

Debit

8 0 0 0 00

DR CR

CPJ5

2 0 0 0 00

NAME: UTILITIES EXPENSE Explanation

Credit

Debit

CPJ5

3 0 0 00

Credit

210 Balance 4 2 0 0 00 1 9 9 5 00

610

DR CR

Balance

2 0 0 0 00

ACCOUNT NO. Post Ref.

150

ACCOUNT NO. Post Ref.

9 2 0 00 1 6 7 0 00

Balance

Cr CPJ5

Balance

DR CR

ACCOUNT NO.

NAME: RENT EXPENSE

Date 20XX May 28

ACCOUNT NO.

NAME: ACCOUNTS PAYABLE

Date 20XX May 27

DR CR Dr

NAME: DELIVERY TRUCK

Date 20XX May 1 31

Credit

132

620

DR CR

Balance

3 0 0 00

BROWN’S COMPUTER CENTRE SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Adam Co. Jerry Co. Evan Co. Total Accounts Payable

$1 2 6 0 3 1 5 4 2 0 $1 9 9 5

00 00 00 00

13-29

GROUP A PROBLEMS, Cont. P13-5A.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE PURCHASES JOURNAL

Date 20XX May

1 8 12 19 26 28

Account Credited

Date of Invoice

Inv.

Maggie Co. Maggie Co. Adam Co. Sam Katz Garage Woody Smith Maggie Co.

3/1 3/8 3/12 3/19 3/26 3/26

410

13-30

No.

415 311

Terms 2/10, n/30 2/10, n/30 1/15, n/60

111 211 436

2/10, n/30 2/10, n/30

Post Ref.

✔ ✔ ✔ ✔ ✔ ✔

Page 10

Accounts Payable Cr.

Inventory Dr.

Prepaid HST Dr.

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

4 0 0 0 00 1 2 0 0 00 4 0 0 0 00 4 8 0 0 00 1 4 0 0 00

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

20 7 9 2 00

15 4 0 0 0 0

2 3 9 2 00

3 0 0 0 00

( 21 0)

( 11 5)

( 11 6)

(X)

Sundry Dr. Account

Amount

Delivery Truck

121

3 0 0 0 00

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE CASE PAYMENTS JOURNAL

Date 20XX May

Chq. No. 1 11 11 15 22 25 29 31

1 2 3 4 5 6

Account Debited Prepaid Rent Cleaning Expense Maggie Co. Salaries Expense Adam Co. Cash Purchase Maggie co.

Post Ref. 114 612

Sundry Dr. 3 0 0 0 00 3 0 0 00

Prepaid HST Dr.

Inventory Dr.

Inventory Cr.

3 9 0 00 3 9 00

Cash Cr.

2 8 00

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

3 9 0 0 00

9 4 9 2 00

5 0 7 0 00

6 0 0 00

1 3 8 0 00

14 3 6 1 0 0

( X)

( 21 0)

( 11 6)

( 11 5)

(1 15 )

( 11 0)

4 5 2 0 00

✔ 610

Accounts Payable Dr.

Page 8

8 0 00

6 0 0 00 3 3 9 0 00

✔ X

3 0 00 7 8 00

6 0 0 00

1 5 8 2 00

✔

13-31

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE CASH RECEIPTS JOURNAL

Date 20XX Mar

Cash Dr.

1 13 15 15 18 26 26 28

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

24 7 8 3 0 0 (1 10 )

13-32

Accounts Receivable Cr.

Toy Sales Cr. 1 3 0 0 00 4 0 0 0 00

HST Payable Cr. 1 6 9 00 5 2 0 00

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

Dr. Cost of Goods Sold Cr. Inventory 9 7 5 00 3 0 0 0 00

8 00 1 8 00 2 2 00

3 8 4 2 00 5 3 0 0 00 (1 12 )

Sales Discounts Dr.

Page 14

(4 10 )

6 8 9 00 (2 18 )

4 8 00 (4 14 )

3 9 7 5 00 (50 2)

(1 15)

Description of Receipt A. Joy, Capital Cash Sale Cash Sale Holly Co. Bill Burton Bill Burton Amy Rose A. Joy, Capital

Ref.

Sundry Cr.

310

10 0 0 0 0 0

Post

X X

✔ ✔ ✔ ✔ 310

5 0 0 0 00 15 0 0 0 0 0 ( X)

P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE SALES JOURNAL

Date 20XX

Invoice No.

Mar 4 6 8 18 22 22 29 31

1 2 3 4 5 6 7

Customer’s Name Bill Burton Holly Co. Bill Burton Amy Rose Bill Burton Amy Rose Bonnie Flow Company

Sundry Accounts Dr.

Post Ref.

✔ ✔ ✔ ✔ ✔ ✔ ✔

1 1 3 0 00 7 9 1 00 6 7 8 00 4 5 2 0 00 1 0 1 7 00 1 2 4 3 00 3 3 9 0 00 12 7 6 9 0 0 (1 12 )

Page 4 HST Payable Cr.

Toy Sales Cr.

1 3 0 00 1 0 0 0 00 9 1 00 7 0 0 00 7 8 00 6 0 0 00 5 2 0 00 4 0 0 0 00 1 1 7 00 9 0 0 00 1 4 3 00 1 1 0 0 00 3 9 0 00 3 0 0 0 00 1 4 6 9 0 0 11 3 0 0 0 0 (2 18 )

(4 10 )

ABBEY’S TOY HOUSE GENERAL JOURNAL Date 20XX Mar

Account Title and Description 12

Sales Returns and Allowances HST Payable Accounts Receivable, Holly Co. Issued Credit Memo #1 Inventory Cost Of Goods sold Return of Inventory Accounts Payable, Adam Co. Inventory Prepaid HST Issued Debit Memo #1

Dr. Cost of Goods Sold Cr. Inventory 7 5 0 00 5 2 5 00 4 5 0 00 3 0 0 0 00 6 7 5 00 8 2 5 00 2 2 5 0 00 8 4 7 5 00 (50 2)

(1 15)

Page 3 Post Ref. 412 218

Dr. 3 0 0 00 3 9 00

3 3 9 00

112/✔

115

2 2 5 00 2 2 5 00

502

210/✔ 115 116

Cr.

1 1 3 0 00 1 0 0 0 00 1 3 0 00

13-33

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ACCOUNTS RECEIVABLE LEDGER

NAME ADDRESS Date 20XX Mar 4 8 18 22 26 NAME ADDRESS Date 20XX Mar 29

NAME ADDRESS Date 20XX Mar 6 12 15

NAME ADDRESS Date 20XX Mar 18 22 26

BILL BURTON

Post

Explanation

Ref. SJ4 SJ4

Debit 1 1 3 0 00 6 7 8 00

1 0 1 7 00

Credit

Dr. Balance

1 0 1 7 00

CRJ14

Dr. Balance 1 1 3 0 1 8 0 8 6 7 8 1 6 9 5 6 7 8

1 1 3 0 00

CRJ14 SJ4

Credit

00 00 00 00 00

BONNIE FLOW COMPANY

Explanation

Post Ref. SJ4

Debit 3 3 9 0 00

3 3 9 0 00

HOLLY CO.

Explanation

Post Ref.

Debit

SJ4

7 9 1 00

Credit 3 3 9 00 4 5 2 00

GJ3 CRJ14

Dr. Balance 7 9 1 00 4 5 2 00

AMY ROSE

Explanation

Post Ref. SJ4 SJ4

Debit 4 5 2 0 00 1 2 4 3 00

CRJ14

Credit

1 2 4 3 00

Dr. Balance 4 5 2 0 00 5 7 6 3 00 4 5 2 0 00

ABBEY’S TOY HOUSE SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 20XX Bill Burton Bonnie Flow Company Amy Rose Total Accounts Receivable

13-34

$ 6 7 8 3 3 9 0 4 5 2 0 $8 5 8 8

00 00 00 00

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ACCOUNTS PAYABLE LEDGER

NAME ADDRESS Date 20XX Mar 12 15 22 NAME ADDRESS Date 20XX Mar 19

NAME ADDRESS Date 20XX Mar 1 8 11 28 29 NAME ADDRESS Date 20XX Mar 26

ADAM CO.

Post Ref.

Explanation

Debit

4 5 2 0 00

PJ10 GJ3 CPJ8

Credit

1 1 3 0 00 3 3 9 0 00

Cr. Balance 4 5 2 0 00 3 3 9 0 00

SAM KATZ GARAGE

Post Ref.

Explanation

Debit

PJ10

Credit

Cr. Balance

3 3 9 0 00

Credit

Cr. Balance

MAGGIE CO.

Post Ref.

Explanation

Debit

4 5 2 0 00 1 3 5 6 00

PJ10 PJ10 CPJ8

4 5 2 0 00 1 5 8 2 00

PJ10 CPJ8

1 5 8 2 00

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

00 00 00 00 00

WOODY SMITH

Explanation

Post Ref.

Debit

PJ10

Credit 5 4 2 4 00

Cr. Balance 5 4 2 4 00

ABBEY’S TOY HOUSE SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 20XX Sam Katz Garage

$3 3 9 0 0 0

Maggie Co. Woody Smith

1 3 5 6 00 5 4 2 4 00

Total Accounts Receivable

$10 1 7 0 0 0

13-35

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: CASH Date 20XX Mar 31 31

ACCOUNT NO. Explanation

Post Ref.

Debit

CRJ14

24 7 8 3 00

Explanation

Post Ref.

Debit

SJ4

12 7 6 9 00

Post Ref.

Debit

GJ3

2 2 5 00

13-36

PJ10

Explanation

Dr.

ACCOUNT NO.

114

Post Ref.

Debit

CPJ8

3 0 0 0 00

Cr. Cr. Cr. Dr.

3 9 7 5 00 8 4 7 5 00

SJ4

Credit

Dr.

Debit

GJ3 PJ10 CPJ8

2 3 9 2 00 5 0 7 00

00 00 00 00 00 00 00

DR CR

Balance

3 0 0 0 00

ACCOUNT NO. Post Ref.

115

2 2 5 7 7 5 1 7 5 3 1 3 15 0 8 7 11 1 1 2 2 6 3 7

15 4 0 0 0 0

CRJ14

3 3 9 00 12 4 3 0 00 8 5 8 8 00

1 3 8 00

CPJ8

20XX

Balance

6 0 0 00

NAME: PREPAID HST Date 20XX Mar 15 31 31

DR CR

Credit 1 0 0 0 00

GJ3 CPJ8

112

DR B CR a

ACCOUNT NO.

Explanation

24 7 8 3 00 10 4 2 2 00

3 8 4 2 00

CRJ14

NAME: PREPAID RENT Date 20XX Mar 1

Credit 3 3 9 00

GJ3

Explanation

Balance

ACCOUNT NO.

NAME: INVENTORY Date 20XX Mar 12 15 31 31 31 31 31

DR CR Dr

14 3 6 1 00

CPJ8

NAME: ACCOUNTS RECEIVABLE Date 20XX Mar 12 31 31

Credit

110

116

Credit

DR CR

Balance

1 3 0 00

1 3 0 00 2 2 6 2 00 2 7 6 9 00

Dr Dr

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: DELIVERY TRUCK Date 20XX Mar

ACCOUNT NO. Post Ref.

Debit

PJ10

3 0 0 0 00

Explanation

NAME: ACCOUNTS PAYABLE Date 20XX Mar

Explanation

Post Ref.

Debit

GJ3

1 1 3 0 00

CPJ8

9 4 9 2 00

Post Ref.

Explanation

GJ3

Debit

3 0 0 0 00

Credit 1 4 6 9 00 6 8 9 00

CRJ14

Balance

1 1 3 0 00 19 6 6 2 00 10 1 7 0 00

Post Ref.

Debit

CRJ14 CRJ14

Balance

3 9 00 1 4 3 0 00 2 1 1 9 00

Cr Cr

Post Ref.

Debit

SJ4 CRJ14

NAME: SALES RETURNS AND ALLOWANCES Explanation

DR CR

Balance

10 0 0 0 00 5 0 0 0 00

10 0 0 0 00 15 0 0 0 00

Debit

GJ3

3 0 0 00

410

Credit

DR CR

Balance

11 3 0 0 00 5 3 0 0 00

11 3 0 0 00 16 6 0 0 00

ACCOUNT NO. Post Ref.

310

Credit

ACCOUNT NO. Explanation

218

DR CR

ACCOUNT NO.

Explanation

210

DR CR

3 9 00

SJ4

NAME: TOY SALES

Date 20XX Mar 12

Balance

ACCOUNT NO.

NAME: A. JOY, CAPITAL

Date 20XX Mar 31 31

Credit 20 7 9 2 00

PJ10

NAME: HST PAYABLE

Date 20XX Mar 1 28

DR CR

ACCOUNT NO.

15 31 31

Date 20XX Mar 12 31 31

Credit

121

Credit

412

DR CR

Balance

3 0 0 00

13-37

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES HST (13%) ABBEY’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: SALES DISCOUNTS Date 20XX Mar 31

Explanation

ACCOUNT NO. Post Ref. CRJ14

Debit 4 8 00

NAME: COST OF GOODS SOLD Date 20XX Mar 12 31 31

Explanation

Post Ref.

Debit

SJ4

13-38

Explanation

Credit

3 9 7 5 00 8 4 7 5 00

DR CR Cr. Dr. Dr.

ACCOUNT NO. Post Ref.

Debit

CPJ8

6 0 0 00

NAME: CLEANING EXPENSE Date 20XX Mar 11

2 2 5 00

GJ3 CRJ14

Explanation

DR CR

ACCOUNT NO.

NAME: SALARIES EXPENSE Date 20XX Mar 15

Credit

Debit

CPJ8

3 0 0 00

Credit

Balance 4 8 00 502 Balance 2 2 5 00 3 7 5 0 00 12 2 2 5 0 0

610

DR CR

Balance

6 0 0 00

ACCOUNT NO. Post Ref.

414

612

DR CR

Balance

3 0 0 00

GROUP A PROBLEMS, Cont. P13-5A., Cont.

THIS SOLUTION ASSUMES GST (5%) ABBY’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: GST PAYABLE Date 20XX Mar 12 31 31

Explanation

ACCOUNT NO. Post Ref. GJ3

Debit 1 5 00

5 6 5 00 2 6 5 00

SJ4 CRJ14

NAME: PURCHASES DISCOUNTS Date 20XX Mar

Explanation

Credit

DR CR

Balance

1 5 00 5 5 0 00 8 1 5 00

Cr Cr

ACCOUNT NO. Post Ref. CPJ8

Debit

218

514

Credit

DR CR

Balance

1 3 8 00

13-39

GROUP B PROBLEMS P13-1B. LAURA’S COSMETIC MARKET SALES JOURNAL Date 20XX April 5 9 19 22 26

13-40

Customer Corsen Co. Kaelen Parker Co. Jaiden Co. Rusty Neal Co. Kaelen Parker Co.

Sales Invoice

Post

1001 1002 1003 1004 1005

✔ ✔ ✔ ✔ ✔

Ref.

Accounts Receivable Dr.

PST Payable Cr.

Page 1 GST Payable Cr.

