College Accounting A Contemporary Approach 3e David Haddock John Ellis Price Michael Farina (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file.
CHAPTER 1 ACCOUNTING: THE LANGUAGE OF BUSINESS Chapter Opener: Thinking Critically Stockholders, the IRS, SEC, banks, lenders and creditors are all examples of organizations that would be interested in how Google is performing.
Fast Facts • Google’s mission is to organize the world’s information and make it universally accessible and useful. • “Googol” is the mathematical term for a 1 followed by 100 zeros. Google’s play on the term reflects the company’s mission to organize the immense amount of information available on the web. • Google’s interface can be customized into more than 100 languages. • Google’s culture is unlike any in corporate America—lava lamps and large rubber balls dot company headquarters and the company’s chef used to cook for the Grateful Dead. Google Inc. puts employees first when it comes to daily life in all of their offices. Managerial Implications: Thinking Critically Managers use financial information to make decisions about adding new products and services, offering current products and services, and choosing vendors. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Public, managerial, and governmental. 2. Auditing, tax, and management advisory services. 3. Advice on how to structure financial affairs in order to reduce taxes without violating tax laws. 4. Establish accounting policies, direct the accounting system, prepare and interpret financial statements, provide financial advice, prepare tax forms. 5. Sole proprietorship (owned by one person). Partnership (owned by two or more people). Corporation (can be owned by one person or many). 6. Measure business performance; separate entity. 7. Owners and managers: evaluate operations. Suppliers: assess ability of a firm to pay debts. Banks: ability to repay loans. Tax authorities: determine a tax base. Governmental agencies: legal compliance. Employees: wage levels and profit-sharing plans. 8. Statements of Financial Accounting Standards. 9. SEC, AICPA, AAA. 10. Regulation of financial reporting by publicly owned corporations. 11. The Public Company Accounting Reform and Investor Protection Act of 2002 was passed in response to the wave of corporate accounting scandals starting with the demise of Enron Corporation in 2001, the arrest of top executives at WorldCom and Adelphia Communications Corporations, and ultimately, the demise of Arthur Andersen, an international public accounting firm. 12. The purpose of the Public Company Accounting Oversight Board is to oversee the accounting profession through its investigative and enforcement powers and to discipline corrupt accountants and auditors. © 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-1
CRITICAL THINKING PROBLEM 1.1 Student answers will vary. The student’s reasons for choosing one form of ownership over another are more important than the specific choice made. Generate a discussion on the proposed name of the business. Ask the students if they think the name is creative. Sole proprietorship: Advantage—Heidi would be her own boss and could direct the business as she wants. Disadvantages—Heidi would be responsible for the debts and taxes of the business and may be limited in the amount of capital she could borrow to finance the business. Partnership: Advantage—Heidi would have one or more partners to assist with business operations and to contribute capital. Disadvantages—Heidi would have to share control of the business, as well as its profits. Heidi could be liable for the debts of the partnership. Corporation: Advantages—The business would be a separate entity. Capital would be easier to raise and liability would be limited to the assets of the business. Disadvantages—A corporation is a more complicated form of ownership and is usually more expensive to form. There is also more government regulation and, consequently, more paperwork with a corporation.
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-2
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Questions asked might include: What is the profit or loss?, How much cash does the business have?, How much money do customers owe the business?.How much money is owed to suppliers?, What is the change in sales volume?, and what is the cost of merchandise sold? 2. 3. 4. 5.
6. 7. 8.
Financial information is used to evaluate performance and make decisions about a business or a nonprofit Keep your employees, creditors, and investors happy. Yes, financial information is a tool for making business decisions that will yield the above results. Inaccurate accounting records and poor business decisions. Every business needs an efficient accounting system which accumulates financial data, classifies and summarizes the information. Without an accounting system, suppliers, lenders, investors, and governmental tax authorities would not be able to accurately make decisions based on the financial information of the company. The manager makes financial decisions based upon the financial information provided by the accountant. Yes. The firm’s financial records need to be separate from the owner’s personal financial records in order to evaluate and measure the performance of the business. These standards are important to management because they enhance comparability of reporting practices.
Ethical Dilemma: Yes. Ethics and accounting are intertwined. Financial Statement Analysis: Analyze Online: 1. Clothing, accessories, outerwear and footwear. 2. Investors, suppliers, and banks. To assist the users when making financial decisions. 3. 15 to 25 year-olds. 4. Economic entity because it is a business for profit. Teamwork: The bank will ask for information to assess the firm's finanacial position. Questions such as how much property does the firm own?; how much debt does the firm owe?; how much cash does the firm have? Anticipated cost of expansion and future income projections may also be requested. Banks might also require a list of your customers and vendors. There is no requirement to indicate to the bank problems you are having with certain customers and vendors. Internet Connection: The number of Accounting Standards Update used will vary from year to year. Accounting Standards Update are cited as “ASU2016-1 (year) (standard number in chronological order).
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-3
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. FALSE 3. FALSE 4. TRUE 5. FALSE 6. FALSE 7. FALSE 8. TRUE 9. TRUE 10. TRUE 11. FALSE 12. FALSE Part B Completion 1. language of business 2. international accounting 3. FBI 4. governmental accounting 5. AAA 6. AICPA 7. generally accepted accounting principles 8. SEC 9. IRS 10. stockholders or shareholders 11. shares of stock 12. partnerships 13. social entity 14. recording, classifying 15. financial statements
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-4
CHAPTER 2 ANALYZING BUSINESS TRANSACTIONS Chapter Opener: Thinking Critically The individuals in charge of keeping track of these transactions at Southwest as well as in other companies, are known as accountants. When recording the transactions, accountants are required to follow a set of rules and regulations known as GAAP. For every financial transaction that Southwest has, their accountants determine the accounts that were affected and then they record, report and then analyze these transactions. By doing so they can, at a specific point in time and over a stipulated period, be able to assess the company’s financial performance including profitability of the airline, assets owned by the company and of course the amount owed to creditors and owners.
Fast Facts • Southwest Airlines opened in 1971 with three planes flying between Houston, Dallas, and San Antonio. Southwest Airlines currently flies over 100 million passengers a year to 97 cities all across the country. • For the fiscal year 2012, the company’s net income was $421 million while its total operating revenue was $17.09 billion. • In 2012 Southwest served 63.3 million cans of soda, juices, and water; 14.1 million alcoholic beverages; 37.2 million bags of pretzels; 88.3 million bags of peanuts; 22.9 million Select-ASnacks; and 45.5million other snacks. Managerial Implications: Thinking Critically Answers will vary. Students should mention total assets and the type of assets, the liabilities the business would be responsible for, and whether the business is making a profit. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Assets = Liabilities + Owner’s Equity 2. Assets: property owned. Liabilities: debts. Owners’ equity: owner’s financial interest. 3. Assets, liabilities, and owner’s equity. 4. Revenue and expenses; net income or loss 5. Beginning-of-period capital balance, additional investments, net income/loss for period, less withdrawals ending capital balance. 6. Firm name, title of statement, date of statement or the period of time covered 7. Balance sheet shows position at particular date; increase of operations for a period of time 8. Inflow of money/assets resulting from sales or use of property. 9. Outflow of money/assets for costs used to produce revenue.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-1 distribution in any manner.
Discussion Questions (continued) 10. Subtract total expenses from revenue 11. Increases owner's equity 12. a. assets increase, owner’s equity increase b. one asset increase and another decrease; no change in total assets c. assets decrease, liabilities decrease d. assets increase, owner’s equity increase e. assets decrease, owner’s equity decrease f. assets decrease, owner’s equity decrease EXERCISE 2.1 Assets: Liabilities: Owners’ Equity
$125,900 $26,225 $99,675
EXERCISE 2.2 1. 2. 3. 4. 5.
$22,240 $19,020 $5,675 $36,725 $8,875
EXERCISE 2.3 Transaction 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Assets I I I/D I/D I D I I/D D D
=
Liabilities
+
Owners’ Equity I
I
I = Increase (-) D = Decrease (+)
I D I D D
EXERCISE 2.4
1. 2. 3. 4. 5.
Assets Cash $13,500 Dental Supplies 3,650 Dental Equipment 26,550 Office Furniture 8,000 Total $51,700
= = = = =
Liabilities Accounts Payable $23,180
$23,180
+ Owner’s Equity + David Malone, Capital $28,520 + + + + $28,520
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-2 distribution in any manner.
EXERCISE 2.5 Assets Cash 1.
= +
Accounts Receivable
+
Liabilities
+
Equipment
Accounts = Payable
+
Owner’s Equity John Amos Capital + Revenue
+$60,000
2.
+22,000
3.
+3,100
4.
-4,600
+22,000 +3,100
+5,050 -4,450
7.
+3,200
8. Totals
-13,000 $44,250
+5,050 4,450
-3,200 +
$,1,850
+
$26,600
=
-13,000 $9,000
+
$60,000
+
$8,150
-
EXERCISE 2.6 Net income of $23,000 Revenue Repair Fees ………………………………………….. $51,150 Expenses Advertising Expense ………………………………………….. $6,300 Salaries Expense ………………………………………….. 19,100 Telephone Expense ………………………………………….. 1,150 Utilities Expense ………………………………………….. 1,600 Total Expenses ………………………………………….. $28,150 Net Income ………………………………………….. $23,000 EXERCISE 2.7 1. 2. 3. 4. 5. 6. 7.
Expenses
+4,600
5. 6.
-
+$60,000
Services were performed for cash. Equipment was purchased for cash. A payment was made on the amount owed to a creditor. An expense was paid in cash. Cash was received from charge customer. Services were performed on credit. An expense was paid in cash.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-3 distribution in any manner.
$4,450
EXERCISE 2.8 Perez Investment Services Income Statement Month Ended September 30, 2016 Revenue Fees Income
77 9 0 0 00
Expenses Advertising Expense Salaries Expense Telephone Expense Total Expenses
6 5 0 0 00 16 0 0 0 00 8 0 0 00 23 3 0 0 00 54 6 0 0 00
Net Income
EXERCISE 2.9 NetNet Loss loss of of $1,150 $950 Revenue Service Revenue ………………………………………….. $5,800 Expenses Advertising Expense………………………………………….. $3,100 Telephone Expense………………………………………….. 800 Salaries Expense ………………………………………….. 2,600 Cleaning Expense ………………………………………….. 450 Total Expense ………………………………………….. $6,950 Net Loss ……………………………………………….. -$1,150 EXERCISE 2.10 Perez Investment Services Statement of Owner’s Equity Month Ended September 30, 2016 Alexandria Perez, Capital, September 1, 2016 Net Income for September Less Withdrawals for September Increase in Capital Alexandria Perez, Capital, September 30, 2016
26 7 0 0 00 54 6 0 0 00 9 0 0 0 00 45 6 0 0 00 72 3 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-4 distribution in any manner.
EXERCISE 2.10 (continued) Perez Investment Services Balance Sheet September 30, 2016 Assets Cash Accounts Receivable Office Supplies Office Equipment Total Assets
Liabilities 33 1 0 0 00 Accounts Payable 4 0 0 0 00 3 4 0 0 00 Owner's Equity 37 5 0 0 00 Alexandria Perez, Capital 78 0 0 0 00 Total Liabilities and Owner's Equity
5 7 0 0 00
72 3 0 0 00 78 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-5 distribution in any manner.
PROBLEM 2.1A
Cash +$97,000 -$19,750
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Totals
Assets Accounts + Receivable + Supplies
-$11,800 +$30,000 +$8,200 +$6,300 -$4,000 +$3,500 -$6,460 -$9,000 $87,690
= Liabilities + Owner's Equity Accounts Owner’s Capital + Equipment = Payable + +$97,000 +$19,750 +$14,400 +$14,400 -$11,800 +$30,000 +$8,200 +$6,300 -$4,000
-$3,500 + $6,460 +
$2,800 +
$6,460
+
$2,600 +
-$9,000 $128,500
= Liabilities + Accounts = Payable +
M. Dickey Capital
+
Revenue
-
Expenses
$34,150 =
Analyze: The ending balance in the Cash account is $87,690. PROBLEM 2.2A
Cash Beginning Balances
Assets Accounts Office + Receivable + Furniture +
$61,000
+
$16,600 +6,680
+
$35,800
+ $23,500
=
$11,200
+
$91,500
+
$58,600 +6,680
-
$24,400
+
23,280
+
35,800 +1,700
+ $23,500
=
11,200
+
91,500
+
65,280
-
24,400
2.
61,000 -1,700
+
23,280 -11,200
+
37,500
+ $23,500
=
11,200
+
91,500
+
65,280
-
24,400
3.
59,300 +11,200
1. New Balances New Balances
.
Auto
Owner’s Equity
2-6
PROBLEM 2.2A (continued)
Cash New Balances
Owner’s Equity M. Dickey Capital
+
Revenue
-
Expenses
70,500 -880
+
12,080
+
37,500
+ $23,500
=
11,200
+
91,500
+
65,280
-
24,400 +880
69,620 -4,500
+
12,080
+
37,500
+ $23,500
=
11,200 -4,500
+
91,500
+
65,280
-
25,280
5.
+
12,080
+
37,500
+ $23,500
=
6,700
+
91,500
+
65,280
-
6.
65,120 -9,700
25,280 +9,700
55,420 -1,120
+
12,080
+
37,500
+ $23,500
=
6,700
+
91,500
+
65,280
-
7.
34,980 +1,120
54,300 +10,500
+
12,080
+
37,500
+ $23,500
=
6,700
+
91,500
+
65,280 +10,500
-
36,100
8.
+
12,080
+
37,500
+ $23,500
=
6,700
+
91,500
+
75,780
-
9.
64,800 -2,350
36,100 +2,350
62,450
+ +
12,080 +12,500
+
37,500
+ $23,500
=
6,700
+
91,500
+
75,780 +12,500
-
38,450
$62,450
+
$24,580
+
$37,500
+ $23,500
=
$6,700
+
$91,500
+
$88,280
-
$38,450
New Balances New Balances New Balances New Balances New Balances 10.
Analyze: Total assets equal $148,030.
.
Auto
= Liabilities + Accounts = Payable +
4. New Balances
New Balances
Assets + Accounts + Office Receivable Furniture +
2-7
PROBLEM 2.3A Brown Equipment Repair Service Balance Sheet February 29, 2016 Assets Cash Supplies Accounts Receivable Equipment Total Assets
Liabilities 34 3 0 0 00 Accounts Payable 24 0 0 0 00 6 3 8 0 00 13 2 0 0 00 Owner's Equity 78 0 0 0 00 James Brown, Capital 107 8 8 0 00 131 8 8 0 00 Total Liabilities and Owner's Equity 131 8 8 0 00
Analyze: Owner's Equity is $107,880 at February 29, 2016. PROBLEM 2.4A Cotton Cleaning Service Income Statement Month Ended May 31, 2016 Revenue Fees Income Expenses Utilities Expense Salaries Expense Telephone Expense Total Expenses Net Loss
7 8 8 0 00 9 8 0 00 8 9 0 0 00 3 1 4 00 10 1 9 4 00 (2 3 1 4 00)
Cotton Cleaning Service Statement of Owner's Equity Month Ended May 31, 2016 Taylor Cotton, Capital, May 1, 2016 Net Loss for May (2 3 1 4 00) Less Withdrawal for May 3 0 0 0 00 Decrease in Capital Taylor Cotton, Capital, May 31, 2016
50 6 0 0 00
5 3 1 4 00) 45 2 8 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-8 distribution in any manner.
PROBLEM 2.4A (continued) Cotton Cleaning Service Balance Sheet May 31, 2016 Assets Cash Accounts Receivable Supplies Equipment Total Assets
4 6 8 6 00 5 9 0 0 00 5 8 0 0 00 33 8 0 0 00 50 1 8 6 00
Liabilities Accounts Payable
4 9 0 0 00
Owner's Equity Taylor Cotton, Capital Total Liabilities and Owner's Equity
45 2 8 6 00 50 1 8 6 00
Analyze: Analyze: The Theamount amountofof$43,296 $45,286(Carol (Taylor West, Cotton, Capital) Capital) waswas transferred transferred to the to balance the balance sheet. sheet.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-9 distribution in any manner.
PROBLEM 2.1B
Cash +$72,000 -$32,000
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Totals
Assets Accounts + Receivable + Supplies
-$6,000 +$12,000 +$8,400 +$7,300 -$5,200 +$5,000 -$6,300 -$10,000 $37,900
= Liabilities + Owner's Equity Accounts Owner’s Capital + Equipment = Payable + +$72,000 +$32,000 +$12,000 +$12,000 -$6,000 +$12,000 +$8,400 +$7,300 -$5,200
-$5,000 + $6,300 +
$2,300
+
$6,300
+
$44,000
=
$6,000
+
-$10,000 $84,500
Analyze: Transaction 3 increased the Company's debt by $12,000. PROBLEM 2.2B Assets Accounts + Receivable +
Supplies
+
$38,000
+
$12,000 +8,000
+
$12,800
38,000 -2,880
+
20,000
+
2.
35,120 +10,000
+
20,000
+
3.
Cash Beginning Balances 1. New Balances New Balances
.
Owner’s Equity
Office Furniture
= Liabilities + Accounts = Payable +
S. Cravens Capital
+
Revenue
-
Expenses
+
$24,000
=
$10,000
+
$49,800
+
$52,000 +8,000
-
$25,000
12,800
+
24,000
=
10,000
+
49,800
+
60,000
-
25,000 +2,880
12,800
+
24,000
=
10,000
+
49,800
+
60,000 +10,000
-
27,880
2-10
PROBLEM 2.2B (continued) Assets + Accounts + Receivable
Supplies
+
Office Furniture
= Liabilities + Accounts = Payable +
+
20,000
+
12,800
+
24,000
=
10,000
4.
45,120 -1,600 43,520 -4,800
+
20,000
+
12,800
+
24,000
=
5.
38,720 -1,920
+
20,000
+
12,800
+
24,000
6.
+
20,000
+
12,800
+
7.
36,800 -14,000
+
20,000
+
12,800
8.
22,800 +11,200 34,000
+
20,000
+
34,000 +6,000
+ +
20,000 -6,000
$40,000
+
$14,000
Cash New Balances New Balances New Balances New Balances New Balances New Balances
S. Cravens Capital
+
Revenue
-
Expenses
+
49,800
+
70,000
-
27,880 +1,600
10,000 -4,800
+
49,800
+
70,000
-
29,480
=
5,200
+
49,800
+
70,000
-
29,480 +1,920
24,000
=
5,200
+
49,800
+
70,000
-
31,400 +14,000
+
24,000
=
5,200
+
49,800
+
70,000 +11,200
-
45,400
12,800 +2,000
+
24,000
=
5,200 +2,000
+
49,800
+
81,200
-
45,400
+
14,800
+
24,000
=
7,200
+
49,800
+
81,200
-
45,400
+
$14,800
+
$24,000
=
$7,200
+
$49,800
+
$81,200
-
$45,400
9. New Balances 10. New Balances
Analyze: Owner's Equity balance is $85,600; $49,800 + ($81,200 - $45,400).
.
Owner’s Equity
2-11
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 2.3B Smith's Tax Service Balance Sheet December 1, 2016 Assets
Liabilities
Cash
50 0 0 0 00
Furniture
10 0 0 0 00
Equipment
12 0 0 0 00 Owner's Equity Douglas Smith, Capital
72 0 0 0 00
72 0 0 0 00 Total Liabilities and Owner's Equity
72 0 0 0 00
Total Assets
Analyze: The amount reported on the balance sheet for owner’s equity would be $56,000. PROBLEM 2.4B Kathryn Proctor, Attorney and Counselor of Law Income Statement Month Ended August 31, 2016 Revenue Fees Income
10 8 0 0 00
Expenses Utilities Expense Salaries Expense Telephone Expense
6 0 0 00 5 4 0 0 00 6 0 0 00
Total Expenses
6 6 0 0 00
Net Income
4 2 0 0 00
Kathryn Proctor, Attorney and Counselor of Law Statement of Owner's Equity Month Ended August 31, 2016 Kathryn Proctor, Capital, Aug. 1, 2016 Net Income for August Less Withdrawals for August
23 2 0 0 00 4 2 0 0 00 1 2 0 0 00
Increase in Capital
3 0 0 0 00
Kathryn Proctor, Capital, Aug. 31, 2016
26 2 0 0 00
Analyze: Net Income of $4,200 was transferred from the income statement. © 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-12 distribution in any manner.
PROBLEM 2.4B (continued) Kathryn Proctor, Attorney and Counselor at Law Balance Sheet August 31, 2016 Assets Cash Accounts Receivable Supplies Equipment Total Assets
Liabilities 4 8 0 0 00 Accounts Payable 6 6 0 0 00 5 4 0 0 00 Owner's Equity 10 0 0 0 00 Kathryn Proctor, Capital 26 8 0 0 00 Total Liabilities and Owner's Equity
6 0 0 00
26 2 0 0 00 26 8 0 0 00
Analyze: Net income of $4,200 was transferred from the income statement.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-13 distribution in any manner.
CRITICAL THINKING PROBLEM 2.1 Determine the balance for Carl Nicholson, April 30, 2016. Assets
Cash $30,000
Accounts + Receivable + Machinery = + $12,000 + $21,000 =
Accounts Payable $13,200
= Liabilities + Owner’s Equity C. Nicholson C. Nicholson Drawing + Capital + Revenue + ? $6,800 + $26,800 -
Let Carl Nicholson, Capital = X. Solving for X: $63,000 (Total Assets) = $13,200 (Accounts Payable) - $6,800 (Drawing) + $26,800 (Revenue) - $21,490 (Expenses) + X
$63,000 Carl Nicholson, Capital, April 1, 2016 Advertising Expense Maintenance Expense Salaries Expense Total Expenses
.
=
$63,000 = $11,710 = $51,290 = $51,290
$11,710 $11,710 X
$3,890 4,600 13,000 $21,490
2-14
+ -
X $11,710
+
X
Expenses $21,490
CRITICAL THINKING PROBLEM 2.1 (continued) Carl Nicholson, Certified Public Accountant Income Statement Month Ended April 30, 2016 Revenue Fees Earned
26 8 0 0 00
Expenses Advertising Expense Maintenance Expense Salaries Expense
3 8 9 0 00 4 6 0 0 00 13 0 0 0 00
Total Expenses
21 4 9 0 00
Net Income
5 3 1 0 00
Carl Nicholson, Certified Public Accountant Statement of Owner's Equity Month Ended April 30, 2016 Carl Nicholson, Capital, April 1, 2016 Net Income for April Less Withdrawals for April
51 2 9 0 00 5 3 1 0 00 6 8 0 0 00
Decrease in Capital
(1 4 9 0 00)
Carl Nicholson, Capital, April 30, 2016
49 8 0 0 00
Carl Nicholson, Certified Public Accountant Balance Sheet April 30, 2016 Assets Cash Accounts Receivable Equipment
Liabilities 30 0 0 0 00 Accounts Payable 12 0 0 0 00 Owner's Equity 21 0 0 0 00 Carl Nicholson, Capital
Total Assets
63 0 0 0 00 Total Liabilities and Owner's Equity
13 2 0 0 00 49 8 0 0 00 63 0 0 0 00
Analyze: Analyze:The The increase decrease in in owner's owner's equity equity was was $1,450. $1,490.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-15 distribution in any manner.
CRITICAL THINKING PROBLEM 2.2 Body Builders Fitness Center Income Statement Two Months Ended December 31, 2016 Revenue Fees Earned Expenses Rent Expense Cleaning Expense Advertising Expense
9 7 6 0 00 8 0 0 0 00 2 1 0 0 00 8 0 0 00 Total Expenses
Net Loss
10 9 0 0 00 (1 1 4 0 00)
Some students may include the warm-up suits as a business expense. If the suits are a type of uniform, their inclusion is appropriate; if they are to be worn at home and at work, their cost is not a business expense. The parking ticket is a personal expense. The cleaning of the studio and the printing of the flyers are business expenses. Payment of expenses with the owner’s personal credit card would be considered an additional investment by the owner. It is not unusual for new businesses to operate at a loss. James should project his income and expenses for the next several months to determine how much new business he will need to earn an income. Students’ suggestions for improving the accounting system might include opening a business checking account, not using a personal credit card for business expenses, setting up a filing system for business records, and purchasing a computer to maintain financial records.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-16 distribution in any manner.
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Not necessarily. Reinvestments in assets or use of cash to pay debts affect cash. In addition, sales or revenue may have been "on account." 2. No. Early development is expensive, risky, and time consuming. Profits may not be achieved for a year or more. 3. The firm’s obligations must be met as they become due. 4. Organized financial information can be used to evaluate operating efficiency and to make decisions about current and future activities. Ethical JuliaDilemma: should not record the sale until she receives the purchase order from the customer and the goods are shipped. If she enters the sale and for some reason the customer doesn’t make the order or the goods are not available for shipment, Carol would need to pay the bonus back. Julia’s job would be in jeopardy. Financial Statement Analysis: 1. Southwest Airlines Co., Consolidated Statement of Income, Years Ended December 31, 2. Passenger, Freight, Other. 3. Statement of Owner’s Equity (Consolidated Statement of Stockholders’ Equity). 4. Total operating revenue was $4.2 billion for the quarter ended December 31, 2012. 5. See current topic on website. Internet Connection: Macy’s, Bloomingdales, and now May is included in the Federated Corporation. Shopping online is on every home page. To record an online sale it must debit a credit card receivable and credit sales. A general job announcement and requirements are given at the site. Team Work: Accounts Payable Clerk would use Purchases (Increase), A/P (increase and decrease) and Cash (decrease). Accounts Receivable Clerk would use Sales (increase), A/R (increase and decrease) and Cash (increase). Full charge bookkeeper would use accounts Cash (increase and decrease), Bank Charges (increase) and Miscellaneous account (increase), Interest Income (increase), Interest Expense (increase). Accurate numbers are developed when it is determined that all transactions have been entered and that total assets equal total liabilities plus owner’s equity.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-17 distribution in any manner.
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. FALSE 4. TRUE 5. FALSE 6. 7. 8. 9. 10.
TRUE FALSE TRUE FALSE TRUE
Part B Matching 1. b 2. f 3. e 4. c 5. h 6. 7. 8.
d g a
Part C Completion 1. profit 2. credit or on account 3. reduced or decreased 4. assets 5. asset or property 6. equal 7. accounts payable or liability 8. analyze
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or 2-18 distribution in any manner.
CHAPTER 3 ANALYZING BUSINESS TRANSACTIONS USING T ACCOUNTS Chapter Opener: Thinking Critically Cash or Accounts Receivable would have increased and Equity or the Service Revenue account would have also increased. The equation would increase by the same amount on both sides. (Assets would increase and Owners Equity would increase.) Fast Facts • Mobile data traffic on AT&T’s network grew more than 20,000 percent, more than doubling in 2011 alone. Mobile data speeds on AT&T’s network increased dramatically. The download speeds available on AT&T’s 4G LTE network today are more than 50X faster than AT&T’s 2G network five years ago. • The number of smartphones, tablets and other advanced mobile Internet devices on AT&T’s network soared to more than 43 million. • Total mobile data connections on AT&T’s network more than doubled to more than 74 million, and mobile data revenues increased 5X, from just over $4 billion to more than $22 billion. •
AT&T’s total wireless subscribers grew nearly to 107 million in 2012, and AT&T’s wireless revenues increased 17.8 percent.
Managerial Implications: Thinking Critically Answers will vary but could include the following: • Cash is overstated and checks bounce. • The credit rating of the business is affected. • The business loses customers because payments on account are not recorded properly. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Written records for all assets, liabilities, and owner’s equity of a business. 2. Adding the figures on both sides of the account and subtracting the smaller total from the larger total. 3. a. debit b. credit c. credit d. credit e. debit 4. To provide a classified list of the names and numbers of a firm’s accounts. 5. Order in which they appear on financial statements. Balance sheet accounts listed first, followed by income statement accounts. 6. Additional accounts can be added when needed. 7. Permanent account balances are carried forward to start a new accounting period. Temporary account balances are transferred to a summary account at the end of the period and are zero at the start of a new accounting period. 8. a, b, h, i, k: temporary c, d, e, f, g, j, l: permanent 9. Debit: entry on the left side of an account. Credit: entry on the right side of an account. 10. Payment of rent in advance affords the right to occupy the facility the number of months covered by the payment. 11. Each transaction produces at least two effects.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-1
EXERCISE 3.1 Cash 19,000
Equipment 46,000
Accounts Payable
James Wilson, Capital 40,800
24,200
EXERCISE 3.2
(1) (3)
Cash 90,000 (2) 9,000 (4) (5)
Fees Income (3)
(5)
Supplies 3,000
30,000 3,800 3,000
9,000
(2)
Equipment 30,000
(4)
Advertising Expense 3,800
Denise Carswell, Capital (1) 90,000
EXERCISE 3.3 1. Credit 2. Debit 3. Credit 4. Credit
5. Debit 6. Debit 7. Debit 8. Debit
EXERCISE 3.4 1 Credit, Credit, Debit 2 Debit, Debit, Credit 3 Debit, Debit, Credit 4 Credit, Credit, Debit 5 Credit, Credit, Debit
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-2
EXERCISE 3.5 Cash, $160,300 Dr. Accounts Receivable, $7,000 Dr. Supplies, $46,000 Dr. Equipment, $80,000 Dr. Accounts Payable, $80,000 Cr.