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

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

2 0 00 4 5 00 3 0 00 5 0 00 4 5 00

4 2 5 6 00

2 6 6 00

1 9 0 00

(1 2)

(2 0)

(2 2)

Sales Cr. 4 0 0 00 9 0 0 00 6 0 0 00 9 0 0 00

Dr. Cost of Goods Sold Cr. Inventory 3 0 0 6 7 5 4 5 0 7 5 0 6 7 5

00 00 00 00 00

3 8 0 0 00 2 8 5 0 00

(4 0)

(5 0)

(1 5)

GROUP B PROBLEMS, Cont. P13-1B., Cont. LAURA’S COSMETIC MARKET CASH RECEIPTS JOURNAL Date 20XX April

Cash Dr.

Accounts Receivable Dr.

2 10 0 0 0 0 0 3 5 6 0 0 00 4 3 3 6 0 00 18 5 0 4 00 5 0 4 00 29 4 4 8 0 0 0 29 2 2 4 0 0 0 30 1 0 0 8 0 0 1 0 0 8 0 0 27 1 9 2 0 0 1 5 1 2 0 0 ( 10 )

( 12 )

PST Payable Cr. 3 5 0 00 2 1 0 00 2 8 0 00 1 4 0 00

GST Payable Cr.

Page 1 Dr. Cost of Goods Sold Cr. Inventory

Description of Receipt

Post Ref.

Sundry Cr.

10 0 0 0 0 0

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

Laura Murray, Capital Cash Sale Cash Sale Kaelen Parker Co. Cash Sales Cash Sales Kaelen Parker Co.

Sales Cr.

9 8 0 00

7 0 0 0 0 14 0 0 0 0 0 10 5 0 0 0 0

( 20 )

( 22 )

(4 0)

X X

✔ X X

✔ 10 0 0 0 0 0 (X )

13-41

GROUP B PROBLEMS, Cont. P13-1B., Cont. LAURA’S COSMETIC MARKET GENERAL JOURNAL Date 20XX April 16

Page 1 Post

Account Title and Description

Ref.

Sales Returns and Allowances PST Payable GST Payable Accounts Receivable, Corsen Co. Issued Credit Memo #30

42 20 22

Dr. 2 0 0 00 1 4 00 1 0 00

2 2 4 00

12/✔

Sales Returns and Allowances PST Payable GST Payable Accounts Receivable, Jaiden Co. Issued Credit Memo #31

42 20 22

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

12/✔

Inventory Cost of Goods Sold

Cr.

2 2 5 00 2 2 5 00

LAURA’S COSMETIC MARKET ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS Date 20XX April 5 16

NAME ADDRESS Date 20XX April 22

13-42

CORSEN CO.

Explanation

Post Ref. SJ1

Debit

Credit

4 4 8 00 2 2 4 00

GJ1

Dr. Balance 4 4 8 00 2 2 4 00

RUSTY NEAL CO.

Explanation

Post Ref.

Debit

SJ1

1 1 2 0 00

Credit

Dr. Balance 1 1 2 0 00

GROUP B PROBLEMS, Cont. P13-1B., Cont. LAURA’S COSMETIC MARKET ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

KAELEN PARKER CO.

Date 20XX April 9 18 26 30

Explanation

Post Ref.

Debit

SJ1

1 0 0 8 00

Credit

1 0 0 8 00

CRJ1

NAME ADDRESS

1 0 0 8 00

1 0 0 8 00 5 0 4 00 1 5 1 2 00 5 0 4 00

Credit

Dr. Balance

5 0 4 00

CRJ1 SJ1

Dr. Balance

JAIDEN CO.

Date 20XX April 19 23

Explanation

Post Ref.

Debit

SJ1

6 7 2 00

GJ1

3 3 6 00

6 7 2 00 3 3 6 00

ACCOUNT NO.

LAURA’S COSMETIC MARKET PARTIAL GENERAL LEDGER NAME: Date 20XX April 30

NAME: Date 20XX April 16 23 30 30

CASH Explanation

Post Ref.

Debit

CRJ1

27 1 9 2 00

ACCOUNTS RECEIVABLE Explanation

Credit

DR CR

Balance

27 1 9 2 00

ACCOUNT NO. Post Ref.

Debit

2 2 4 00 3 3 6 00

GJ1 GJ1 SJ1 CRJ

Credit

4 2 5 6 00

DR CR Cr Cr Dr

1 5 1 2 00

12 Balance 2 2 4 00 5 6 0 00 3 6 9 6 00 2 1 8 4 00

13-43

GROUP B PROBLEMS, Cont. P13-3B., Cont. LAURA’S COSMETIC MARKET PARTIAL GENERAL LEDGER NAME: INVENTORY Date 20XX April 23 30 30

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ1

2 2 5 00

CRJ1

Cr Cr

ACCOUNT NO. Explanation

Post Ref. GJ1 GJ1

Debit

Credit

1 4 00 2 1 00

CRJ1

Post Ref.

Debit

Credit

2 2 5 00 2 6 2 5 00 13 1 2 5 0 0

20 Balance

1 4 00 3 5 00 2 3 1 00 1 2 1 1 00

Cr Cr

ACCOUNT NO. Explanation

Balance

DR CR Dr

2 6 6 00 9 8 0 00

SJ1

NAME: GST PAYABLE Date 20XX

DR CR Dr

2 8 5 0 00 10 5 0 0 0 0

SJ1

NAME: PST PAYABLE Date 20XX April 16 23 30 30

Credit

DR CR

22 Balance

April 16

GJ1

1 0 00

GJ1

1 5 00

2 5 00

SJ1

1 9 0 00

1 6 5 00

CRJ1

7 0 0 00

8 6 5 00

NAME: LAURA MURRAY, CAPITAL Date 20XX April

Explanation 2

ACCOUNT NO. Post Ref.

Debit

CRJ

NAME: SALES Date 20XX

Credit

DR CR

Balance

10 0 0 0 00

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

DR CR

Balance

April 30

SJ1

3 8 0 0 00

CRJ

14 0 0 0 0 0

17 8 0 0 0 0

13-44

GROUP B PROBLEMS, Cont. P13-1B., Cont. LAURA’S COSMETIC MARKET PARTIAL GENERAL LEDGER NAME: SALES RETURNS AND ALLOWANCES Date 20XX

ACCOUNT NO. Post Ref.

Debit

April 16

GJ1

Explanation

DR CR

Balance

2 0 0 00

3 0 0 00

5 0 0 00

Credit

LAURA’S COSMETIC MARKET SCHEDULE OF ACCOUNTS RECEIVABLE APRIL 30, 20XX Corsen Co.

$ 2 2 4 00

Rusty Neal Co. Kaelen Parker Co. Jaiden Co. Total Accounts Receivable

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

P13-2B. VANWYK’S TRACTOR SHOP SALES JOURNAL Date 20XX

Invoice No.

Apr

614 615 616 617 618

4 4 8 14 25

Customer’s Name Connor Co. R. Langley J. Fellowes Reanne Co. Jaiden Parker

Post Ref.

✔ ✔ ✔ ✔ ✔

Page 11

Accounts Receivable Dr.

HST Payable Cr.

Merchandise Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory

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

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

8 0 0 00 1 6 0 0 00 6 0 0 00 3 0 0 0 00 6 0 0 0 00

5 6 0 00 1 1 2 0 00 4 2 0 00 2 1 0 0 00 4 2 0 0 00

1 5 6 0 00 12 0 0 0 00

8 4 0 0 00

13 5 6 0 00 (1 2 0)

(2 2 1)

(4 0 0)

(50 2)

(1 15)

13-45

GROUP B PROBLEMS, Cont. SOLUTION TO P13-2B., Cont. VANWYK’S TRACTOR SHOP CASH RECEIPTS JOURNAL Date 20XX April

13-46

Cash Dr.

Accounts Receivable Cr.

1 11 18 18

14 0 0 0 0 0 8 8 8 00 1 8 0 8 00 2 8 2 5 00

21 21 22

9 0 4 00 2 3 3 1 00 3 6 1 6 00

9 0 4 00 2 3 7 3 00

26 3 7 2 0 0

5 9 8 9 00

(1 10 )

(1 20 )

HST Payable Cr.

Merchandise Sales Cr.

9 0 4 00 1 8 0 8 00

Dr. Cost of Goods Sold Cr. Inventory

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

Sales Discounts Dr.

Page 12

2 5 0 0 00 4 2 00

4 1 6 00

3 2 0 0 00

7 4 1 00

5 7 0 0 00

(2 21 )

(4 00 )

2 2 4 0 00 5 8 00 (4 04 )

3 9 9 0 00

Ref.

Sundry Cr.

J. VanWyk Capital Connor Co. R. Langley Cash Sales

300

14 0 0 0 0 0

Jaiden Parker Ashley Murray Cash Sales

✔ ✔

Description of Receipt

Post

✔ ✔ X

14 0 0 0 0 0 ( X)

GROUP B PROBLEMS, Cont. P13-3B., Cont. VANWYK’S TRACTOR SHOP GENERAL JOURNAL Date 20XX April 21

Page 13 Post Ref.

Account Title and Description Sales Returns and Allowances HST Payable Accounts Receivable, Reanne Co. Issued Credit Memo #101

402 221

Dr. 9 0 0 00 1 1 7 00

1 0 1 7 00

120/✔

Sales Returns and Allowances HST Payable Accounts Receivable, Jaiden Parker Issued Credit Memo #102

402 221

1 0 0 0 00 1 3 0 00 1 1 3 0 00

120/✔

Inventory Cost of Goods Sold

115

Cr.

7 0 0 00 7 0 0 00

VANWYK’S TRACTOR SHOP ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

JAIDEN PARKER

Date 20XX April 1 Balance 21 25 29

NAME ADDRESS

Explanation

Post Ref.

Debit

Credit

Dr. Balance 9 0 4 00

CRJ1 SJ11

9 0 4 00

1 1 3 0 00

6 7 8 0 00 5 6 5 0 00

Credit

Dr. Balance

6 7 8 0 00

GJ13

J. FELLOWES

Date 20XX April 1 Balance 8

Explanation

Post Ref. SJ11

Debit 6 7 8 00

1 4 1 2 50 2 0 9 0 50

13-47

GROUP B PROBLEMS, Cont. P13-2B., Cont. VANWYK’S TRACTOR SHOP ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

R. LANGLEY

Date 20XX April

Explanation

1 8 0 8 00

CRJ12

Explanation

Dr. Balance 1 8 0 8 00

1 8 0 8 00

Post Ref.

Debit

Credit

Dr. Balance

SJ11

3 3 9 0 00

1 Balance 14 21 21

NAME ADDRESS

SJ11

Credit

REANNE CO.

Date 20XX April

Debit

1 Balance 4 18

NAME ADDRESS

Post Ref.

1 0 1 7 00 2 3 7 3 00

GJ13 CRJ1

3 3 9 0 00 2 3 7 3 00

CONNOR CO.

Date 20XX April 1 Balance 4 11

Explanation

Post Ref.

Debit

SJ11

9 0 4 00

CRJ1

Credit

Dr. Balance

9 0 4 00

5 9 3 25 1 4 9 7 25 5 9 3 25

VANWYK’S TRACTOR SHOP PARTIAL GENERAL LEDGER NAME: CASH Date 20XX April 1 Balance 30

ACCOUNT NO. Explanation

Post Ref.

Debit

13-48

DR CR Dr

CRJ12

26 3 7 2 00

NAME: ACCOUNTS RECEIVABLE Date 20XX April 1 Balance 21 29 30 30

Credit

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

DR CR Dr

1 0 1 7 00 1 1 3 0 00

GJ13 GJ13 SJ11 CRJ12

13 5 6 0 00

Dr Dr Dr

5 9 8 9 00

110 Balance 1 9 5 3 56 28 3 2 5 56

120 Balance 2 9 0 9 75 1 8 9 2 75 7 6 2 75 14 3 2 2 75 8 3 3 3 75

GROUP B PROBLEMS, Cont. P13-2B., Cont. NAME: INVENTORY Date 20XX April 29 30 30

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ13

7 0 0 00

Credit

8 4 0 0 00 3 9 9 0 00

SJ11 CRJ12

DR CR Cr Cr

125 Balance 7 0 0 00 7 7 0 0 00 11 6 9 0 0 0

VANWYK’S TRACTOR SHOP PARTIAL GENERAL LEDGER NAME: HST PAYABLE Date 20XX April 21 29 30 30

ACCOUNT NO. Explanation

Post Ref. GJ13 GJ13

Debit 1 1 7 00 1 3 0 00

Explanation

Post Ref.

Debit

Cr Cr

Post Ref.

Debit

Credit 12 0 0 0 00 5 7 0 0 00

CRJ12

Explanation

Debit

Credit

28 0 0 0 00 42 0 0 0 00

DR CR Cr Cr

DR CR Dr

GJ13 GJ13

9 0 0 00 1 0 0 0 00

300

ACCOUNT NO. Post Ref.

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

Balance

Cr SJ11

Balance

DR CR

ACCOUNT NO.

NAME: SALES RETURNS AND ALLOWANCES Date 20XX April 1 Balance 21 29

Credit 14 0 0 0 00

CRJ12

Explanation

ACCOUNT NO.

NAME: MERCHANDISE SALES Date 20XX April 1 Balance 30 30

DR CR Dr

1 5 6 0 00 7 4 1 00

SJ11 CRJ12

NAME: JOHN VANWYK, CAPITAL Date 20XX April 1 Balance 1

Credit

221

Dr Dr

400 Balance 74 5 2 3 48 86 5 2 3 48 92 2 2 3 48 402 Balance 7 5 2 50 1 6 5 2 50 2 6 5 2 50

13-49

GROUP B PROBLEMS, Cont. P13-2B., Cont. NAME: SALES DISCOUNTS Date 20XX April 29

ACCOUNT NO.

Explanation

Post Ref.

Debit 5 8 00

CRJ12

NAME: COST OF GOODS SOLD Date 20XX April 29 30 30

Credit

DR CR Dr

ACCOUNT NO.

Explanation

Post

Debit

Ref.

7 0 0 00

GJ13 SJ11 CRJ12

Credit

8 4 0 0 00 3 9 9 0 00

DR CR Cr Dr Dr

404 Balance 5 8 00

50 Balance 7 0 0 00 7 7 0 0 00 11 6 9 0 00

VANWYK’S TRACTOR SHOP SCHEDULE OF ACCOUNTS RECEIVABLE APRIL 30, 20XX Jaiden Parker

$5 6 5 0 00

J. Fellowes Connor Co.

2 0 9 0 50 5 9 3 25

Total Accounts Receivable

13-50

$8 3 3 3 75

GROUP B PROBLEMS, Cont. P13-3B. REANNE’S NATURAL FOOD STORE PURCHASES JOURNAL Date 20XX May

Account Credited 8 11 14 18 25 31

Broward Co. Emerson Co. Serena Co. Relar Co. Serena Co.

Date of Inv. Invoice No. 5/7 5/11 5/11 5/18 5/22

Terms

420 2/10, n/60 400 2/10, n/60 510 810 516 2/10, n/60

Post Ref.

✔ ✔ ✔ ✔ ✔

Accounts Payable Cr.

Inventory Dr.

5 2 5 00 9 4 5 00 8 4 0 00 7 8 7 50 8 9 2 50

5 0 0 00 9 0 0 00

3 9 9 0 00

1 4 0 0 00

(2 10 )

(1 15 )

Prepaid GST Dr.

Page 10 Store Supplies Dr.

2 5 00 4 5 00 4 0 00 3 7 50 4 2 50

8 0 0 00

1 9 0 00

1 6 5 0 00

(1 12 )

Sundry Dr. Account

Amount

Office Equipment

120

7 5 0 00

8 5 0 00

(1 10 )

7 5 0 00 ( X)

13-51

GROUP B PROBLEMS, Cont. P13-3B., Cont. REANNE’S NATURAL FOOD STORE GENERAL JOURNAL Date 20XX May

Account Title and Description 15

Accounts Payable, Aton Co. Prepaid GST Inventory Issued Debit Memo #7

Page 2

Post Ref.

Dr.

210/✔

4 2 0 00

Cr. 2 0 00 4 0 0 00

112 115

REANNE’S NATURAL FOOD STORE ACCOUNTS PAYABLE LEDGER NAME: ADDRESS:

EMERSON CO.

Date 20XX May 1 Balance 11 15 NAME: ADDRESS:

Date 20XX May 1 18

13-52

Debit

PJ10 GJ2

4 2 0 00

Post Ref.

Debit

Credit

Cr. Balance

9 4 5 00

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

Explanation

Credit

Cr. Balance

5 2 5 00

6 3 0 00 1 1 5 5 00

PJ10

Credit

Cr. Balance

8 4 0 00 8 9 2 50

1 2 6 0 00 2 1 0 0 00 2 9 9 2 50

Credit

Cr. Balance

7 8 7 50

5 2 5 00 1 3 1 2 50

SERENA CO.

Date 20XX May 1 Balance 14 25 NAME: ADDRESS:

Post Ref.

BROWARD CO.

Date 20XX May 1 Balance 8

NAME: ADDRESS:

Explanation

Post Ref.

Debit

PJ10 PJ10

RELAR CO.

Explanation

Post Ref.

Debit

Balance

PJ10

GROUP B PROBLEMS, Cont. P13-3B., Cont. REANNE’S NATURAL FOOD STORE PARTIAL GENERAL LEDGER NAME: STORE SUPPLIES Date 20XX May 31

Explanation

ACCOUNT NO. Post Ref.

Debit

PJ10

1 6 5 0 00

Credit

NAME: PREPAID GST Date 20XX May 1 Balance 15 31

Explanation

Debit

May

2 0 00

GJ2 PJ10

1 6 5 0 00

1 9 0 00

Dr Dr

ACCOUNT NO. Explanation

Post Ref.

Debit

DR CR

Credit

4 0 0 00

GJ2 PJ10

Explanation

1 4 0 0 00

ACCOUNT NO. Post Ref.

Debit

PJ10

7 5 0 00

Credit

NAME: ACCOUNTS PAYABLE Date 20XX May 1 Balance 15 31

NAME: OFFICE EQUIPMENT Date 20XX

Balance

DR CR

Credit

NAME: INVENTORY Date 20XX May 1 Balance 15 31

DR CR

ACCOUNT NO. Post Ref.

Explanation

Debit

GJ2

4 2 0 00

115 Balance 16 0 0 0 00 15 6 0 0 00 17 0 0 0 00 120

7 5 0 00

3 9 9 0 00

4 7 1 00 4 5 1 00 6 4 1 00

Cr PJ10

Balance

DR CR

Credit

112

DR CR

ACCOUNT NO. Post Ref.

110

210 Balance 2 8 3 5 00 2 4 1 5 00 6 4 0 5 00

REANNE’S NATURAL FOOD STORE SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Emerson Co.

$ 9 4 5 00

Broward Co. Serena Co. Relar Co.

1 1 5 5 00 2 9 9 2 50 1 3 1 2 50

Total Accounts Payable

$6 4 0 5 00

13-53

GROUP B PROBLEMS, Cont. P13-4B. KIM BROWN COMPUTER CENTRE CASH PAYMENTS JOURNAL Date 20XX May

Chq. No.

3 3 7 17 24 27 28 31

21 22 23 24 25 26 27 28

Account Debited Delivery Truck Jerry Co. Cash Purchase Cash Purchase Ryan Co. Rent Expense Evan Co. Utilities Expense

13-54

Post Ref.

Sundry Dr.

150

8 0 0 0 00

Accounts Payable Dr.

Inventory Dr.

1 5 00 4 5 00 5 0 00

9 0 0 00 1 0 0 0 00

1 4 7 0 00

✔

Inventory Cr.

4 0 0 00

3 0 0 0 00

7 0 00 1 5 0 00

4 2 0 00

✔ 620

Prepaid GST Dr.

3 1 5 00

✔

610

Page 5

4 2 5 00

2 1 25

Cash Cr. 8 4 0 0 00 3 0 0 00 9 4 5 00 1 0 5 0 00 1 4 0 0 00 3 1 5 0 00 4 2 0 00 4 4 6 25

11 4 2 5 0 0

2 2 0 5 00

6 6 6 25

1 9 0 0 00

8 5 00

16 1 1 1 2 5

( X)

( 21 0)

( 13 2)

( 11 5)

(1 15 )

( 11 0)

GROUP B PROBLEMS, Cont. P13-4B., Cont. NAME: ADDRESS:

ADAM CO.

Date 20XX May 1 Balance

NAME: ADDRESS:

Debit

Credit

Cr. Balance 1 2 6 0 00

JERRY CO. Post Ref.

Explanation

Debit

Credit

CPJ5

3 1 5 00

Post Ref.

Debit

CPJ5

4 2 0 00

Post Ref.

Debit

CPJ5

1 4 7 0 00

Cr. Balance 6 3 0 00 3 1 5 00

EVAN CO.

Date 20XX May 1 Balance 28

NAME: ADDRESS:

Post Ref.

Explanation

Date 20XX May 1 Balance 3

NAME: ADDRESS:

ACCOUNTS PAYABLE LEDGER

Explanation

Credit

Cr. Balance 8 4 0 00 4 2 0 00

RYAN CO.

Date 20XX May 1 Balance 24

Explanation

Credit

Cr. Balance 1 4 7 0 00

PARTIAL GENERAL LEDGER NAME:

CASH

Date 20XX May 1 Balance 31

NAME: Date 20XX May 31 31

ACCOUNT NO. Explanation

Post Ref.

Debit

16 1 1 1 25

CPJ5

INVENTORY Explanation

Credit

DR CR

Balance

17 0 0 0 00 8 8 8 75

ACCOUNT NO. Post Ref.

Debit

CPJ5

1 9 0 0 00

CPJ5

DR CR

Credit

8 5 00

110

115 Balance 1 9 0 0 00 1 8 1 5 00

13-55

GROUP B PROBLEMS, Cont. P13-4B., Cont. PARTIAL GENERAL LEDGER NAME:

PREPAID GST

Date 20XX May 1 Balance 31 NAME:

ACCOUNT NO.

Explanation

Post Ref.

Debit

CPJ5

6 6 6 25

DELIVERY TRUCK

Date 20XX May 3

NAME:

Explanation

Post Ref.

Debit

CPJ5

8 0 0 0 00

NAME:

Explanation

Post Ref.

Debit

9 2 0 00 1 5 8 6 25

Credit

CPJ5

2 2 0 5 00

Credit

Balance

8 0 0 0 00

DR CR Cr

ACCOUNT NO.

Explanation

Post Ref.

Debit

CPJ5

3 0 0 0 00

Credit

Post Ref.

Debit

CPJ5

4 2 5 00

Credit

210 Balance 4 2 0 0 00 1 9 9 5 00

610

DR CR

Balance

3 0 0 0 00

ACCOUNT NO.

Explanation

150

DR CR

UTILITIES EXPENSE

Date 20XX May 31

Balance

ACCOUNT NO.

RENT EXPENSE

Date 20XX May 27

DR CR

ACCOUNT NO.

ACCOUNTS PAYABLE

Date 20XX May 1 31

Credit

132

620

DR CR

Balance

4 2 5 00

KIM BROWN COMPUTER CENTRE SCHEDULE OF ACCOUNTS PAYABLE MAY 31, 20XX Adam Co.

$1 2 6 0 0 0

Jerry Co. Evan Co.

3 1 5 00 4 2 0 00

Total Accounts Payable

13-56

$1 9 9 5 0 0

GROUP B PROBLEMS, Cont. P13-5B.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE PURCHASES JOURNAL

Date 20XX Mar

Account Credited 1 7 10 19 26 28 31

Earl Miller Co. Earl Miller Co. Minnie Katz Sam Katz Garage Woody Smith Earl Miller Co.

Date of Inv. Invoice No. 3/1 3/7 3/9 3/19 3/26 3/26

410 415 311 111 211 436

Terms 2/10, n/30 2/10, n/30 1/15, n/60 2/10, n/30 2/10, n/30

Post Ref. ✔ ✔ ✔ ✔ ✔ ✔

Page 10

Accounts Payable Cr. 6 7 8 0 00 9 0 4 00 7 9 1 0 00 2 8 2 5 00 6 6 6 7 00 4 7 4 6 00

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

Prepaid HST Dr. 7 8 0 00 1 0 4 00 9 1 0 00 3 2 5 00 7 6 7 00 5 4 6 00

29 8 3 2 00

23 9 0 0 00

3 4 3 2 00

2 5 0 0 00

( 21 0)

( 11 5)

( 11 6)

(X)

Inventory Dr.

Sundry Dr. Account

Amount

Delivery Truck

121

2 5 0 0 00

13-57

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE CASH PAYMENTS JOURNAL

Date 20XX Mar

Chq. No.

1 9 11 15 22 26 29

1 2 3 4 5 6 7

Account Debited Prepaid Rent Cleaning Expense Earl Miller Co. Salaries Expense Minnie Katz Cash Purchase Earl Miller Co.

13-58

Post Ref. 114 612

Sundry Dr. 1 0 0 0 00 4 0 0 00

✔ 610

Accounts Payable Dr.

Page 8 Prepaid HST Dr. 1 3 0 00 5 2 00

Inventory Dr.

Inventory Cr.

6 7 8 0 00

1 2 0 00

7 3 4 5 00

6 5 00

7 0 0 00

✔

1 0 4 00

8 0 0 00

4 7 4 6 00

✔

8 4 00

Cash Cr. 1 1 3 0 4 5 2 6 6 6 0 7 0 0 7 2 8 0 9 0 4 4 6 6 2

00 00 00 00 00 00 00

2 1 0 0 00

18 8 7 1 0 0

2 8 6 0 00

8 0 0 00

2 6 9 00

21 7 8 8 0 0

( X)

( 21 0)

( 11 6)

( 11 5)

(1 15 )

( 11 0)

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE CASH RECEIPTS JOURNAL

Date 20XX Mar

Cash Dr.

Accounts Receivable Cr.

Toy Sales Cr.

1 13 15 15 18 26 26 27

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

25 0 3 3 0 0

7 0 0 6 00

6 3 0 0 00

(1 10 )

(1 12 )

(4 10 )

1 5 0 0 00 4 8 0 0 00

HST Payable Cr.

Sales Discounts Dr.

1 9 5 00 6 2 4 00

6 7 8 00 1 8 0 8 00 2 2 6 0 00 2 2 6 0 00

Page 14 Dr. Cost of Goods Sold Cr. Inventory 1 1 2 5 00 3 6 0 0 00

1 2 00 4 0 00 4 0 00 8 1 9 00 (2 18 )

9 2 00 (4 14 )

4 7 2 5 00

Description of Receipt

Post Ref.

Sundry Cr.

Monique Co. Capital Cash Sale Cash Sale Jim Rex Bill Burton Bill Burton Amy Rose Monique Co. Capital

310

8 0 0 0 00

X X

✔ ✔ ✔ ✔ 310

3 0 0 0 00 11 0 0 0 0 0 ( X)

13-59

P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE SALES JOURNAL

Date 20XX Mar

4 6 9 18 21 22 29

Page 4

Invoice. No.

Customer’s Name

Post Ref.

Accounts Receivable Dr.

HST Payble Cr.

1 2 3 4 5 6 7

Bill Burton Jim Rex Bill Burton Amy Rose Bill Burton Amy Rose Bonnie Flow Company

✔ ✔ ✔ ✔ ✔ ✔ ✔

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

Toy Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory

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

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

1 2 0 0 6 0 0 5 2 5 4 5 0 0 1 5 0 0 1 5 0 0 2 4 0 0

18 4 1 9 0 0

2 1 1 9 00

16 3 0 0 0 0

12 2 2 5 0 0

12 )

( 21 8)

(4 10 )

(5 02 ) 11 5)

MONIQUE’S TOY HOUSE GENERAL JOURNAL Date 20XX Mar 10

13-60

Account Title and Description Sales Returns and Allowances HST Payable Accounts Receivable, Jim Rex Issued Credit Memo #1 Accounts Payable, Minnie Katz Inventory Prepaid HST Issued Debit Memo #1

00 00 00 00 00 00 00

Page 3 Post Ref. 412 218

Dr. 2 0 0 00 2 6 00

2 2 6 00

112/✔

210/✔ 115 116

Cr.

5 6 5 00 5 0 0 00 6 5 00

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) ACCOUNTS RECEIVABLE LEDGER

NAME ADDRESS

BILL BURTON

Date 20XX Mar 4 9 18 21 26 NAME ADDRESS

Explanation

SJ4 SJ4 SJ4

Credit

Dr. Balance

1 8 0 8 00 7 9 1 00

2 2 6 0 00

1 8 0 8 2 5 9 9 7 9 1 3 0 5 1 7 9 1

Credit

Dr. Balance

1 8 0 8 00 2 2 6 0 00

CRJ14

00 00 00 00 00

BONNIE FLOW COMPANY

Explanation

Post Ref. SJ4

Debit 3 6 1 6 00

3 6 1 6 00

JIM REX

Date 20XX Mar 6 10 15

NAME ADDRESS

Debit

CRJ14

Date 20XX Mar 29

NAME ADDRESS

Post Ref.

Explanation

Post Ref.

Debit

SJ4

9 0 4 00

Credit

Dr. Balance 9 0 4 00 6 7 8 00

2 2 6 00 6 7 8 00

GJ3 CRJ14

AMY ROSE

Date 20XX Mar 18 22 26

Explanation

Post Ref. SJ4 SJ4

Debit 6 7 8 0 00 2 2 6 0 00

CRJ14

Credit

Dr. Balance 6 7 8 0 00 9 0 4 0 00 6 7 8 0 00

2 2 6 0 00

MONIQUE’S TOY HOUSE SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 20XX Bill Burton Bonnie Flow Company Amy Rose Total Accounts Receivable

7 9 1 00 3 6 1 6 00 6 7 8 0 00

$11 1 8 7 0 0

13-61

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) ACCOUNTS PAYABLE LEDGER

NAME ADDRESS Date 20XX Mar 10 15 22

NAME ADDRESS Date 20XX Mar 19

NAME ADDRESS Date 20XX Mar 1 7 11 28 29 NAME ADDRESS Date 20XX Mar 26

MINNIE KATZ

Explanation

Post Ref.