Wade Wilson, Capital $190,000 Cr. Fees Income, $40,000 Cr. Telephone Expense, $700 Dr. Salaries Expense, $11,000 Dr. Wade Wilson, Drawing, $5,000 Dr.
EXERCISE 3.6 Housing Locators Trial Balance December 31, 2016 ACCOUNT NAME Cash Accounts Receivable Supplies Equipment Accounts Payable Wade Wilson, Capital Wade Wilson, Drawing Fees Income Salaries Expense Telephone Expense Totals
160 7 46 80
DEBIT 3 0 0 00 0 0 0 00 0 0 0 00 0 0 0 00
CREDIT
80 0 0 0 00 190 0 0 0 00 5 0 0 0 00 40 0 0 0 00 11 0 0 0 00 7 0 0 00 310 0 0 0 00
310 0 0 0 00
Housing Locators Income Statement Month Ended December 31, 2016 Revenue Fees Income Expenses Salaries Expense Telephone Expense
40 0 0 0 00 11 0 0 0 00 7 0 0 00 Total Expenses
Net Income
11 7 0 0 00 28 3 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-3
EXERCISE 3.7 Housing Locators Statement of Owner's Equity Month Ended December 31, 2016 Wade Wilson, Capital, Dec. 1, 2016 Net Income for December Less Withdrawals for December Increase in Capital Wade Wilson, Capital, Dec. 31, 2016
190 0 0 0 00 28 3 0 0 00 5 0 0 0 00 23 3 0 0 00 213 3 0 0 00
Housing Locators Balance Sheet December 31, 2016 Assets Cash Accounts Receivable Supplies Equipment Total Assets
Liabilities 160 3 0 0 00 Accounts Payable 7 0 0 0 00 46 0 0 0 00 Owner's Equity 80 0 0 0 00 Wade Wilson, Capital 293 3 0 0 00 Total Liabilities & Owner's Equity
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-4
80 0 0 0 00
213 3 0 0 00 293 3 0 0 00
EXERCISE 3.8
Account Number 100-199 101 111 121 131 141 200-299 202
Three Brothers Moving Company Chart of Accounts Account Name Account Number ASSETS 300-399 Cash 301 Accounts Receivable 302 Office Supplies 400-499 Prepaid Rent 401 Office Equipment 500-599 LIABILITIES 511 Accounts Payable 514 517
Account Name OWNER'S EQUITY Trey Calhoun, Capital Trey Calhoun, Drawing REVENUE Fees Income EXPENSES Salaries Expense Utilities Expense Telephone Expense
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-5
PROBLEM 3.1A 1.
Cash + 21,000
Hunter Thompson, Capital + 21,000
2.
Equipment + 10,000
Cash - 10,000
3.
Cash + 1,700
Office Furniture - 1,700
4.
Office Equipment + 3,700
Accounts Payable + 3,700
5.
Office Equipment + 11,200
Accounts Payable + 11,200
6.
Nancy Fowler, Drawing + 6,000
7.
Delivery Truck + 37,000
8.
Accounts Payable - 3,500
Cash - 6,000
Accounts Payable + 37,000
Cash - 3,500
Analyze: Transactions 1 and 6 directly affect the owner's equity account.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-6
PROBLEM 3.2A 1.
Cash + 70,000
2.
Office Furniture + 17,000
Gloria Williams, Capital + 70,000
Cash - 17,000
3.
Office Equipment +1,050
Accounts Payable +1,050
4.
Automobile + 17,000
Cash
5.
Cash + 11,000
Gloria Williams, Capital + 11,000
6.
Office Equipment + 4,000
7.
Accounts Payable -1,050
Cash
8. Gloria Williams, Drawing + 5,000
Cash
- 17,000
Accounts Payable + 4,000
-1,050
- 5,000
Analyze: All transactions affected asset accounts.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-7
PROBLEM 3.3A 1.
Office Supplies + 3,000
2.
Cash + 26,000
3.
Rent Expense + 5,000
4.
Accounts Receivable + 4,000
Cash - 3,000
Fees Income + 26,000
Cash - 5,000
Fees Income + 4,000
5.
Cash + 2,000
6.
Salaries Expense + 4,600
Cash
Telephone Expense + 580
Cash
7.
Accounts Receivable - 2,000
- 4,600
- 580
8.
Accounts Receivable + 3,000
Fees Income + 3,000
9.
Office Supplies + 1,100
Accounts Payable + 1,100
10.
Salaries Expense + 4,600
Cash - 4,600
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-8
PROBLEM 3.3A (continued) 11.
Cash + 3,000
Accounts Receivable - 3,000
12.
Cash + 9,100
Fees Income + 9,100
Analyze: $17,780 in cash was spent in June.
PROBLEM 3.4A
Bal.
Cash + 160,000 (b) + 8,200 (c) + 7,000 (e) + 14,500 (g) + 8,000 (i) (k) (l) (p) (q) (r) 113,510 (s)
(g) (k) Bal.
Office Equipment + 38,000 + 40,000 78,000
(a) (d) (h) (m) (o)
(p)
Accounts Payable - 2,900 (g) (j) (k) Bal.
- 6,000 - 16,720 - 1,250 - 13,000 - 4,000 - 20,000 - 9,400 - 2,900 - 700 - 1,220 - 9,000
+ 25,000 + 5,800 + 20,000 47,900
(f) (n) Bal.
Accounts Receivable + 14,000 (h) + 16,000 (o) 15,000
(c) (j) Bal.
Office Furniture + 16,720 + 5,800 22,520
Horace Brock, Capital (a)
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-9
- 7,000 - 8,000
+ 160,000
PROBLEM 3.4A (continued) Horace Brock, Drawing (s) + 9,000
(r)
Utilities Expense + 1,220
Fees Income (d) + 8,200 (f) + 14,000 (m) + 14,500 (n) + 16,000 Bal. 52,700
(l)
Salaries Expense + 9,400
(b)
Rent Expense + 6,000
Telephone Expense (e) + 1,250
Miscellaneous Expense (i) + 4,000 (q) + 700 Bal. 4,700
Analyze: The company owes $47,900 (accounts payable).
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-10
PROBLEM 3.5A Horace Brock, Landscape Consultant Trial Balance June 30, 2016 ACCOUNT NAME Cash Accounts Receivable Office Equipment Office Furniture Accounts Payable Horace Brock, Capital Horace Brock, Drawing Fees Income Miscellaneous Expenses Rent Expense Salaries Expense Telephone Expense Utilities Expense Total
DEBIT 113 5 1 0 00 15 0 0 0 00 78 0 0 0 00 22 5 2 0 00
CREDIT
47 9 0 0 00 160 0 0 0 00 9 0 0 0 00 52 7 0 0 00 4 7 0 0 00 6 0 0 0 00 9 4 0 0 00 1 2 5 0 00 1 2 2 0 00 260 6 0 0 00
260 6 0 0 00
Horace Brock, Landscape Consultant Income Statement Month Ended June 30, 2016 Revenue Fees Income Expenses Miscellaneous Expenses Rent Expense Salaries Expense Telephone Expense Utilities Expense Total Expenses Net Income
52 7 0 0 00 4 7 0 0 00 6 0 0 0 00 9 4 0 0 00 1 2 5 0 00 1 2 2 0 00 22 5 7 0 00 30 1 3 0 00
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-11
PROBLEM 3.5A (Continued) Horace Brock, Landscape Consultant Statement of Owner's Equity Month Ended June 30, 2016 Horace Brock, Capital, June 1, 2016 Net Income for June Less Withdrawals for June Increase in Capital Horace Brock, Capital, June 30, 2016
160 0 0 0 00 30 1 3 0 00 9 0 0 0 00 21 1 3 0 00 181 1 3 0 00
Horace Brock, Landscape Consultant Balance Sheet June 30, 2016 Assets Cash Accounts Receivable Office Equipment Office Furniture Total Assets
113 5 1 0 00 15 0 0 0 00 78 0 0 0 00 22 5 2 0 00 229 0 3 0 00
Liabilities Accounts Payable
47 9 0 0 00
Owner's Equity Horace Brock, Capital 181 1 3 0 00 Total Liabilities & 229 0 3 0 00 Owner's Equity
Analyze: The net increase in owner's equity during the month of June was $21,130.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-12
PROBLEM 3.1B 1.
Equipment + 32,000
Cash
2. Gloria Bahamon, Drawing + 8,000
Cash
3.
4.
5.
Cash + 6,000
- 32,000
- 8,000
Equipment - 6,000
Delivery Truck + 24,000
Cash
Accounts Payable - 7,200
Cash
6.
Office Equipment + 10,000
7.
Cash + 40,000
8.
Accounts Payable - 3,000
-24,000
- 7,200
Accounts Payable + 10,000
Kevin Fralicks, Capital + 40,000
Cash - 3,000
Analyze: The transactions that affect the liability accounts are transactions 5, 6 and 8.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-13
PROBLEM 3.2B 1.
Cash + 40,000
2.
Shop Equipment + 3,600
3.
Store Equipment + 2,400
4.
Truck + 20,000
Royce West, Capital + 40,000
Cash - 3,600
Accounts Payable + 2,400
Cash - 20,000
5.
Shop Equipment + 6,000
Royce West, Capital + 6,000
6.
Store Equipment + 5,000
Accounts Payable + 5,000
7.
Accounts Payable - 800
Cash
Royce West, Drawing + 3,200
Cash
8.
- 800
- 3,200
Analyze: The transactions that affect the cash account are transactions 1, 2, 4, 7, and 8.
PROBLEM 3.3B 1.
Rent Expense + 7,500
Cash - 7,500
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-14
PROBLEM 3.3B (continued) 2.
Cash + 9,000
3.
Salaries Expense + 6,800
4.
Accounts Receivable + 12,200
5.
Telephone Expense + 1,580
Fees Income + 9,000
Cash - 6,800
Fees Income + 12,200
Cash - 1,580
6.
Cash + 8,000
Accounts Receivable - 8,000
7.
Cash - 380
Telephone Expense - 380
8.
Accounts Receivable + 8,560
9.
Utilities Expense + 950
Cash
Gasoline Expense + 1,590
Cash
10.
11.
Cash + 6,250
Fees Income + 8,560
- 950
- 1,590
Accounts Receivable - 6,250
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-15
PROBLEM 3.3B (continued) 12.
Cash + 9,400
Fees Income +9,400
Analyze: The total cash collected for Accounts Receivable during the month was $14,250.00.
PROBLEM 3.4B Cash (a) + 140,000 (b) (d) +10,500 (c) (h) + 5,400 (e) (m) + 7,450 (i) (p) + 4,200 (j) (k) (l) (o) (r) Bal. 73,843 (s)
(k) (q) Bal.
(i)
- 7,800 - 38,500 - 1,850 - 3,800 - 1,590 - 11,400 - 18,900 - 967 - 900 - 8,000
Office Equipment + 22,800 + 6,880 29,680
Accounts Payable - 3,800 (g) + 6,500 (k) + 11,400 (q) +6,880 Bal. 20,980
(f) (n) Bal.
Accounts Receivable + 11,280 (h) - 5,400 +6,500 (p) - 4,200 8,180
(g)
Office Furniture +6,500
(c)
Automobile + 38,500
Conner McAllister, Capital (a) + 140,000
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-16
PROBLEM 3.4B (continued) Conner McAllister, Drawing (s) + 8,000
(e) (r) Bal.
Auto Expense + 1,850 +900 2,750
(o)
Telephone Expense + 967
Fees Income (d) + 10,500 (f) + 11,280 (m) +7,450 (n) + 6,500 Bal. 35,730
(j)
Utilities Expense + 1,590
(b)
Rent Expense + 7,800
Salaries Expense (l) + 18,900
Analyze: Credit customers owe the company $8,180 (Accounts Receivable).
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-17
PROBLEM 3.5B Conner McAllister, Counselor and Attorney at Law Trial Balance April 30, 2016 ACCOUNT NAME Cash Accounts Receivable Automobile Office Equipment Office Furniture Accounts Payable Conner McAllister, Capital Conner McAllister, Drawing Fees Income Auto Expense Rent Expense Salaries Expense Utilities Expense Telephone Expense Total
DEBIT 73 8 4 3 00 8 1 8 0 00 38 5 0 0 00 29 6 8 0 00 6 5 0 0 00
CREDIT
20 9 8 0 00 140 0 0 0 00 8 0 0 0 00 35 7 3 0 00 2 7 5 0 00 7 8 0 0 00 18 9 0 0 00 1 5 9 0 00 9 6 7 00 196 7 1 0 00
196 7 1 0 00
Conner McAllister, Counselor and Attorney at Law Income Statement Month Ended April 30, 2016 Revenue Fees Income Expenses Auto Expense Rent Expense Salaries Expense Utilities Expense Telephone Expense Total Expenses Net Income
35 7 3 0 00 2 7 5 0 00 7 8 0 0 00 18 9 0 0 00 1 5 9 0 00 9 6 7 00 32 0 0 7 00 3 7 2 3 00
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-18
PROBLEM 3.5B (continued) Conner McAllister, Counselor and Attorney at Law Statement of Owner's Equity Month Ended April 30, 2016 C. McAllister, Capital, April 1, 2016 Net Income for April Less Withdrawals for April Decrease in Capital C. McAllister, Capital, April 30, 2016
140 0 0 0 00 3 7 2 3 00 8 0 0 0 00 (4 2 7 7 00) 135 7 2 3 00
Conner McAllister, Counselor and Attorney at Law Balance Sheet April 30, 2016 Assets Cash Accounts Receivable Automobile Office Equipment Office Furniture Total Assets
Liabilities 73 8 4 3 00 Accounts Payable 8 1 8 0 00 38 5 0 0 00 29 6 8 0 00 Owner's Equity 6 5 0 0 00 Conner McAllister, Capital 156 7 0 3 00 Total Liabilities & Owner's Equity
Analyze: The net decrease in owner's equity during the month of April was $4,277.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-19
20 9 8 0 00
135 7 2 3 00 156 7 0 3 00
CRITICAL THINKING PROBLEM 3.1 Cash 6,000 1,200 1,000
Bal.
2,000 3,600 400 1,000 200
Accounts Receivable 2,300
Equipment and Tools 2,000
1,000
Truck 3,600
Jack Walls, Capital 6,000
Fees Income
Bal.
Salary Expense 1,000
Gasoline Expense 400
Advertsing Expense 200
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-20
1,200 2,300 1,000 4,500
CRITICAL THINKING PROBLEM 3.1 (continued) Elegant Lawn Care Income Statement Three Months Ended August 31, 2016 Revenue Fees Income Expenses Salary Expense Gasoline Expense Advertising Expense Total Expenses Net income
4 5 0 0 00 1 0 0 0 00 4 0 0 00 2 0 0 00 1 6 0 0 00 2 9 0 0 00
Elegant Lawn Care Statement of Owner's Equity Three Months Ended August 31, 2016 Jack Wells, Capital, June 1, 2016 Net Income for June-August Jack Wells, Capital, Jaugust 31, 2016
6 0 0 0 00 2 9 0 0 00 8 9 0 0 00
Elegant Lawn Care Balance Sheet August 31, 2016 Assets Cash Accounts Receivable Equipment/Tool Truck Total Assets
Liabilities 1 0 0 0 00 2 3 0 0 00 2 0 0 0 00 3 6 0 0 00 8 9 0 0 00
Owner's Equity Jack Wells, Capital Total Liabilities & Owner's Equity
8 9 0 0 00 8 9 0 0 00
Jack is better off than he would have been had he left his money in the savings account. He earned a profit of $2,900 from his Elegant Lawn Care business, compared to approximately $90.00 in interest his money would have earned over the three summer months (assuming a bank interest rate of 6%; $6,000 × 0.06 × 3/12). Jack needs to look beyond his current checking account balance of $1,000 and realize that this balance will increase to $3,300 when he collects the $2,300 still owed to him. He also owns a truck and power mowers that he could sell for additional cash.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-21
CRITICAL THINKING PROBLEM 3.2 Cash (a) + 40,000 (b) (d) + 9,100 (c) (i) + 4,260 (e) (m) +4,600 (g) (p) + 1,800 (h) (k) (l) (n) (q) Bal. 33,820 (r)
(g)
- 4,000 - 4,600 - 420 - 150 -1,100 - 8,000 - 550 - 920 - 5,000 -1,200
Office Equipment + 650
Accounts Receivable (f) + 3,120 (i) - 4,260 (0) + 4,300 (p) - 1,800 Bal. 1,360
(l)
John Arrow, Drawing (q) + 5,000
(n)
Utilities Expense +920
Accounts Payable - 550 (g) + 500 (j) +1,090 Bal. 1,040
Fees Income (d) (f) (m) (o) Bal.
(k)
(c) (j) Bal.
+ 9,100 + 3,120 + 4,600 + 4,300 21,120
Salaries Expense +8000
Office Furniture + 4,600 1,090 5,690
John Arrow, Capital (a) + 40,000
(b)
Advertising Expense + 4,000
(e)
Telephone Expense +420
Miscellaneous Expense (h) +1,100 (r) +1,200 Bal. 2,300
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-22
CRITICAL THINKING PROBLEM 3.2 (continued) John Arrow, Architect Trial Balance January 31, 2016 ACCOUNT NAME Cash Accounts Receivable Office Furniture Office Equipment Accounts Payable John Arrow, Capital John Arrow, Drawing Fees Income Advertising Expense Utilities Expense Salaries Expense Telephone Expense Miscellaneous Expense Totals
DEBIT 33 8 2 0 00 1 3 6 0 00 5 6 9 0 00 6 5 0 00
CREDIT
1 0 4 0 00 40 0 0 0 00 5 0 0 0 00 21 1 2 0 00 4 0 0 0 00 9 2 0 00 8 0 0 0 00 4 2 0 00 2 3 0 0 00 62 1 6 0 00
62 1 6 0 00
John Arrow, Architect Income Statement Month Ended January 31, 2016 Revenue Fees Income Expenses Advertising Expense Utilities Expense Salaries Expense Telephone Expense Miscellaneous Expense Total Expenses Net Income
21 1 2 0 00 4 0 0 0 00 9 2 0 00 8 0 0 0 00 4 2 0 00 2 3 0 0 00 15 6 4 0 00 5 4 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-23
CRITICAL THINKING PROBLEM 3.2 (continued) John Arrow, Architect Statement of Owner's Equity Month Ended January 31, 2016 John Arrow, Capital, January 1, 2016 Net Income for January Less Withdrawals for January Increase in Capital John Arrow, Capital, January 31, 2016
40 0 0 0 00 5 4 8 0 00 5 0 0 0 00 4 8 0 00 40 4 8 0 00
John Arrow, Architect Balance Sheet January 31, 2016 Assets Cash Accounts Receivable Office Furniture Office Equipment Total Assets
33 8 2 0 00 1 3 6 0 00 5 6 9 0 00 6 5 0 00 41 5 2 0 00
Liabilities Accounts Payable Owner's Equity John Arrow, Capital Total Liabilities & Owner's Equity
Analyze: Assets ($41,520) = Liabilities ($1,040) + Owner's Equity ($40,480)
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-24
1 0 4 0 00
40 4 8 0 00 41 5 2 0 00
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Net income (or net loss) for the period. 2. Reduce expenses; increase sales volume or raise sales prices. 3. Review of financial records containing cash available, amounts due, and dates due. 4. Provide summaries of: a. Income Statement—revenues and expenses, b. Balance Sheet—assets, liabilities, and owner’s equity. Ethical Dilemma: Do not open the account New Expenses without approval from the controller. You must identify what expenses will be put into that account. If the account is not monitored, the Accounts Payable clerk might enter personal expenses, which would not be appropriate. Financial Statement Analysis: 1. Financial data, operational information, plans for the future. 2. $4.4 billion. 3. $3,538,353 of cash, cash equivalents, and short-term investments were on hand at December 31, 2012. 4. Financial results are relatively the same. GAAP net income was $832,775 or fiscal year 2012 compared to $832847 in fiscal year 2011. 5. Adobe is targeting revenue of $950 million to $1 billion for the first quarter of 2013. Teamwork: All companies would have a cash account and accounts payable. A plumbing service would have accounts receivable whereas a clothing store would also have a credit card receivable. Both grocery store and clothing store would have inventory. All would have wages expense except the real estate would have sales commission. All would have office supplies expense. Depending on whether the company owned the building most would have rent expense.
Internet Connection: For Fiscal Year 2012, Honeywell is the most profitable, and has the most cash and assets.
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-25
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. FALSE 4. FALSE 5. FALSE 6. TRUE 7. FALSE 8. FALSE 9. TRUE 10. FALSE 11. TRUE 12. TRUE 13. TRUE 14. TRUE 15. TRUE Part B Matching 1. i 2. c 3. h 4. f 5. b 6. d 7. e 8. g 9. a Part C Completion 1. trial balance 2. normal balance 3. footing 4. transposition 5. slide
© 2015 McGraw-Hill Education. This is proprietary material for authorized instructor use. Not authorized for sale or distribution in any manner. 3-26
CHAPTER 4 THE GENERAL JOURNAL AND THE GENERAL LEDGER Chapter Opener: Thinking Critically They would probably record (debit) the cost of the arm to their Equipment or Machinery account and credit Accounts Payable. The robotic arm will be used for many years so its cost will be expensed over its years of useful life. Fast Facts • William Boeing founded Pacific Aero Products Company in 1916; the name was changed to Boeing in 1917. • In 1917, the company employed 28 people. In 2013, Boeing employed more than 170,000 people across the United States and in 70 countries. • Boeing is the largest contractor working for NASA. • Along with the ISS, the Boeing Company manufactures and services commercial airplanes, military aircraft, helicopters, a variety of electronic defense systems, and advanced communication systems. • Boeing’s 2012 sales were $81.6 billion from customers in 150 countries. Seventy percent of commercial airplane revenue historically from customers outside the United States. Managerial Implications: Thinking Critically Answers will vary but may include the following. • Exposing the assets of the business to fraud and theft. • Increasing the risk of producing inaccurate financial statements. • Difficulty in auditing transactions. • Research customer billing. (Customer says no invoice was received.) Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Transfer of data from a journal to a ledger. 2. Groups of accounts. 3. Assets, liabilities, and owner’s equity first, followed by revenue accounts, then expenses. They are in order of the financial statements. 4. Notations of the page number of the journal from which a figure comes; number of account to which the figure was posted; to provide cross-references. 5. To record business transactions in chronological order. 6. Helps establish audit trail. 7. Record month, day, debited account/amount, credited account/amount, description. 8. Entry that includes more than a single debit and credit—two or more debits and/or credits. 9. Before entry posted: cross out incorrect item, write correct data above it. After posted: journalize and post a correcting entry. 10. Chain of references; prevents fraud and errors. 11. Steps performed to classify, record, and summarize financial data for a business. © 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-1
EXERCISE 4.1
1. 2. 3. 4.
Debit Credit Debit 401 101 5. 202 517 101 6. 101 111 401 7. 101 131 101
Credit 101 401 111
8. 9. 10.
Debit 101 121 511
Credit 301 202 101
EXERCISE 4.2 GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
DATE DESCRIPTION 2016 Sept. 1 Cash Jewell Tucker, Capital Beginning investment of owner
PAGE 1 POST. REF.
DEBIT 60 0 0 0 00
101 301
4 Equipment Accounts Payable Purchased equipment on credit from Den, Inc., Invoice 9823, payable in 30 days
131 202
6 5 0 0 00
16 Automobile Cash Purchased an automobile, Check 1001
141 101
14 5 0 0 00
20 Supplies Cash Purchased supplies, Check 1002
121 101
5 2 0 00
23 Cash Supplies Returned damaged supplies and received cash refund
101 121
1 7 0 00
30 Accounts Payable Cash Paid Den, Inc., on account for Invoice 9823, Check 1003
202 101
4 2 0 0 00
CREDIT 1 2 60 0 0 0 00 3 4 5 6 6 5 0 0 00 7 8 9 10 11 14 5 0 0 00 12 13 14 15 5 2 0 00 16 17 18 19 1 7 0 00 20 21 22 23 24 4 2 0 0 00 25 26 27
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-2
EXERCISE 4.2 (continued) GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
DATE DESCRIPTION 2016 Sept. 30 Jewell Tucker, Drawing Cash Owner withdrew cash for personal use
PAGE 2 POST. REF.
DEBIT
302 101
3 0 0 0 00
30 Rent Expense Cash Paid October rent, Check 1004
511 101
1 7 0 0 00
30 Cash
101 401
2 7 5 0 00
517 101
4 3 5 00
Fees Income Performed services for cash 30 Telephone Expense Cash Paid monthly telephone bill, Check 1005
CREDIT 1 2 3 0 0 0 00 3 4 5 6 1 7 0 0 00 7 8 9 10 2 7 5 0 00 11 12 13 14 4 3 5 00 15 16 17 18
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-3
EXERCISE 4.3 GENERAL LEDGER ACCOUNT
Cash
DATE 2016 Sept. 1 16 20 23 30 30 30 30 30
ACCOUNT
DATE
ACCOUNT
POST DESCRIPTION REF. J1 J1 J1 J1 J1 J2 J2 J2 J2
DEBIT
CREDIT
DESCRIPTION
60 0 0 0 00 14 5 0 0 00 45 5 0 0 00 5 2 0 00 44 9 8 0 00 1 7 0 00 45 1 5 0 00 4 2 0 0 00 40 9 5 0 00 3 0 0 0 00 37 9 5 0 00 1 7 0 0 00 36 2 5 0 00 2 7 5 0 00 39 0 0 0 00 4 3 5 00 38 5 6 5 00
ACCOUNT NO. 111
POST REF.
DEBIT
CREDIT
Supplies
BALANCE DEBIT CREDIT
ACCOUNT NO. 121 POST REF. J1 J1
DEBIT
CREDIT
5 2 0 00 1 7 0 00
Equipment
DATE DESCRIPTION 2016 Sept. 4
BALANCE DEBIT CREDIT
60 0 0 0 00
Accounts Receivable
DATE DESCRIPTION 2016 Sept. 20 23
ACCOUNT
ACCOUNT NO. 101
BALANCE DEBIT CREDIT 5 2 0 00 3 5 0 00
ACCOUNT NO. 131 POST REF.
DEBIT
J1
6 5 0 0 00
CREDIT
BALANCE DEBIT CREDIT 6 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-4
EXERCISE 4.3 (continued) ACCOUNT
Automobile
DATE DESCRIPTION 2016 Sept. 16
ACCOUNT
DATE 2016 Sept. 4 30
ACCOUNT
DATE 2016 Sept. 1
ACCOUNT
DATE 2016 Sept. 30
POST REF.
DEBIT
J1
14 5 0 0 00
CREDIT
BALANCE DEBIT CREDIT 14 5 0 0 00
Accounts Payable
ACCOUNT NO. 202
POST DESCRIPTION REF. J1 J1
DEBIT
CREDIT
POST DESCRIPTION REF.
BALANCE DEBIT CREDIT
6 5 0 0 00
6 5 0 0 00 2 3 0 0 00
4 2 0 0 00
Jewell Tucker, Capital
ACCOUNT NO. 301
DEBIT
J1
CREDIT
BALANCE DEBIT CREDIT
60 0 0 0 00
Jewell Tucker, Drawing
DATE DESCRIPTION 2016 Sept. 30
ACCOUNT
ACCOUNT NO. 141
60 0 0 0 00
ACCOUNT NO. 302
POST REF.
DEBIT
J2
3 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 3 0 0 0 00
Fees Income
ACCOUNT NO. 401
POST DESCRIPTION REF. J2
DEBIT
CREDIT 2 7 5 0 00
BALANCE DEBIT CREDIT 2 7 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-5
EXERCISE 4.3 (continued) ACCOUNT
DATE 2016 Sept. 30
ACCOUNT
DATE
ACCOUNT
DATE 2016 Sept. 30
Rent Expense
DESCRIPTION
ACCOUNT NO. 511 POST REF.
DEBIT
J2
1 7 0 0 00
CREDIT
1 7 0 0 00
Salaries Expense
DESCRIPTION
ACCOUNT NO. 514 POST REF.
DEBIT
CREDIT
Telephone Expense
DESCRIPTION
BALANCE DEBIT CREDIT
BALANCE DEBIT CREDIT
ACCOUNT NO. 517 POST REF. J2
DEBIT 4 3 5 00
CREDIT
BALANCE DEBIT CREDIT 4 3 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-6
EXERCISE 4.4 GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
DATE DESCRIPTION 2016 Nov. 5 Cash Accounts Receivable Fees Income Performed services for Job Search receiving part of fees in cash with remainder due in 60 days
PAGE POST. REF.
DEBIT
CREDIT
1 2 3 40 0 0 0 00 4 5 6 7 8 4 2 5 00 9 5 7 5 00 10 1 0 0 0 00 11 12 13 14 2 1 0 0 00 15 1 0 5 0 00 16 1 0 5 0 00 17 18 19 20 21
19 0 0 0 00 21 0 0 0 00
18 Equipment Supplies Cash Purchased graphing calculator and supplies, Check 1008 23 Automobile Expense Cash Accounts Payable Received Invoice 1602 from Automotive Technicians Repair, issued Check 1009 for half the amount, balance due in 30 days
EXERCISE 4.5 GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 July 30 Telephone Expense 3 Utilities Expense 4 To correct July 9 error charging 5 telephone bill to Utilities Expense 6
PAGE POST. REF.
DEBIT
CREDIT
1 0 0 0 00 1 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-7
1 2 3 4 5 6
EXERCISE 4.6 GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2016 Oct. 1 Repair Expense Truck To correct September 16 error charging truck charges to the Truck account
PAGE POST. REF.
DEBIT
CREDIT
8 0 0 00 8 0 0 00
1 2 3 4 5 6
PROBLEM 4.1A GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Sept. 1 Rent Expense 3 Cash 4 Paid September rent, Check 1169 5 6 5 Cash 7 Fees Income 8 Performed services for cash 9 10 6 Accounts Receivable 11 Fees Income 12 Performed services on credit 13 14 10 Telephone Expense 15 Cash 16 Paid monthly telephone bill, Check 1170 17 18 11 Equipment Repair Expense 19 Cash 20 Paid for repairs, Check 1171 21 22 12 Cash 23 Accounts Receivable 24 Received cash on account
PAGE 1 POST. REF.
DEBIT 1 9 0 0 00
3 0 0 0 00
1 8 5 0 00
7 0 0 00
9 4 0 00
3 7 0 0 00
CREDIT 1 2 1 9 0 0 00 3 4 5 6 3 0 0 0 00 7 8 9 10 1 8 5 0 00 11 12 13 14 7 0 0 00 15 16 17 18 9 4 0 00 19 20 21 22 3 7 0 0 00 23 24
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-8
PROBLEM 4.1A (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Sept. 15 Salaries Expense 3 Cash 4 Paid semimonthly salaries, Checks 1172-1177 5 6 18 Supplies 7 Cash 8 Paid for supplies, Check 1178 9 10 19 Equipment 11 Accounts Payable 12 Purchased tennis rackets from The Tennis 13 Supply Shop, Invoice 3108, payable in 30 days 14 15 20 Equipment 16 Cash 17 Purchased nets, Check 1179 18 19 21 Cash 20 Accounts Receivable 21 Received cash on account 22 23 21 Cash 24 Equipment 25 Returned damaged net for cash refund 26 27 22 Cash 28 Fees Income 29 Performed services for cash 30 31 23 Accounts Receivable 32 Fees Income 33 Performed services on account 34 35 26 Supplies 36 Cash 37 Paid for supplies, Check 1180
PAGE POST. REF.
DEBIT 4 7 0 0 00
2 5 0 0 00
2 7 5 0 00
2 8 6 0 00
1 0 5 0 00
5 5 0 00
3 3 6 0 00
4 9 5 0 00
5 6 0 00
2
CREDIT 1 2 4 7 0 0 00 3 4 5 6 2 5 0 0 00 7 8 9 10 2 7 5 0 00 11 12 13 14 15 2 8 6 0 00 16 17 18 19 1 0 5 0 00 20 21 22 23 5 5 0 00 24 25 26 27 3 3 6 0 00 28 29 30 31 4 9 5 0 00 32 33 34 35 5 6 0 00 36 37
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-9
PROBLEM 4.1A (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Sept. 28 Utilities Expense 3 Cash 4 Paid monthly electric bill, Check 1181 5 6 30 Salaries Expense 7 Cash 8 Paid semimonthly salaries, Check 1182-1187 9 10 30 Selena Cantu, Drawing 11 Cash 12 Owner withdrew cash for personal use, 13 Check 1188
PAGE 3 POST. REF.
DEBIT 2 3 5 0 00
4 7 0 0 00
4 7 0 0 00
CREDIT 1 2 2 3 5 0 00 3 4 5 6 4 7 0 0 00 7 8 9 10 4 7 0 0 00 11 12 13
Analyze: Check 1189 would be included in the journal entry description.
PROBLEM 4.2A GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13
DATE DESCRIPTION 2016 Oct. 1 Cash Satillo Richey, Capital Beginning investment of owner
PAGE POST. REF. 101 301
2 Rent Expense Cash Paid October rent, Check 1001
514 101
5 Office Equipment Accounts Payable Purchased equipment from Office Furniture Mart, Inc., Invoice 6704, payable in 60 days
141 202
DEBIT
1
CREDIT
1 60 0 0 0 00 2 60 0 0 0 00 3 4 5 3 0 0 0 00 6 3 0 0 0 00 7 8 9 15 0 0 0 00 10 15 0 0 0 00 11 12 13
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-10
PROBLEM 4.2A (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Oct. 6 Art Equipment 3 Cash Purchased art equipment, Check 1002 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
PAGE 12 POST. REF.
DEBIT
151 101
3 2 0 0 0
7 Supplies Cash Purchased supplies, Check 1003
121 101
1 5 5 0 00
10 Office Cleaning Expense Cash Paid for office cleaning, Check 1004
511 101
6 0 0 00
12 Cash Accounts Receivable Fees Income Performed services for cash and on credit
101 111 401
4 1 0 0 00 1 9 0 0 00
15 Cash Supplies Returned damaged supplies for cash refund
101 121
4 0 0 00
18 Office Equipment Cash Accounts Payable Purchased equip. from Office Furniture Mart, Inc., Invoice 7108; Check 1005; balance due in 30 days
141 101 202
3 0 0 0 00
20 Accounts Payable Cash Paid Office Furniture Mart, Inc., on account, Invoice 6704; Check 1006
202 101
7 5 0 0 00
CREDIT
3 2 0 0 0
1 5 5 0 00
6 0 0 00
6 0 0 0 00
4 0 0 00
1 7 5 0 00 1 2 5 0 00
7 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-11
1 2 3
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
PROBLEM 4.2A (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Oct. 26 Accounts Receivable 3 Fees Income Performed services on credit 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PAGE 13 POST. REF. 111 401
DEBIT 4 4 0 0 0
4 4 0 0 0
27 Telephone Expense Cash Paid monthly telephone bill, Check 1007
520 101
3 2 5 00
30 Cash
101 111
3 7 0 0 00
30 Utilities Expense Cash Paid monthly utility bill, Check 1008
523 101
4 0 0 00
30 Salaries Expense Cash Paid monthly salaries, Checks 1009-1011
517 101
8 0 0 0 00
Accounts Receivable Received cash on account
CREDIT 1 2 3
4 5 3 2 5 00 6 7 8 9 3 7 0 0 00 10 11 12 13 4 0 0 00 14 15 16 17 8 0 0 0 00 18 19 20
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-12
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Cash
DATE 2016 Oct. 1 2 6 7 10 12 15 18 20 27 30 30 30
ACCOUNT
POST DESCRIPTION REF. J1 J1 J1 J1 J1 J1 J1 J2 J2 J3 J3 J3 J3
DEBIT
CREDIT
60 0 0 0 00 3 0 0 0 00 3 2 0 0 00 1 5 5 0 00 6 0 0 00 4 1 0 0 00 4 0 0 00 1 7 5 0 00 7 5 0 0 00 3 2 5 00 3 7 0 0 00 4 0 0 00 8 0 0 0 00
Accounts Receivable
DATE 2016 Oct. 12 26 30
ACCOUNT
ACCOUNT NO. 101
POST DESCRIPTION REF. J1 J3 J3
60 0 0 0 00 57 0 0 0 00 53 8 0 0 00 52 2 5 0 00 51 6 5 0 00 55 7 5 0 00 56 1 5 0 00 54 4 0 0 00 46 9 0 0 00 46 5 7 5 00 50 2 7 5 00 49 8 7 5 00 41 8 7 5 00
ACCOUNT NO. 111
DEBIT
CREDIT
1 9 0 0 00 4 4 0 0 00 3 7 0 0 00
Supplies
DATE 2016 Oct. 7 15
BALANCE DEBIT CREDIT
BALANCE DEBIT CREDIT 1 9 0 0 00 6 3 0 0 00 2 6 0 0 00
ACCOUNT NO. 121
POST DESCRIPTION REF. J1 J1
DEBIT
CREDIT
1 5 5 0 00 4 0 0 00
BALANCE DEBIT CREDIT 1 5 5 0 00 1 1 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-13
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Office Equipment
DATE 2016 Oct. 5 18
ACCOUNT
ACCOUNT NO. 141
POST DESCRIPTION REF. J1 J2
15 0 0 0 00 3 0 0 0 00
BALANCE DEBIT CREDIT 15 0 0 0 00 18 0 0 0 00
ACCOUNT NO. 151
DEBIT
CREDIT
3 2 0 0 00
BALANCE DEBIT CREDIT 3 2 0 0 00
Accounts Payable
DATE 2016 Oct. 5 18 20
ACCOUNT
CREDIT
Art Equipment
POST DATE DESCRIPTION REF. 2016 Oct. 6 J1
ACCOUNT
DEBIT
ACCOUNT NO. 202
POST DESCRIPTION REF. J1 J2 J2
DEBIT
CREDIT 15 0 0 0 00 1 2 5 0 00
7 5 0 0 00
Saltillo Richey, Capital
POST DATE DESCRIPTION REF. 2016 Oct. 1 J1
BALANCE DEBIT CREDIT 15 0 0 0 00 16 2 5 0 00 8 7 5 0 00
ACCOUNT NO. 301
DEBIT
CREDIT 60 0 0 0 00
BALANCE DEBIT CREDIT 60 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-14
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Wilson Adams, Drawing
DATE
POST DESCRIPTION REF.
ACCOUNT
CREDIT
POST DESCRIPTION REF.
DEBIT
J1 J3
POST DESCRIPTION REF.
CREDIT
BALANCE DEBIT CREDIT
6 0 0 0 00 4 4 0 0 00
6 0 0 0 00 10 4 0 0 00
ACCOUNT NO. 511
DEBIT
CREDIT
6 0 0 00
BALANCE DEBIT CREDIT 6 0 0 00
Rent Expense
DATE DESCRIPTION 2016 Oct. 2
BALANCE DEBIT CREDIT
ACCOUNT NO. 401
Office Cleaning Expense
DATE 2016 Oct. 10
ACCOUNT
DEBIT
Fees Income
DATE 2016 Oct. 12 26
ACCOUNT
ACCOUNT NO. 302
ACCOUNT NO. 514 POST REF.
DEBIT
J1
3 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 3 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-15
PROBLEM 4.2A (continued) GENERAL LEDGER ACCOUNT
Salaries Expense
DATE 2016 Oct. 30
ACCOUNT
ACCOUNT NO. 517
POST DESCRIPTION REF. J3
CREDIT
8 0 0 0 00
ACCOUNT NO. 520
DEBIT
CREDIT
3 2 5 00
BALANCE DEBIT CREDIT 3 2 5 00
Utilities Expense
DATE 2016 Oct. 30
BALANCE DEBIT CREDIT 8 0 0 0 00
Telephone Expense
POST DATE DESCRIPTION REF. 2016 Oct. 27 J3
ACCOUNT
DEBIT
ACCOUNT NO. 523
POST DESCRIPTION REF. J3
DEBIT
CREDIT
4 0 0 00
BALANCE DEBIT CREDIT 4 0 0 00
Analyze: General ledger account 202 has an $8,750 credit balance. PROBLEM 4.3A April 1: The debit should be to Accounts Receivable, not Accounts Payable. April 2: The debit and credit amounts are reversed. Telephone Expense should be debited and Cash should be credited. April 3: The two debit amounts and the credit amount in the entry are not equal because of a math error. The credit for Cash should be $8,000. Analyze: After correcting the three entries, the assets are increased by $11,800 ($12,400 - $1,000 + $400).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-16
PROBLEM 4.4A GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Nov. 1 Cash 3 Tools 4 Dennis Ortiz, Capital 5 Beginning investment of owner 6 7 2 Equipment 8 Office Supplies 9 Cash 10 Accounts Payable 11 Purchased equipment and office supplies from 12 Office Depot, Invoice 501; issued Check 100 13 for a down payment, balance payable in 30 days 14 15 10 Cash 16 Accounts Receivable 17 Fees Income 18 Services for cash and credit 19 20 20 Machinery 21 Cash 22 Accounts Payable 23 Purchased machinery from Craft Machinery Inc., 24 Invoice 709; issued Check 101 25 for a down payment, balance due in 30 days 26
PAGE 1 POST. REF.
DEBIT
101 131 301
55 0 0 0 00 2 0 0 0 00
151 121 101 202
2 0 5 0 00 5 5 0 00
101 111 401
1 0 0 0 00 1 9 0 0 00
141 101 202
4 0 0 0 00
CREDIT
57 0 0 0 00
7 0 0 00 1 9 0 0 00
2 9 0 0 00
1 5 0 0 00 2 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-17
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
PROBLEM 4.4A (continued) GENERAL LEDGER ACCOUNT
Cash
DATE 2016 Nov. 1 2 10 20
ACCOUNT
POST DESCRIPTION REF. J1 J1 J1 J1
55 0 0 0 00 1 0 0 0 00
CREDIT
55 0 0 0 00 7 0 0 00 54 3 0 0 00 55 3 0 0 00 1 5 0 0 00 53 8 0 0 00
J1
DEBIT
CREDIT
1 9 0 0 00
BALANCE DEBIT CREDIT 1 9 0 0 00
Office Supplies
ACCOUNT NO. 121 POST REF. J1
DEBIT
CREDIT
5 5 0 00
BALANCE DEBIT CREDIT 5 5 0 00
Tools
DATE 2016 Nov. 1
BALANCE DEBIT CREDIT
ACCOUNT NO. 111
POST DESCRIPTION REF.
DATE DESCRIPTION 2016 Nov. 2
ACCOUNT
DEBIT
Accounts Receivable
DATE 2016 Nov. 10
ACCOUNT
ACCOUNT NO. 101
ACCOUNT NO. 131
POST DESCRIPTION REF. J1
DEBIT 2 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 2 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-18
PROBLEM 4.4A (continued) GENERAL LEDGER ACCOUNT
Machinery
DATE DESCRIPTION 2016 Nov. 20
ACCOUNT
DEBIT
J1
4 0 0 0 00
CREDIT
ACCOUNT NO. 151 POST REF.
DEBIT
J1
2 0 5 0 00
CREDIT
BALANCE DEBIT CREDIT 2 0 5 0 00
ACCOUNT NO. 202 POST REF.
DEBIT
J1 J1
CREDIT 1 9 0 0 00 2 5 0 0 00
Dennis Ortiz, Capital
DATE DESCRIPTION 2016 Nov. 1
BALANCE DEBIT CREDIT 4 0 0 0 00
Accounts Payable
DATE DESCRIPTION 2016 Nov. 2 20
ACCOUNT
POST REF.
Equipment
DATE DESCRIPTION 2016 Nov. 2
ACCOUNT
ACCOUNT NO. 141
BALANCE DEBIT CREDIT 1 9 0 0 00 4 4 0 0 00
ACCOUNT NO. 301
POST REF. J1
DEBIT
CREDIT 57 0 0 0 00
BALANCE DEBIT CREDIT 57 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-19
PROBLEM 4.4A (continued) GENERAL LEDGER ACCOUNT
Fees Income
DATE 2016 Nov. 10
ACCOUNT NO. 401
POST DESCRIPTION REF.
DEBIT
J1
CREDIT
BALANCE DEBIT CREDIT
2 9 0 0 00
2 9 0 0 00
Analyze: The business owes $4,400 as of November 30.
PROBLEM 4.1B GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Sept. 1 Cash 3 Charles Brown, Capital 4 Beginning investment of owner 5 6 5 Cash 7 Fees Income 8 Performed services for cash 9 10 6 Rent Expense 11 Cash 12 Paid for September, Check 1000 13 14 7 Accounts Receivable 15 Fees Income 16 Performed services on credit 17 18 9 Telephone Expense 19 Cash 20 Paid telephone bill, Check 1001
PAGE 1 POST REF.
DEBIT
CREDIT
50 0 0 0 00 50 0 0 0 00
6 0 0 0 00 6 0 0 0 00
2 5 0 0 00 2 5 0 0 00
6 3 0 0 00 6 3 0 0 00
6 4 0 00 6 4 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PROBLEM 4.1B (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 Sept. 10 Equipment Repair Expense 3 Cash 4 Paid for equipment repairs, Check 1002 5 6 12 Cash 7 Accounts Receivable 8 Received cash on account 9 10 14 Salaries Expense 11 Cash 12 Paid semimonthly salaries to employees, 13 Checks 1003-1004 14 15 18 Cleaning Supplies Expense 16 Cash 17 Paid for cleaning supplies, Check 1005 18 19 19 Office Supplies Expense 20 Cash 21 Paid for office supplies, Check 1006 22 23 20 Equipment 24 Cash 25 Accounts Payable 26 Purchase from Razor Equipment, Inc., 27 Invoice 1012; issued Check 1007 for down 28 payment, balance due in 30 days 29 30 22 Cash 31 Fees Income 32 Performed services for cash 33 34 24 Utilities Expense 35 Cash 36 Paid utility bill, Check 1008
PAGE 12 POST. REF.
DEBIT
CREDIT
1 6 7 5 00 2 6 7 5 00 3 4 5 1 0 9 0 00 6 1 0 9 0 00 7 8 9 12 5 0 0 00 10 12 5 0 0 00 11 12 13 14 8 0 0 00 15 8 0 0 00 16 17 18 9 5 0 00 19 9 5 0 00 20 21 22 10 0 0 0 00 23 2 0 0 0 00 24 8 0 0 0 00 25 26 27 28 29 4 8 0 0 00 30 4 8 0 0 00 31 32 33 9 5 0 00 34 9 5 0 00 35 36
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-21
PROBLEM 4.1B (continued) GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
DATE DESCRIPTION 2016 Sept. 26 Accounts Receivable Fees Income Performed services on account
PAGE 13 POST. REF.
DEBIT
CREDIT
1 7 2 0 0 00 2 7 2 0 0 00 3 4 5 12 5 0 0 00 6 12 5 0 0 00 7 8 9 10 6 0 0 0 00 11 6 0 0 0 00 12 13 14 15
30 Salaries Expense Cash Paid semimonthly salaries, Checks 1009-1010 30 Charles Brown, Drawing Cash Owner withdrew cash for personal use, Check 1011
Analyze: Eight transactions affected expense accounts. PROBLEM 4.2B GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14
DATE DESCRIPTION 2016 June 1 Cash Carolyn Davis, Capital Beginning investment of owner
PAGE 1 POST. REF. 101 301
2 Rent Expense Cash Paid rent for June, Check 1001
514 101
5 Office Equipment Accounts Payable Purchased office equipment fromDeSoto, Inc., Invoice 5312, payable in 60 days
141 202
DEBIT
CREDIT
1 2 18 0 0 0 00 3 4 5 1 2 5 0 00 6 1 2 5 0 00 7 8 9 7 5 0 0 00 10 7 5 0 0 00 11 12 13 14
18 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-22
PROBLEM 4.2B (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 June 6 Photographic Equipment 3 Cash 4 Purchased photo equipment, Check 1002 5 6 7 Supplies 7 Cash 8 Purchased supplies, Check 1003 9 10 10 Office Cleaning Expense 11 Cash 12 Paid for office cleaning, Check 1004 13 14 12 Cash 15 Accounts Receivable 16 Fees Income 17 Performed services for cash and credit 18 19 15 Cash 20 Supplies 21 Returned damaged supplies for cash 22 23 18 Office Equipment 24 Cash 25 Accounts Payable 26 Purchase from Denison Office Supply, 27 Invoice 304; issued Check 1005 for down 28 payment, balance payable in 30 days 29 30 20 Accounts Payable 31 Cash 32 Paid DeSoto, Inc., on account, Invoice 33 5312, Check 1006 34 35 26 Accounts Receivable 36 Fees Income 37 Performed services on credit
PAGE 12 POST. REF.
DEBIT
151 101
1 9 0 0 00
121 101
5 3 8 00
511 101
4 0 0 00
101 111 401
1 3 0 0 00 1 3 0 0 00
101 121
1 5 0 00
141 101 202
1 8 5 0 00
202 101
2 5 0 0 00
111 401
2 0 0 0 00
CREDIT 1 2 1 9 0 0 00 3 4 5 6 5 3 8 00 7 8 9 10 4 0 0 00 11 12 13 14 15 2 6 0 0 00 16 17 18 19 1 5 0 00 20 21 22 23 5 0 0 00 24 1 3 5 0 00 25 26 27 28 29 30 2 5 0 0 00 31 32 33 34 35 2 0 0 0 00 36 37
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-23
PROBLEM 4.2B (continued) GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 June 27 Telephone Expense 3 Cash 4 Paid monthly phone bill, Check 1007 5 6 30 Cash 7 Accounts Receivable 8 Received cash on account 9 10 30 Utilities Expense 11 Cash 12 Paid monthly utility bill, Check 1008 13 14 30 Salaries Expense 15 Cash 16 Paid monthly salaries to employees, 17 Checks 1009-1011 18
PAGE 13 POST. REF.
DEBIT
520 101
5 8 0 00
101 111
2 1 0 0 00
523 101
5 7 5 00
517 101
5 6 0 0 00
CREDIT 1 2 5 8 0 00 3 4 5 6 2 1 0 0 00 7 8 9 10 5 7 5 00 11 12 13 14 5 6 0 0 00 15 16 17 18
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-24
PROBLEM 4.2B (continued) GENERAL LEDGER ACCOUNT
DATE 2016 June 1 2 6 7 10 12 15 18 20 27 30 30 30
ACCOUNT
DATE 2016 June 12 26 30
ACCOUNT
DATE 2016 June 7 15
Cash
ACCOUNT NO. 101
POST DESCRIPTION REF. J1 J1 J1 J1 J1 J1 J1 J2 J2 J3 J3 J3 J3
DEBIT
CREDIT
18 0 0 0 00 1 2 5 0 00 1 9 0 0 00 5 3 8 00 4 0 0 00 1 3 0 0 00 1 5 0 00 5 0 0 00 2 5 0 0 00 5 8 0 00 2 1 0 0 00 5 7 5 00 5 6 0 0 00
Accounts Receivable
BALANCE DEBIT CREDIT 18 0 0 0 00 16 7 5 0 00 14 8 5 0 00 14 3 1 2 00 13 9 1 2 00 15 2 1 2 00 15 3 6 2 00 14 8 6 2 00 12 3 6 2 00 11 7 8 2 00 13 8 8 2 00 13 3 0 7 00 7 7 0 7 00
ACCOUNT NO. 111
POST DESCRIPTION REF. J1 J2 J3
DEBIT
CREDIT
BALANCE DEBIT CREDIT
2 1 0 0 00
1 3 0 0 00 3 3 0 0 00 1 2 0 0 00
1 3 0 0 00 2 0 0 0 00
Supplies
ACCOUNT NO. 121
POST DESCRIPTION REF. J1 J1
DEBIT
CREDIT
5 3 8 00 1 5 0 00
BALANCE DEBIT CREDIT 5 3 8 00 3 8 8 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-25
PROBLEM 4.2B (continued) GENERAL LEDGER ACCOUNT
Office Equipment
DATE DESCRIPTION 2016 June 5 18
ACCOUNT
DEBIT
J1 J2
7 5 0 0 00 1 8 5 0 00
CREDIT
ACCOUNT NO. 151
POST REF.
DEBIT
J1
1 9 0 0 00
CREDIT
BALANCE DEBIT CREDIT 1 9 0 0 00
ACCOUNT NO. 202 POST REF. J1 J2 J2
DEBIT
CREDIT 7 5 0 0 00 1 3 5 0 00
2 5 0 0 00
Carolyn Davis, Capital
DATE DESCRIPTION 2016 June 1
BALANCE DEBIT CREDIT 7 5 0 0 00 9 3 5 0 00
Accounts Payable
DATE DESCRIPTION 2016 June 5 18 20
ACCOUNT
POST REF.
Photographic Equipment
DATE DESCRIPTION 2016 June 6
ACCOUNT
ACCOUNT NO. 141
POST REF. J1
BALANCE DEBIT CREDIT 7 5 0 0 00 8 8 5 0 00 6 3 5 0 00
ACCOUNT NO. 301
DEBIT
CREDIT 18 0 0 0 00
BALANCE DEBIT CREDIT 18 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-26
PROBLEM 4.2B (continued) GENERAL LEDGER ACCOUNT
Wallace King, Drawing
DATE
POST DESCRIPTION REF.
ACCOUNT
CREDIT
POST DESCRIPTION REF.
DEBIT
J1 J2
POST DESCRIPTION REF.
CREDIT
BALANCE DEBIT CREDIT
2 6 0 0 00 2 0 0 0 00
2 6 0 0 00 4 6 0 0 00
ACCOUNT NO. 511
DEBIT
CREDIT
4 0 0 00
BALANCE DEBIT CREDIT 4 0 0 00
Rent Expense
DATE DESCRIPTION 2016 June 2
BALANCE DEBIT CREDIT
ACCOUNT NO. 401
Office Cleaning Expense
DATE 2016 June 10
ACCOUNT
DEBIT
Fees Income
DATE 2016 June 12 26
ACCOUNT
ACCOUNT NO. 302
ACCOUNT NO. 514 POST REF.
DEBIT
J1
1 2 5 0 00
CREDIT
BALANCE DEBIT CREDIT 1 2 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-27
PROBLEM 4.2B (continued) GENERAL LEDGER ACCOUNT
DATE 2016 June 30
ACCOUNT
Salaries Expense
ACCOUNT NO. 517
POST DESCRIPTION REF. J3
DATE 2016 June 30
CREDIT
5 6 0 0 00
BALANCE DEBIT CREDIT 5 6 0 0 00
Telephone Expense
POST DATE DESCRIPTION REF. 2016 June 27 J3
ACCOUNT
DEBIT
ACCOUNT NO. 520
DEBIT
CREDIT
BALANCE DEBIT CREDIT
5 8 0 00
5 8 0 00
Utilities Expense
ACCOUNT NO. 523
POST DESCRIPTION REF. J3
DEBIT
CREDIT
BALANCE DEBIT CREDIT
5 7 5 00
5 7 5 00
Analyze: The Cash account balance after the June 27 transaction was $11,782.
PROBLEM 4.3B January 1: The debit should be to Accounts Receivable, not Accounts Payable. January 2: The debit and credit amounts are reversed. Telephone Expense should be debited and Cash should be credited. January 3: The two debit amounts and the credit amount in the entry are not equal because of a mathematical error. The credit for Cash should be $580. Analyze: The assets decreased by $80. (Accounts Receivable + $100; Cash - $150 [$75 x 2]; Cash - $30)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-28
PROBLEM 4.4B GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
DATE 2016 Dec. 3 Cash
DESCRIPTION
James Boynton, Capital Beginning investment of owner
PAGE 1 POST. REF. 101 301
4 Computers Cash Paid cash for computer
131 101
5 Furnitures and Fixtures Accounts Payable Purchased office furniture on credit
151 202
6 Office Equipment Cash Paid cash for equipment
141 101
10 Accounts Receivable Fees Income Rendered services on account
111 401
11 Office Supplies Cash Paid cash for supplies
121 101
15 Accounts Payable Cash Paid invoice for furniture purchased on December 5
202 101
DEBIT
CREDIT
1 20 0 0 0 00 2 20 0 0 0 00 3 4 5 2 4 0 0 00 6 2 4 0 0 00 7 8 9 6 5 0 0 00 10 6 5 0 0 00 11 12 13 2 1 5 0 00 14 2 1 5 0 00 15 16 17 2 6 0 0 00 18 2 6 0 0 00 19 20 21 9 5 0 00 22 9 5 0 00 23 24 25 6 5 0 0 00 26 6 5 0 0 00 27 28 29
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-29
PROBLEM 4.4B (continued) GENERAL LEDGER ACCOUNT
Cash
DATE DESCRIPTION 2016 Dec. 3 4 6 11 15
ACCOUNT
J1 J1 J1 J1 J1
DEBIT
CREDIT
20 0 0 0 00 2 4 0 0 00 2 1 5 0 00 9 5 0 00 6 5 0 0 00
POST REF.