Debit

7 9 1 0 00

PJ10 GJ3 CPJ8

Credit

5 6 5 00 7 3 4 5 00

Cr. Balance 7 9 1 0 00 7 3 4 5 00

SAM KATZ GARAGE Post Ref.

Explanation

Debit

PJ10

Credit

Cr. Balance

2 8 2 5 00

Credit

Cr. Balance

EARL MILLER CO. Post

Explanation

Ref.

Debit

6 7 8 0 00 9 0 4 00

PJ10 PJ10 CPJ8

6 7 8 0 00 4 7 4 6 00

PJ10 CPJ8

4 7 4 6 00

6 7 8 0 7 6 8 4 9 0 4 5 6 5 0 9 0 4

00 00 00 00 00

WOODY SMITH

Explanation

Post Ref.

Debit

PJ10

Credit 6 6 6 7 00

Cr. Balance 6 6 6 7 00

MONIQUE’S TOY HOUSE SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 20XX Sam Katz Garage Earl Miller Co. Woody Smith Total Accounts Payable

13-62

$2 8 2 5 0 0 9 0 4 00 6 6 6 7 00 $10 3 9 6 0 0

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: CASH

ACCOUNT NO.

Date 20XX Mar 31 31

Explanation

Post Ref.

Debit

CRJ14

25 0 3 3 00

NAME: ACCOUNTS RECEIVABLE Explanation

Post Ref. SJ4

Debit

Post Ref.

Debit

CPJ8

1 0 0 0 00

Post Ref.

Debit

CPJ8 PJ10

Post Ref.

Debit

CPJ8

Explanation

PJ10

2 5 0 0 00

115 Balance

ACCOUNT NO.

116

DR CR

Credit

Cr Dr Dr

ACCOUNT NO. Debit

114

Dr Dr

3 4 3 2 00 2 8 6 00

Post Ref.

2 2 6 00 18 1 9 3 00 11 1 8 7 00

5 0 0 3 0 0 3 1 23 9 3 1 19 2 0 6 6 9 8 1

6 5 00

GJ3 PJ10

Balance

1 0 0 0 00

4 7 2 5 00 12 2 2 5 0 0

SJ4

112

5 0 0 00

23 9 0 0 00

CRJ14

25 0 3 3 00 3 2 4 5 00

Balance

DR CR

2 6 9 00

CPJ8

Balance

DR CR

Credit

8 0 0 00

NAME: DELIVERY TRUCK Date 20XX Mar 19

Credit

ACCOUNT NO.

GJ3

Explanation

ACCOUNT NO.

NAME: PREPAID HST Date 20XX Mar 15 31 31

Cr Dr

7 0 0 6 00

NAME: INVENTORY Explanation

18 4 1 9 00

NAME: PREPAID RENT

Date 20XX Mar 15 31 31 31 31 31

Credit 2 2 6 00

CRJ14

Explanation

ACCOUNT NO.

GJ3

Date 20XX Mar 1

21 7 8 8 00

CPJ8

Date 20XX Mar 10 31 31

DR CR

Credit

110

Credit

00 00 00 00 00 00

Balance 6 5 00 3 3 6 7 00 3 6 5 3 00 121

DR CR

Balance

2 5 0 0 00

13-63

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: ACCOUNTS PAYABLE Date 20XX Mar 15 31 31

ACCOUNT NO.

Explanation

Post Ref.

Debit

GJ3

5 6 5 00 18 8 7 1 00

NAME: HST PAYABLE Date 20XX Mar 10 31 31

Post Ref.

Explanation

GJ3

Debit

CRJ14

Post Ref.

Explanation

Debit

13-64

Credit 8 0 0 0 00 3 0 0 0 00

CRJ14 CRJ14

Cr Cr

Post Ref.

Explanation

Debit

SJ4 CRJ14

Explanation

Debit

GJ3

2 0 0 00

Explanation

CRJ14

Debit

Explanation

CRJ14 SJ4

$4 7 2 5 0 0 $12 2 2 5 0 0

2 6 00 2 0 9 3 00 2 9 1 2 00 310

410

Credit

DR CR

Balance

16 3 0 0 00 6 3 0 0 00

16 3 0 0 00 22 6 0 0 00

Credit

9 2 00

Debit

Balance

8 0 0 0 00 11 0 0 0 00

Balance

2 0 0 00

DR CR Dr

Credit

412

DR CR

ACCOUNT NO. Post Ref.

218

ACCOUNT NO. Post Ref.

5 6 5 00 29 2 6 7 00 10 3 9 6 00

Balance

ACCOUNT NO. Post Ref.

Balance

DR CR

ACCOUNT NO.

NAME: COST OF GOODS SOLD Date 20XX Mar 31 31

DR CR

ACCOUNT NO.

NAME: SALES DISCOUNTS Date 20XX Mar 31

Credit 2 1 1 9 00 8 1 9 00

NAME: SALES RETURNS AND ALLOWANCES Date 20XX Mar 10

2 6 00

SJ4

NAME: TOY SALES Date 20XX Mar 31 31

ACCOUNT NO.

NAME: MONIQUE CO. CAPITAL Date 20XX Mar 1 27

DR CR Dr

29 8 3 2 00

PJ10 CPJ8

Credit

210

DR CR Dr Dr

414 Balance 9 2 00 502 Balance $4 7 2 5 0 0 $16 9 5 0 0 0

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES HST (13%) MONIQUE’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: SALARIES EXPENSE Date 20XX Mar 15

Explanation

ACCOUNT NO. Post Ref.

Debit

CPJ8

7 0 0 00

NAME: CLEANING EXPENSE Date 20XX Mar 9

Explanation

Credit

DR CR

Balance

7 0 0 00

ACCOUNT NO. Post Ref.

Debit

CPJ8

4 0 0 00

Credit

610

612

DR CR

Balance

4 0 0 00

13-65

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) MONIQUE’S TOY HOUSE PURCHASES JOURNAL

Date 20XX Mar

Account Credited 1 7 10 19 26 28

Earl Miller Co. Earl Miller Co. Minnie Katz Sam Katz Garage Woody Smith Earl Miller Co.

Date of Inv. Invoice No. 3/1 3/7 3/9 3/19 3/26 3/26

13-66

410 415 311 111 211 436

Terms 2/10, n/30 2/10, n/30 1/15, n/60 2/10, n/30 2/10, n/30

Post Ref.

✔ ✔ ✔ ✔ ✔ ✔

Page 10 Sundry Dr.

Accounts Payable Cr.

Inventory Dr.

Prepaid GST Dr.

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

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

3 0 0 00 4 0 00 3 5 0 00 1 2 5 00 2 9 5 00 2 1 0 00

27 7 2 0 00

23 9 0 0 00

1 3 2 0 00

2 5 0 0 00

( 21 0)

( 11 5)

( 11 6)

(X)

Account

Amount

Delivery Truck

121

2 5 0 0 00

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) MONIQUE’S TOY HOUSE CASH PAYMENTS JOURNAL

Date 20XX Mar

1 9 11 15 22 26 29 31

Chq. No. 1 2 3 4 5 6 7

Account Debited Prepaid Rent Cleaning Expense Earl Miller Co. Salaries Expense Minnie Katz Cash Purchase Earl Miller Co.

Post Ref. 114 612

Sundry Dr. 1 0 0 0 00 4 0 0 00

✔ 610

Accounts Payable Dr.

Page 8 Prepaid GST Dr. 5 0 00 2 0 00

Inventory Dr.

Inventory Cr.

8 4 00

Cash Cr. 1 0 5 0 00 4 2 0 00 6 1 8 0 00 7 0 0 00 6 7 6 0 00 8 4 0 00 4 3 2 6 00

6 3 0 0 00

1 2 0 00

6 8 2 5 00

6 5 00

7 0 0 00

✔

4 0 00

8 0 0 00

4 4 1 0 00

✔ 2 1 0 0 00

17 5 3 5 0 0

1 1 0 00

8 0 0 00

2 6 9 00

20 2 7 6 0 0

( X)

( 21 0)

( 11 6)

( 11 5)

(1 15 )

( 11 0)

13-67

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) MONIQUE’S TOY HOUSE CASH RECEIPTS JOURNAL

Date 20XX Mar

13-68

Cash Dr.

Accounts Receivable Cr.

Toy Sales Cr.

1 13 15 15 18 26 26 27

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

24 0 3 3 0 0

6 5 1 0 00

6 3 0 0 00

(1 10 )

(1 12 )

(4 10 )

1 5 0 0 00 4 8 0 0 00

GST Payable Cr. 7 5 00 2 4 0 00

6 3 0 00 1 6 8 0 00 2 1 0 0 00 2 1 0 0 00

Sales Discounts Dr.

Page 14 Dr. Cost of Goods Sold Cr. Inventory 1 1 2 5 00 3 6 0 0 00

1 2 00 4 0 00 4 0 00 3 1 5 00 (2 18 )

9 2 00 (4 14 )

4 7 2 5 00

Description of Receipt

Post Ref.

Sundry Cr.

Monique Co. Capital Cash Sale Cash Sale Jim Rex Bill Burton Bill Burton Amy Rose Monique Co. Capital

310

8 0 0 0 00

X X

✔ ✔ ✔ ✔ 310

3 0 0 0 00 11 0 0 0 0 0 ( X)

MONIQUE’S TOY HOUSE SALES JOURNAL Date 20XX Mar

4 6 9 18 21 22 29

Page 4

Invoice. No.

Customer’s Name

Post Ref.

Accounts Receivable Dr.

GST Payble Cr.

1 2 3 4 5 6

Bill Burton Jim Rex Bill Burton Amy Rose Bill Burton Amy Rose Bonnie Flow Company

✔ ✔ ✔ ✔ ✔ ✔ ✔

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

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

17 1 1 5 0 0

(1 12 )

Toy Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory

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

1 2 0 0 00 6 0 0 00 5 2 5 00 4 5 0 0 00 1 5 0 0 00 1 5 0 0 00 2 4 0 0 00

8 1 5 0 0 16 3 0 0 0 0

12 2 2 5 0 0

( 21 8)

(5 02 ) ( 11 5)

(4 10 )

MONIQUE’S TOY HOUSE GENERAL JOURNAL Date 20XX Mar 10

Account Title and Description Sales Returns and Allowances GST Payable Accounts Receivable, Jim Rex Issued Credit Memo #1 Accounts Payable, Minnie Katz Inventory Prepaid GST Issued Debit Memo #1

Page 3 Post Ref.

Dr.

412

2 0 0 00 1 0 00

218

2 1 0 00

112/

210/✔ 115 116

Cr.

5 2 5 0 00 5 0 0 00 2 5 00

13-69

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) ACCOUNTS RECEIVABLE LEDGER

NAME ADDRESS

BILL BURTON

Date 20XX Mar 4 9 18 21 26 NAME ADDRESS

Explanation

SJ4

Debit

SJ4

Credit

Dr. Balance

1 6 8 0 00 7 3 5 00

2 1 0 0 00

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

Credit

Dr. Balance

1 6 8 0 00

CRJ14

2 1 0 0 00

CRJ14

00 00 00 00 00

BONNIE FLOW COMPANY

Explanation

Post Ref. SJ4

Debit 3 3 6 0 00

3 3 6 0 00

JIM REX

Date 20XX Mar 6 10 15

NAME ADDRESS

Ref. SJ4

Date 20XX Mar 29

NAME ADDRESS

Post

Explanation

Post Ref.

Debit

SJ4

8 4 0 00

Credit

Dr. Balance 8 4 0 00 6 3 0 00

2 1 0 00 6 3 0 00

GJ3 CRJ14

AMY ROSE

Date 20XX Mar 18 22 26

Explanation

Post Ref. SJ4 SJ4

Debit 6 3 0 0 00 2 1 0 0 00

CRJ14

Credit

Dr. Balance 6 3 0 0 00 8 4 0 0 00 6 3 0 0 00

2 1 0 0 00

MONIQUE’S TOY HOUSE SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 20XX Bill Burton Bonnie Flow Company Amy Rose Total Accounts Receivable

13-70

7 3 5 00 3 3 6 0 00 6 3 0 0 00

$10 3 9 5 0 0

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) ACCOUNTS PAYABLE LEDGER

NAME ADDRESS Date 20XX Mar 10 15 22

NAME ADDRESS Date 20XX Mar 19

NAME ADDRESS Date 20XX Mar 1 7 11 28 29 NAME ADDRESS Date 20XX Mar 26

MINNIE KATZ Post Ref.

Explanation

Debit

7 3 5 0 00

PJ10 GJ3 CPJ8

Credit

5 2 5 00 6 8 2 5 00

Cr. Balance 7 3 5 0 00 6 8 2 5 00

SAM KATZ GARAGE Post Ref.

Explanation

Debit

PJ10

Credit

Cr. Balance

2 6 2 5 00

Credit

Cr. Balance

EARL MILLER CO. Post

Explanation

Ref.

Debit

6 3 0 0 00 8 4 0 00

PJ10 PJ10 CPJ8

6 3 0 0 00 4 4 1 0 00

PJ10 CPJ8

4 4 1 0 00

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

00 00 00 00 00

WOODY SMITH

Explanation

Post Ref.

Debit

PJ10

Credit 6 1 9 5 00

Cr. Balance 6 1 9 5 00

MONIQUE’S TOY HOUSE SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 20XX Sam Katz Garage

$2 6 2 5 0 0

Earl Miller Co. Woody Smith

8 4 0 00 6 1 9 5 00

Total Accounts Payable

$9 6 6 0 0 0

13-71

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) MONIQUE’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: CASH Date 20XX Mar 31 31

ACCOUNT NO. Explanation

Post Ref.

Debit

CRJ14

24 0 3 3 00

Explanation

Post Ref.

Debit

SJ4

17 1 1 5 00

Post Ref.

Debit

CPJ8

1 0 0 0 00

13-72

Credit

Explanation

Post Ref.

Debit

5 0 0 00

GJ3 CPJ8

Explanation

Post Ref. PJ10 CPJ8

Explanation

1 0 0 0 00

DR CR Cr Dr

Credit

DR CR Cr Dr Dr

ACCOUNT NO. Debit

PJ10

2 5 0 0 00

115 Balance

116

1 3 2 0 00 1 1 0 00

Post Ref.

114

ACCOUNT NO.

2 5 00

GJ3

2 1 0 00 16 9 0 5 00 10 3 9 5 00

4 7 2 5 00 12 2 2 5 0 0

Debit

Balance

23 9 0 0 0 0

SJ4

112

Balance

2 6 9 00

CRJ14

24 0 3 3 00 3 7 5 7 00

5 0 0 3 0 0 3 1 23 9 3 1 19 2 0 6 6 9 8 1

8 0 0 00

CPJ8 PJ10

Credit

Balance

DR CR

ACCOUNT NO.

NAME: DELIVERY TRUCK Date 20XX Mar 19

ACCOUNT NO.