DEBIT
J1
2 6 0 0 00
CREDIT
20 0 0 0 00 17 6 0 0 00 15 4 5 0 00 14 5 0 0 00 8 0 0 0 00
BALANCE DEBIT CREDIT 2 6 0 0 00
ACCOUNT NO. 121 POST REF. J1
DEBIT
CREDIT
9 5 0 00
BALANCE DEBIT CREDIT 9 5 0 00
Computers
DATE DESCRIPTION 2016 Dec. 4
BALANCE DEBIT CREDIT
ACCOUNT NO. 111
Office Supplies
DATE DESCRIPTION 2016 Dec. 11
ACCOUNT
POST REF.
Accounts Receivable
DATE DESCRIPTION 2016 Dec. 10
ACCOUNT
ACCOUNT NO. 101
ACCOUNT NO. 131 POST REF.
DEBIT
J1
2 4 0 0 00
CREDIT
BALANCE DEBIT CREDIT 2 4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-30
PROBLEM 4.4B (continued) GENERAL LEDGER ACCOUNT
Office Equipment
DATE DESCRIPTION 2016 Dec. 6
ACCOUNT
DEBIT
J1
2 1 5 0 00
CREDIT
ACCOUNT NO. 151
POST REF.
DEBIT
J1
6 5 0 0 00
CREDIT
BALANCE DEBIT CREDIT 6 5 0 0 00
ACCOUNT NO. 202 POST REF.
DEBIT
J1 J1
6 5 0 0 00
CREDIT 6 5 0 0 00
James Boynton, Capital
DATE DESCRIPTION 2016 Dec. 3
BALANCE DEBIT CREDIT 2 1 5 0 00
Accounts Payable
DATE DESCRIPTION 2016 Dec. 5 15
ACCOUNT
POST REF.
Furniture and Fixtures
DATE DESCRIPTION 2016 Dec. 5
ACCOUNT
ACCOUNT NO. 141
POST REF. J1
BALANCE DEBIT CREDIT 6 5 0 0 00 − 0 −
ACCOUNT NO. 301
DEBIT
CREDIT 20 0 0 0 00
BALANCE DEBIT CREDIT 20 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-31
PROBLEM 4.4B (continued) GENERAL LEDGER ACCOUNT
Fees Income
DATE 2016 Dec. 10
DESCRIPTION
ACCOUNT NO. 401 POST REF. J1
DEBIT
CREDIT 2 6 0 0 00
BALANCE DEBIT CREDIT 2 6 0 0 00
Analyze: Two postings were recorded, one debit and one credit.
CRITICAL THINKING PROBLEM 4.1 Income Statement Errors: 1. The third line of the heading is incorrect; this line must indicate the time period covered by the income statement. 2. Drawing is not an expense but a reduction of owner’s equity and is included in the calculation of ending owner’s equity, not on the income statement. 3. Arithmetic errors were made in adding column of expenses and in subtracting total expenses from revenue. Balance Sheet Errors: 1. The third line of the heading is incorrect; the balance sheet is identified by the last day of the accounting period. 2. Accounts Payable and Accounts Receivable are classified incorrectly; they should be interchanged. Accounts Payable is a liability and Accounts Receivable is an asset. 3. 4.
The assets are not listed in the correct order. The amount for Owner’s Equity on the balance sheet should be the ending owner’s equity, not the beginning owner’s equity. A statement of owner’s equity should be prepared to compute ending owner’s equity.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-32
CRITICAL THINKING PROBLEM 4.1 (continued) Sarah's Beauty Supply Income Statement Month Ended April 30, 2016 Revenue Fees Income Expenses Salaries Expense Rent Expense Repair Expense Utilities Expense Total Expenses Net Income
36 6 0 0 00 9 0 0 0 00 1 8 0 0 00 3 0 0 00 1 7 0 0 00 12 8 0 0 00 23 8 0 0 00
Sarah's Beauty Supply Statement of Owner's Equity Month Ended April 30, 2016 Sarah Davis, Capital, April 1, 2016 Net Income for April Less Withdrawals for April Increase in Capital Sarah Davis, Capital, April 30, 2016
49 2 0 0 00 23 8 0 0 00 4 0 0 0 00 19 8 0 0 00 69 0 0 0 00
Sarah's Beauty Supply Balance Sheet April 30, 2016 Assets Cash Accounts Receivable Land Building Total Assets
15 0 0 0 00 7 0 0 0 00 12 0 0 0 00 40 0 0 0 00 74 0 0 0 00
Liabilities Accounts Payable
5 0 0 0 00
Owner's Equity Sarah Davis, Capital Total Liabilities & Owner's Equity
69 0 0 0 00 74 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-33
CRITICAL THINKING PROBLEM 4.2 GENERAL JOURNAL DATE DESCRIPTION 1 2016 2 June 1 Cash 3 Ashley Jackson, Capital 4 Beginning investment of owner 5 6 2 Rent Expense 7 Cash 8 Paid rent for June, Check 201 9 10 3 Office Furniture 11 Cash 12 Accounts Payable 13 Purchased furniture from Lowe's 14 Office Supply, Invoice 5103; issued 15 Check 202, balance due in 30 days 16 17 4 Supplies 18 Cash 19 Purchased supplies, Check 203 20 21 6 Cash 22 Fees Income 23 Performed services for cash 24 25 7 Advertising Expense 26 Cash 27 Paid for advertising, Check 204 28 29 8 Recording Equipment 30 Cash 31 Accounts Payable 32 Purchased equipment from Special 33 Moves, Inc., Invoice 2122; 34 issued Check 205, balance due in 30 days 35 36 10 Accounts Receivable 37 Fees Income 38 Performed services on account
PAGE 1 POST. REF. 101 301
514 101
141 101 202
121 101
101 401
511 101
151 101 202
111 401
DEBIT
CREDIT
1 2 30 0 0 0 00 3 4 5 1 8 0 0 00 6 1 8 0 0 00 7 8 9 12 0 0 0 00 10 2 0 0 0 00 11 10 0 0 0 00 12 13 14 15 16 1 5 0 0 00 17 1 5 0 0 00 18 19 20 6 0 0 0 00 21 6 0 0 0 00 22 23 24 2 0 0 0 00 25 2 0 0 0 00 26 27 28 15 0 0 0 00 29 5 0 0 0 00 30 10 0 0 0 00 31 32 33 34 35 4 5 0 0 00 36 4 5 0 0 00 37 38 30 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-34
CRITICAL THINKING PROBLEM 4.2 (continued) GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
DATE DESCRIPTION 2016 June 11 Accounts Payable Cash Paid Lowe's Office Supply on account for Invoice 5103, Check 206
PAGE 2 POST. REF.
DEBIT
202 101
3 0 0 0 00
101 401
9 0 0 0 00
15 Salaries Expense Cash Paid semimonthly salary, Check 207
517 101
5 0 0 0 00
18 Cash
101 111
4 0 0 0 00
20 Accounts Payable Cash Paid Special Moves, Inc., on account, Invoice 2122, Check 208
202 101
6 0 0 0 00
25 Telephone Expense Cash Paid telephone bill, Check 209
520 101
3 5 0 00
27 Utilities Expense Cash Paid utility bill, Check 210
523 101
8 0 0 00
28 Ashley Jackson, Drawing Cash Owner withdrew cash for personal use, Check 211
302 101
4 0 0 0 00
30 Salaries Expense Cash Paid semimonthly salary, Check 212
517 101
5 0 0 0 00
12 Cash Fees Income Performed services for cash
Accounts Receivable Received payment on account
CREDIT 1 2 3 0 0 0 00 3 4 5 6 7 9 0 0 0 00 8 9 10 11 5 0 0 0 00 12 13 14 15 4 0 0 0 00 16 17 18 19 6 0 0 0 00 20 21 22 23 24 3 5 0 00 25 26 27 28 8 0 0 00 29 30 31 32 4 0 0 0 00 33 34 35 36 37 5 0 0 0 00 38 39
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-35
CRITICAL THINKING PROBLEM 4.2 (continued) GENERAL LEDGER ACCOUNT
DATE 2016 June 1 2 3 4 6 7 8 11 12 15 18 20 25 27 28 30
ACCOUNT
DATE 2016 June 10 18
ACCOUNT
DATE 2016 June 4
Cash
ACCOUNT NO. 101
POST DESCRIPTION REF. J1 J1 J1 J1 J1 J1 J1 J2 J2 J2 J2 J2 J2 J2 J2 J2
DEBIT 30 0 0 0 00
6 0 0 0 00
9 0 0 0 00 4 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT
30 0 0 0 00 1 8 0 0 00 28 2 0 0 00 2 0 0 0 00 26 2 0 0 00 1 5 0 0 00 24 7 0 0 00 30 7 0 0 00 2 0 0 0 00 28 7 0 0 00 5 0 0 0 00 23 7 0 0 00 3 0 0 0 00 20 7 0 0 00 29 7 0 0 00 5 0 0 0 00 24 7 0 0 00 28 7 0 0 00 6 0 0 0 00 22 7 0 0 00 3 5 0 00 22 3 5 0 00 8 0 0 00 21 5 5 0 00 4 0 0 0 00 17 5 5 0 00 5 0 0 0 00 12 5 5 0 00
Accounts Receivable
ACCOUNT NO. 111
POST DESCRIPTION REF. J2 J2
DEBIT
CREDIT
BALANCE DEBIT CREDIT
4 0 0 0 00
4 5 0 0 00 5 0 0 00
4 5 0 0 00
Supplies
ACCOUNT NO. 121
POST DESCRIPTION REF. J1
DEBIT 1 5 0 0 00
CREDIT
BALANCE DEBIT CREDIT 1 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-36
CRITICAL THINKING PROBLEM 4.2 (continued) GENERAL LEDGER ACCOUNT
Office Furniture
DATE DESCRIPTION 2016 June 3
ACCOUNT
DEBIT
J1
12 0 0 0 00
CREDIT
ACCOUNT NO. 151
POST REF.
DEBIT
J1
15 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 15 0 0 0 00
ACCOUNT NO. 202 POST REF. J1 J1 J2 J2
DEBIT
CREDIT 10 0 0 0 00 10 0 0 0 00
3 0 0 0 00 6 0 0 0 00
Ashley Jackson, Capital
DATE DESCRIPTION 2016 June 1
BALANCE DEBIT CREDIT 12 0 0 0 00
Accounts Payable
DATE DESCRIPTION 2016 June 3 8 11 20
ACCOUNT
POST REF.
Recording Equipment
DATE DESCRIPTION 2016 June 8
ACCOUNT
ACCOUNT NO. 141
POST REF. J1
BALANCE DEBIT CREDIT 10 0 0 0 00 20 0 0 0 00 17 0 0 0 00 11 0 0 0 00
ACCOUNT NO. 301
DEBIT
CREDIT 30 0 0 0 00
BALANCE DEBIT CREDIT 30 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-37
CRITICAL THINKING PROBLEM 4.2 (continued) GENERAL LEDGER ACCOUNT 4
Ashley Jackson, Drawing
DATE DESCRIPTION 2016 June 28
ACCOUNT
DEBIT
J2
4 0 0 0 00
CREDIT
ACCOUNT NO. 401 POST REF.
DEBIT
J1 J2 J2
CREDIT
BALANCE DEBIT CREDIT
6 0 0 0 00 4 5 0 0 00 9 0 0 0 00
6 0 0 0 00 10 5 0 0 00 19 5 0 0 00
ACCOUNT NO. 511
POST REF.
DEBIT
J1
2 0 0 0 00
CREDIT
BALANCE DEBIT CREDIT 2 0 0 0 00
Rent Expense
DATE DESCRIPTION 2016 June 2
BALANCE DEBIT CREDIT 4 0 0 0 00
Advertising Expense
DATE DESCRIPTION 2016 June 7
ACCOUNT
POST REF.
Fees Income
DATE DESCRIPTION 2016 June 6 10 12
ACCOUNT
ACCOUNT NO. 302
ACCOUNT NO. 514 POST REF.
DEBIT
J1
1 8 0 0 00
CREDIT
BALANCE DEBIT CREDIT 1 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-38
CRITICAL THINKING PROBLEM 4.2 (continued) GENERAL LEDGER ACCOUNT
Salaries Expense
DATE DESCRIPTION 2016 June 15 30
ACCOUNT
POST REF.
DEBIT
J2 J2
5 0 0 0 00 5 0 0 0 00
CREDIT
ACCOUNT NO. 520 POST REF. J2
DEBIT
CREDIT
3 5 0 00
BALANCE DEBIT CREDIT 3 5 0 00
Utilities Expense
DATE DESCRIPTION 2016 June 27
BALANCE DEBIT CREDIT 5 0 0 0 00 10 0 0 0 00
Telephone Expense
DATE DESCRIPTION 2016 June 25
ACCOUNT
ACCOUNT NO. 517
ACCOUNT NO. 523 POST REF. J2
DEBIT 8 0 0 00
CREDIT
BALANCE DEBIT CREDIT 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-39
CRITICAL THINKING PROBLEM 4.2 (continued) Leadership Talent Agency Trial Balance June 30, 2016 ACCOUNT NAME Cash Accounts Receivable Supplies Office Furniture Recording Equipment Accounts Payable Ashley Jackson, Capital Ashley Jackson, Drawing Fees Income Advertising Expense Rent Expense Salaries Expense Telephone Expense Utilities Expense Totals
12 DEBIT 5 5 0 00 5 0 0 00 1 5 0 0 00 12 0 0 0 00 15 0 0 0 00
CREDIT
11 0 0 0 00 30 0 0 0 00 4 0 0 0 00 19 5 0 0 00 2 0 0 0 00 1 8 0 0 00 10 0 0 0 00 3 5 0 00 8 0 0 00 60 5 0 0 00
60 5 0 0 00
Leadership Talent Agency Income Statement Month Ended June 30, 2016 Revenue Fees Income Expenses Advertising Expense Rent Expense Salaries Expense Telephone Expense Utilities Expense Total Expenses Net Income
19 5 0 0 00 2 0 0 0 00 1 8 0 0 00 10 0 0 0 00 3 5 0 00 8 0 0 00 14 9 5 0 00 4 5 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-40
CRITICAL THINKING PROBLEM 4.2 (continued) Leadership Talent Agency Statement of Owner's Equity Month Ended June 30, 2016 Ashley Jackson, Capital, June 1, 2016 Net Income for June Less Withdrawals for June Increase in Owner's Equity Ashley Jackson, Capital, June 30, 2016
30 0 0 0 00 4 5 5 0 00 4 0 0 0 00 5 5 0 00 30 5 5 0 00
Leadership Talent Agency Balance Sheet June 30, 2016 Assets Cash Accounts Receivable Supplies Office Furniture Recording Equipment Total Assets
12 5 5 0 00 5 0 0 00 1 5 0 0 00 12 0 0 0 00 15 0 0 0 00 41 5 5 0 00
Liabilities Accounts Payable
Owner's Equity Ashley Jackson, Capital Total Liabilities & Owner's Equity
11 0 0 0 00
30 5 5 0 00 41 5 5 0 00
Analyze: There were 16 postings in the Cash account.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-41
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Inefficient flow of information; errors and insufficient information. 2. For prompt and accurate journalizing of all transactions. 3. To assure accuracy and safeguards against fraud. 4. Journal: detailed chronological record. Ledger: permanent, classified record of all financial events. Ethical Dilemma: You must check to see if the cash account is going down because of her actions. Is Mesia keeping the cash from the reversed sales because she has made so many errors? Is this something she does each month? It is unethical to accept a dinner for fixing her error. Financial Statement Analysis: 1. Debit the Property and Equipment account, credit Accounts Payable. 2. Invoice from the supplier. 3. Dates for equipment purchases, posting reference, purchase amount, and account balance. Analyze Online: Answers will vary depending on the year. Teamwork: Answers will vary. Journal Entry to General Ledger to Trial Balance to Financial Statement. Internet Connection: Sites that might be displayed are: www.careerbank.com , www.careersinaccounting.com , www.account.com . Suggested experience would require 5 years or more, with an AA degree. Skills would include good communication skills, detailed and multi-task oriented.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-42
SOLUTIONS TO PRACTICE TEST Part A Matching 1. a 2. f 3. b 4. j 5. i 6. h 7. d 8. e 9. c 10. g Part B Completion 1. ledger 2. posting references 3. brief or concise 4. credit 5. debit 6. debit 7. year 8. chronological or date 9. assets or balance sheet accounts 10. posted
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 4-43
CHAPTER 5 ADJUSTMENTS AND THE WORKSHEET Chapter Opener: Thinking Critically If businesses are allowed to record revenues in one year and then postpone the recognition of their expenses until the next year, then their reported net income would be too high in the first year and too low in the second year when all of the expenses were recorded. Fast Facts • Willamette Valley Vineyards, Inc. (the “Company”) was formed in May 1988 to produce and sell premium, super premium and ultra premium varietal wines (i.e., wine which sells at retail prices of $7 to $14, $14 to $20 and over $20 per 750 ml bottle, respectively). • Willamette Valley Vineyards was originally established as a sole proprietorship by Oregon winegrower Jim Bernau in 1983. The Company is headquartered in Turner, Oregon, where the Company’s Turner Vineyard and Winery are located on 75 acres of Company-owned land adjacent to Interstate 5, approximately two miles south of Salem, Oregon. • The Company’s wines are made from grapes grown on the 592 acres of vineyard owned, leased or contracted by the Company, and from grapes purchased from other nearby vineyards. The grapes are crushed, fermented and made into wine at the Company’s Turner winery (the “Winery”) and the wines are sold principally under the Company’s Willamette Valley Vineyards label. Willamette Valley Vineyards is the owner of Tualatin Estate Vineyards and Winery located on approximately 120 acres near Forest Grove, Oregon, and leases an additional 114 acres of vineyard land at the Forest Grove location. •
Willamette Valley (NASDAQ: WVVI) produced revenues of $12.53 million in 2012 versus $12.24 million in the prior year, an increase of 2.4%.
Managerial Implications: Thinking Critically Assets are depreciated because they have a limited life and will be used up over time. Depreciation is the allocation of the cost of the asset over its useful life. Discussion Questions Note to instructor : These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. 2. 3. 4. 5. 6. 7.
Update supplies account at the end of a period to reflect amounts used. Expense items that are acquired and paid for in advance of their use. Supplies, prepaid rent, prepaid insurance, and prepaid advertising. Debit Insurance Expense; credit Prepaid Insurance. Debit Depreciation Expense—Machine, $400; Credit Accum. Depr. – Machine, $400. a. none b. none c. none d. decrease a. decrease b. none c. none d. decrease To create a permanent record of any changes in account balances that are shown on the worksheet.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-1
Discussion Questions (cont.) 8
Asset cost, accumulated depreciation, book value.
9 Cost of asset less accumulated depreciation. 10. Contra asset accounts have a credit balance. Asset accounts have a debit balance. 11. To keep a record of total depreciation taken; to reduce the book value of asset. 12. b, d, f, g, and i are depreciated. Only long-term tangible assets are subject to depreciation. 13. Charges off an equal amount of cost of asset during each accounting period in asset’s useful life. 14. Equipment, buildings, and automobiles. EXERCISE 5.1 1.
Rent Expense, $1,000 Dr. Prepaid Rent, $1,000 Cr. ($7,000 ÷ 7 months = $1,000 per month)
2.
Supplies Expense, $4,650 Dr. Supplies, $4,650 Cr. ($7,950 - $3,300 = $4,650)
3.
Depreciation Expense—Equipment, $600 Dr. Accumulated Depreciation—Equipment, $600 Cr. ($64,800 ÷ 108 months = $600)
EXERCISE 5.2 1.
Insurance Expense, $350 Dr. Prepaid Insurance, $350 Cr. ($12,600 ÷ 36 months = $350)
2.
Advertising Expense, $1,350 Dr. Prepaid Advertising, $1,350 Cr. ($32,400 ÷ 24 months = $1,350)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-2
EXERCISE 5.3 Meeks Company Worksheet (Partial) Month Ended January 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Equipment 6 Accumulated Depreciation—Equipment 7 Accounts Payable 8 Lorraine Meeks, Capital 9 Fees Income 10 Rent Expense 11 Salaries Expense 12 Supplies Expense 13 Insurance Expense 14 Depreciation Expense—Equipment 15 Totals
TRIAL BALANCE DEBIT CREDIT 63 0 0 0 00 22 5 0 0 00 9 0 0 0 00 8 2 0 0 00 91 5 0 0 00
ADJUSTMENTS DEBIT CREDIT
ADJUSTED TRIAL BALANCE DEBIT CREDIT 63 0 0 0 00 22 5 0 0 00 (a) 5 7 0 0 00 3 3 0 0 00 (b) 2 0 5 0 00 6 1 5 0 00 91 5 0 0 00 (c) 1 8 2 5 00 1 8 2 5 00 16 7 0 0 00 16 7 0 0 00 81 9 5 0 00 81 9 5 0 00 117 0 0 0 00 117 0 0 0 00 10 6 0 0 00 10 6 0 0 00 10 8 5 0 00 10 8 5 0 00 (a) 5 7 0 0 00 5 7 0 0 00 (b) 2 0 5 0 00 2 0 5 0 00 (c ) 1 8 2 5 00 1 8 2 5 00 215 6 5 0 00 215 6 5 0 00
9 5 7 5 00
9 5 7 5 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14
217 4 7 5 00 217 4 7 5 00 15
16
16
17 18 19 20 21 22
17 18 19 20 21 22
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-3
EXERCISE 5.4 Net Income Before Adjustments Less Adjustments: Rent Expense Depreciation Expense Supplies Expense Total Adjustments for Expenses Not Made
$90,000 $7,000 8,200 3,600
Corrected Net Income
18,800 $71,200
If the adjusting entries are not made, total expenses will be understated by $18,800. Net income will be overstated by $18,800. EXERCISE 5.5 PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 3 Dec. 31 Supplies Expense 4 Supplies 5 6 31 Insurance Expense 7 Prepaid Insurance 8 9 31 Depreciation Expense—Equipment 10 Accumulated Depreciation—Equipment
POST. REF.
DEBIT
523 121
11 0 0 0 00
521 131
8 2 0 0 00
517 142
5 8 0 0 00
3
CREDIT 1 2 3 11 0 0 0 00 4 5 6 8 2 0 0 00 7 8 9 5 8 0 0 00 10
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-4
EXERCISE 5.5 (continued) GENERAL LEDGER ACCOUNT Supplies
DATE DESCRIPTION 2016 Dec. 1 31 Adjusting
ACCOUNT NO. POST. REF. J1 J3
DEBIT
CREDIT
18 0 0 0 00 11 0 0 0 00
ACCOUNT Prepaid Insurance
DATE DESCRIPTION 2016 Dec. 1 31 Adjusting
J1 J3
DEBIT 49 2 0 0 00
CREDIT
POST. REF.
DEBIT
J3
CREDIT
DEBIT
J3
5 8 0 0 00
5 8 0 0 00
ACCOUNT NO.
CREDIT
142
BALANCE DEBIT CREDIT
5 8 0 0 00
POST. REF.
131
BALANCE DEBIT CREDIT
ACCOUNT NO.
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting
18 0 0 0 00 7 0 0 0 00
49 2 0 0 00 8 2 0 0 00 41 0 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
121
517
BALANCE DEBIT CREDIT 5 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-5
EXERCISE 5.5 (continued) GENERAL LEDGER ACCOUNT Insurance Expense
ACCOUNT NO.
POST. DESCRIPTION REF.
DATE 2016 Dec. 31 Adjusting
J3
DEBIT
CREDIT
8 2 0 0 00
DATE 2016 Dec. 31 Adjusting
BALANCE DEBIT CREDIT 8 2 0 0 00
ACCOUNT Supplies Expense
ACCOUNT NO.
POST. DESCRIPTION REF. J3
DEBIT 11 0 0 0 00
521
CREDIT
523
BALANCE DEBIT CREDIT 11 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-6
PROBLEM 5.1A Nixon Company Worksheet (Partial) Month Ended January 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Equipment 6 Accumulated Depn—Equipment 7 Accounts Payable 8 Robert Nixon, Capital 9 Robert Nixon, Drawing 10 Fees Income 11 Supplies Expense 12 Insurance Expense 13 Salaries Expense 14 Depreciation Expense—Equipment 15 Utilities Expense 16 Totals 17 Net Income 18 19
TRIAL BALANCE DEBIT CREDIT 105 0 0 0 00 21 8 0 0 00 39 4 0 0 00 66 0 0 0 00 109 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 35 2 0 0 00 (b) 5 5 0 0 00 (c ) 1 6 0 0 00
25 8 0 0 00 253 0 0 0 00 15 4 0 0 00 114 2 0 0 00 (a) 35 2 0 0 00 (b) 5 5 0 0 00 32 2 0 0 00 (c ) 1 6 0 0 00 4 2 0 0 00 393 0 0 0 00 393 0 0 0 00
42 3 0 0 00
42 3 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-7
PROBLEM 5.1A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 105 0 0 0 00 21 8 0 0 00 4 2 0 0 00 60 5 0 0 00 109 0 0 0 00 1 6 0 0 00 25 8 0 0 00 253 0 0 0 00 15 4 0 0 00 114 2 0 0 00 35 2 0 0 00 5 5 0 0 00 32 2 0 0 00 1 6 0 0 00 4 2 0 0 00 394 6 0 0 00 394 6 0 0 00
INCOME STATEMENT DEBIT CREDIT
114 2 0 0 00 35 2 0 0 00 5 5 0 0 00 32 2 0 0 00 1 6 0 0 00 4 2 0 0 00 78 7 0 0 00 114 2 0 0 00 35 5 0 0 00 114 2 0 0 00 114 2 0 0 00
BALANCE SHEET DEBIT CREDIT 105 0 0 0 00 21 8 0 0 00 4 2 0 0 00 60 5 0 0 00 109 0 0 0 00 1 6 0 0 00 25 8 0 0 00 253 0 0 0 00 15 4 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 315 9 0 0 00 280 4 0 0 00 16 35 5 0 0 00 17 315 9 0 0 00 315 9 0 0 00 18 19
Analyze: The adjustment to Prepaid Insurance decreased the account balance.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-8
PROBLEM 5.2A The College Bookstore Worksheet (Partial) Month Ended November 30, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Rent 5 Equipment 6 Accumulated Depreciation-Equip. 7 Accounts Payable 8 Randy Moss, Capital 9 Randy Moss, Drawing 10 Fees Income 11 Depreciation Expense—Equipment 12 Rent Expense 13 Salaries Expense 14 Supplies Expense 15 Utilities Expense 16 Totals 17
TRIAL BALANCE DEBIT CREDIT 46 1 5 0 00 7 6 2 4 00 15 0 0 0 00 49 0 0 0 00 55 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 5 8 0 0 00 (b) 7 0 0 0 00 (c) 1
9 0 0 00
18 0 0 0 00 83 6 7 4 00 8 0 0 0 00 97 1 0 0 00 (c) 1 9 0 0 00 (b) 7 0 0 0 00 17 0 0 0 00 (a) 5 1 0 0 0 00 198 7 7 4 00 198 7 7 4 00
8 0 0 00
14 7 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-9
14 7 0 0 00
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 5.2A (continued)
ADJUSTED TRIAL BALANCE DEBIT 46 1 5 0 00 7 6 2 4 00 9 2 0 0 00 42 0 0 0 00 55 0 0 0 00
CREDIT
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT
1 9 0 0 00 18 0 0 0 00 83 6 7 4 00 8 0 0 0 00 97 1 0 0 00 1 9 0 0 00 7 0 0 0 00 17 0 0 0 00 5 8 0 0 00 1 0 0 0 00 200 6 7 4 00 200 6 7 4 00
Analyze:
The balance of the Prepaid Rent account prior to the adjusting entry for expired rent is $49,000.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-10
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
PROBLEM 5.3A Vasquez Corporation Income Statement Month Ended December 31, 2016 Revenue Fees Income Expenses Salaries Expense Utilities Expense Supplies Expense Advertising Expense Depreciation Expense—Equipment Total Expenses Net Income
115 5 0 0 00 17 8 0 0 00 2 8 0 0 00 7 0 0 0 00 3 4 0 0 00 1 7 0 0 00 32 7 0 0 00 82 8 0 0 00
Vasquez Corporation Statement of Owner's Equity Month Ended December 31, 2016 Rosa Vasquez, Capital, December 1, 2016 Net income for December Less Withdrawals for December Increase in Capital Rosa Vasquez, Capital, December 31, 2016
109 0 0 0 00 82 8 0 0 00 8 2 0 0 00 74 6 0 0 00 183 6 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-11
PROBLEM 5.3A (continued) Vasquez Corporation Balance Sheet December 31, 2016 Assets Cash Accounts Receivable Supplies Prepaid Advertising Equipment Less Accumulated Depreciation—Equipment Total Assets
78 2 0 0 00 13 0 0 0 00 5 1 0 0 00 17 0 0 0 00 85 0 0 0 00 1 7 0 0 00
Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Rosa Vasquez, Capital Total Liabilities and Owner's Equity
83 3 0 0 00 196 6 0 0 00
13 0 0 0 00 183 6 0 0 00 196 6 0 0 00
Analyze: Net Income $79,400 ($82,800 - $3,400). Analyze: Incomewould wouldbebe $48,900 ($51,300 - $2,400).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-12
PROBLEM 5.4A Judge Creative Designs Worksheet Month Ended January 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Advertising 5 Prepaid Rent 6 Equipment 7 Accumulated Depreciation—Equip. 8 Accounts Payable 9 Paula Judge, Capital 10 Paula Judge, Drawing 11 Fees Income 12 Advertising Expense 13 Depreciation Expense—Equipment 14 Rent Expense 15 Salaries Expense 16 Supplies Expense 17 Utilities Expense 18 Totals 19 Net Income 20 21
TRIAL BALANCE DEBIT CREDIT 36 5 0 0 00 13 6 0 0 00 9 7 5 0 00 12 4 0 0 00 25 2 0 0 00 33 6 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 8 1 5 0 00 (b) 3 1 0 0 00 (c )2 1 0 0 00 (d)
2 8 0 00
16 5 5 0 00 61 0 0 0 00 8 0 0 0 00 74 1 0 0 00 (b) 3 1 0 0 00 (d) 2 8 0 00 (c )2 1 0 0 00 10 7 0 0 00 (a) 8 1 5 0 00 1 9 0 0 00 151 6 5 0 00 151 6 5 0 00
13 6 3 0 00
13 6 3 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-13
PROBLEM 5.4A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 36 5 0 0 00 13 6 0 0 00 1 6 0 0 00 9 3 0 0 00 23 1 0 0 00 33 6 0 0 00 2 8 0 00 16 5 5 0 00 61 0 0 0 00 8 0 0 0 00 74 1 0 0 00 3 1 0 0 00 2 8 0 00 2 1 0 0 00 10 7 0 0 00 8 1 5 0 00 1 9 0 0 00 151 9 3 0 00 151 9 3 0 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 36 5 0 0 00 13 6 0 0 00 1 6 0 0 00 9 3 0 0 00 23 1 0 0 00 33 6 0 0 00 2 8 0 00 16 5 5 0 00 61 0 0 0 00 8 0 0 0 00
74 1 0 0 00 3 1 0 0 00 2 8 0 00 2 1 0 0 00 10 7 0 0 00 8 1 5 0 00 1 9 0 0 00 26 2 3 0 00 47 8 7 0 00 74 1 0 0 00
74 1 0 0 00 74 1 0 0 00
125 7 0 0 00
77 8 3 0 00 47 8 7 0 00 125 7 0 0 00 125 7 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-14
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
PROBLEM 5.4A (continued) Judge Creative Designs Income Statement Month Ended January 31, 2016 Revenue Fees Income Expenses Salaries Expense Utilities Expense Supplies Expense Advertising Expense Rent Expense Depreciation Expense—Equipment Total Expenses Net Income
74 1 0 0 00 10 7 0 0 00 1 9 0 0 00 8 1 5 0 00 3 1 0 0 00 2 1 0 0 00 2 8 0 00 26 2 3 0 00 47 8 7 0 00
Judge Creative Designs Statement of Owner's Equity Month Ended January 31, 2016 Paula Judge, Capital, January 1, 2016 Net income for January Less Withdrawals for January Increase in Capital Paula Judge, Capital, January 31, 2016
61 0 0 0 00 47 8 7 0 00 8 0 0 0 00 39 8 7 0 00 100 8 7 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-15
PROBLEM 5.4A (continued) Judge Creative Designs Balance Sheet January 31, 2016 Assets Cash Accounts Receivable Supplies Prepaid Advertising Prepaid Rent Equipment Less Accumulated Depreciation—Equipment Total Assets
36 5 0 0 00 13 6 0 0 00 1 6 0 0 00 9 3 0 0 00 23 1 0 0 00 33 6 0 0 00 2 8 0 00
Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Paula Judge, Capital Total Liabilities and Owner's Equity
16 5 5 0 00 100 8 7 0 00 117 4 2 0 00
PAGE
GENERAL JOURNAL
DATE 1 2 3 4 5 6 7 8 9 10 11 12 13 14
2016 Jan.
DESCRIPTION Adjusting Entries
33 3 2 0 00 117 4 2 0 00
POST. P REF. O
DEBIT
31 Supplies Expense Supplies
517 121
8 1 5 0 00
31 Advertising Expense Prepaid Advertising
519 130
3 1 0 0 00
31 Rent Expense Prepaid Rent
520 131
2 1 0 0 00
31 Depreciation Expense—Equipment Accumulated Depreciation—Equipment
523 142
2 8 0 00
3
CREDIT
8 1 5 0 00
3 1 0 0 00
2 1 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-16
2 8 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14
PROBLEM 5.4A (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Jan. 1 31 Adjusting
ACCOUNT
J1 J3
DEBIT
BALANCE DEBIT CREDIT
8 1 5 0 00
9 7 5 0 00 1 6 0 0 00
9 7 5 0 00
ACCOUNT NO. POST. REF. J1 J3
DEBIT 12 4 0 0 00
CREDIT
J1 J3
DEBIT 25 2 0 0 00
12 4 0 0 00 3 1 0 0 00 9 3 0 0 00
CREDIT
DATE DESCRIPTION 2016 Jan. 31 Adjusting
J3
DEBIT
131
BALANCE DEBIT CREDIT
25 2 0 0 00 2 1 0 0 00 23 1 0 0 00
Accumulated Depreciation—Equipment POST. REF.
130
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
121
CREDIT
Prepaid Rent
DATE DESCRIPTION 2016 Jan. 1 31 Adjusting
ACCOUNT
POST. REF.
Prepaid Advertising
DATE DESCRIPTION 2016 Jan. 1 31 Adjusting
ACCOUNT
ACCOUNT NO.
Supplies
ACCOUNT NO.
CREDIT 2 8 0 00
142
BALANCE DEBIT CREDIT 2 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-17
PROBLEM 5.4A (continued) GENERAL LEDGER ACCOUNT Supplies Expense
DATE DESCRIPTION 2016 Jan. 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
8 1 5 0 00
CREDIT
ACCOUNT NO. POST. REF.
DEBIT
J3
3 1 0 0 00
CREDIT
DEBIT
J3
2 1 0 0 00
CREDIT
Analyze:
POST. REF. J3
DEBIT 2 8 0 00
520
BALANCE DEBIT CREDIT 2 1 0 0 00
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Jan. 31 Adjusting
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
519
3 1 0 0 00
ACCOUNT Rent Expense
DATE DESCRIPTION 2016 Jan. 31 Adjusting
BALANCE DEBIT CREDIT 8 1 5 0 00
ACCOUNT Advertising Expense
DATE DESCRIPTION 2016 Jan. 31 Adjusting
517
ACCOUNT NO.
CREDIT
523
BALANCE DEBIT CREDIT 2 8 0 00
If adjusting entries had not been made, net income would be overstated.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-18
PROBLEM 5.1B Sanchez Company Worksheet Month Ended February 29, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Rent 5 Equipment 6 Accumulated Depreciation—Equip. 7 Accounts Payable 8 Maria Sanchez, Capital 9 Maria Sanchez, Drawing 10 Fees Income 11 Salaries Expense 12 Utilities Expense 13 Supplies Expense 14 Rent Expense 15 Depreciation Expense-Equipment 16 Totals 17 Net Income 18 19 20 21
TRIAL BALANCE DEBIT CREDIT 73 0 0 0 00 6 4 0 0 00 4 2 0 0 00 24 0 0 0 00 46 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 2 0 0 0 00 (b) 2 0 0 0 00 (c) 1 0 0 0 00
12 0 0 0 00 98 5 0 0 00 3 0 0 0 00 54 0 0 0 00 6 3 0 0 00 1 6 0 0 00 (a) 2 0 0 0 00 (b) 2 0 0 0 00 (c) 1 0 0 0 00 164 5 0 0 00 164 5 0 0 00 5 0 0 0 00
5 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-19
PROBLEM 5.1B (continued)
ADJUSTED TRIAL DEBIT CREDIT 73 0 0 0 00 6 4 0 0 00 2 2 0 0 00 22 0 0 0 00 46 0 0 0 00 1 0 0 0 00 12 0 0 0 00 98 5 0 0 00 3 0 0 0 00 54 0 0 0 00 6 3 0 0 00 1 6 0 0 00 2 0 0 0 00 2 0 0 0 00 1 0 0 0 00 165 5 0 0 00 165 5 0 0 00
INCOME STATEMENT DEBIT CREDIT
54 0 0 0 00 6 3 0 0 00 1 6 0 0 00 2 0 0 0 00 2 0 0 0 00 1 0 0 0 00 12 9 0 0 00 41 1 0 0 00 54 0 0 0 00
54 0 0 0 00 54 0 0 0 00
BALANCE SHEET DEBIT CREDIT 73 0 0 0 00 6 4 0 0 00 2 2 0 0 00 22 0 0 0 00 46 0 0 0 00 1 0 0 0 00 12 0 0 0 00 98 5 0 0 00 3 0 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 152 6 0 0 00 111 5 0 0 00 16 41 1 0 0 00 17 152 6 0 0 00 152 6 0 0 00 18 19 20 21
Analyze: No depreciation has been recorded for the fiscal period, or any previous fiscal period.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-20
PROBLEM 5.2B Lisa Morgan, Attorney-at-Law Worksheet (Partial) Month Ended November 30, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Rent 5 Equipment 6 Accumulated Depreciation—Equip. 7 Accounts Payable 8 Lisa Morgan, Capital 9 Lisa Morgan, Drawing 10 Fees Income 11 Salaries Expense 12 Utilities Expense 13 Supplies Expense 14 Rent Expense 15 Depreciation Expense—Equipment 16 Totals 17 18 19
TRIAL BALANCE DEBIT CREDIT 140 2 0 0 00 34 0 0 0 00 41 6 0 0 00 176 8 0 0 00 264 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 14 4 0 0 00 (b) 13 6 0 0 00 (c ) 2 2 0 0 00
68 0 0 0 00 320 0 0 0 00 24 0 0 0 00 342 8 0 0 00 43 2 0 0 00 7 0 0 0 00 (a) 14 4 0 0 00 (b) 13 6 0 0 00 (c ) 2 2 0 0 00 730 8 0 0 00 730 8 0 0 00 30 2 0 0 00
30 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-21
PROBLEM 5.2B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 140 2 0 0 00 34 0 0 0 00 27 2 0 0 00 163 2 0 0 00 264 0 0 0 00 2 2 0 0 00 68 0 0 0 00 320 0 0 0 00 24 0 0 0 00 342 8 0 0 00 43 2 0 0 00 7 0 0 0 00 14 4 0 0 00 13 6 0 0 00 2 2 0 0 00 733 0 0 0 00 733 0 0 0 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT
Analyze: Accumulated Depreciation—Equipment
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-22
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
PROBLEM 5.3B CJ's Accounting Services Income Statement Month Ended December 31, 2016 Revenue Fees Income Expenses Salaries Expense Supplies Expense Utilities Expense Rent Expense Advertising Expense Depreciation Expense—Fixtures Total Expenses Net Income
31 3 3 0 00 18 6 0 0 00 6 0 0 00 1 0 8 0 00 3 5 0 0 00 8 0 0 00 3 0 0 00 24 8 8 0 00 6 4 5 0 00
CJ’s Accounting Services Statement of Owner's Equity Month Ended December 31, 2016 Charlene Jordan, Capital, December 1, 2016 Net income for December 2016 Less Withdrawals for Year Increase in Capital Charlene Jordan, Capital, December 31, 2016
30 0 0 0 00 6 4 5 0 00 3 0 0 0 00 3 4 5 0 00 33 4 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-23
PROBLEM 5.3B (continued) CJ's Accounting Services Balance Sheet December 31, 2016 Assets Cash Accounts Receivable Supplies Prepaid Advertising Fixtures Less Accumulated Depreciation Total Assets Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Charlene Jordan, Capital Total Liabilities and Owner's Equity
16 9 5 0 00 2 2 0 0 00 9 0 0 00 3 2 0 0 00 18 0 0 0 00 3 0 0 00
17 7 0 0 00 40 9 5 0 00
7 5 0 0 00 33 4 5 0 00 40 9 5 0 00
Analyze: Adjusting entries decreased the assets of the company by $1,700.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-24
PROBLEM 5.4B Nix Estate Planning and Investments Worksheet Month Ended June 30, 2016 TRIAL BALANCE DEBIT CREDIT 39 4 0 0 00 12 2 0 0 00 15 2 0 0 00 28 8 0 0 00 72 0 0 0 00 96 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies (a) 9 2 0 0 00 4 Prepaid Advertising (b) 7 2 0 0 00 5 Prepaid Rent (c )6 0 0 0 00 6 Equipment 7 Accumulated Depreciation—Equip. (d) 1 6 0 0 00 8 Accounts Payable 21 6 0 0 00 9 Sam Nix, Capital 120 2 0 0 00 10 Sam Nix, Drawing 8 0 0 0 00 11 Fees Income 147 6 0 0 00 12 Advertising Expense (b) 7 2 0 0 00 13 Depreciation Expense—Equipment (d) 1 6 0 0 00 14 Rent Expense (c ) 6 0 0 0 00 15 Salaries Expense 15 2 0 0 00 16 Supplies Expense (a) 9 2 0 0 00 17 Utilities Expense 2 6 0 0 00 18 Totals 289 4 0 0 00 289 4 0 0 00 24 0 0 0 00 24 0 0 0 00 19 Net Income 20 21 22
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-25
PROBLEM 5.4B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 39 4 0 0 00 12 2 0 0 00 6 0 0 0 00 21 6 0 0 00 66 0 0 0 00 96 0 0 0 00 1 6 0 0 00 21 6 0 0 00 120 2 0 0 00 8 0 0 0 00 147 6 0 0 00 7 2 0 0 00 1 6 0 0 00 6 0 0 0 00 15 2 0 0 00 9 2 0 0 00 2 6 0 0 00 291 0 0 0 00 291 0 0 0 00
INCOME STATEMENT DEBIT CREDIT
147 6 0 0 00 7 2 0 0 00 1 6 0 0 00 6 0 0 0 00 15 2 0 0 00 9 2 0 0 00 2 6 0 0 00 41 8 0 0 00 105 8 0 0 00 147 6 0 0 00
147 6 0 0 00 147 6 0 0 00
BALANCE SHEET DEBIT CREDIT 39 4 0 0 00 1 12 2 0 0 00 2 6 0 0 0 00 3 21 6 0 0 00 4 66 0 0 0 00 5 96 0 0 0 00 6 1 6 0 0 00 7 21 6 0 0 00 8 120 2 0 0 00 9 8 0 0 0 00 10 11 12 13 14 15 16 17 249 2 0 0 00 143 4 0 0 00 18 105 8 0 0 00 19 249 2 0 0 00 249 2 0 0 00 20 21 22
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-26
PROBLEM 5.4B (continued) Nix Estate Planning and Investments Income Statement Month Ended June 30, 2016 Revenue Fees Income Expenses Salaries Expense Utilities Expense Supplies Expense Advertising Expense Rent Expense Depreciation Expense—Equipment Total Expenses Net Income
147 6 0 0 00 15 2 9 7 6 1
2 0 6 0 2 0 2 0 0 0 6 0
0 00 0 00 0 00 0 00 0 00 0 00 41 8 0 0 00 105 8 0 0 00
Nix Estate Planning and Investments Statement of Owner's Equity Month Ended June 30, 2016 Sam Nix, Capital, June 1, 2016 Net income for June Less Withdrawals for June Increase in Capital Sam Nix, Capital, June 30, 2016
120 2 0 0 00 105 8
8 0 0 00 0 0 0 00 97 8 0 0 00 218 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-27
PROBLEM 5.4B (continued) Nix Estate Planning and Investments Balance Sheet June 30, 2016 Assets Cash Accounts Receivable Supplies Prepaid Advertising Prepaid Rent Equipment Less Accumulated Depreciation—Equipment Total Assets
39 4 0 0 00 12 2 0 0 00 6 0 0 0 00 21 6 0 0 00 66 0 0 0 00 96 0 0 0 00 1 6 0 0 00
Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Sam Nix, Capital Total Liabilities and Owner's Equity
21 6 0 0 00 218 0 0 0 00 239 6 0 0 00
PAGE
GENERAL JOURNAL
DATE 1 2 3 4 5 6 7 8 9 10 11 12 13 14
2016 June
DESCRIPTION Adjusting Entries
94 4 0 0 00 239 6 0 0 00
POST. P REF. O DEBIT
30 Supplies Expense Supplies
517 121
9 2 0 0 00
30 Advertising Expense Prepaid Advertising
519 130
7 2 0 0 00
30 Rent Expense Prepaid Rent
520 131
6 0 0 0 00
30 Depreciation Expense—Equipment Accumulated Depreciation—Equipment
523 142
1 6 0 0 00
3
CREDIT 1 2 3 9 2 0 0 00 4 5 6 7 2 0 0 00 7 8 9 6 0 0 0 00 10 11 12 1 6 0 0 00 13 14
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-28
PROBLEM 5.4B (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 June 1 30 Adjusting
ACCOUNT
J1 J3
DEBIT
CREDIT
15 2 0 0 00 9 2 0 0 00
POST. REF. J1 J3
DEBIT 28 8 0 0 00
CREDIT
J1 J3
DEBIT 72 0 0 0 00
POST. REF. J3
DEBIT
130
BALANCE DEBIT CREDIT
28 8 0 0 00 7 2 0 0 00 21 6 0 0 00
CREDIT
131
BALANCE DEBIT CREDIT
72 0 0 0 00 6 0 0 0 00 66 0 0 0 00
Accumulated Depreciation—Equipment
DATE DESCRIPTION 2016 June 30 Adjusting
15 2 0 0 00 6 0 0 0 00
ACCOUNT NO. POST. REF.
121
BALANCE DEBIT CREDIT
ACCOUNT NO.
Prepaid Rent
DATE DESCRIPTION 2016 June 1 30 Adjusting
ACCOUNT
POST. REF.
Prepaid Advertising
DATE DESCRIPTION 2016 June 1 30 Adjusting
ACCOUNT
ACCOUNT NO.
Supplies
ACCOUNT NO.
142
CREDIT
BALANCE DEBIT CREDIT
1 6 0 0 00
1 6 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-29
PROBLEM 5.4B (continued) GENERAL LEDGER ACCOUNT Supplies Expense
DATE DESCRIPTION 2016 June 30 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
9 2 0 0 00
CREDIT
ACCOUNT NO. POST. REF.
DEBIT
J3
7 2 0 0 00
CREDIT
DEBIT
J3
6 0 0 0 00
CREDIT
POST. REF.
DEBIT
J3
1 6 0 0 00
520
BALANCE DEBIT CREDIT 6 0 0 0 00
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 June 30 Adjusting
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
519
7 2 0 0 00
ACCOUNT Rent Expense
DATE DESCRIPTION 2016 June 30 Adjusting
BALANCE DEBIT CREDIT 9 2 0 0 00
ACCOUNT Advertising Expense
DATE DESCRIPTION 2016 June 30 Adjusting
517
ACCOUNT NO.
CREDIT
523
BALANCE DEBIT CREDIT 1 6 0 0 00
Analyze: Generally accepted accounting principles require that the original cost of the asset appear in the asset account until the asset has been used up or disposed. A contra asset account is used to record depreciation costs.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-30
CRITICAL THINKING PROBLEM 5.1 TO: James Parkland, Owner FROM: Student’s Name DATE: Current Date SUBJEC Effect on Financial Statements of Omitting Adjusting Entries Adjusting entries are recorded to update the accounts at the end of the accounting period for previously unrecorded items that belong to that period. If these entries are omitted, the net income will not be an accurate measure of the operation of the company for the year and certain accounts on the balance sheet will not report correct end-of-year balances. In particular, Parkland Industries' net income for the year will be overstated by $26,150; net income should be $56,600 instead of $82,750. This amount represents a 32% decrease in net income over the amount that would be reported if the adjusting entries were not made. ($26,150 ÷ $82,750 = 0.32). This decrease in net income results from not making adjusting entries for the following unrecorded expenses: 1. Expense of Rent for the year ($21,000 x 6/12 = $10,500 for 6 months) 2. Expense of supplies used during the year (Total supplies of $9,000 - Ending Inventory of $1,750 = $7,250 supplies used) 3. Depreciation expense for the year ($210,000 ÷ 25 years = $8,400 per year) Total increase in expenses
$10,500 7,250 8,400 $26,150
In addition to overstating the net income, the balances of Prepaid Rent and Supplies on the balance sheet would be overstated and the book value of Building would also be overstated. Preparation of the adjusting entries would permit the financial statements to present a more accurate measure of the company’s operations for the year and its financial condition at the end of the year. Therefore, it is important and the time is well spent to prepare adjusting entries so that the financial statements are up-to-date and present an accurate picture of the business.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-31
CRITICAL THINKING PROBLEM 5.2 Rogers International Company Worksheet Month Ended January 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Equipment 6 Accumulated Depreciation—Equip. 7 Accounts Payable 8 Maxine Rogers, Capital 9 Maxine Rogers, Drawing 10 Fees Income 11 Advertising Expense 12 Depreciation Expense—Equipment 13 Insurance Expense 14 Rent Expense 15 Salaries Expense 16 Supplies Expense 17 Telephone Expense 18 Utilities Expense 19 Totals 20 Net Income 21 22
TRIAL BALANCE DEBIT CREDIT 18 4 7 5 00 3 4 0 0 00 2 1 5 0 00 15 0 0 0 00 24 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 1 0 5 0 00 (b) 2 5 0 0 00 (c)
2 0 0 00
6 0 0 0 00 40 0 0 0 00 2 0 0 0 00 30 9 2 5 00 1 5 0 0 00 (c) 2 0 0 00 (b) 2 5 0 0 00 2 5 0 0 00 6 7 0 0 00 (a) 1 0 5 0 00 3 5 0 00 8 5 0 00 76 9 2 5 00 76 9 2 5 00
3 7 5 0 00
3 7 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-32
CRITICAL THINKING PROBLEM 5.2 (continued)
ADJUSTED TRIAL DEBIT CREDIT 18 4 7 5 00 3 4 0 0 00 1 1 0 0 00 12 5 0 0 00 24 0 0 0 00 2 0 0 00 6 0 0 0 00 40 0 0 0 00 2 0 0 0 00 30 9 2 5 00 1 5 0 0 00 2 0 0 00 2 5 0 0 00 2 5 0 0 00 6 7 0 0 00 1 0 5 0 00 3 5 0 00 8 5 0 00 77 1 2 5 00 77 1 2 5 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 18 4 7 5 00 3 4 0 0 00 1 1 0 0 00 12 5 0 0 00 24 0 0 0 00 2 0 0 00 6 0 0 0 00 40 0 0 0 00 2 0 0 0 00
30 9 2 5 00 1 5 0 0 00 2 0 0 00 2 5 0 0 00 2 5 0 0 00 6 7 0 0 00 1 0 5 0 00 3 5 0 00 8 5 0 00 15 6 5 0 00 15 2 7 5 00 30 9 2 5 00
30 9 2 5 00
61 4 7 5 00
30 9 2 5 00
61 4 7 5 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 46 2 0 0 00 19 15 2 7 5 00 20 61 4 7 5 00 21 22
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-33
CRITICAL THINKING PROBLEM 5.2 (continued) Rogers International Company Income Statement Month Ended January 31, 2016 Revenue Fees Income Expenses Advertising Expense Depreciation Expense—Equipment Insurance Expense Rent Expense Salaries Expense Supplies Expense Telephone Expense Utilities Expense Total Expenses Net Income
30 9 2 5 00 1 5 0 0 00 2 0 0 00 2 5 0 0 00 2 5 0 0 00 6 7 0 0 00 1 0 5 0 00 3 5 0 00 8 5 0 00 15 6 5 0 00 15 2 7 5 00
Rogers International Company Statement of Owner’s Equity Month Ended January 31, 2016 Maxine Rogers, Capital, January 1, 2016 Net income for January Less Withdrawals for January Increase in Capital Maxine Rogers, Capital, January 31, 2016
40 0 0 0 00 15 2 7 5 00 2 0 0 0 00 13 2 7 5 00 53 2 7 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-34
CRITICAL THINKING PROBLEM 5.2 (continued) Rogers International Company Balance Sheet January 31, 2016 Assets Cash Accounts Receivable Supplies Prepaid Insurance Equipment Less Accumulated Depreciation—Equipment Total Assets
18 4 7 5 00 3 4 0 0 00 1 1 0 0 00 12 5 0 0 00 24 0 0 0 00 2 0 0 00
Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Maxine Rogers, Capital Total Liabilities and Owner's Equity
6 0 0 0 00 53 2 7 5 00 59 2 7 5 00
PAGE
GENERAL JOURNAL
DATE 1 2 3 4 5 6 7 8 9 10 11
2016 Jan.
DESCRIPTION Adjusting Entries
23 8 0 0 00 59 2 7 5 00
POST. P REF. O DEBIT
31 Supplies Expense Supplies
520 121
1 0 5 0 00
31 Insurance Expense Prepaid Insurance
517 131
2 5 0 0 00
30 Depreciation Expense—Equipment Accumulated Depreciation—Equipment
514 142
2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-35
3
CREDIT 1 2 3 1 0 5 0 00 4 5 6 2 5 0 0 00 7 8 9 2 0 0 00 10 11
CRITICAL THINKING PROBLEM 5.2 (continued) GENERAL LEDGER ACCOUNT Supplies
DATE DESCRIPTION 2016 Jan. 1 Balance 31 Adjusting
ACCOUNT NO. POST. REF. ✔ J3
DEBIT
CREDIT
BALANCE DEBIT CREDIT
1 0 5 0 00
2 1 5 0 00 1 1 0 0 00
2 1 5 0 00
ACCOUNT Prepaid Insurance
DATE DESCRIPTION 2016 Jan. 1 Balance 31 Adjusting
ACCOUNT NO. POST. REF. ✔ J3
DEBIT 15 0 0 0 00
CREDIT
POST. REF.
DEBIT
J3
DATE DESCRIPTION 2016 Jan. 31 Adjusting
J3
DEBIT 2 0 0 00
BALANCE DEBIT CREDIT
ACCOUNT NO.
142
CREDIT
BALANCE DEBIT CREDIT
2 0 0 00
2 0 0 00
ACCOUNT Depreciation Expense—Equipment POST. REF.
131
15 0 0 0 00 2 5 0 0 00 12 5 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE DESCRIPTION 2016 Jan. 31 Adjusting
121
ACCOUNT NO.
CREDIT
514
BALANCE DEBIT CREDIT 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-36
CRITICAL THINKING PROBLEM 5.2 (continued) GENERAL LEDGER ACCOUNT Insurance Expense
DATE DESCRIPTION 2016 Jan. 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
2 5 0 0 00
CREDIT
Analyze:
BALANCE DEBIT CREDIT 2 5 0 0 00
ACCOUNT Supplies Expense
DATE DESCRIPTION 2016 Jan. 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
1 0 5 0 00
517
CREDIT
520
BALANCE DEBIT CREDIT 1 0 5 0 00
If the useful life of the equipment had been 12 years instead of 10 years, depreciation would have been $166.67 rather than $200. Net Income would have been $33.33 greater.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-37
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Accounting records generally reflect an asset’s historical or original cost, less accumulated depreciation (not market value). 2. Depreciation Expense will offset income. Accumulated Depreciation will decrease the book value of the asset. 3. Are necessary to present an accurate financial position of the firm. 4. Provides end-of-period adjusting entries and contains income statement and balance sheet accounts.
Ethical Dilemma: If the company wanted to donate to a nonprofit organization they would write a check and get a tax deduction. It is unethical to record higher costs than are actually incurred. Financial Statement Analysis: 1. 4.1% ($1,319 ÷ $31,826) 2. 60% ($19,085 ÷ $31,826) 3. 9.7 years ($12,741 ÷ $1,319) Analyze Online: Answers will vary depending on the year. Teamwork: Mr. Foster has expenses that will appear on the income statement. He needs to match these expenses with revenue. He can record the revenue as a receivable for the amount that he has completed (40% 25% = 15%). In this case, he can record $30,000 or 15% of the price of the job.