NAME: PREPAID GST Date 20XX Mar 15 31 31

DR CR Dr

6 5 1 0 00

CRJ14

NAME: INVENTORY Date 20XX Mar 15 31 31 31 31 31

Credit 2 1 0 00

GJ3

Explanation

ACCOUNT NO.

NAME: PREPAID RENT Date 20XX Mar 1

DR CR Dr

20 2 7 6 00

CPJ8

NAME: ACCOUNTS RECEIVABLE Date 20XX Mar 10 31 31

Credit

110

Credit

00 00 00 00 00 00

Balance 2 5 00 1 2 9 5 00 1 4 0 5 00 121

DR CR

Balance

2 5 0 0 00

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) MONIQUE’S TOY HOUSE - PARTIAL GENERAL LEDGER

NAME: ACCOUNTS PAYABLE Date 20XX Mar 15 31 31

ACCOUNT NO.

Explanation

Post Ref.

Debit

GJ3

5 2 5 00 17 5 3 5 00

NAME: GST PAYABLE Date 20XX Mar 10 31 31

Post Ref. GJ3

Debit

Mar

Post Ref.

Explanation

Debit

CRJ14

Post Ref.

Debit

Mar

CR Cr Cr

Explanation

Credit

CR Cr Cr

ACCOUNT NO.

Post Ref.

Debit

GJ3

2 0 0 00

SALES DISCOUNTS

Credit

16 3 0 0 00 6 3 0 0 00

SJ4 CRJ14

NAME: SALES RETURNS AND ALLOWANCES

Date 20XX

ACCOUNT NO.

31 31

NAME:

8 0 0 0 00 3 0 0 0 00

CRJ14

Explanation

Date 20XX Mar 10

ACCOUNT NO.

NAME: TOY SALES Date 20XX

Credit 8 1 5 00 3 1 5 00

CRJ14

1 27

1 0 00

SJ4

NAME: MONIQUE CAPITAL

Mar

ACCOUNT NO.

Explanation

Date 20XX

27 7 2 0 00

PJ10 CPJ8

DR CR

Credit

DR CR Dr

ACCOUNT NO. Post Ref. CRJ14

Debit 9 2 00

Credit

DR CR Dr

210 Balance 5 2 5 00 27 1 9 5 00 9 6 6 0 00 218 Balance 1 0 00 8 0 5 00 1 1 2 0 00 310 Balance 8 0 0 0 00 11 0 0 0 00

410 Balance 16 3 0 0 00 22 6 0 0 00

412 Balance 2 0 0 00

414 Balance 9 2 00

13-73

GROUP B PROBLEMS, Cont. P13-5B., Cont.

THIS SOLUTION ASSUMES GST (5%) MONIQUE’S TOY HOUSE—PARTIAL GENERAL LEDGER

NAME: COST OF GOODS SOLD Date 20XX Mar 31 31

Explanation

ACCOUNT NO. Post Ref. CRJ14 SJ4

Debit 4 7 2 5 00 12 2 2 5 0 0

NAME: SALARIES EXPENSE Date 20XX Mar 15

Explanation

Mar

13-74

Explanation 9

DR CR Dr Dr

ACCOUNT NO. Post Ref.

Debit

CPJ8

7 0 0 00

NAME: CLEANING EXPENSE Date 20XX

Credit

DR CR Dr

ACCOUNT NO. Post Ref.

Debit

CPJ8

4 0 0 00

Credit

DR CR Dr

502 Balance 4 7 2 5 00 16 9 5 0 0 0

610 Balance 7 0 0 00

612 Balance 4 0 0 00

GROUP C PROBLEMS P13-1C. MALORIE EQUIPMENT SUPPLY SALES JOURNAL Date 20XX Sept

2 5 8 12 30

Invoice. No. 703 704 705 706

Customer’s Name Ray Fortuna Wilma Jorge Cassie Ho Wilma Jorge

Post Ref. ✔ ✔ ✔ ✔

Page 5

Accounts Receivable Dr.

Sales Tax Payble Cr.

Equipment Sales Cr.

Dr. Cost of Goods Sold Cr. Inventory

9 9 7 5 00 3 1 5 0 00 16 5 9 0 00 4 8 8 2 50 3 4 5 9 7 50

4 7 5 00 1 5 0 00 7 9 0 00 2 3 2 50 1 6 4 7 50

9 5 0 0 00 3 0 0 0 00 15 8 0 0 0 0 4 6 5 0 00 32 9 5 0 0 0

7 1 2 5 00 2 2 5 0 00 11 8 5 0 0 0 3 4 8 7 50 24 7 1 2 50

(1 11 )

( 21 2)

(4 00 )

(5 02 ) 13 0) (

MALORIE EQUIPMENT SUPPLY GENERAL JOURNAL Date 20XX Sept 9

Account Title and Description Sales Returns and Allowances Sales Tax Payable Accounts Receivable, Ray Fortuna Issued Credit Memo #14

Page 3 Post Ref. 402 212 111/✔

Dr.

Cr.

1 2 0 0 00 6 0 00 1 2 6 0 00

13-75

GROUP C PROBLEMS, Cont. P13-1C., Cont. MALORIE EQUIPMENT SUPPLY ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

RAY FORTUNA

Date 20XX Sept 1 Balance 2 9

NAME ADDRESS

Debit

SJ5

9 9 7 5 00

GJ3

Credit

Dr. Balance

1 2 6 0 00

2 1 0 0 00 12 0 7 5 00 10 8 1 5 00

Explanation

Post Ref.

Debit

Credit

Dr. Balance

SJ5

16 5 9 0 00

Post Ref.

Debit

7 3 5 00 17 3 2 5 00

WILMA JORGE

Date 20XX Sept 1 Balance 5 12

13-76

Post Ref.

CASSIE HO

Date 20XX Sept 1 Balance 8

NAME ADDRESS

Explanation

SJ5 SJ5

3 1 5 0 00 4 8 8 2 50

Credit

Dr. Balance 1 2 6 0 00 4 4 1 0 00 9 2 9 2 50

GROUP C PROBLEMS, Cont. P13-1C., Cont. MALORIE EQUIPMENT SUPPLY PARTIAL GENERAL LEDGER NAME: ACCOUNTS RECEIVABLE Date 20XX Sept 1 9 30

Explanation

ACCOUNT NO. Post Ref.

Debit

Balance

1 2 6 0 00

GJ3 SJ5

34 5 9 7 50

NAME: INVENTORY Date 20XX Sept 30

Explanation

Post Ref.

Debit

SJ5

Explanation

Post Ref.

Debit

GJ3

Explanation

Sept

Balance

$24 7 1 2 5 0

Credit

212 DR CR

Balance

1 7 4 2 50 1 6 8 2 50 3 3 3 0 00

1 6 4 7 50

Debit

SJ5

Explanation

115

ACCOUNT NO. Post Ref.

400

Credit

DR CR

Balance

32 9 5 0 00

ACCOUNT NO. Post Ref.

Debit

GJ3

1 2 0 0 00

4 0 9 5 00 2 8 3 5 00 37 4 3 2 50

DR CR

6 0 00

SJ5

Balance

Credit

Balance

NAME: SALES RETURNS AND ALLOWANCES Date 20XX

ACCOUNT NO.

NAME: EQUIPMENT SALES Date 20XX Sept 30

ACCOUNT NO.

NAME: SALES TAX PAYABLE Date 20XX Sept 1 9 30

DR CR

Credit

111

Credit

402 DR CR

Balance

1 2 0 0 00

13-77

GROUP C PROBLEMS, Cont. P13-1C., Cont. NAME: COST OF GOODS SOLD Date 20XX Sep 30

ACCOUNT NO.

Explanation

Post Ref.

Debit

SJ5

$24 7 1 2 5 0

Credit

502

DR CR

Balance

$24 7 1 2 5 0

MALORIE EQUIPMENT SUPPLY SCHEDULE OF ACCOUNTS RECEIVABLE SEPTEMBER 30, 20XX Ray Fortuna

$1 0 8 1 5 0 0

Cassie Ho Wilma Jorge

17 3 2 5 00 9 2 9 2 50

Total Accounts Receivable

13-78

$3 7 4 3 2 5 0

GROUP C PROBLEMS, Cont. P13-2C. RARITY COLLECTIBLES SHOP SALES JOURNAL Date Sales 20XX Invoice Jan 3 6 8 14 27

344 345 346 347 348

Customer’s Name

Post Ref.

Accounts Receivable Dr.

HST Payable Cr.

Starcraft Reproductions Burgess Fancys Hard-To-Find Co. Georgina’s Collections Perfect Sales Co.

✔ ✔ ✔ ✔ ✔

2 9 3 8 00 3 6 1 6 00 4 2 9 4 00 2 8 0 2 40 6 7 8 0 00

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

Page 13 Merchandise Sales Cr.

Dr. Cost of Goods sold Cr. Inventory

00 00 00 40 00

2 6 0 0 00 3 2 0 0 00 3 8 0 0 00 2 4 8 0 00 6 0 0 0 00

1 9 2 4 2 8 1 8 4 5

20 4 3 0 40

2 3 5 0 40

18 0 8 0 00

13 5 6 0 0 0

( 12 5)

( 22 1)

( 40 0)

( 50 2)( 13 0)

5 0 5 6 0

0 0 0 0 0

00 00 00 00 00

13-79

GROUP C PROBLEMS, Cont. P13-2C., Cont.

Date 20XX Jan

13-80

RARITY COLLECTIBLES SHOP CASH RECEIPTS JOURNAL Cash Dr.

2 10 16 17 21 24

42 0 0 0 00 2 8 8 6 00 3 5 5 2 00 4 6 6 1 25 2 1 9 7 80 5 3 3 3 60

Accounts Receivable Cr.

HST Payable Cr.

Merchandise Sales Cr.

2 9 3 8 00 3 6 1 6 00

Dr. Cost of Goods sold Cr. Inventory

5 2 00 6 4 00 5 3 6 25

4 1 2 5 00

2 2 3 7 40

3 0 9 3 75 3 9 60

6 1 3 60

4 7 2 0 00

60 6 3 0 65

8 7 9 1 40

1 1 4 9 85

8 8 4 5 00

(1 11 )

(1 25 )

(2 21 )

(4 00 )

Sales Discounts Dr.

Page 17

3 5 4 0 00

Description of Receipt K. Henderson Capital Starcraft Repr. Burgess Fancys Cash Sales Georgina’s Coll. Cash Sales

Ref.

Sundry Cr.

300

42 0 0 0 0 0

Post

✔ ✔ X

✔ X

1 5 5 60

6 6 3 3 75

42 0 0 0 0 0

(4 04 )

(5 02 ) ( 13 0)

( X)

GROUP C PROBLEMS, Cont. P13-2C., Cont. RARITY COLLECTIBLES SHOP GENERAL JOURNAL Date 20XX Jan 20

Page 19 Post Ref

Account Title and Description Sales Returns and Allowances HST Payable Accounts Receivable, Georgina’s Collections Issued Credit Memo #10

401 221

Dr. 5 0 0 00 6 5 00

5 6 5 00

125/✔

Sales Returns and Allowances HST Payable Accounts Receivable, Perfect Sales Co. Issued Credit Memo #11

401 221

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

125/✔

Inventory Cost of Goods Sold

130

Cr.

9 0 0 00 9 0 0 00

502

RARITY COLLECTIBLES SHOP ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS

BURGESS FANCYS

Date 20XX Jan

Explanation

Credit

Dr. Balance

SJ13

3 6 1 6 00

CRJ1

3 6 1 6 00 3 6 1 6 00

Credit

Dr. Balance

GEORGINA’S COLLECTIONS

Date 20XX Jan

Debit

1 Balance 6 16

NAME ADDRESS

Post Ref.

Explanation 1 Balance 14 20 21

Post Ref.

Debit

SJ13

2 8 0 2 40

0 GJ19 CRJ1

5 6 5 00 2 2 3 7 40

2 8 0 2 40 2 2 3 7 40

13-81

GROUP C PROBLEMS, Cont. P13-2C., Cont. RARITY COLLECTIBLES SHOP ACCOUNTS RECEIVABLE LEDGER NAME ADDRESS Date 20XX Jan 1 8

HARD-TO-FIND CO.

Credit

Dr. Balance

SJ13

4 2 9 4 00

Post Ref

Debit

2 0 4 7 56 6 3 4 1 56

PERFECT SALES CO.

Explanation

Credit

Dr. Balance

1 3 5 6 00

7 9 6 65 7 5 7 6 65 6 2 2 0 65

Credit

Dr. Balance

2 9 3 8 00

1 8 0 9 13 4 7 4 7 13 1 8 0 9 13

Balance SJ13

6 7 8 0 00

GJ19

NAME ADDRESS Date 20XX Jan 1 3 10

Debit

Balance

NAME ADDRESS Date 20XX Jan 1 27 31

Post Ref

Explanation

STARCRAFT REPRODUCTIONS Post Ref

Explanation

Debit

Balance SJ13

2 9 3 8 00

CRJ1

RARITY COLLECTIBLES SHOP PARTIAL GENERAL LEDGER NAME: CASH Date 20XX Jan 1 31

ACCOUNT NO. Explanation

Post Ref

Debit

CRJ17

60 6 3 0 65

Balance

13-82

DR CR Dr

NAME: ACCOUNTS RECEIVABLE Date 20XX Jan 1 20 31 31 31

Credit

Explanation

ACCOUNT NO. Post Ref

Debit

Credit

Balance

5 6 5 00 1 3 5 6 00

GJ19 GJ19 SJ13 CRJ1

20 4 3 0 40

Balance 2 6 7 5 32 63 3 0 5 97

125

DR CR

Balance

4 6 5 3 34 4 0 8 8 34 2 7 3 2 34 23 1 6 2 74 14 3 7 1 34

Dr Dr Dr

8 7 9 1 40

111

GROUP C PROBLEMS, Cont. P13-2C., Cont. RARITY COLLECTIBLES SHOP PARTIAL GENERAL LEDGER NAME: INVENTORY Date 20XX Jan

ACCOUNT NO. Post Ref.

Debit

GJ19

9 0 0 00

SJ13

CRJ17

Explanation

NAME: HST PAYABLE Date 20XX Jan

Post Ref.

Debit

Balance

9 0 0 00

13 5 6 0 0 0

12 6 6 0 0 0

6 6 3 3 75

19 2 9 3 7 5

ACCOUNT NO.

Explanation 1

Credit

130

Credit

Balance

221 Balance

3 1 4 6 90

GJ19

6 5 00

3 0 8 1 90

GJ19

1 5 6 00

2 9 2 5 90

SJ13

2 3 5 0 40

5 2 7 6 30

CRJ17

1 1 4 9 85

6 4 2 6 15

NAME: KYLIE HENDERSON CAPITAL Date 20XX Jan 1

ACCOUNT NO. Post Ref.

Explanation

Debit

Balance

42 0 0 0 00

CRJ17

NAME: MERCHANDISE SALES Date 20XX Jan 1

Credit

Post Ref.

Debit

48 0 0 0 00

90 0 0 0 00

Credit

Balance

ACCOUNT NO.

Explanation

300

400 Balance

82 1 4 5 62

SJ13

18 0 8 0 00

100 2 2 5 62

CRJ17

8 8 4 5 00

109 0 7 0 62

NAME: SALES RETURNS AND ALLOWANCES Date 20XX Jan 1

Explanation

ACCOUNT NO. Post Ref.

Debit

Balance

Credit

DR CR

401 Balance

1 1 4 3 56

GJ19

5 0 0 00

1 6 4 3 56

GJ19

1 2 0 0 00

2 8 4 3 56

13-83

GROUP C PROBLEMS, Cont. P13-2C., Cont. RARITY COLLECTIBLES SHOP PARTIAL GENERAL LEDGER NAME: SALES DISCOUNTS Date 20XX Jan

Explanation

ACCOUNT NO. Post Ref.

Debit

CRJ17

1 5 5 60

NAME: COST OF GOODS SOLD Date 20XX Jan

Explanation

Credit

DR CR Dr

ACCOUNT NO. Post Ref.

GJ19

SJ13

CRJ17

Debit

Credit 9 0 0 00

DR CR

402 Balance 1 5 5 60

502 Balance

9 0 0 00

13 5 6 0 00

12 6 6 0 0 0

6 6 3 3 75

19 2 9 3 7 5

RARITY COLLECTIBLES SHOP SCHEDULE OF ACCOUNTS RECEIVABLE JANUARY 31, 20XX Hard-To-Find Co. Perfect Sales Co. Starcraft Reproductions Total Accounts Receivable

13-84

$6 3 4 1 56 6 2 2 0 65 1 8 0 9 13 $1 4 3 7 1 3 4

GROUP C PROBLEMS, Cont. P13-3C. ALEX YEOMAN PAINTING CO. PURCHASES JOURNAL Date 20XX Aug

3 7 10 13 17 24 28 31

Account Credited Euro. Painting Co. Rob Co. RJ Co. Garret Co. Reliant Co. Lavoy Co. Euro. Painting Co.

Date Inv. of No. Invoice 8/2 8/7 8/7 8/13 8/16 8/24 8/27

Terms

Post Ref.

653 n/15 ✔ 250 2/10, n/60 ✔ 1124 1/10, n/60 ✔ 712 ✔ 873 ✔ 816 2/10, n/3 ✔ 713 n/15 ✔

Page 21

Accounts Payable Cr.

Inventory Dr.

Prepaid GST Dr.

Store Supplies Dr.

1 4 3 0 10 9 6 6 00 1 7 0 7 30 2 8 1 4 00 2 7 4 0 50 7 6 1 25 2 8 7 7 00

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

2 6 8 0 00

2 7 4 0 00

6 8 10 4 6 00 8 1 30 1 3 4 00 1 3 0 50 3 6 25 1 3 7 00

13 2 9 6 15

6 6 4 8 00

6 3 3 15

3 4 0 5 00

2 6 1 0 00

( 11 5)

( 14 2)

( 13 0)

(X)

( 22 0)

Sundry Dr. Account

Amount

Office Equipment

180

2 6 1 0 00

7 2 5 00

13-85

GROUP C PROBLEMS, Cont. P13-3C., Cont. ALEX YEOMAN PAINTING CO—ACCOUNTS PAYABLE LEDGER NAME ADDRESS Date 20XX Aug 1 7 14 NAME ADDRESS Date 20XX Aug 1 3 28 NAME ADDRESS Date 20XX Aug 1 10

NAME ADDRESS Date 20XX Aug 1 13 24 NAME ADDRESS Date 20XX Aug 1 17

13-86

ROB CO.

Explanation

Post Ref.

Debit

Credit

Cr. Balance

9 6 6 00

8 4 0 00 1 8 0 6 00 1 6 3 8 00

Credit

Cr. Balance

Balance PJ21 GJ32

1 6 8 00

EUROPEAN IMPORT PAINTING CO.

Explanation

Post Ref.

Debit

Balance 1 4 3 0 10 2 8 7 7 00

PJ21 PJ21

3 2 5 5 00 4 6 8 5 10 7 5 6 2 10

RJ CO.

Explanation

Post Ref.

Debit

Credit

Cr. Balance

1 7 0 7 30

1 5 7 5 00 3 2 8 2 30

Credit

Cr. Balance

Balance PJ21

GARRET CO.

Explanation

Post Ref.

Debit

Balance 2 8 1 4 00 7 6 1 25

PJ21 PJ21

5 2 5 00 3 3 3 9 00 4 1 0 0 25

RELIANT CO.

Explanation

Post Ref.

Debit

Credit

Balance

PJ21

2 7 4 0 50

Cr. Balance 2 7 3 0 00 5 4 7 0 50

GROUP C PROBLEMS, Cont. P13-3C., Cont. ALEX YEOMAN PAINTING CO—PARTIAL GENERAL LEDGER NAME: INVENTORY Date 20XX Aug 1 14 31

ACCOUNT NO. Explanation

Post Ref.

Debit

Balance PJ21

Explanation

6 6 4 8 00

Explanation

Post Ref.

Debit

PJ21

3 4 0 5 00

Credit

DR CR Dr

ACCOUNT NO. Post Ref.

Debit

Credit

Balance

DR CR Dr

8 00

GJ32 PJ21

6 3 3 15

NAME: OFFICE EQUIPMENT Explanation

Explanation

Dr Dr

ACCOUNT NO. Post Ref.

Debit

PJ21

2 6 1 0 00

NAME: ACCOUNTS PAYABLE Date 20XX Aug 1 14 31

ACCOUNT NO.

NAME: PREPAID GST

Date 20XX Aug 17

1 6 0 00

GJ32

Date 20XX Aug 31

DR Dr

NAME: STORE SUPPLIES

Date 20XX Aug 1 14 31

Credit

DR CR Dr

ACCOUNT NO. Post Ref.

Debit

Credit

Balance

DR CR Cr

GJ32 PJ21

1 6 8 00

13 2 9 6 15

115 Balance 84 9 6 6 00 84 8 0 6 00 91 4 5 4 00

130 Balance 3 4 0 5 00

142 Balance 2 7 9 5 00 2 7 8 7 00 3 4 2 0 15 180 Balance 2 6 1 0 00

220 Balance 8 9 2 5 00 8 7 5 7 00 22 0 5 3 15

13-87

GROUP C PROBLEMS, Cont. P13-3C., Cont. ALEX YEOMAN PAINTING CO. GENERAL JOURNAL Date 20XX Aug 14

Account Title and Description Accounts Payable, Eddyn Co. Inventory Prepaid GST Issued Debit Memo #8

Page 32

Post Ref.

Dr.

220/✔

1 6 8 00

115 142

Cr. 1 6 0 00 8 00

ALEX YEOMAN PAINTING CO. SCHEDULE OF ACCOUNTS PAYABLE AUGUST 31, 20XX RoB Co.

$1 6 3 8 0 0

European Import Painting Co. RJ Co. Garret Co. Reliant Co.

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

Total Accounts Payable

$2 2 0 5 3 1 5

13-88

10 30 25 50

GROUP C PROBLEMS, Cont. P13-4C. I=

PRT 100

R = 100 × 100 × $20 $980 ×

I = Dollars of Interest R = Rate of Interest (years) T = Period of Loan

1 PT 20 360

P = Principal = Approx. 36.74%

To solve this problem, the bookkeeper should be informed that competition in the business world is sometimes fierce and all discounts should be taken, if available. This improves the company’s competitive position.

P13-5C. SALES JOURNAL Date

Sales Invoice No.

Terms

Page 5 Post Ref.

Account Debited

Acct. Receivable Dr. Sales Cr.

P. Bond M. Raff R. Venner J. Smooth J. Smooth

1 5 0 1 0 0 4 0 0 2 0 0 0 1 0 0 0

00 00 00 00 00

3 6 5 0

GENERAL JOURNAL Date

Account Title and Description Sales Returns and Allowances Accounts Receivable, J. Smooth Inventory Cost of Goods Sold Sales Returns And Allowances Accounts Receivable, J. Smooth Inventory Cost of Goods Sold

Page 2 Post Ref.

Dr.

Cr.

1 0 0 0 00 1 0 0 0 00 7 5 0 00 7 5 0 00 5 0 0 00 5 0 0 00 3 7 5 00 3 7 5 00

Ron should be advised that using a computer with appropriate software (such as Simply Accounting) can be of great assistance in preventing these sorts of data disasters. However, to ensure that the data is safe, it should be backed up periodically and a copy of the backup maintained at an appropriate off-site location.

13-89

GROUP C PROBLEMS, Cont. P13-5C., Cont. CASH RECEIPTS JOURNAL Date 20XX

Accounts Receivable Cr.

Cash Dr. 5 0 0 0 1 4 7 4 0 0 5 0 0 0 1 0 0 0 9 9 0 2 0 0

00 00 00 00 00 00 00

12 7 3 7 00

13-90

Sales Cr.

1 5 0 00 4 0 0 00

Sales Discounts Dr. 3 00

5 0 0 0 00 1 0 0 0 00 1 0 0 0 00 1 5 5 0 00

1 0 00 6 0 0 0 00

1 3 00

Page 1 Description of Receipt M. Rang, Capital P. Bond R. Venner Cash Sales Cash Sales J. Smooth Shelving Equipment

Post Ref

Sundry Cr. 5 0 0 0 00

2 0 0 00 5 2 0 0 00

MINI PRACTICE SET THE CORNER DRESS SHOP GENERAL JOURNAL Date 20XX Mar

Account Title and Description HST Collected HST Prepaid Preparation for remittance to CRA Sales Returns & Allowances, Credit Memo 001 HST Collected Accounts Receivable Bing Company allowance re CD1082 Wages Expense Income Taxes Payable CPP Payable EI Payable Medical Plan Payable Charitable Donations Payable Accrued Wages Payable Distribution re March payroll EI Expense CPP Expense EI Payable CPP Payable To record March payroll tax expenses

Page 5 Post Ref. 2400

Dr. 4 3 6 34

4 3 6 34

1150 4150 2400

1 4 9 95 1 9 49 1 6 9 44

1120 5400

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

2330 2340 2335 2350 2360 2200 5430 5440

Cr.

00 07 15 00 00 78

2 0 0 41 4 4 6 07 2 0 0 41 4 4 6 07

2335 2340

Adjusting Entries Mar.

31 31 31 31

Cost of Goods Sold Inventory Rent Received in Advance Rental Income Depn. Expense - Computer & Office Equipment Acc. Depn. - Computer & Office Equipment Depn. Expense - Software Acc. Depn. - Computer Software

5040

3 7 79 3 7 79

1210 2500

3 0 0 00 3 0 0 00

4200 5550

1 3 0 56 1 3 0 56

1335 5560 1345

3 0 79 3 0 79

13-91

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP GENERAL JOURNAL Date 20XX Mar

Account Title and Description

31 31

Depn. Expense - Delivery Truck Acc. Depn. - Delivery Truck Insurance Expense Prepaid Insurance

Page 5 Post

Dr.

5570

1 7 0 00 1 7 0 00

1355 5510

Cr.

1 0 0 00 1 0 0 00

1145

Closing Mar

31 31

13-92

Sales Rental Income Income Summary Income Summary Sales Discounts Sales Returns & Allowances Cost of Goods Sold Wages Expense EI Expense CPP Expense Postage Expense Insurance Expense Cleaning Expense Rent Expense Delivery Expense Depn. Exp - Comp & Office Equip. Depn. Expense - Software Depn. Expense - Delivery Truck Accounting Expense Miscellaneous Expense Income Summary Betty Loeb, Capital Betty Loeb, Capital Betty Loeb, Withdrawals

4110 4200

75 7 3 0 65 3 0 0 00 76 0 3 0 65

3380 3380

6 6 0 7 9 76 1 8 68 1 4 9 95 31 0 1 0 3 8 27 1 8 0 00 6 7 7 33 1 2 5 6 37 1 2 00 3 0 0 00 3 0 0 00 2 7 0 0 00 5 00 3 9 1 68 9 2 37 5 1 0 00 1 4 6 0 00 1 6 00

4140 4150 5040 5400 5430 5440 5500 5510 5520 5530 5540 5550 5560 5570 5590 5595 3380

9 9 5 0 89 9 9 5 0 89

3110 3110 3120

8 3 0 0 00 8 3 0 0 00

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP AUXILIARY PETTY CASH RECORD Category of Payment Date 20XX Mar

Voucher No. 1 4 7 11 28

1 2 3 4

Description Balance Forward Misc. Expense - Doughnuts Postage Expense Delivery Expense Misc Exp-First Aid Emergency

Receipts 5 0 00

Payment 6 1 2 5 1 0

5 0 00

Postage Expense 00 00 00 00

3 3 00

Delivery Expense

Sundry Account

Amount

Misc

6 00

Misc

1 0 00

1 2 00 5 00

1 2 00

5 00

1 6 00

1 7 00 5 0 00 31 29

Balance 3/31/XX Replenishment

1 7 00 3 3 00

New Balance

5 0 00

13-93

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP—PAYROLL REGISTER

Employee Mel Case Jane Holl Jackie Moore Totals

Monthly Salary 1 8 6 0 00 2 9 0 0 00 4 3 0 0 00 9 0 6 0 00

* Federal and Provincial Income Taxes combined

13-94

Net Claim Code 4 1 3

Cumulative CPP

Tax* 3 9 2 00 5 8 0 00 8 6 0 00 1 8 1 2 00

MINI PRACTICE SET, Cont. PAYROLL REGISTER, Cont. Deductions CPP 8 5 47 1 4 2 15 2 1 8 45

EI 2 9 39 4 5 82 6 7 94

Health 2 8 00 4 2 00 4 2 00

Charitable 2 0 00 3 0 00 4 0 00

Net Pay

Chq. No.

1 3 2 5 14 2 0 6 0 03 3 0 7 1 61

131 132 133

4 4 6 07

1 4 3 15

1 1 2 00

9 0 00

6 4 5 6 78

THE CORNER DRESS SHOP

Date 20XX Mar

4 15 21 31

SALES JOURNAL

Invoice No.

Customer’s Name

Post Ref.

Accounts Receivable Dr.

CD1081 CD1082 CD1084

Morris Company Bing Company Sally’s Store

✓ ✓ ✓

1 0 5 5 31 1 6 9 44 2 3 7 2 44 3 5 9 7 19 (1 12 0)

Page 3 HST Collected Cr.

Dress Sales Cr.

Dr. COGS Cr. Inventory

1 2 1 41 1 9 49 2 7 2 94

9 3 3 90 1 4 9 95 2 0 9 9 50

7 0 0 43 1 1 2 46 1 5 7 4 63

4 1 3 84

3 1 8 3 35

2 3 8 7 52

(4 11 0)

(5 04 0) (1 210)

(2 40 0)

13-95

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP CASH RECEIPTS JOURNAL

Date 20XX Mar 5 8 12 18

12-96

Invoice No. CD1078 CD1076 CD1081 CD1083

Description of Receipt Ronald Company Sally’s Store Morris Co. Cash Sale

Post Ref. ✓ ✓ ✓

Sundry Cr.

Accounts Receivable Cr. 5 5 3 8 00 2 7 5 3 85 1 0 5 5 31

9 3 4 7 16

(X)

(1 12 0)

HST Collected Cr.