Internet Connection: Professional liability, surety bonds, umbrella policies, errors and omissions, product liability, fire, auto, dental, workers’ compensation, sexual harassment.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-38
SOLUTIONS TO PRACTICE TEST Part A True-False 1. FALSE 2. FALSE 3. TRUE 4. TRUE 5. TRUE 6. TRUE 7. TRUE 8. TRUE 9. FALSE 10. TRUE Part B Matching 1. d 2. b 3. c 4. f 5. e 6. a
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instrutor use. Not authorized for sale or distribution in any manner. 5-39
CHAPTER 6 CLOSING ENTRIES AND THE POSTCLOSING TRIAL BALANCE Chapter Opener: Thinking Critically Students should recognize that financial statements can be used to evaluate net profit or loss, return on investments, expense trends, or growth in company net assets. The income statement is used to measure net income or loss, while the balance sheet can be used to measure growth in assets or liabilities. Executives and managers would use financial statements to make decisions about expanding business, investing in new ventures, or hiring new employees. Fast Facts • Carnival has 80,000 employees worldwide. • Of the 3 million passengers Carnival serves annually, approximately 1,000,000 are seniors and 500,000 are children. • Carnival became a publicly traded company in 1987. • Carnival Corporation is comprised of distinct brands operating in North and South America, the United Kingdom, Germany, Italy, France, Spain, and Australia, which account for nearly 90 percent of cruise passengers worldwide. • Carnival Corporation operates 100 ships with 9 new vessels scheduled for delivery between March 2013 and March 2016. Managerial Implications: Thinking Critically Answers will vary but could include monthly or quarterly. Students should want financial statements frequently so that trends can be observed and timely decisions made before the business is negatively impacted. Discussion Questions Note to instructor: These questions are designed to check the students’ understanding of the new terms, concepts, and procedures presented in the chapter. 1. Adjustments columns of the worksheet. 2. Transfer results of operations to the owner’s capital account; Reduce balances of revenue, expense, and drawing accounts to zero. 3. Worksheet. 4. Balances of revenue and expense accounts are transferred to Income Summary. Next the balance of the Income Summary account is transferred to the owner’s equity account. 5. Source document info to general journal, to general ledger, to worksheet, to financial statements. 6. Journalize and post adjusting entries; Journalize and postclosing entries; Prepare a postclosing trial balance.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-1
7. (1) analyze (2) journalize (3) post (4) prepare worksheet (5) prepare financial statements (6) journalize and post adjusting entries (7) journalize and post-closing entries (8) prepare post-closing trial balance (9) interpret financial information 8. Steps to classify, record, and summarize financial data. 9. Asset, liability, and owner’s capital. 10. Avoids errors, proves total debits and credits are equal after the closing process.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-2
EXERCISE 6.1 PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Dec. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Depreciation Expense 8 Salaries Expense 9 Supplies Expense 10 Telephone Expense 11 Utilities Expense 12 13 31 Income Summary 14 Maria Hernandez, Capital 15 16 31 Maria Hernandez, Capital 17 Maria Hernandez, Drawing 18
POST. REF.
DEBIT
CREDIT
53 7 5 0 00 53 7 5 0 00 30 0 0 0 00 2 7 5 0 00 17 0 0 0 00 3 0 0 0 00 2 6 0 0 00 4 6 5 0 00 23 7 5 0 00 23 7 5 0 00 26 0 0 0 00
EXERCISE 6.2 1. Analyze transactions. 2. Journalize the transactions. 3. Post the journal entries. 4. Prepare a worksheet. 5. Prepare financial statements. 6. Record adjusting entries. 7. Record closing entries. 8. Prepare a post-closing trial balance. 9. Interpret the financial information.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-3
4
26 0 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
EXERCISE 6.3 1. Cash 2. Accounts Receivable 3. Supplies 4. Equipment
5. Accumulated Depreciation 6. Accounts Payable 7. John Martin, Capital
EXERCISE 6.4 1. B 2. I 3. B 4. B 5. I
6. 7. 8. 9. 10.
B E B I B
11. 12. 13. 14. 15.
I, E B, E B I B
EXERCISE 6.5 1. Total revenue for the period is $67,000. 2. Total expenses for the period are $35,900. 3. Net income for the period is $31,100. 4. Owner’s withdrawals for the period are $11,000.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-4
EXERCISE 6.6 PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Mar. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Depreciation Expense- Equipment 8 Insurance Expense 9 Rent Expense 10 Salaries Expense 11 Supplies Expense 12 Telephone Expense 13 Utilities Expense 14 15 31 Income Summary 16 Lee Retha Hale, Capital 17 18 31 Lee Retha Hale, Capital 19 Lee Retha Hale, Drawing 20
POST. REF.
DEBIT
401 399
374 4 6 0 00
399 510 511 514 517 518 519 523
253 3 6 0 00
399 301
121 1 0 0 00
301 302
13 0 0 0 00
CREDIT
374 4 6 0 00
21 1 6 0 00 11 4 0 0 00 33 0 0 0 00 166 0 0 0 00 5 6 0 0 00 6 8 0 0 00 9 4 0 0 00
121 1 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-5
4
13 0 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
EXERCISE 6.6 (continued) GENERAL LEDGER ACCOUNT Lee Retha Hale, Capital
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing 31 Closing
POST. REF. J4 J4
ACCOUNT NO.
DEBIT
CREDIT
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
POST. REF.
130 0 0 0 00 251 1 0 0 00 238 1 0 0 00
13 0 0 0 00
ACCOUNT NO.
DEBIT
J4
CREDIT
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF. J4 J4 J4
302
13 0 0 0 00 13 0 0 0 00 −0−
ACCOUNT Income Summary
DATE DESCRIPTION 2016 Mar. 31 Closing 31 Closing 31 Closing
BALANCE DEBIT CREDIT
121 1 0 0 00
ACCOUNT Lee Retha Hale, Drawing
301
DEBIT
CREDIT
399
BALANCE DEBIT CREDIT
374 4 6 0 00 253 3 6 0 00 121 1 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-6
374 4 6 0 00 121 1 0 0 00 −0−
EXERCISE 6.6 (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
ACCOUNT
POST. REF. J4
DEBIT
CREDIT
POST. REF. J4
ACCOUNT NO.
CREDIT
21 1 6 0 00
21 1 6 0 00 −0−
ACCOUNT NO. POST. REF.
DEBIT
J4
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
CREDIT
11 4 0 0 00
11 4 0 0 00 −0−
ACCOUNT NO.
DEBIT
511
BALANCE DEBIT CREDIT
ACCOUNT Rent Expense POST. REF.
510
BALANCE DEBIT CREDIT
Insurance Expense
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
BALANCE DEBIT CREDIT
374 4 6 0 00
DEBIT
401
374 4 6 0 00 −0−
Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
ACCOUNT
ACCOUNT NO.
Fees Income
514
CREDIT
BALANCE DEBIT CREDIT
33 0 0 0 00
33 0 0 0 00 −0−
J4
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-7
EXERCISE 6.6 (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
ACCOUNT
DEBIT
J4
CREDIT
166 0 0 0 00
POST. REF.
DEBIT
J4
CREDIT
5 6 0'00 00
DEBIT
J4
CREDIT
6 8 0 0 00
POST. REF. J4
DEBIT
CREDIT
9 4 0 0 00
518
BALANCE DEBIT CREDIT 5 6 0 0 00 − 0 −
519
BALANCE DEBIT CREDIT 6 8 0 0 00 − 0 −
ACCOUNT NO.
Utilities Expense
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
166 0 0 0 00 − 0 −
ACCOUNT NO. POST. REF.
517
BALANCE DEBIT CREDIT
ACCOUNT NO.
Telephone Expense
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
ACCOUNT
POST. REF.
Supplies Expense
DATE DESCRIPTION 2016 Mar. 31 Balance 31 Closing
ACCOUNT
ACCOUNT NO.
Salaries Expense
523
BALANCE DEBIT CREDIT 9 4 0 0 00 − 0 −
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-8
EXERCISE 6.7 PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Dec. 31 Michelle Davison, Capital 4 Income Summary 5 6 31 Michelle Davison, Capital 7 Michelle Davison, Drawing 8
POST. REF.
DEBIT
37 0 0 0 00
4 0 0 0 00
CREDIT 1 2 3 37 0 0 0 00 4 5 6 4 0 0 0 00 7 8
The new balance of Michelle Davison, Capital is $17,000 ($58,000 – $37,000 – $4,000).
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-9
4
EXERCISE 6.8
Analyze transactions
Journalize transactions
Post transactions
Prepare a worksheet
Prepare financial statements
Record adjusting entries
Record closing entries
Prepare post-closing trial balance
Interpret financial information
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-10
PROBLEM 6.1A PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 3 Jan. 31 Supplies Expense 4 Supplies 5 6 31 Rent Expense 7 Prepaid Rent 8 9 31 Depreciation Expense—Office Equipment 10 Accumulated Depreciation—Office Equip. 11
POST. REF.
DEBIT
2 3 4 0 00
13 0 0 0 00
4 5 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-11
3
CREDIT 1 2 3 2 3 4 0 00 4 5 6 13 0 0 0 00 7 8 9 4 5 8 0 00 10 11
PROBLEM 6.1A (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Jan. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Depreciation Expense—Office Equipment 8 Rent Expense 9 Salaries Expense 10 Supplies Expense 11 Telephone Expense 12 Travel Expense 13 Utilities Expense 14 15 31 Income Summary 16 Sam Hill, Capital 17 18 31 Sam Hill, Capital 19 Sam Hill, Drawing 20
POST. REF.
DEBIT
4
CREDIT
1 2 100 0 0 0 00 3 100 0 0 0 00 4 5 82 4 1 0 00 6 4 5 8 0 00 7 13 0 0 0 00 8 49 5 0 0 00 9 2 3 4 0 00 10 1 3 5 0 00 11 10 3 9 0 00 12 1 2 5 0 00 13 14 17 5 9 0 00 15 17 5 9 0 00 16 17 11 0 0 0 00 18 11 0 0 0 00 19 20
Analyze: Debit the Capital account; credit the Drawing account.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-12
PROBLEM 6.2A PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 3 Dec. 31 Supplies Expense 4 Supplies 5 6 31 Advertising Expense 7 Prepaid Advertising 8 9 31 Depreciation Expense—Equipment 10 Accumulated Depreciation—Equipment 11
POST. REF.
DEBIT
517 121
3 4 0 0 00
526 131
4 0 0 0 00
523 142
3 4 0 0 00
DATE DESCRIPTION 1 Closing Entries 2 2016 3 Dec. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Supplies Expense 8 Advertising Expense 9 Depreciation Expense—Equipment 10 Salaries Expense 11 Utilities Expense 12 13 31 Income Summary 14 Delva King, Capital 15 16 31 Delva King, Capital 17 Delva King, Drawing 18
CREDIT 1 2 3 3 4 0 0 00 4 5 6 4 0 0 0 00 7 8 9 3 4 0 0 00 10 11
PAGE
GENERAL JOURNAL POST. REF.
401 309 309 517 526 523 511 514 309 301 301 302
DEBIT
3
4
CREDIT
1 2 103 5 0 0 00 3 103 5 0 0 00 4 5 28 5 0 0 00 6 3 4 0 0 00 7 4 0 0 0 00 8 3 4 0 0 00 9 15 4 0 0 00 10 2 3 0 0 00 11 12 75 0 0 0 00 13 75 0 0 0 00 14 15 9 4 0 0 00 16 9 4 0 0 00 17 18
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-13
PROBLEM 6.2A (continued) GENERAL LEDGER ACCOUNT Supplies
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
CREDIT
BALANCE DEBIT CREDIT
3 4 0 0 00
8 0 0 0 00 4 6 0 0 00
ACCOUNT Prepaid Advertising
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
CREDIT
4 0 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting
POST. REF.
DEBIT
J3
CREDIT
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing 31 Closing
32 0 0 0 00 28 0 0 0 00
3 4 0 0 00
ACCOUNT NO.
J4 J4
CREDIT
142
BALANCE DEBIT CREDIT
3 4 0 0 00
DEBIT
131
BALANCE DEBIT CREDIT
ACCOUNT NO.
ACCOUNT Delva King, Capital POST. REF.
121
301
BALANCE DEBIT CREDIT
75 0 0 0 00 9 4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-14
142 0 0 0 00 217 0 0 0 00 207 6 0 0 00
PROBLEM 6.2A (continued) GENERAL LEDGER ACCOUNT Delva King, Drawing
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT
ACCOUNT NO.
POST. REF.
DEBIT
J4
CREDIT
BALANCE DEBIT CREDIT
9 4 0 0 00
9 4 0 0 00 −0−
ACCOUNT NO.
Income Summary
DATE DESCRIPTION 2016 Dec. 31 Closing 31 Closing 31 Closing
POST. REF.
DEBIT
J4 J4 J4
28 5 0 0 00 75 0 0 0 00
CREDIT
103 5 0 0 00 75 0 0 0 00 −0−
ACCOUNT NO. POST. REF. J4
DEBIT
CREDIT
309
BALANCE DEBIT CREDIT
103 5 0 0 00
ACCOUNT Fees Income
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
302
401
BALANCE DEBIT CREDIT
103 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-15
103 5 0 0 00 −0−
PROBLEM 6.2A (continued) GENERAL LEDGER ACCOUNT Salaries Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4
CREDIT
15 4 0 0 00
ACCOUNT Utilities Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
DEBIT
2 3 0 0 00
2 3 0 0 00 −0−
ACCOUNT NO.
POST. REF. J3 J4
DEBIT
POST. REF.
CREDIT
3 4 0 0 00
3 4 0 0 00 −0−
ACCOUNT NO.
523
CREDIT
BALANCE DEBIT CREDIT
3 4 0 0 00
3 4 0 0 00 −0−
3 4 0 0 00 J3 J4
517
BALANCE DEBIT CREDIT
3 4 0 0 00
DEBIT
514
CREDIT
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
15 4 0 0 00 −0−
BALANCE DEBIT CREDIT
ACCOUNT Supplies Expense
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
BALANCE DEBIT CREDIT
ACCOUNT NO.
POST. REF. J4
511
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-16
PROBLEM 6.2A (continued) GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Advertising Expense
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
POST. REF. J3 J4
DEBIT
CREDIT
4 0 0 0 00 4 0 0 0 00
BALANCE DEBIT CREDIT 4 0 0 0 00 −0−
The King Group Post-closing Trial Balance December 31, 2016 ACCOUNT NAME Cash Accounts Receivable Supplies Prepaid Advertising Equipment Accumulated Depreciation—Equipment Accounts Payable Delva King, Capital Totals
DEBIT 93 4 0 0 00 13 0 0 0 00 4 6 0 0 00 28 0 0 0 00 85 0 0 0 00
526
CREDIT
3 4 0 0 00 13 0 0 0 00 207 6 0 0 00 224 0 0 0 00 224 0 0 0 00
Analyze: Fifteen accounts are listed in the Adjusted Trial Balance section. Eight accounts are listed on the post-closing trial balance.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-17
PROBLEM 6.3A PAGE
GENERAL JOURNAL
DATE 1 2 2016 3 Dec. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
DESCRIPTION Closing Entries
POST. REF.
DEBIT
31 Fees Income Income Summary
401 399
163 6 0 0 00
31 Income Summary Advertising Expense Depreciation Expense—Equipment Rent Expense Salaries Expense Utilities Expense
399 511 514 517 519 523
57 9 2 0 00
31 Income Summary Andrea Gomez, Capital
399 301
105 6 8 0 00
31 Andrea Gomez, Capital Andrea Gomez, Drawing
301 302
8 2 0 0 00
CREDIT
163 6 0 0 00
5 8 0 0 00 1 0 0 0 00 4 6 0 0 00 38 8 0 0 00 7 7 2 0 00
105 6 8 0 00
8 2 0 0 00
GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Andrea Gomez, Capital POST. DESCRIPTION REF.
DATE 2016 Dec. 31 Balance 31 Closing 31 Closing
J4 J4
DEBIT
CREDIT
301
BALANCE DEBIT CREDIT
105 6 8 0 00 8 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-18
4
65 6 2 0 00 171 3 0 0 00 163 1 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
PROBLEM 6.3A (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT
POST. REF.
DEBIT
J4
BALANCE DEBIT CREDIT
8 2 0 0 00
8 2 0 0 00 −0−
ACCOUNT NO. POST. REF.
DEBIT
J4 J4 J4
57 9 2 0 00 105 6 8 0 00
CREDIT
163 6 0 0 00 105 6 8 0 00 −0−
ACCOUNT NO. POST. REF. J4
DEBIT
CREDIT
399
BALANCE DEBIT CREDIT
163 6 0 0 00
Fees Income
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
302
CREDIT
Income Summary
DATE DESCRIPTION 2016 Dec. 31 Closing 31 Closing 31 Closing
ACCOUNT
ACCOUNT NO.
Andrea Gomez, Drawing
401
BALANCE DEBIT CREDIT
163 6 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-19
163 6 0 0 00 −0−
PROBLEM 6.3A (continued) GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Advertising Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
POST. REF.
DEBIT
J4
CREDIT
BALANCE DEBIT CREDIT
5 8 0 0 00
5 8 0 0 00 −0−
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
POST. REF. J4
DEBIT
ACCOUNT NO.
CREDIT
1 0 0 0 00
1 0 0 0 00 −0−
ACCOUNT NO.
POST. REF. J4
DEBIT
CREDIT
4 6 0 0 00
4 6 0 0 00 −0−
ACCOUNT NO.
POST. REF. J4
DEBIT
517
BALANCE DEBIT CREDIT
ACCOUNT Salaries Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
514
BALANCE DEBIT CREDIT
ACCOUNT Rent Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
511
CREDIT
38 8 0 0 00
519
BALANCE DEBIT CREDIT 38 8 0 0 00 −0−
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-20
PROBLEM 6.3A (continued) GENERAL LEDGER ACCOUNT Utilities Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4
523
CREDIT
BALANCE DEBIT CREDIT
7 7 2 0 00
7 7 2 0 00 −0−
Analyze: The balance in the Salaries Expense account is $0.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-21
PROBLEM 6.4A Home Auto Detailing Service Worksheet Month Ended December 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Advertising 5 Equipment 6 Accumulated Depreciation—Equip. 7 Accounts Payable 8 Clifton Davis, Capital 9 Clifton Davis, Drawing 10 Fees Income 11 Supplies Expense 12 Advertising Expense 13 Depreciation Expense—Equipment 14 Salaries Expense 15 Utilities Expense 16 Totals 17 Net Income 18 19
TRIAL BALANCE DEBIT CREDIT 32 0 5 0 00 5 4 5 0 00 6 0 0 0 00 4 0 0 0 00 21 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 2 1 0 0 00 (b) 1 9 0 0 00 (c)
5 8 0 00
6 0 0 0 00 45 5 0 0 00 3 0 0 0 00 26 6 0 0 00 (a) 2 1 0 0 00 (b) 1 9 0 0 00 (c) 5 8 0 00 5 8 0 0 00 8 0 0 00 78 1 0 0 00
78 1 0 0 00
4 5 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-22
4 5 8 0 00
PROBLEM 6.4A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 32 0 5 0 00 5 4 5 0 00 3 9 0 0 00 2 1 0 0 00 21 0 0 0 00 5 8 0 00 6 0 0 0 00 45 5 0 0 00 3 0 0 0 00 26 6 0 0 00 2 1 0 0 00 1 9 0 0 00 5 8 0 00 5 8 0 0 00 8 0 0 00 78 6 8 0 00 78 6 8 0 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 32 0 5 0 00 5 4 5 0 00 3 9 0 0 00 2 1 0 0 00 21 0 0 0 00 5 8 0 00 6 0 0 0 00 45 5 0 0 00 3 0 0 0 00
26 6 0 0 00 2 1 0 0 00 1 9 0 0 00 5 8 0 00 5 8 0 0 00 8 0 0 00 11 1 8 0 00 15 4 2 0 00 26 6 0 0 00
26 6 0 0 00
67 5 0 0 00
26 6 0 0 00
67 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-23
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 52 0 8 0 00 16 15 4 2 0 00 17 67 5 0 0 00 18 19
PROBLEM 6.4A (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 (a) 3 Dec. 31 Supplies Expense 4 Supplies 5 6 (b) 7 31 Advertising Expense 8 Prepaid Advertising 9 10 (c) 11 31 Depreciation Expense—Equipment 12 Accumulated Depreciation—Equipment 13
POST. REF.
DEBIT
517 121
2 1 0 0 00
526 131
1 9 0 0 00
523 142
5 8 0 00
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Dec. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Salaries Expense 8 Utilities Expense 9 Supplies Expense 10 Depreciation Expense—Equipment 11 Advertising Expense 12 13 31 Income Summary 14 Clifton Davis, Capital 15 16 31 Clifton Davis, Capital 17 Clifton Davis, Drawing 18
CREDIT 1 2 3 2 1 0 0 00 4 5 6 7 1 9 0 0 00 8 9 10 11 5 8 0 00 12 13
PAGE
GENERAL JOURNAL POST. REF.
DEBIT
401 399
26 6 0 0 00
399 511 514 517 523 526
11 1 8 0 00
399 301
15 4 2 0 00
301 302
3 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-24
3
4
CREDIT 1 2 3 26 6 0 0 0000 4 5 6 5 8 0 0 00 7 8 0 0 00 8 2 1 0 0 00 9 5 8 0 00 10 1 9 0 0 00 11 12 13 15 4 2 0 00 14 15 16 3 0 0 0 00 17 18
PROBLEM 6.4A (continued) GENERAL LEDGER ACCOUNT Supplies
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
CREDIT
2 1 0 0 00
ACCOUNT Prepaid Advertising
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Adjusting
DEBIT
J3
CREDIT
1 9 0 0 00
ACCOUNT Accumulated Depreciation—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting
6 0 0 0 00 3 9 0 0 00
POST. REF.
DEBIT
J3
CREDIT
4 0 0 0 00 2 1 0 0 00
5 8 0 00
J4 J4
DEBIT
CREDIT
142
BALANCE DEBIT CREDIT 5 8 0 00
ACCOUNT NO.
POST. REF.
131
BALANCE DEBIT CREDIT
ACCOUNT NO.
ACCOUNT Clifton Davis, Capital
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing 31 Closing
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
121
301
BALANCE DEBIT CREDIT
15 4 2 0 00 3 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-25
45 5 0 0 00 60 9 2 0 00 57 9 2 0 00
PROBLEM 6.4A (continued) GENERAL LEDGER ACCOUNT Clifton Davis, Drawing
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
POST. REF.
ACCOUNT NO.
DEBIT
J4
CREDIT
BALANCE DEBIT CREDIT
3 0 0 0 00
3 0 0 0 00 −0−
ACCOUNT Income Summary
DATE DESCRIPTION 2016 Dec. 31 Closing 31 Closing 31 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4 J4 J4
11 1 8 0 00 15 4 2 0 00
CREDIT
J4
DEBIT
CREDIT
BALANCE DEBIT CREDIT
26 6 0 0 00
ACCOUNT NO. POST. REF. J4
DEBIT
401
26 6 0 0 00 −0−
ACCOUNT Salaries Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
26 6 0 0 00 15 4 2 0 00 −0−
ACCOUNT NO. POST. REF.
399
BALANCE DEBIT CREDIT
26 6 0 0 00
ACCOUNT Fees Income
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
302
511
CREDIT
BALANCE DEBIT CREDIT
5 8 0 0 00
5 8 0 0 00 −0−
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-26
PROBLEM 6.4A (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT
DEBIT
J4
CREDIT
8 0 0 00
POST. REF. J3 J4
DEBIT
POST. REF. J3 J4
2 1 0 0 00
2 1 0 0 00 −0−
ACCOUNT NO.
CREDIT
5 8 0 00 5 8 0 00
J3 J4
DEBIT
523
BALANCE DEBIT CREDIT 5 8 0 00 −0−
ACCOUNT NO.
POST. REF.
517
CREDIT
Advertising Expense
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
8 0 0 00 −0−
BALANCE DEBIT CREDIT
2 1 0 0 00
DEBIT
514
BALANCE DEBIT CREDIT
ACCOUNT NO.
Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
ACCOUNT
POST. REF.
Supplies Expense
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
ACCOUNT
ACCOUNT NO.
Utilities Expense
526
CREDIT
BALANCE DEBIT CREDIT
1 9 0 0 00
1 9 0 0 00 −0−
1 9 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-27
PROBLEM 6.4A (continued) Home Auto Detailing Service Post-closing Trial Balance December 31, 2016 ACCOUNT NAME
DEBIT 32 0 5 0 00 5 4 5 0 00 3 9 0 0 00 2 1 0 0 00 21 0 0 0 00
Cash Accounts Receivable Supplies Prepaid Advertising Equipment Accumulated Depreciation—Equipment Accounts Payable Clifton Davis, Capital Totals
64 5 0 0 00
CREDIT
5 8 0 00 6 0 0 0 00 57 9 2 0 00 64 5 0 0 00
Analyze: Total debits of $56,200 were posted to the general ledger to complete the closing entries PROBLEM 6.1B PAGE
GENERAL JOURNAL
DATE 1 2 3 4 5 6 7 8 9 10 11
2016 Jan.
DESCRIPTION Adjusting Entries
(a) 31 Supplies Expense Supplies (b) 31 Insurance Expense Prepaid Insurance (c) 31 Depreciation Expense—Machinery Accumulated Depreciation—Machinery
POST. REF.
DEBIT
523 121
4 2 9 0 00
514 134
2 2 2 0 00
511 142
1 6 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-28
3
CREDIT 1 2 3 4 2 9 0 00 4 5 6 2 2 2 0 00 7 8 9 1 6 8 0 00 10 11
PROBLEM 6.1B PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Jan. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Depreciation Expense—Machinery 8 Insurance Expense 9 Rent Expense 10 Salaries Expense 11 Supplies Expense 12 Telephone Expense 13 Utilities Expense 14 15 31 Income Summary 16 Fred Sanford, Capital 17 18 31 Fred Sanford, Capital 19 Fred Sanford, Drawing 20
POST. REF.
DEBIT
401 309
49 2 0 0 00
309 511 514 517 520 523 526 529
37 9 6 5 00
309 301
11 2 3 5 00
301 302
3 6 0 0 00
CREDIT
49 2 0 0 00
1 6 8 0 00 2 2 2 0 00 4 5 0 0 00 24 0 0 0 00 4 2 9 0 00 3 1 5 00 9 6 0 00
11 2 3 5 00
3 6 0 0 00
Analyze: The adjusting entry for expired insurance created a debit to Insurance Expense, increasing the Insurance Expense account balance to $2,220.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-29
4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PROBLEM 6.2B PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 (a) 3 Dec. 31 Supplies Expense 4 Supplies 5 (b) 6 31 Advertising Expense 7 Prepaid Advertising 8 (c) 9 31 Depreciation Expense—Equipment 10 Accumulated Depreciation—Equipment 11
POST. REF.
DEBIT
517 121
3 0 0 0 00
526 131
1 2 0 0 00
523 142
1 5 0 0 00
DATE DESCRIPTION 1 Closing Entries 2 2016 3 Dec. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Salaries Expense 8 Utilities Expense 9 Supplies Expense 10 Depreciation Expense—Equipment 11 Advertising Expense 12 13 31 Income Summary 14 Scott Jeremy, Capital 15 16 31 Scott Jeremy, Capital 17 Scott Jeremy, Drawing 18
CREDIT 1 2 3 3 0 0 0 00 4 5 6 1 2 0 0 00 7 8 9 1 5 0 0 00 10 11
PAGE
GENERAL JOURNAL POST. REF.
DEBIT
401 309
46 8 0 0 00
309 511 514 517 523 526
21 9 0 0 00
309 301
24 9 0 0 00
301 302
8 4 0 0 00
4
CREDIT
46 8 0 0 00
14 4 0 0 00 1 8 0 0 00 3 0 0 0 00 1 5 0 0 00 1 2 0 0 00
24 9 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-30
3
8 4 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
PROBLEM 6.2B (continued) GENERAL LEDGER ACCOUNT Supplies
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
CREDIT
BALANCE DEBIT CREDIT
3 0 0 0 00
6 0 0 0 00 3 0 0 0 00
ACCOUNT Prepaid Advertising
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Adjusting
ACCOUNT NO. POST. REF.
DEBIT
J3
DATE DESCRIPTION 2016 Dec. 31 Adjusting
DEBIT
J3
CREDIT
1 2 0 0 00
9 0 0 0 00 7 8 0 0 00
ACCOUNT NO.
CREDIT
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing 31 Closing
1 5 0 0 00
ACCOUNT NO.
J4 J4
DEBIT
CREDIT
142
BALANCE DEBIT CREDIT
1 5 0 0 00
ACCOUNT Scott Jeremy, Capital POST. REF.
131
BALANCE DEBIT CREDIT
ACCOUNT Accumulated Depreciation—Equipment POST. REF.
121
301
BALANCE DEBIT CREDIT
24 9 0 0 00 8 4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-31
82 2 0 0 00 107 1 0 0 00 98 7 0 0 00
PROBLEM 6.2B (continued) GENERAL LEDGER ACCOUNT Scott Jeremy, Drawing
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT NO.
POST. REF.
DEBIT
J4
CREDIT
BALANCE DEBIT CREDIT
8 4 0 0 00
8 4 0 0 00 −0−
ACCOUNT Income Summary
DATE DESCRIPTION 2016 Dec. 31 Closing 31 Closing 31 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4 J4 J4
21 9 0 0 00 24 9 0 0 00
CREDIT
46 8 0 0 00 24 9 0 0 00 −0−
ACCOUNT NO. POST. REF. J4
DEBIT
CREDIT
309
BALANCE DEBIT CREDIT
46 8 0 0 00
ACCOUNT Fees Income
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
302
401
BALANCE DEBIT CREDIT
46 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-32
46 8 0 0 00 −0−
PROBLEM 6.2B (continued) GENERAL LEDGER ACCOUNT Salaries Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4
CREDIT
14 4 0 0 00
ACCOUNT Utilities Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
DEBIT
J4
1 8 0 0 00
1 8 0 0 00 −0−
ACCOUNT NO. POST. REF. J3 J4
DEBIT
POST. REF. J3 J4
517
CREDIT
BALANCE DEBIT CREDIT
3 0 0 0 00
3 0 0 0 00 −0−
3 0 0 0 00
DEBIT
514
CREDIT
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
14 4 0 0 00 −0−
BALANCE DEBIT CREDIT
ACCOUNT Supplies Expense
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
511
ACCOUNT NO.
523
CREDIT
BALANCE DEBIT CREDIT
1 5 0 0 00
1 5 0 0 00 −0−
1 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-33
PROBLEM 6.2B (continued) GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Advertising Expense
DATE DESCRIPTION 2016 Dec. 31 Adjusting 31 Closing
POST. REF. J3 J4
DEBIT
CREDIT
1 2 0 0 00 1 2 0 0 00
526
BALANCE DEBIT CREDIT 1 2 0 0 00 −0−
Cedar Valley Nursery and Landscape Post-closing Trial Balance December 31, 2016 ACCOUNT NAME Cash Accounts Receivable Supplies Prepaid Advertising Equipment Accumulated Depreciation—Equipment Accounts Payable Scott Jeremy, Capital Totals
DEBIT 32 4 0 0 00 6 0 0 0 00 3 0 0 0 00 7 8 0 0 00 60 0 0 0 00
CREDIT
1 5 0 0 00 9 0 0 0 00 98 7 0 0 00 109 2 0 0 00 109 2 0 0 00
Analyze: Total credits of $102,000 were posted to the general ledger to complete the closing entries
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-34
PROBLEM 6.3B PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Fees Income 3 Income Summary 5 6 31 Income Summary 7 Advertising Expense 8 Depreciation Expense—Equipment 9 RentRent Expense Expense 10 Salaries Salaries Expense Expense 11 Utilities Utilities Expense Expense 12 13 31 Income Summary 14 Taylor Jackson, Capital 15 16 31 Taylor Jackson, Capital 17 Taylor Jackson, Drawing 18
POST. REF.
DEBIT
401 399
162 0 0 0 00
399 511 514 517 519 523
62 1 0 0 00
399 301
99 9 0 0 00
301 302
10 8 0 0 00
4
CREDIT
162 0 0 0 00
9 9 0 0 00 2 7 0 0 00 6 3 0 0 00 32 4 0 0 00 10 8 0 0 00
99 9 0 0 00
10 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-35
1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18
PROBLEM 6.3B (continued) GENERAL LEDGER ACCOUNT Taylor Jackson, Capital
DATE
DESCRIPTION
ACCOUNT NO.
POST. REF. DEBIT
BALANCE CREDIT DEBIT
2016 Dec.
1 Balance 31 Closing 31 Closing
J4 J4
#
99 9 0 0 00 10 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-36
CREDIT 172 3 5 0 00 272 2 5 0 00 261 4 5 0 00
PROBLEM 6.3B (continued) GENERAL LEDGER ACCOUNT Taylor Jackson, Drawing
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
POST. REF.
ACCOUNT NO.
DEBIT
J4
CREDIT
10 8 0 0 00
ACCOUNT Income Summary
DATE DESCRIPTION 2016 Dec. 31 Closing 31 Closing 31 Closing
DEBIT
J4 J4 J4
62 1 0 0 00 99 9 0 0 00
CREDIT
10 8 0 0 00 −0−
162 0 0 0 00 99 9 0 0 00 −0−
ACCOUNT NO. POST. REF. J4
DEBIT
CREDIT
399
BALANCE DEBIT CREDIT
162 0 0 0 00
ACCOUNT Fees Income
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
BALANCE DEBIT CREDIT
ACCOUNT NO. POST. REF.
302
401
BALANCE DEBIT CREDIT
162 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-37
162 0 0 0 00 −0−
PROBLEM 6.3B (continued) GENERAL LEDGER ACCOUNT Advertising Expense
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
ACCOUNT NO.
POST. REF.
DEBIT
J4
CREDIT
BALANCE DEBIT CREDIT
9 9 0 0 00
9 9 0 0 00 −0−
ACCOUNT Depreciation Expense—Equipment
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
POST. REF.
DEBIT
J4
ACCOUNT NO.
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
CREDIT
2 7 0 0 00
2 7 0 0 00 −0−
ACCOUNT NO.
DEBIT
J4
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
CREDIT
6 3 0 0 00
6 3 0 0 00 −0−
ACCOUNT NO.
J4
DEBIT
517
BALANCE DEBIT CREDIT
ACCOUNT Salaries Expense POST. REF.
514
BALANCE DEBIT CREDIT
ACCOUNT Rent Expense POST. REF.
511
CREDIT
32 4 0 0 00
519
BALANCE DEBIT CREDIT 32 4 0 0 00 −0−
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-38
PROBLEM 6.3B (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Dec. 31 Balance 31 Closing
Analyze:
ACCOUNT NO.
Utilities Expense POST. REF. J4
DEBIT
CREDIT
10 8 0 0 00
523
BALANCE DEBIT CREDIT 10 8 0 0 00 −0−
Fees Income, Income Summary, Taylor Jackson—Capital, Taylor Jackson—Drawing, Advertising, Depreciation, Rent, Salaries, and Utilities Expense.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-39
PROBLEM 6.4B Christopher Cobb, CPA Worksheet Month Ended June 30, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Computers 5 Accumulated Depreciation—Computers 6 Accounts Payable 7 Christopher Cobb, Capital 8 Christopher Cobb, Drawing 9 Fees Income 10 Salaries Expense 11 Supplies Expense 12 Depreciation Expense—Computers 13 Travel Expense 14 Utilities Expense 15 Totals
TRIAL BALANCE DEBIT CREDIT 63 9 0 0 00 22 6 8 0 00 31 5 0 0 00 57 6 0 0 00 5 7 6 0 00 25 2 0 0 00 124 4 7 0 00 24 0 0 0 00 135 9 0 0 00 75 4 5 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 5 4 0 0 00 (b)
4 8 0 00
(a) 5 4 0 0 00 (b) 4 8 0 00 10 8 0 0 00 5 4 0 0 00 291 3 3 0 00 291 3 3 0 00
5 8 8 0 00
16 Net Income 17 18
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-40
5 8 8 0 00
PROBLEM 6.4B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 63 9 0 0 00 22 6 8 0 00 26 1 0 0 00 57 6 0 0 00 6 2 4 0 00 25 2 0 0 00 124 4 7 0 00 24 0 0 0 00 135 9 0 0 00 75 4 5 0 00 5 4 0 0 00 4 8 0 00 10 8 0 0 00 5 4 0 0 00
75 4 5 0 00 5 4 0 0 00 4 8 0 00 10 8 0 0 00 5 4 0 0 00
291 8 1 0 00
97 5 3 0 00
291 8 1 0 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 63 9 0 0 00 22 6 8 0 00 26 1 0 0 00 57 6 0 0 00 6 2 4 0 00 25 2 0 0 00 124 4 7 0 00 24 0 0 0 00
135 9 0 0 00
135 9 0 0 00
194 2 8 0 00 155 9 1 0 00
15
38 3 7 0 00
16
194 2 8 0 00 194 2 8 0 00
17
38 3 7 0 00 135 9 0 0 00
135 9 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14
18
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-41
PROBLEM 6.4B (continued) PAGE
GENERAL JOURNAL
DATE 1 2 2016 3 Jun. 4 5 6 7 8 9 10 11 12 13
DESCRIPTION Adjusting Entries
POST. REF.
DEBIT
30 Supplies Expense Supplies
517 121
5 4 0 0 00
30 Depreciation Expense—Computers Accumulated Depreciation—Computers
523 142
4 8 0 00
1 2 2016 3 Jun. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
DESCRIPTION Closing Entries
CREDIT
4 8 0 00
PAGE POST. REF.
1 2 3 4 5 6 7 8 9 10 11 12 13
5 4 0 0 00
GENERAL JOURNAL
DATE
3
DEBIT
30 Fees Income Income Summary
401 309
135 9 0 0 00
30 Income Summary Salaries Expense Supplies Expense Depreciation Expense—Computers Travel Expense Utilities Expense
309 511 517 523 519 514
97 5 3 0 00
30 Income Summary Christopher Cobb, Wilson, Capital
309 301
38 3 7 0 00
30 Christopher Cobb, Capital Christopher Cobb, Drawing
301 302
24 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-42
4
CREDIT 1 2 3 135 9 0 0 0000 4 5 6 75 4 5 0 00 7 5 4 0 0 00 8 4 8 0 00 9 10 8 0 0 00 10 5 4 0 0 00 11 12 13 38 3 7 0 00 14 15 16 24 0 0 0 00 17 18
PROBLEM 6.4B (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Jun. 30 Balance 30 Adjusting
ACCOUNT
POST. REF.
DEBIT
J3
CREDIT
BALANCE DEBIT CREDIT
ACCOUNT NO.
POST. REF.
121
31 5 0 0 00 5 4 0 0 00 26 1 0 0 00
Computers
DATE DESCRIPTION 2016 Jun. 30 Balance
ACCOUNT
ACCOUNT NO.
Supplies
DEBIT
CREDIT
131
BALANCE DEBIT CREDIT 57 6 0 0 00
Accumulated Depreciation—Computers
ACCOUNT NO.
POST. DESCRIPTION REF.
BALANCE DEBIT CREDIT
DATE 2016 Jun. 30 Balance 30 Adjusting
J3
DEBIT
CREDIT
4 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-43
142
5 7 6 0 00 6 2 4 0 00
PROBLEM 6.4B (continued) ACCOUNT
ACCOUNT NO.
Christopher Cobb, Capital
DATE DESCRIPTION 2016 Jun. 30 Balance 30 Closing 30 Closing
POST. REF. J4 J4
DEBIT
CREDIT
301
BALANCE DEBIT CREDIT 124 4 7 0 00 162 8 4 0 00 138 8 4 0 00
38 3 7 0 00 24 0 0 0 00
GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2016 Jun. 30 Balance 30 Closing
ACCOUNT
ACCOUNT NO.
Christopher Cobb, Drawing POST. REF.
DEBIT
J4
CREDIT
24 0 0 0 00
DATE DESCRIPTION 2016 Jun. 30 Closing 30 Closing 30 Closing
BALANCE DEBIT CREDIT 24 0 0 0 00 −0−
ACCOUNT NO.
Income Summary POST. REF. J4 J4 J4
DEBIT
CREDIT
302
309
BALANCE DEBIT CREDIT
135 9 0 0 00 97 5 3 0 00 38 3 7 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-44
135 9 0 0 00 38 3 7 0 00 −0−
PROBLEM 6.4B (continued) ACCOUNT Fees Income
DATE DESCRIPTION 2016 Jun. 30 Balance 30 Closing
ACCOUNT NO. POST. REF. J4
DEBIT
CREDIT
BALANCE DEBIT CREDIT 135 9 0 0 00 −0−
135 9 0 0 00
ACCOUNT Salaries Expense
DATE DESCRIPTION 2016 Jun. 30 Balance 30 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4
401
CREDIT
75 4 5 0 00
511
BALANCE DEBIT CREDIT 75 4 5 0 00 −0−
GENERAL LEDGER ACCOUNT Utilities Expense
DATE DESCRIPTION 2016 Jun. 30 Balance 30 Closing
ACCOUNT NO. POST. REF. J4
DEBIT
514
CREDIT
BALANCE DEBIT CREDIT
5 4 0 0 00
5 4 0 0 00 −0−
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-45
PROBLEM 6.4B (continued) ACCOUNT Supplies Expense
DATE 2010 2016 Jun.
DESCRIPTION 30 Adjusting 30 Closing
ACCOUNT NO. POST. REF. J3 J4
DEBIT
CREDIT
BALANCE DEBIT CREDIT
5 4 0 0 00
5 4 0 0 00 −0−
5 4 0 0 00
ACCOUNT Travel Expense
DATE 2010 2016 Jun.
DESCRIPTION 30 Balance 30 Closing
ACCOUNT NO. POST. REF.
DEBIT
J4
CREDIT
10 8 0 0 00
ACCOUNT Depreciation Expense—Computers
DATE DESCRIPTION 2010 2016 Jun. 30 Adjusting 30 Closing
POST. REF. J3 J4
DEBIT
517
BALANCE DEBIT CREDIT 10 8 0 0 00 −0−
ACCOUNT NO.
CREDIT
4 8 0 00 4 8 0 00
519
523
BALANCE DEBIT CREDIT 4 8 0 00 −0−
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-46
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 6.4B (continued) Christopher Cobb, CPA Post-closing Trial Balance June 30, 2016 ACCOUNT NAME Cash Accounts Receivable Supplies Computers Accumulated Depreciation—Computers Accounts Payable Scott Wilson, Capital Totals
Analyze:
DEBIT 63 9 0 0 00 22 6 8 0 00 26 1 0 0 00 57 6 0 0 00
CREDIT
6 2 4 0 00 25 2 0 0 00 138 8 4 0 00 170 2 8 0 00 170 2 8 0 00
Net Income for Christopher Cobb , CPA for the month of June 2016 was $38,370.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-47
CRITICAL THINKING PROBLEM 6.1 21st Century Fashions Worksheet Month Ended December 31, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Machinery 6 Accumulated Depreciation—Machinery 7 Accounts Payable 8 Carolyn Davis, Capital 9 Carolyn Davis, Drawing 10 Fees Income 11 Supplies Expense 12 Insurance Expense 13 Salaries Expense 14 Depreciation Expense—Machinery 15 Utilities Expense 16 Totals
TRIAL BALANCE DEBIT CREDIT 81 6 0 0 00 18 0 0 0 00 14 4 0 0 00 21 6 0 0 00 168 0 0 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 7 (b) 4
2 0 0 00 8 0 0 00
(c ) 2 4 0 0 00 27 0 0 0 00 149 1 6 0 00 12 0 0 0 00 165 0 0 0 00 (a) 7 2 0 0 00 (b) 4 8 0 0 00 22 2 0 0 00 (c ) 2 4 0 0 00 3 3 6 0 00 341 1 6 0 00 341 1 6 0 00
14 4 0 0 00 00 14 4 0 0 00
17 Net Income 18 19
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-48
CRITICAL THINKING PROBLEM 6.1 (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 81 6 0 0 00 18 0 0 0 00 7 2 0 0 00 16 8 0 0 00 168 0 0 0 00 2 4 0 0 00 27 0 0 0 00 149 1 6 0 00 12 0 0 0 00 165 0 0 0 00 7 2 0 0 00 4 8 0 0 00 22 2 0 0 00 2 4 0 0 00 3 3 6 0 00 343 5 6 0 00
343 5 6 0 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 81 6 0 0 00 18 0 0 0 00 7 2 0 0 00 16 8 0 0 00 168 0 0 0 00 2 4 0 0 00 27 0 0 0 00 149 1 6 0 00 12 0 0 0 00
165 0 0 0 00 7 2 0 0 00 4 8 0 0 00 22 2 0 0 00 2 4 0 0 00 3 3 6 0 00 39 9 6 0 00
165 0 0 0 00
303 6 0 0 00 178 5 6 0 00 16
125 0 4 0 00 165 0 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
125 0 4 0 00 17 165 0 0 0 00
303 6 0 0 00 303 6 0 0 00 18 19
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-49
CRITICAL THINKING PROBLEM 6.1 (continued) 21st Century Fashions Income Statement Month Ended December 31, 2016 Revenue Fees Income Expenses Supplies Expense Insurance Expense Salaries Expense Depreciation Expense—Machinery Utilities Expense Total Expenses Net Income
165 0 0 0 00 7 2 0 0 00 4 8 0 0 00 22 2 0 0 00 2 4 0 0 00 3 3 6 0 00 39 9 6 0 00 125 0 4 0 00
21st Century Fashions Statement of Owner's Equity Month Ended December 31, 2016 Carolyn Davis, Capital, December 1, 2016 Net income for December Less Withdrawals for December Increase in Capital Carolyn Davis, Capital, December 31, 2016
149 1 6 0 00 125 0 4 0 00 12 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-50
113 0 4 0 00 262 2 0 0 00
CRITICAL THINKING PROBLEM 6.1 (continued) 21st Century Fashions Balance Sheet December 31, 2016 Assets Cash Accounts Receivable Supplies Prepaid Insurance Machinery Accumulated Depreciation—Machinery Total Assets Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Carolyn Davis, Capital Total Liabilities and Owner's Equity
81 6 18 0 7 2 16 8 168 0 2 4
0 0 00 0 0 00 0 0 00 0 0 00
0 0 00 0 0 00 165 6 0 0 00 289 2 0 0 00
27 0 0 0 00 262 2 0 0 00 289 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-51
CRITICAL THINKING PROBLEM 6.1 (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
POST. REF.
1 2 2016 3 Dec. 31 Supplies Expense 4 Supplies 5 6 31 Insurance Expense 7 Prepaid Insurance 8 9 31 Depreciation Expense—Machinery 10 Accumulated Depreciation—Machinery 11
DEBIT
7 2 0 0 00
4 8 0 0 00
2 4 0 0 00
DATE DESCRIPTION 1 Closing Entries 2 2016 3 Dec. 31 Fees Income 4 Income Summary 5 6 31 Income Summary 7 Supplies Expense 8 Insurance Expense 9 Salaries Expense 10 Depreciation Expense—Machinery 11 Utilities Expense 12 13 31 Income Summary 14 Carolyn Davis, Capital 15 16 31 Carolyn Davis, Capital 17 Carolyn Davis, Drawing 18
CREDIT 1 2 3 7 2 0 0 00 4 5 6 4 8 0 0 00 7 8 9 2 4 0 0 00 10 11
PAGE
GENERAL JOURNAL POST. REF.
DEBIT
3
4
CREDIT
1 2 165 0 0 0 00 3 165 0 0 0 0000 4 5 39 9 6 0 00 6 7 2 0 0 00 7 4 8 0 0 00 8 22 2 0 0 00 9 2 4 0 0 00 10 3 3 6 0 00 11 12 125 0 4 0 00 13 125 0 4 0 00 14 15 12 0 0 0 00 16 12 0 0 0 00 17 18
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-52
CRITICAL THINKING PROBLEM 6.1 (continued) 21st Century Fashions Post-closing Trial Balance December 31, 2016 ACCOUNT NAME Cash Accounts Receivable Supplies Prepaid Insurance Machinery Accumulated Depreciation—Machinery Accounts Payable Carolyn Davis, Capital
DEBIT 81 6 0 0 00 18 0 0 0 00 7 2 0 0 00 16 8 0 0 00 168 0 0 0 00
Totals
291 6 0 0 00 291 6 0 0 00
Analyze:
CREDIT
2 4 0 0 00 27 0 0 0 00 262 2 0 0 00
The net income would be $134,640.
CRITICAL THINKING PROBLEM 6.2 1. Davis made the following errors preparing the closing entries: a. Accumulated Depreciation and Accounts Payable are permanent accounts that continue from accounting period to accounting period and, consequently, are not closed. b.
The Drawing account is not an expense account to be closed to Income Summary but is a reduction of equity and is closed directly to the Capital account.
Demetria Davis closed accounts based on what kind of balance they had (debit/credit) rather than looking at the type of account (permanent/temporary) they were. Only temporary, or nominal, accounts are closed.
2.
1 2 3 4 5 6
PAGE
GENERAL JOURNAL
DATE DESCRIPTION 2016 Dec. 31 Thomas Richey, Capital Accumulated Depreciation Accounts Payable To correct errors made in closing entries
POST. REF.
DEBIT 41 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-53
CREDIT 1 2 8 5 0 0 00 3 33 0 0 0 00 4 5 6
CRITICAL THINKING PROBLEM 6.2 (continued) 3. The proof of this entry is: Fees Income Expenses: Salaries Expense Supplies Expense Depreciation Expense Net Income Withdrawals Increase in Capital Capital, Beginning Capital, Ending
98,000 78,000 5,000 2,400
Capital account balance in general ledger Less debit from correcting entry Corrected ending Capital balance
85,400 12,600 (7,000) 5,600 50,000 55,600 97,100 (41,500) 55,600
Note: It is not necessary to make an entry to correct the closing of the Drawing account to the Income Summary account. Closing the Drawing account to the Income Summary account, which in turn was closed to the Capital account, results in reducing the Capital account by the amount of the withdrawals. So, while incorrect, Davis’s entry with regard to Drawing achieves the correct end result.
The balance of the Capital account after closing entries have been posted must agree with the ending Capital balance as shown. Posting the entry closing the Income Summary account increases the Capital account by the amount of the net income (or decreases it by the amount of a net loss), while posting the entry closing the Drawing account decreases the Capital account. These postings reflect the same changes to Capital that are shown on the statement of owner’s equity and on the balance sheet, and therefore, the ending Capital amount must be the same for both. Note that the errors Davis made in preparing the closing entries would not be revealed by the post-closing trial balance. Since each entry Davis made had equal debits and credits, the post-closing trial balance would be in balance. The errors would not become evident until the next year when postings were made to the Accumulated Depreciation and Accounts Payable accounts or when the ledger account balances were compared to the balance sheet amounts.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-54
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. No. A thorough analysis of the components of the income statement would reveal how costs directly impact net income. The balance sheet helps determine the amount of the firm’s assets and its liquidity, liabilities, and equity. 2. Current assets compared with current liabilities. 3. Timely preparation of financial statements support future planning, prompt payment of debts, developing effective credit policies. 4. The income statement might help determine the adequacy of profit, how to improve revenue and hold down expenses, how to reduce expenses without decreasing revenue, and how to even out the business operating cycle. Balance sheet data might influence decisions concerning growth of equity, the return on investment, adequacy of the firm’s assets, whether collections on accounts receivable should be accelerated, and whether more capital is needed. Ethical Dilemma: You should wait to verify the invoice is an actual invoice. At the end of the year, Miscellaneous Expense will be closed and the $2,000 expense will be in the previous year and not given the verification it so badly needs. Financial Statement Analysis: 1. Dr. Inc. Summ., $8,299,000; Cr. Labor and Fringe, $3,020,000; Cr. Materials, Supplies, and Other $2,156,000; Cr. Depreciation, $1,059,000; Cr. Fuel, $1,672,000; Cr. Equipment & Other Rents, $392,000 2. Dr. Revenue $11,756,000; Cr. Inc. Summ., $11,756,000 Analyze Online: Answers will vary depending on the year. Teamwork: 1) Analyze transactions, 2) journalize the data about transactions, 3) post the data about transactions, 4) prepare a worksheet, 5) prepare financial statements, 6) record adjusting entries, 7) record closing entries, 8) prepare a post-closing trial balance, and 9) interpret the financial information. Internet Connection: 1. Requirements Experience: At least 2 years full-time experience or the part-time or freelance equivalent. 2. Examination: Candidates must pass a 4-part national examination, including 2 parts given at any Prometric Test Center (there are over 300 nationwide). 3. Code of Ethics: Applicants must sign a Code of Ethics.
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-55
SOLUTIONS TO PRACTICE TEST Part A True-False 1. FALSE 2. TRUE 3. FALSE 4. TRUE 5. FALSE 6. FALSE 7. TRUE 8. FALSE 9. FALSE 10. TRUE Part B Matching 1. d 2. c 3. e 4. b 5. a
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-56
MINI-PRACTICE SET 1 SERVICE BUSINESS ACCOUNTING CYCLE PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2017 2 Jan. 2 Supplies 3 Cash 4 Bought supplies for cash, Check 1015 5 6 2 Prepaid Insurance 7 Cash 8 Purchased one year of insurance, Check 1016 9 10 7 Cash 11 Accounts Receivable 12 Fees Income 13 Performed services for cash and on account 14 15 12 Cash 16 Accounts Receivable 17 Received cash on account 18 19 12 Advertising Expense 20 Cash 21 Paid for advertising on radio, Check 1017 22 23 13 Cash 24 Accounts Receivable 25 Received cash on account 26 27 14 Cash 28 Supplies 29 Returned damaged supplies for cash refund 30 31 15 Cash 32 Accounts Receivable 33 Fees Income 34 Performed services for cash and on account 35
POST. REF.
DEBIT
121 101
6 0 0 0 00
134 101
7 2 0 0 00
101 111 401
20 0 0 0 00 4 0 0 0 00
101 111
4 0 0 0 00
526 101
3 2 0 0 00
101 111
3 5 0 0 00
101 121
6 5 0 00
101 111 401
20 7 0 0 00 2 3 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-57
3
CREDIT 1 2 6 0 0 0 00 3 4 5 6 7 2 0 0 00 7 8 9 10 11 24 0 0 0 00 12 13 14 15 4 0 0 0 00 16 17 18 19 3 2 0 0 00 20 21 22 23 3 5 0 0 00 24 25 26 27 6 5 0 00 28 29 30 31 32 23 0 0 0 00 33 34 35
MINI-PRACTICE SET 1 (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2017 2 Jan. 20 Supplies 3 Accounts Payable 4 Bought supplies on account 5 6 20 Cash 7 Accounts Receivable 8 Fees Income 9 Performed services for cash and on account 10 11 20 Cash 12 Accounts Receivable 13 Performed services for cash and on account 14 15 21 Maintenance Expense 16 Cash 17 Paid for maintenance on equipment 18 Check 1018 19 20 22 Advertising Expense 21 Cash 22 Paid cash for newspaper ads, Check 1019 23 24 23 Telephone Expense 25 Cash 26 Paid monthly telephone bill, Check 1020 27 28 26 Cash 29 Accounts Receivable 30 Received cash on account 31 32 27 Accounts Payable 33 Cash 34 Made payment to creditor, Check 1021 35 36 37
POST. REF. 121 202
101 111 401
101 111
529 101
526 101
532 101
101 111
202 101
DEBIT
4
CREDIT
1 4 6 0 0 00 2 4 6 0 0 00 3 4 5 12 5 0 0 00 6 3 3 5 0 00 7 15 8 5 0 00 8 9 10 4 5 0 0 00 11 4 5 0 0 00 12 13 14 6 0 7 5 00 15 6 0 7 5 00 16 17 18 19 3 2 0 0 00 20 3 2 0 0 00 21 22 23 9 2 5 00 24 9 2 5 00 25 26 27 1 6 0 0 00 28 1 6 0 0 00 29 30 31 3 0 0 0 00 32 3 0 0 0 00 33 34 35 36 37
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-58
MINI-PRACTICE SET 1 (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2017 28 Utilities Expense 2 Jan. Cash 3 Paid monthly utility bill, Check 1022 4 5 29 Cash 6 Accounts Receivable 7 Fees Income 8 Performed services for cash and on account 9 10 31 Salaries Expense 11 Cash 12 Paid monthly salaries, Checks 1023–1027 13 14 31 Carolyn Wells, Drawing 15 Cash 16 Owner withdrew cash for personal use, 17 Check 1028 18 19 31 Maintenance Expense 20 Cash 21 Paid for monthly maintenance services, 22 Check 1029 23 24 31 Equipment 25 Cash 26 Accounts Payable 27 Bought equipment for cash and on account, 28 Check 1030 29 30 31 Cash 31 Accounts Receivable 32 Fees Income 33 Performed services for cash and on account 34 35 36 37
POST. REF. 514 101
DEBIT 2 3 5 0 00
101 111 401
19 0 0 0 00 2 7 5 0 00
511 101
25 7 5 0 00
302 101
15 0 0 0 00
529 101
4 1 5 0 00
141 101 202
15 0 0 0 00
101 111 401
5 6 0 0 00 1 5 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-59
5
CREDIT 1 2 3 5 0 00 2 3 4 5 6 21 7 5 0 00 7 8 9 10 25 7 5 0 00 11 12 13 14 15 0 0 0 00 15 16 17 18 19 4 1 5 0 00 20 21 22 23 24 10 0 0 0 00 25 5 0 0 0 00 26 27 28 29 30 31 7 1 8 0 00 32 33 34 35 36 37
MINI-PRACTICE SET 1 (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Adjusting Entries 2 2017 3 Jan. 31 Supplies Expense 4 Supplies 5 6 31 Insurance Expense 7 Prepaid Insurance 8 9 31 Rent Expense 10 Prepaid Rent 11 12 31 Depreciation Expense—Equipment 13 Accumulated Depreciation—Equipment 14 15 Closing Entries 16 17 31 Fees Income 18 Income Summary 19 20 31 Income Summary 21 Salaries Expense 22 Utilities Expense 23 Supplies Expense 24 Rent Expense 25 Depreciation Expense—Equipment 26 Advertising Expense 27 Maintenance Expense 28 Telephone Expense 29 Insurance Expense 30 31 31 Income Summary 32 Carolyn Wells, Capital 33 34 31 Carolyn Wells, Capital 35 Carolyn Wells, Drawing 36
POST. REF.