Page 6

Dr. COGS Cr. Inventory

Sales Discounts Dr.

1 6 4 8 69 12 6 8 2 25

9 5 1 1 69

Cash Dr. 5 5 3 8 2 7 5 3 1 8 68 1 0 3 6 14 3 3 0

1 6 4 8 69 12 6 8 2 25

9 5 1 1 69

1 8 68 23 6 5 9 42

(2 40 0)

Sales Cr.

(4 11 0)

(5 04 0) (1 210)

(4 14 0)

(1 11 0)

00 85 63 94

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP PURCHASE JOURNAL

Date 20XX Mar 4 12 13 26

Account Credited Jones Company Dresses by Shelley Blew Company Dresses by Shelley

Date of Invoice Mar 4 Mar 12 Mar 13 Mar 26

Invoice No. JC 59087 DS 12947 BC 1896 DS 13062

Post Ref ✓ ✓ ✓ ✓

Page 4

Accounts Payable Cr. 1 1 3 0 00 3 2 2 0 50 5 0 1 1 55 2 1 4 7 00

Inventory Dr. 1 0 0 0 00 2 8 5 0 00 4 4 3 5 00 1 9 0 0 00

HST Prepaid Dr. 1 3 0 00 3 7 0 50 5 7 6 55 2 4 7 00

11 5 0 9 0 5

10 1 8 5 00

1 3 2 4 05

(2 10 0)

(1 21 0)

(1 15 0)

Sundry Dr. Account

Post Ref.

Amount

13-97

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP CASH PAYMENTS JOURNAL Date 20XX Mar

Chq. No. 1 121 5 122 8 123 12 124 15 125 15 125 15 125 15 126 15 127 18 128 19 129 20 130 29 131 29 132 29 133 29 134 29 134 29 134

Account Debited Smithstone Realty Dresses by Shelley, DS 12895 Blew Company, BC 1795 Cleaners Inc. CRA- Income Taxes Payable CRA - El Payable CRA - CPP Payable CRA - HST Collected Gov. of Ont. Medical Plan Pay. Jones Company, JC 59087 Dresses by Shelley, DS 12947 Betty Loeb, Withdrawals Mel Case Jane Holl Jackie Moore Postage Delivery Miscellaneous Totals

13-98

Post Ref. 5530

Sundry Dr. 9 0 0 00

3 0 0 $1 1 0 8 4 0 8 8 1 0 1 8 7 7 1 1 2

00 82 79 30 31 00

Cost of Goods Sold Dr.

-Inventory Cr.

Cash Cr. 1 0 1 7 1 5 1 0 2 5 4 3 3 3 9

00 22 77 00

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

91 31 00 00 50 00 14 03 61

3 9 00

1 1 3 0 00 3 2 2 0 50

✓ ✓ 3120 2200 2200 2200 5500 5540 5595 1150

HST Prepaid Dr. 1 1 7 00

1 5 1 0 22 2 5 4 3 77

✓ ✓ 5520 2330 2335 2340 2400 2350

Accounts Payable Dr.

Page 7

1 0 0 0 1 3 2 5 2 0 6 0 3 0 7 1 1 2 5 1 6 0

00 14 03 61 00 00 00 60

3 3 60

13 0 0 7 60

8 4 0 4 49

1 5 6 00

(X )

( 21 00 )

( 11 50 )

5 7 00 ( 12 10 )

21 5 1 1 0 9 (1 11 0)

MINI PRACTICE SET, Cont. ACCOUNTS RECEIVABLE LEDGER NAME: ADDRESS

BING COMPANY

Date 20XX Mar

Explanation 15 19

NAME: ADDRESS

SJ3

1 6 9 44

Credit 1 6 9 44

Dr. Balance 1 6 9 44 O

MORRIS COMPANY

Explanation

Post Ref.

Debit

SJ3

1 0 5 5 31

CRJ4

Credit

Dr. Balance

1 0 5 5 31

1 0 5 5 31 O

Credit

Dr. Balance

5 5 3 8 00

5 5 3 8 00 O

Credit

Dr. Balance

2 7 5 3 85

2 7 5 3 85 O 2 3 7 2 44

RONALD COMPANY

Date 20XX Mar 1 Balance 5

NAME: ADDRESS

Debit

GJ4

Date 20XX Mar 4 12

NAME: ADDRESS

Post Ref.

Explanation

Post Ref.

Debit

CRJ6

SALLY’S STORE

Date 20XX Mar 1 Balance 8 21

Explanation

Post Ref.

Debit

CRJ6 SJ3

2 3 7 2 44

THE CORNER DRESS SHOP SCHEDULE OF ACCOUNTS RECEIVABLE MARCH 31, 20XX Sally’s Store Total Accounts Receivable

$2 3 7 2 4 4 $2 3 7 2 4 4

13-99

MINI PRACTICE SET, Cont. ACCOUNTS PAYABLE LEDGER NAME: ADDRESS

BLEW COMPANY

Date 20XX Mar. 1 Balance 8 13 NAME: ADDRESS

1 Balance 5 12 19 26

CPJ7

2 5 4 3 77

Credit

Cr. Balance

5 0 1 1 55

2 5 4 3 77 O 5 0 1 1 55

Post Ref.

CPJ7

Debit

Credit

Cr. Balance

3 2 2 0 50 2 1 4 7 00

1 5 1 0 22 O 2 9 9 2 50 O 2 1 4 7 00

Credit

Cr. Balance

1 1 3 0 00

1 0 5 0 00 O

Credit

Cr. Balance

1 5 1 0 22

PJ4 CPJ7

3 2 2 0 50

PJ4

JONES COMPANY

Date 20XX Mar. 4 8

NAME: ADDRESS

Debit

PJ4

Explanation

NAME: ADDRESS

Post Ref.

DRESSES BY SHELLEY

Date 20XX Mar.

Explanation

Post Ref.

Debit

PJ4 CPJ7

1 1 3 0 00

Post Ref.

Debit

SILK MAGIC

Date 20XX Mar. 1 Balance

Explanation

7 3 5 00

THE CORNER DRESS SHOP SCHEDULE OF ACCOUNTS PAYABLE MARCH 31, 20XX Blew Company Dresses by Shelley Silk Magic

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

13-100

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP—GENERAL LEDGER NAME:

CASH

Date 20XX Mar. 1 Balance 30 30 NAME:

CRJ6

23 6 5 9 42

DR CR Dr

21 5 1 1 09

CPJ7

ACCOUNT NO. Explanation

Post Ref.

Debit

Credit

Explanation

DR CR

ACCOUNT NO. Post Ref.

Debit

1 6 9 44 9 3 4 7 16

GJ4 CRJ SJ3

Explanation

Credit

3 5 9 7 19

Debit

Credit

8 2 9 1 85 8 1 2 2 41 1 2 2 4 75 2 3 7 2 44

Dr Cr

1135 DR CR

Balance

6 2 4 30

1140 DR CR

Balance

1 8 0 0 00

ACCOUNT NO. Post Ref. GJ5

Debit

Credit 1 0 0 00

5 0 00

Balance

ACCOUNT NO. Post Ref.

Balance

DR CR

Credit

30 7 7 5 31 54 4 3 4 73 32 9 2 3 64

1120

ACCOUNT NO. Post Ref.

Balance

1115

PREPAID INSURANCE

Date 20XX Mar. 1 Balance 31 Adjusting

Credit

1110

PREPAID RENT

Date 20XX Mar. 1 Balance

NAME:

Debit

OFFICE SUPPLIES

Date 20XX Mar. 1 Balance

NAME:

Post Ref.

ACCOUNTS RECEIVABLE

Date 20XX Mar. 1 Balance 19 31 31 NAME:

Explanation

PETTY CASH

Date 20XX Mar. 1 Balance NAME:

ACCOUNT NO.

1145 DR CR

Balance

1 0 0 0 00 9 0 0 00

13-101

MINI PRACTICE SET, Cont. NAME:

HST PREPAID

Date 20XX Mar. 1 Balance 15 31 31

NAME:

CPJ7 PJ4

Credit

1150 DR CR

Balance

4 3 6 34 O 1 5 6 00 1 4 8 0 05

4 3 6 34

GJ4

1 5 6 00 1 3 2 4 05

Dr Dr

ACCOUNT NO. Explanation

Post Ref.

Debit

GJ4 PJ4

10 1 8 5 00

CPJ7

Explanation

1210 DR CR

Balance

8 3 0 9 00 5 9 2 1 48 3 5 9 0 21 6 5 9 4 79 6 5 5 7 00 6 5 0 0 00

Dr Cr Dr

3 7 79 5 7 00

GJ4

Explanation

Credit 2 3 8 7 52 9 5 1 1 69

SJ3

Dr Dr

ACCOUNT NO. Post Ref.

Debit

Post Ref.

Credit

1330 DR CR

Balance

5 0 0 0 00

ACCOUNT NO. Debit

Credit

1335 DR CR Cr

1 3 0 56

GJ4

COMPUTER SOFTWARE

Date 20XX Mar. 1 Balance

13-102

Debit

ACC. DEPN. - COMPUTER & OFFICE EQUIPMENT

Date 20XX Mar. 1 Balance 31 Adjusting

NAME:

Post Ref.

COMPUTER AND OFFICE EQUIPMENT

Date 20XX Mar. 1 Balance

NAME:

Explanation

INVENTORY

Date 20XX Mar. 1 Balance 31 31 31 Adjusting 31 31 NAME:

ACCOUNT NO.

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit

Balance 2 6 1 12 3 9 1 68

1340 DR CR Dr

Balance 7 3 9 00

MINI PRACTICE SET, Cont. NAME:

ACC. DEPN. - COMPUTER SOFTWARE

Date 20XX Mar. 1 Balance 31 Adjusting

NAME:

Debit

Explanation

NAME:

ACCOUNT NO. Post Ref.

Debit

Credit

Explanation

Debit

3 4 0 00 5 1 0 00

2100 DR

Credit

8 4 0 4 49

Explanation

Mar. 29 29 29 29

ACCOUNT NO. Post Ref.

Debit

GJ4 CPJ7 CPJ7 CPJ7

1 3 2 5 14 2 0 6 0 03 3 0 7 1 61

INCOME TAXES PAYABLE Explanation

11 5 0 9 0 5

PJ4

Debit

Credit

6 4 5 6 78

CR Cr Cr

CPJ7

1 1 0 8 82

Credit

1 8 1 2 00

4 7 8 8 99 3 6 1 5 50 7 8 9 3 55

Balance 6 4 5 6 78 5 1 3 1 64 3 0 7 1 60 0 00

2330 DR CR Cr

GJ4

Balance

2200

ACCOUNT NO. Post Ref.

12 0 0 0 00

Balance

Cr CPJ7

Balance

1355

ACCOUNT NO. Post Ref.

6 1 58 9 2 37

DR CR

1 7 0 00

GJ5

WAGES PAYABLE

Date 20XX Mar. 1 Balance 15 29

ACCOUNT NO. Post Ref.

Balance

1350 DR

Credit

ACCOUNTS PAYABLE

Date 20XX

1 Balance 31 Adjusting

Date 20XX Mar. 1 Balance 31 31

3 0 79

GJ4

Explanation

NAME:

1345 DR

Credit

ACC. DEPN. - DELIVERY TRUCK

Date 20XX

NAME:

Post Ref.

DELIVERY TRUCK

Date 20XX Mar. 1 Balance

Mar.

Explanation

ACCOUNT NO.

Balance 1 1 0 8 82 0 00 1 8 1 2 00

13-103

MINI PRACTICE SET, Cont. NAME:

EI PAYABLE

Date 20XX Mar. 1 Balance 15 29 29

NAME:

CPJ7

4 0 8 79

GJ4

Explanation

Credit

1 4 3 15 2 0 0 41

GJ4

2335 DR CR

Balance

4 0 8 79 0 00 1 4 3 15 3 4 3 56

Cr Cr

ACCOUNT NO. Post Ref.

Debit

Credit

2340 DR CR Cr

CPJ7

8 1 0 30 4 4 6 07 4 4 6 07

GJ4 GJ4

Explanation

Cr Cr

ACCOUNT NO. Post Ref.

Debit

Credit

CPJ7

DR CR

1 1 2 00 1 1 2 00

GJ4

Explanation

ACCOUNT NO. Post Ref.

Debit

Credit 9 0 00

Explanation

DR CR

ACCOUNT NO. Post Ref.

Debit

Credit

CPJ7 GJ4 CRJ6 SJ3

4 3 6 34 1 8 7 7 31 1 9 49

DR CR Cr Dr

1 6 4 8 69 4 1 3 84

Balance 1 1 2 00 O 1 1 2 00

Balance 1 8 0 00 2 7 0 00

2400

Cr GJ4

8 1 0 30 0 00 4 4 6 07 8 9 2 14

2360

Cr GJ4

Balance

2350

HST COLLECTED

Date 20XX Mar. 1 Balance 15 15 19 31 31

13-104

Debit

CHARITABLE DONATIONS PAYABLE

Date 20XX Mar. 1 Balance 29

NAME:

Post Ref.

MEDICAL PLAN PAYABLE

Date 20XX Mar. 1 Balance 15 29 NAME:

Explanation

CPP PAYABLE

Date 20XX Mar. 1 Balance 15 29 29

NAME:

ACCOUNT NO.

Cr Cr

Balance 2 3 1 3 65 1 8 7 7 31 O 1 9 49 1 6 2 9 20 2 0 4 3 04

MINI PRACTICE SET, Cont. NAME:

RENT RECEIVED IN ADVANCE

Date 20XX Mar. 1 Balance 31 Adjusting

NAME:

3 0 0 00

Explanation

Post Ref.

Debit

DR CR

Balance

6 0 0 00 3 0 0 00

Credit

3110 DR CR Cr

9 8 4 6 18

GJ5 GJ5

8 3 0 0 00

Explanation

Cr Cr

ACCOUNT NO. Post Ref.

Debit

Credit

Explanation

Post Ref.

Debit

GJ5 GJ5 GJ5

DR CR

Post Ref.

ACCOUNT NO.

3380

Credit

76 0 3 0 65

66 2 4 1 47 9 7 8 9 18

Debit

CR Cr

Credit

SJ3 GJ5

Explanation

DR CR Cr Cr

75 7 3 0 65 ACCOUNT NO.

Post Ref. CRJ6 GJ5

Debit

Credit

1 8 68

76 0 3 0 65 9 7 8 9 18 O

Balance 59 8 6 5 05 72 5 4 7 30 75 7 3 0 65 O 4140

DR CR Dr

1 8 68

Balance

4110

12 6 8 2 25 3 1 8 3 35

CRJ6

Balance

8 3 0 0 00

ACCOUNT NO. Explanation

48 0 7 8 80 57 9 2 4 98 49 6 2 4 98

7 3 0 0 00 8 3 0 0 00 O

1 0 0 0 00

GJ5

Balance

3120

Dr CPJ7

SALES DISCOUNTS

Date 20XX Mar. 31 31 Closing

Credit

2500

ACCOUNT NO.

SALES

Date 20XX Mar. 1 Balance 31 31 31 Closing NAME:

GJ4

INCOME SUMMARY

Date 20XX Mar. 31 Closing 31 Closing 31 Closing

NAME:

Debit

B. LOEB, WITHDRAWALS

Date 20XX Mar. 1 Balance 20 31 Closing

NAME:

Post Ref.

B. LOEB, CAPITAL

Date 20XX Mar. 1 Balance 31 Closing 31 Closing NAME:

Explanation

ACCOUNT NO.

Balance 1 8 68 O

13-105

MINI PRACTICE SET, Cont. NAME:

SALES RETURNS & ALLOWANCES

Date 20XX Mar. 18 31 Closing

NAME:

Post Ref.

Debit

GJ4

1 4 9 95

NAME:

Post Ref.

Debit

GJ4 GJ5

Explanation 1 Balance 31 31 31 31 Adjusting 31 Closing

NAME:

DR CR

Balance

3 0 0 00

3 0 0 00 O

SJ3

2 3 8 7 52 9 5 1 1 69 9 4 79

Credit

CRJ6 CPJ7 GJ5

Explanation

Dr Dr

5 7 00 31 0 1 0 38

GJ3

Post Ref.

Debit

Credit

9 01 6 0 0 0

DR CR Dr

2 7 12 8 0 0 0

GJ5

ACCOUNT NO. Post Ref.

Debit

GJ4

CPP EXPENSE Explanation

Post Ref.

Debit

GJ5

38 90 59 59 38

Balance 18 1 2 0 00 27 1 8 0 00 O 5430 Balance

4 7 6 92

6 7 7 33

6 7 7 33 0 00

ACCOUNT NO.

5440

Credit

DR CR Dr

GJ4

19 0 7 3 21 4 6 0 30 9 7 2 30 9 1 5 31 0 1 0 0

DR CR

Credit

2 0 0 41

GJ5

Balance

5400

29 31

13-106

ACCOUNT NO.

GJ4

Explanation

Date 20XX Mar. 1 Balance 29 31

DR CR Dr

1 Balance

NAME:

5040

EI EXPENSE

Date 20XX Mar.

Debit

1 4 9 95 O

Credit

ACCOUNT NO. Post Ref.

Balance

4200

3 0 0 00

WAGES EXPENSE

Date 20XX Mar. 1 Balance 31 31 Closing

ACCOUNT NO.

COST OF GOODS SOLD

Date 20XX

1 4 9 95

GJ5

Explanation

4150 DR

Credit

RENTAL INCOME

Date 20XX Mar. 31 Adjusting 31 Closing

Mar.

Explanation

ACCOUNT NO.

4 4 6 07

1 2 5 6 37

Balance 8 1 0 30 1 2 5 6 37 0 00

MINI PRACTICE SET, Cont. NAME:

POSTAGE EXPENSE

Date 20XX Mar. 30 31 Closing

NAME:

Debit

GJ5

1 0 0 00

Credit

Post Ref.

Debit

CPJ7

3 0 0 00

Balance

2 0 0 00 3 0 0 00 O

5520 DR CR Dr

3 0 0 00

ACCOUNT NO. Post Ref.

Debit

CPJ7

9 0 0 00

Credit

Explanation

Post Ref.

Debit

DR CR

Explanation

Post Ref.

Debit

ACCOUNT NO.

5540

Credit

DR CR

GJ5

Balance 5 00

ACCOUNT NO. Credit

5550 DR CR Dr

GJ4

Balance

2 7 0 0 00

5 00

GJ5

3 0 0 00 O

1 8 0 0 00 2 7 0 0 00 O

5 00

CPJ7

Balance

5530

Dr GJ5

1 2 00 O

DR CR Dr

Credit

Balance

5510

ACCOUNT NO.

DEPN. EXP - COMPUTER AND OFFICE EQUIPMENT

Date 20XX Mar. 1 Balance 31 Adjusting 31 Closing

3 0 0 00

DELIVERY EXPENSE

Date 20XX Mar. 30 31 Closing

NAME:

Post Ref.

GJ5

Explanation

DR CR

ACCOUNT NO.

GJ5

Explanation

5500

1 2 00

GJ5

Explanation

Credit

1 2 00

CPJ7

RENT EXPENSE

Date 20XX Mar. 1 Balance 1 31 Closing NAME:

Debit

CLEANING EXPENSE

Date 20XX Mar. 12 31 Closing

NAME:

Post Ref.

INSURANCE EXPENSE

Date 20XX Mar. 1 Balance 31 Adjusting 31 Closing

NAME:

Explanation

ACCOUNT NO.

1 3 0 56

3 9 1 68

Balance 2 6 1 12 3 9 1 68 O

13-107

MINI PRACTICE SET, Cont. NAME:

DEPN. EXP - SOFTWARE

Date 20XX Mar. 1 Balance 31 Adjusting 31 Closing NAME:

Credit

5560 DR CR Dr

GJ4

3 0 79

Explanation

ACCOUNT NO. Post Ref.

Debit

GJ5

1 7 0 00

Post Ref.

Debit

Post Ref. CPJ7 GJ5

Debit

6 1 58 9 2 37 O

DR CR

Balance

3 4 0 00 5 1 0 00 O

ACCOUNT NO.

GJ5

Explanation

Credit

Balance

5570

5 1 0 00

GJ5

Explanation

9 2 37

GJ5

MISCELLANEOUS EXPENSE

Date 20XX Mar. 29 31 Closing

13-108

Debit

ACCOUNTING EXPENSE

Date 20XX Mar. 1 Balance 31 Closing

NAME:

Post Ref.

DEPN. EXPENSE - DELIVERY TRUCK

Date 20XX Mar. 1 Balance 31 Adjusting 31 Closing

NAME:

Explanation

ACCOUNT NO.

5590 DR CR

Balance

1 4 6 0 00

1 4 6 0 00 O

ACCOUNT NO.

5595

Credit

1 6 00

DR CR Dr

1 6 00

Balance 1 6 00 O

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP—WORKSHEET FOR THE MONTH ENDED MARCH 31, 20XX Account Titles Cash Petty Cash Accounts Receivable Office Supplies Prepaid Rent Prepaid Insurance HST Prepaid Inventory Computer and Office Equipment Acc. Depn. - Computer & Office Equipment Computer Software Acc. Depn. - Computer Software Delivery Truck Accum. Depr., Delivery Truck Accounts Payable Accrued Wages Payable Income Taxes Payable EI Payable CPP Payable Medical Plan Payable Charitable Donations Payable HST Collected Rent Received in Advance B. Loeb, Capital B. Loeb, Withdrawals Income Summary Sales Sales Discounts Sales Returns & Allowances Rental Income Cost of Goods Sold Wages Expense EI Expense CPP Expense Postage Expense Insurance Expense

32 2 1 1 1 6 5

Trial Balance Dr. Cr. 9 2 3 64 5 0 00 3 7 2 44 6 2 4 30 8 0 0 00 0 0 0 00 4 8 0 65 5 3 7 79 0 0 0 00 2 6 1 12 7 3 9 00 6 1 58 0 0 0 00 3 4 0 00 7 8 9 3 55 0 00 1 8 1 2 00 3 4 3 56 8 9 2 14 1 1 2 00 2 7 0 00 2 0 4 3 04 6 0 0 00 48 0 7 8 80 3 0 0 00

Page 1

Adjustments Dr.

Cr.

1 0 0 00 3 7 79 1 3 0 56 3 0 79 1 7 0 00

3 0 0 00

75 7 3 0 65 1 8 68 1 4 9 95 30 9 7 2 59 27 1 8 0 00 6 7 7 33 1 2 5 6 37 1 2 00 2 0 0 00

0 00

3 0 0 00 3 7 79

1 0 0 00

Continued on page 2

13-109

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP—WORKSHEET FOR THE MONTH ENDED MARCH 31, 20XX Account Titles Cleaning Expense Rent Expense Delivery Expense Depr. Expense, Computer & Office Equip. Depr. Expense, Computer Software Dern. Expense, Delivery Truck Accounting Expense Miscellaneous Expense

1 3 8 4 3 8 44

Total Net Income

Continued from page 1

13-110

Trial Balance Dr. Cr. 3 0 0 00 2 7 0 0 00 5 00 2 6 1 12 6 1 58 3 4 0 00 1 4 6 0 00 1 6 00

138 4 3 8 44

Page 2

Adjustments Dr.

Cr.

1 3 0 56 3 0 79 1 7 0 00

7 6 9 14

MINI PRACTICE SET, Cont. WORKSHEET—FOR MONTH ENDED MARCH 31, 20XX Adjusted Trial Balance Dr. Cr. 3 2 9 2 3 64 5 0 00 2 3 7 2 44 6 2 4 30 1 8 0 0 00 9 0 0 00 1 4 8 0 05 6 5 0 0 00 5 0 0 0 00 3 9 1 68 7 3 9 00 9 2 37 12 0 0 0 00 5 1 0 00 7 8 9 3 55 1 8 1 2 00 3 4 3 56 8 9 2 14 1 1 2 00 2 7 0 00 2 0 4 3 04 3 0 0 00 48 0 7 8 80 8 3 0 0 00 75 7 3 0 65 1 8 68 1 4 9 95 3 0 0 00 31 0 1 0 38 27 1 8 0 00 6 7 7 33 1 2 5 6 37 1 2 00 3 0 0 00

Income Statement Dr. Cr.

Balance Sheet

Dr. 32 9 2 3 64 5 0 00 2 3 7 2 44 6 2 4 30 1 8 0 0 00 9 0 0 00 1 4 8 0 05 6 5 0 0 00 5 0 0 0 00

Cr.

3 9 1 68 7 3 9 00 9 2 37 12 0 0 0 00 5 1 0 7 8 9 3 1 8 3 2 4 1 3 8 2 0 1 1 2 2 7 0 2 0 4 3 3 0 0 48 0 7 8

00 55 00 30 20 00 00 04 00 80

8 3 0 0 00 75

7 3 0 65

1 8 68 1 4 9 95 3 0 0 00 31 0 1 0 38 27 1 8 0 00 6 7 7 33 1 2 5 6 37 1 2 00 3 0 0 00

13-111

MINI PRACTICE SET, Cont. WORKSHEET—FOR MONTH ENDED MARCH 31, 20XX Adjusted Trial Balance Dr. Cr. 3 0 0 00 2 7 0 0 00 5 00 3 9 1 68 9 2 37 5 1 0 00 1 4 6 0 00 1 6 00 138 7 6 9 79

1 38 7 6 9 79

Income Statement Dr. Cr. 3 0 0 00 2 7 0 0 00 5 00 3 9 1 68 9 2 37 5 1 0 00 1 4 6 0 00 1 6 00 6 6 0 7 9 76

76 0 3 0 65

Dr.

Balance Sheet

7 2 6 9 0 03

9 9 5 0 89 76 0 3 0 65

13-112

Cr.

62 7 3 9 14 9 9 5 0 89

76 0 3 0 65

7 2 6 9 0 03

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP INCOME STATEMENT FOR THE MONTH ENDED MARCH 31, 20XX Revenue: Gross Sales Less: Sales Returns and Allowances Sales Discounts

$7 5 7 3 0 6 5 $ 1 8 68 1 4 9 95

Net Sales

75 5 6 2 02

Cost of Goods Sold Gross Profit Operating Expenses: Wages Expense EI Expense CPP Expense Postage Expense Insurance Expense Cleaning Expense Rent Expense Delivery Expense Depn. Expense - Comp. & Office Equip. Depn. Expense - Software Depn. Expense - Delivery Truck Accounting Expense Miscellaneous Expense Total Operating Expenses Net Income from Operations Other Income: Rental Income Net Income

1 6 8 63

31 0 1 0 38 44 5 5 1 64

27 1 8 0 00 6 7 7 33 1 2 5 6 37 1 2 00 3 0 0 00 3 0 0 00 2 7 0 0 00 5 00 3 9 1 68 9 2 37 5 1 0 00 1 4 6 0 00 1 6 00 34 9 0 0 7 5 9 6 5 0 89

3 0 0 00 $9 9 5 0 89

13-113

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MARCH 31, 20XX Betty Loeb, Capital, March 1, 20XX Net Income Less: Withdrawals Increase in Capital Betty Loeb, Capital, March 31, 20XX

13-114

$4 8 0 7 8 8 0 $9 9 5 0 8 9 8 3 0 0 00 1 6 5 0 89 $4 9 7 2 9 6 9

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP BALANCE SHEET MARCH 31, 20XX Assets Current Assets: Cash Petty Cash Accounts Receivable Office Supplies Prepaid Rent Prepaid Insurance Prepaid HST Inventory

$3 2 9 2 3 6 4 5 0 00 2 3 7 2 44 6 2 4 30 1 8 0 0 00 9 0 0 00 1 4 8 0 65 6 5 0 0 00

Total Current Assets Capital Assets: Computer & Office Equipment Less: Accumulated Depreciation, Comp. & Office Equip. Computer Software Less: Accumulated Depreciation, Software Delivery Truck Less: Accumulated Depreciation, Delivery Truck

$4 6 6 5 1 0 3 $5 0 0 0 0 0 3 9 1 68 7 3 9 00 9 2 37 12 0 0 0 00 5 1 0 00

$4 6 0 8 3 2 6 4 6 63 11 4 9 0 00

Total Assets

16 7 4 4 95 $6 3 3 9 5 98

Liabilities Current Liabilities: Accounts Payable Income Taxes Payable EI Payable CPP Payable Medical Plan Payable Charitable Donations Payable HST Collected Rent Received in Advance Total Liabilities

$7 8 9 3 5 5 1 8 1 2 00 3 4 3 56 8 9 2 14 1 1 2 00 2 7 0 00 2 0 4 3 04 3 0 0 00 $1 3 6 6 6 2 9

Owner’s Equity Betty Loeb, Capital Total Liabilities and Owner’s Equity

49 7 2 9 69 $6 3 3 9 5 98

13-115

MINI PRACTICE SET, Cont. THE CORNER DRESS SHOP POST-CLOSING TRIAL BALANCE MARCH 31, 20XX Cash

32 9 2 3 64

Petty Cash Accounts Receivable Office Supplies Prepaid Rent Prepaid Insurance GST Prepaid Inventory Computer and Office Equipment Accumulated Depreciation-Computer & Office Equipment Computer Software Accumulated Depreciation-Computer Software Delivery Truck Accumulated Depreciation- Delivery Truck Accounts Payable Income Taxes Payable EI Payable CPP Payable Medical Plan Payable Charitable Donations Payable GST Collected Rent Received in Advance B. Loeb, Capital Totals

13-116

5 0 00 2 3 7 2 44 6 2 4 30 1 8 0 0 00 9 0 0 00 1 4 8 0 65 6 5 0 0 00 5 0 0 0 00 3 9 1 68 7 3 9 00 9 2 37 12 0 0 0 00 5 1 0 00 7 8 9 3 55 1 8 1 2 00 3 4 3 56 8 9 2 14 1 1 2 00 2 7 0 00 2 0 4 3 04 3 0 0 00 49 7 2 9 69 6 4 3 9 0 03

64 3 9 0 03