DEBIT
517 121
6 7 5 0 00
535 134
6 0 0 00
520 137
4 0 0 0 00
523 142
1 8 3 00
401 309
91 7 8 0 00
309 511 514 517 520 523 526 529 532 535
57 1 8 3 00
309 301
34 5 9 7 00
301 302
15 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-60
6
CREDIT 1 2 3 6 7 5 0 00 4 5 6 6 0 0 00 7 8 9 4 0 0 0 00 10 11 12 1 8 3 00 13 14 15 16 17 91 7 8 0 00 18 19 20 25 7 5 0 00 21 2 3 5 0 00 22 6 7 5 0 00 23 4 0 0 0 00 24 1 8 3 00 25 6 4 0 0 00 26 10 2 2 5 00 27 9 2 5 00 28 6 0 0 00 29 30 31 34 5 9 7 00 32 33 34 15 0 0 0 00 35 36
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Cash
DATE DESCRIPTION 2017 Jan. 1 Balance 2 2 7 12 12 13 14 15 20 20 21 22 23 26 27 28 29 31 31 31 31 31
POST. REF. ✔ J3 J3 J3 J3 J3 J3 J3 J4 J4 J4 J4 J4 J4 J4 J5 J5 J5 J5 J5 J5 J5 J5
DEBIT
CREDIT
6 0 0 0 00 7 2 0 0 00 20 0 0 0 00 4 0 0 0 00 3 2 0 0 00 3 5 0 0 00 6 5 0 00 20 7 0 0 00 12 5 0 0 00 4 5 0 0 00 6 0 7 5 00 3 2 0 0 00 9 2 5 00 1 6 0 0 00 3 0 0 0 00 2 3 5 0 00 19 0 0 0 00 25 7 5 0 00 15 0 0 0 00 4 1 5 0 00 10 0 0 0 00 5 6 0 0 00
101
BALANCE DEBIT CREDIT 111 3 5 0 00 105 3 5 0 00 98 1 5 0 00 118 1 5 0 00 122 1 5 0 00 118 9 5 0 00 122 4 5 0 00 123 1 0 0 00 143 8 0 0 00 156 3 0 0 00 160 8 0 0 00 154 7 2 5 00 151 5 2 5 00 150 6 0 0 00 152 2 0 0 00 149 2 0 0 00 146 8 5 0 00 165 8 5 0 00 140 1 0 0 00 125 1 0 0 00 120 9 5 0 00 110 9 5 0 00 116 5 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-61
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2017 Jan. 1 Balance 7 12 13 15 20 20 26 29 31
ACCOUNT
ACCOUNT NO.
Accounts Receivable POST. REF. ✔ J3 J3 J3 J4 J4 J4 J4 J5 J5
DEBIT
CREDIT
4 0 0 0 00 4 0 0 0 00 3 5 0 0 00 2 3 0 0 00 3 3 5 0 00 4 5 0 0 00 1 6 0 0 00 2 7 5 0 00 1 5 8 0 00
111
BALANCE DEBIT CREDIT 5 0 9 0 5 0 1 5 3 8 7 1 2 6 1 0 3 8 5 3
0 0 0 0 0 5 5 5 0 8
0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00
Supplies
ACCOUNT NO.
POST. DESCRIPTION REF.
BALANCE DEBIT CREDIT
DATE 2017 Jan. 1 Balance 2 14 20 31 Adjusting
✔ J3 J3 J4 J6
DEBIT
6 0 0 0 00 4 6 0 0 00
CREDIT
1 0 7 0 6 5 0 00 6 3 10 9 6 7 5 0 00 4 2
0 0 5 5 0
0 00 0 00 0 00 0 00 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-62
121
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Accounts Payable
POST. DATE DESCRIPTION REF. 2017 Jan. 1 Balance ✔ 20 J4 27 J5 31 J5
ACCOUNT
CREDIT
DATE 2017 Jan. 1 Balance 31 Closing 31 Closing
✔ J6 J6
Carolyn Wells, Drawing
BALANCE DEBIT CREDIT 3 5 0 0 00 8 1 0 0 00 5 1 0 0 00 10 1 0 0 00
4 6 0 0 00 3 0 0 0 00 5 0 0 0 00
ACCOUNT NO.
Carolyn Wells, Capital POST. DESCRIPTION REF.
ACCOUNT
DEBIT
DEBIT
CREDIT
202
301
BALANCE DEBIT CREDIT 128 6 6 7 00 163 2 6 4 00 148 2 6 4 00
34 5 9 7 00 15 0 0 0 00
ACCOUNT NO.
302
BALANCE POST. DEBIT CREDIT DATE DESCRIPTION REF. DEBIT CREDIT 2017 Jan. 31 J5 15 0 0 0 00 15 0 0 0 00 31 Closing J6 15 0 0 0 00 − 0 −
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-63
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2017 Jan. 2 31 Adjusting
ACCOUNT
ACCOUNT NO.
Prepaid Insurance POST. REF. J3 J6
DATE 2017 Jan. 1 Balance 31 Adjusting
7 2 0 0 00 6 0 0 00
DEBIT
✔ J6
CREDIT
4 0 0 0 00
✔ J5
DEBIT
CREDIT
POST. DESCRIPTION REF. ✔ J6
DEBIT
137
BALANCE DEBIT CREDIT 4 0 0 0 00 − 0−
141
BALANCE DEBIT CREDIT 11 0 0 0 00 26 0 0 0 00
15 0 0 0 00
Accumulated Depreciation—Equipment
DATE 2017 Jan. 1 Balance 31 Adjusting
7 2 0 0 00 6 6 0 0 00
ACCOUNT NO.
Equipment
DATE 2017 Jan. 1 Balance 31
BALANCE DEBIT CREDIT
ACCOUNT NO.
POST. DESCRIPTION REF.
ACCOUNT
CREDIT
Prepaid Rent POST. DESCRIPTION REF.
ACCOUNT
DEBIT
134
ACCOUNT NO.
CREDIT
142
BALANCE DEBIT CREDIT
1 8 3 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-64
1 8 3 00 3 6 6 00
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
ACCOUNT NO.
Income Summary
POST. DATE DESCRIPTION REF. DEBIT CREDIT 2017 Jan. 31 Closing J6 91 7 8 0 00 31 Closing J6 57 1 8 3 00 31 Closing J6 34 5 9 7 00
ACCOUNT
POST. DESCRIPTION REF.
DATE 2017 Jan. 7 15 20 29 31 31 Closing
ACCOUNT
J3 J4 J4 J5 J5 J6
DEBIT
CREDIT
91 7 8 0 00 34 5 9 7 00 − 0 −
24 0 0 0 00 47 0 0 0 00 62 8 5 0 00 84 6 0 0 00 91 7 8 0 00 − 0 −
91 7 8 0 00
ACCOUNT NO.
POST. DESCRIPTION REF. J5 J6
DEBIT 25 7 5 0 00
CREDIT
401
BALANCE DEBIT CREDIT
24 0 0 0 00 23 0 0 0 00 15 8 5 0 00 21 7 5 0 00 7 1 8 0 00
Salaries Expense
DATE 2017 Jan. 31 31 Closing
BALANCE DEBIT CREDIT
ACCOUNT NO.
Fees Income
309
511
BALANCE DEBIT CREDIT
25 7 5 0 00 25 7 5 0 00 − 0 −
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-65
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2017 Jan. 28 31 Closing
ACCOUNT
J5 J6
DEBIT
CREDIT
2 3 5 0 00 2 3 5 0 00
POST. REF. J6 J6
DEBIT
CREDIT
6 7 5 0 00 6 7 5 0 00
J6 J6
DEBIT
CREDIT
4 0 0 0 00 4 0 0 0 00
Depreciation Expense—Equipment
DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing
2 3 5 0 00 − 0 −
POST. REF. J6 J6
DEBIT
517
BALANCE DEBIT CREDIT 6 7 5 0 00 − 0 −
ACCOUNT NO. POST. REF.
514
BALANCE DEBIT CREDIT
ACCOUNT NO.
Rent Expense
DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing
ACCOUNT
POST. REF.
Supplies Expense
DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing
ACCOUNT
ACCOUNT NO.
Utilities Expense
520
BALANCE DEBIT CREDIT 4 0 0 0 00 − 0 −
ACCOUNT NO.
523
CREDIT
BALANCE DEBIT CREDIT
1 8 3 00
1 8 3 00 − 0 −
1 8 3 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-66
MINI−PRACTICE SET 1 (continued) GENERAL LEDGER ACCOUNT
DATE DESCRIPTION 2017 Jan. 12 22 31 Closing
ACCOUNT
J3 J4 J6
DEBIT
CREDIT
3 2 0 0 00 3 2 0 0 00 6 4 0 0 00
POST. REF. J4 J5 J6
DEBIT 6 0 7 5 00 4 1 5 0 00
CREDIT
J4 J6
DEBIT
BALANCE DEBIT CREDIT
CREDIT
9 2 5 00
9 2 5 00 − 0 −
9 2 5 00
J6 J6
DEBIT
532
BALANCE DEBIT CREDIT
ACCOUNT NO.
POST. REF.
529
6 0 7 5 00 10 2 2 5 00 10 2 2 5 00 − 0 −
Insurance Expense
DATE DESCRIPTION 2017 Jan. 31 Adjusting 31 Closing
3 2 0 0 00 6 4 0 0 00 − 0 −
ACCOUNT NO.
POST. REF.
526
BALANCE DEBIT CREDIT
ACCOUNT NO.
Telephone Expense
DATE DESCRIPTION 2017 Jan. 23 31 Closing
ACCOUNT
POST. REF.
Maintenance Expense
DATE DESCRIPTION 2017 Jan. 21 31 31 Closing
ACCOUNT
ACCOUNT NO.
Advertising Expense
535
CREDIT
BALANCE DEBIT CREDIT
6 0 0 00
6 0 0 00 − 0 −
6 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-67
MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Worksheet Month Ended January 31, 2017
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Insurance 5 Prepaid Rent 6 Equipment 7 Accumulated Depreciation—Equipment 8 Accounts Payable 9 Carolyn Wells, Capital 10 Carolyn Wells, Drawing 11 Income Summary 12 Fees Income 13 Salaries Expense 14 Utilities Expense 15 Supplies Expense 18 Insurance Expense 16 Rent Expense 17 Depreciation Expense—Equipment 19 Advertising Expense 20 Telephone Expense 21 Maintenance Expense 22 Totals
TRIAL BALANCE DEBIT CREDIT 116 5 5 0 00 5 3 8 0 00 10 9 5 0 00 7 2 0 0 00 4 0 0 0 00 26 0 0 0 00 1 8 3 00
ADJUSTMENTS DEBIT CREDIT
(a) 6 7 5 0 00 (b) 6 0 0 00 (c) 4 0 0 0 00 (d)
1 8 3 00
10 1 0 0 00 128 6 6 7 00 15 0 0 0 00 91 7 8 0 00 25 7 5 0 00 2 3 5 0 00 (a) 6 (b) (c) 4 (d)
7 5 0 00 6 0 0 00 0 0 0 00 1 8 3 00
6 4 0 0 00 9 2 5 00 10 2 2 5 00 230 7 3 0 00
230 7 3 0 00
11 5 3 3 00
23 Net Income 24 25
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-68
11 5 3 3 00
MINI-PRACTICE SET 1 (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 − 0 − 6 6 0 0 00 26 0 0 0 00 3 6 6 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 − 0 − 6 6 0 0 00 26 0 0 0 00 3 6 6 00
10 1 0 0 00 128 6 6 7 00 15 0 0 0 00
25 7 5 0 00 2 3 5 0 00 6 7 5 0 00 4 0 0 0 00 1 8 3 00 6 0 0 00 6 4 0 0 00 9 2 5 00 10 2 2 5 00 230 9 1 3 00
10 1 0 0 00 128 6 6 7 00
8 9 10 11 12 13 14 15 16 17 18 19 20 21
139 1 3 3 00
22
34 5 9 7 00
23
173 7 3 0 00
24
15 0 0 0 00 91 7 8 0 00
91 7 8 0 00 25 7 5 0 00 2 3 5 0 00 6 7 5 0 00 4 0 0 0 00 1 8 3 00 6 0 0 00 6 4 0 0 00 9 2 5 00 10 2 2 5 00
230 9 1 3 00
57 1 8 3 00
91 7 8 0 00
173 7 3 0 00
34 5 9 7 00 91 7 8 0 00
91 7 8 0 00
173 7 3 0 00
1 2 3 4 5 6 7
25
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-69
MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Income Statement Month Ended January 31, 2017 Revenue Fees Income Expenses Salaries Expense Utilities Expense Supplies Expense Rent Expense Insurance Expense Depreciation Expense—Equipment Advertising Expense Telephone Expense Maintenance Expense Total Expenses Net Income
91 7 8 0 00 25 7 5 0 00 2 3 5 0 00 6 7 5 0 00 4 0 0 0 00 6 0 0 00 1 8 3 00 6 4 0 0 00 9 2 5 00 10 2 2 5 00 57 1 8 3 00 34 5 9 7 00
Wells’ Consulting Services Statement of Owner's Equity Month Ended January 31, 2017 Carolyn Wells, Capital, January 1, 2017 Net Income for January Less Withdrawals for January Increase in Capital for January Carolyn Wells, Capital, January 31, 2017
128 6 6 7 00 34 5 9 7 00 15 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-70
19 5 9 7 00 148 2 6 4 00
MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Balance Sheet January 31, 2017 Assets Cash Accounts Receivable Supplies Prepaid Insurance Equipment Less Accumulated Depreciation—Equipment Total Assets
116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 6 6 0 0 00 26 0 0 0 00 3 6 6 00
25 6 3 4 00 158 3 6 4 00
Liabilities and Owner's Equity Liabilities Accounts Payable Owner's Equity Carolyn Wells, Capital Total Liabilities and Owner's Equity
10 1 0 0 00 148 2 6 4 00 158 3 6 4 00
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-71
MINI-PRACTICE SET 1 (continued) Wells’ Consulting Services Post-closing Trial Balance January 31, 2017 ACCOUNT NAME Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation—Equipment Accounts Payable Carolyn Wells, Capital Totals
Analyze:
DEBIT 116 5 5 0 00 5 3 8 0 00 4 2 0 0 00 6 6 0 0 00 26 0 0 0 00
CREDIT
3 6 6 00 10 1 0 0 00 148 2 6 4 00 158 7 3 0 00 158 7 3 0 00
a. Total assets increased by $26,197 ($158,364 – $132,167). Total liabilities increased by $6,600 ($10,100 – $3,500). Owner’s capital increased by $19,597 ($148,264 – 128,667). b. The balance of Cash increased by $5,200 ($116,550 – $111,350). The balance of Accounts Receivable increased by $380 ($5,380 – $5,000). c. Yes. The firm’s financial position improved through the increases in capital of $19,597 ($148,264 – $128,667).
© 2015 McGraw-Hill Education. This is proprietary material solely for instructor use. Not authorized for sale or distribution in any manner. 6-72
CHAPTER 7 ACCOUNTING FOR SALES, ACCOUNTS RECEIVABLE, AND CASH RECEIPTS Chapter Opener: Thinking Critically It is common practice for stores to offer trade and/or cash discounts to its customers. For example, if a store purchases larger quantities of goods then Kellogg may offer it a trade discount based on the size of its order. It may also offer a store an early payment discount if the store pays its balance owed within a certain period of time. In this way, Kellogg can increase its volume of sales as well as collect more quickly, the amounts owed from its customers.
Fast Facts • Kellogg offers more than 1,600 products, which are produced in 18 countries and marketed in over 180 countries. • Kellogg's employs over 31,000 people. • As of 2012, the North America frozen food business alone generates $1 billion in revenues. • Kellogg's business in Latin America, Asia, South Africa, Mediterranean and Russia reached $2 billion in 2012, which is a 140% increase since 2001. Discussion Questions These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Retail: sell goods directly to consumers. Wholesale: sell goods to retailers. Net sales are sales, less sales returns and allowances and less sales discounts. Prove balances, summarize receivables. Separate record of returns and allowances. Contra revenue account. Contra revenue account. Time of sale; Sales Tax Payable. Divide total of Sales account by 105 percent, multiply by sales tax rate. a. Debit Accounts Receivable, credit Sales, b. Debit Accounts Receivable from Credit Card Companies, credit Sales.of credit card sales submitted to the credit card company for payment. Summaries The credit card company. No responsibility for collecting cash from customer exists. Credit Card Expense. Purchase amount to be paid at a later date. A reduction from the list price, offered by wholesalers; attracts customers.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-1
EXERCISE 7.1 Cr Sales Dr Sales Returns and Allowances Dr Sales Discounts
Dr Credit Card Expense Cr Sales Tax Payable
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-2
EXERCISE 7.2 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
Post Ref.
1 2016 2 June 5 Accounts Receivable 3 Sales 4 Sold merchandise on account to Mahonga Company, 5 Sales Slip 1200, terms n/30 6 7 15 Cash 8 Sales 9 Recorded cash sales 10 11 30 Cash 12 Accounts Receivable 13 Received cash from Mahonga Company on account 14
DEBIT
8 7 5 00
1 8 4 0 00
8 7 5 00
1
CREDIT 1 2 8 7 5 00 3 4 5 6 7 1 8 4 0 00 8 9 10 11 8 7 5 00 12 13 14
EXERCISE 7.3 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 May 1 Accounts Receivable ($2,000 + $160) 3 Sales 4 Sales Tax Payable ($2,000 x 8%) 5 Sold merchandise on credit to Bill Walker, 6 Sales Slip 1015, terms n/30 7 8 15 Cash ($4,800 + $384) 9 Sales 10 Sales Tax Payable ($4,800 x 8%) 11 Recorded cash sales 12 13 31 Cash 14 Accounts Receivable 15 Received payment on account from Bill Walker 16
Post Ref.
DEBIT
2 1 6 0 00
5 1 8 4 00
2 1 6 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-3
1
CREDIT 1 2 2 0 0 0 00 3 1 6 0 00 4 5 6 7 8 4 8 0 0 00 9 3 8 4 00 10 11 12 13 2 1 6 0 00 14 15 16
EXERCISE 7.4 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 April 2 Cash ($1,500 + $120) 3 Sales 4 Sales Tax Payable ($1,500 x 8%) 5 Recorded cash sales 6 7 3 Sales Returns and Allowances 8 Sales Tax Payable ($150 x 8%) 9 Cash ($150 + $12) 10 Recorded sales return 11 12 4 Accounts Receivable ($1,050 + $84) 13 Sales 14 Sales Tax Payable ($1,050 × 8%) 15 Sold merchandise on credit to Tisha Lee, 16 Sales Slip 908, terms n/30 17 18 6 Sales Returns and Allowances 19 Sales Tax Payable ($75 x 8%) 20 Accounts Receivable ($75+ $6) 21 Accept a return of defective merchandise, Credit 22 Memorandum 302; original sale made on 23 Sales Slip 908 to Tisha Lee on April 4 24 25 30 Cash ($1,134 - $81) 26 Accounts Receivable 27 Received cash from Tisha Lee, after deducting 28 Credit Memorandum 302 29
Post Ref.
DEBIT
1 6 2 0 00
1 5 0 00 1 2 00
1 1 3 4 00
7 5 00 6 00
1 0 5 3 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-4
1
CREDIT 1 2 1 5 0 0 00 3 1 2 0 00 4 5 6 7 8 1 6 2 00 9 10 11 12 1 0 5 0 00 13 8 4 00 14 15 16 17 18 19 8 1 00 20 21 22 23 24 25 1 0 5 3 00 26 27 28 29
EXERCISE 7.5 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 2 Credit Card Expense ($3,800 + $304) × 2% 3 Cash ($3,800 + $304 - $82.08) 4 Sales 5 Sales Tax Payable ($3,800 × 8%) 6 Record sales to customers using bank credit cards 7 8 15 Accounts Receivable ($2,100 + $168) 9 Sales 10 Sales Tax Payable ($2,100 × 8%) 11 Record sales to customers using American Express 12 13 20 Credit Card Expense ($2,268 × 3%) 14 Cash ($2,268 - $68.04) 15 Accounts Receivable 16 Record payment received from American Express 17
Post Ref.
DEBIT
8 2 08 4 0 2 1 92
2 2 6 8 00
6 8 04 2 1 9 9 96
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-5
1
CREDIT 1 2 3 3 8 0 0 00 4 3 0 4 00 5 6 7 8 2 1 0 0 00 9 1 6 8 00 10 11 12 13 14 2 2 6 8 00 15 16 17
EXERCISE 7.6 1. 2. 3.
$512 ($640 × 20% = $128; $640 - $128 = $512) $444 ($740 × 40% = $296; $740 - $296 = $444) $224 ($320 × 30% = $96; $320 - $96 = $224)
EXERCISE 7.7 1.
2.
3.
List price Less first discount ($4,500 × 30%)
$4,500.00 1,350.00
Difference Less second discount ($3,150×20%)
$3,150.00 630.00
Invoice price
$2,520.00
List price Less first discount ($5,200 × 30%)
$5,200.00 1,560.00
Difference Less second discount ($3,640× 20%)
$3,640.00 728.00
Invoice price
$2,912.00
List price Less first discount $3,550 × 20%)
$3,550.00 710.00
Difference Less second discount ($2,840 × 10%)
$2,840.00 284.00
Invoice price
$2,556.00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-6
EXERCISE 7.8 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
Post Ref.
1 2016 2 April 1 Accounts Receivable 3 Sales 4 Sold merchandise on account to Fronke's 5 Franks, Invoice 1001, terms 1/10, n30. 6 7 10 Sales Discounts ($3,000 x 1%) 8 Cash ($3,000 - $30 discount) 9 Accounts Receivable 10 Received payment from Fronke's Franks for 11 Invoice 1001, dated April 1. 12 13
DEBIT
14
CREDIT
3 0 0 0 00 3 0
3 0 00 2 9 7 0 00 3 0
1 2 0 0 00 3 4 5 6 7 8 0 0 00 9 10 11 12 13
EXERCISE 7.9 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Jan. 8 Cash 3 Accounts Receivable/John Gibrone 4 5 6 7 8 9 10 11 12 13
Post Ref.
DEBIT
40
CREDIT
6
1 2 4 0 00 3
2
4 5 6 7 8 1 6 00 9
6 4 0 00 111
✔
Received partial payment on account from John Gibrone 20 Sales Returns and Allowances Sales Tax Payable Accounts Receivable/Jim Garcia
2 0 0 00 1 6 00 111
✔
Accept return of defective merchandise, Credit Memorandum 121; original sale made on Sales Slip 11102 of December 27, 2015
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-7
10 11 12 13
EXERCISE 7.9 (continued) GENERAL LEDGER ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
DESCRIPTION
Post Ref.
2016 Jan. 1 Balance 8 20
DEBIT
CREDIT
✔ J40 J40
6 4 0 00 2 1 6 00
BALANCE DEBIT CREDIT 9 8 4 0 00 9 2 0 0 00 8 9 8 4 00
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Jim Garcia ADDRESS DATE
DESCRIPTION
2016 Jan. 1 Balance 20
Post Ref.
DEBIT
✔ J40
CREDIT
2 1 6 00
BALANCE
2 2 6 0 00 2 0 4 4 00
NAME John Gibrone ADDRESS DATE
DESCRIPTION
2016 Jan. 1 Balance 8
Post Ref.
DEBIT
✔ J40
CREDIT
6 4 0 00
BALANCE
6 4 0 0 00 5 7 6 0 00
NAME June Lin ADDRESS DATE 2016 Jan. 1 Balance
DESCRIPTION
Post Ref.
DEBIT
CREDIT
✔
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-8
BALANCE
1 1 8 0 00
EXERCISE 7.10 1. Calderone Company Schedule of Accounts Receivable January 31, 2016 Jim Garcia John Gibrone June Lin Total
2 0 4 4 00 5 7 6 0 00 1 1 8 0 00 8 9 8 4 00
2. Yes, they should be equal. The balance of the Accounts Receivable control account is also $8,984.00.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-9
PROBLEM 7.1A PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 March 1 Accounts Receivable/Dave Allen ($600 + $36) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Sales Sales Tax Payable ($600 × 6%) Sold merchandise on credit to Dave Allen, Sales Slip 101 4 Accounts Receivable/Castor Phan ($900 + $54) Sales Sales Tax Payable ($900 × 6%) Sold merchandise on credit to Castor Phan, Sales Slip 102 12 Accounts Receivable/Chris Hughes ($1,100 + $66) Sales Sales Tax Payable ($1,100 × 6%) Sold merchandise on credit to Chris Hughes, Sales Slip 103
Post Ref.
DEBIT
111
6 3 6 00
1 2
9 5 4 00
6 0 0 00 3 3 6 00 4 5 6 7 8
1 1 6 6 00
9 0 0 00 9 5 4 00 10 11 12 13 14
✔
401 221
111
✔
401 221
111
✔
401 221
15 Cash ($7,600 + $456) Sales Sales Tax Payable ($7,600 × 6%) Record cash sales, March 1-15
101 401 221
25 Accounts Receivable/Brian Cooley ($850 + $51)
111
Sales Sales Tax Payable ($850 × 6%) Sold merchandise on credit to Brian Cooley, Sales Slip 104 28 Cash Accounts Receivable/Castor Phan
1
✔
8 0 5 6 00
9 0 1 00
401 221
101 111
2 2 0 00
✔
Received partial payment on account from Castor Phan
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-10
CREDIT
1 1 0 0 00 15 6 6 00 16 17 18 19 20 7 6 0 0 00 21 4 5 6 00 22 23 24 25 8 5 0 00 26 5 1 00 27 28 29 30 31 2 2 0 00 32 33 34 35 36
PROBLEM 7.1A (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 March 31 Cash ($4,500 + $270) 3 Sales 4 Sales Tax Payable ($4,500 × 6%) 5 Record cash sales, March 16 - 31 6 7 31 Cash 8 Accounts Receivable/Dave Allen 9 10
Post Ref.
DEBIT
101 401 221
4 7 7 0 00
101
6 3 6 00
111
✔
Received full payment on account from Dave Allen
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-11
2
CREDIT 1 2 4 5 0 0 00 3 2 7 0 00 4 5 6 7 6 3 6 00 8 9 10
PROBLEM 7.1A (continued) GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 March 15 28 31 31
Post Ref.
DEBIT
J1 J1 J2 J2
8 0 5 6 00 2 2 0 00 4 7 7 0 00 6 3 6 00
CREDIT
8 0 5 6 00 8 2 7 6 00 13 0 4 6 00 13 6 8 2 00
ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
DESCRIPTION
2016 March 1 4 12 25 28 31
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2
6 3 6 00 9 5 4 00 1 1 6 6 00 9 0 1 00
CREDIT
2 2 0 00 6 3 6 00
2016 March 1 4 12 15 25 31
DESCRIPTION
BALANCE DEBIT CREDIT 6 3 6 00 1 5 9 0 00 2 7 5 6 00 3 6 5 7 00 3 4 7 3 00 2 8 0 1 00
ACCOUNT NO. 221
ACCOUNT Sales Tax Payable DATE
BALANCE DEBIT CREDIT
Post Ref. J1 J1 J1 J1 J1 J2
DEBIT
CREDIT
BALANCE DEBIT CREDIT
3 6 00 5 4 00 6 6 00 4 5 6 00 5 1 00 2 7 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-12
3 6 00 9 0 00 1 5 6 00 6 1 2 00 6 6 3 00 9 3 3 00
PROBLEM 7.1A (continued) ACCOUNT NO. 401
ACCOUNT Sales DATE 2016 March 1 4 12 15 25 31
DESCRIPTION
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2
CREDIT
BALANCE DEBIT CREDIT
6 0 0 00 9 0 0 00 1 1 0 0 00 7 6 0 0 00 8 5 0 00 4 5 0 0 00
Analyze: The total cash receipts during March were $13,682.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-13
6 0 0 00 1 5 0 0 00 2 6 0 0 00 10 2 0 0 00 11 0 5 0 00 15 5 5 0 00
PROBLEM 7.2A PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Sept. 1 Accounts Receivable/Candy Cho ($2,400 + $168) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Sales Sales Tax Payable ($2,400 × 7%) Sold TV on credit to Candy Cho, Sales Slip 101 3 Accounts Receivable/Jim Peterson ($900 + $63) Sales Sales Tax Payable ($900 × 7%) Sold stereo equip. on credit to Jim Peterson, Sales Slip 102 7 Accounts Receivable/Bridgette Huffman ($200 + $14) Sales Sales Tax Payable ($200 × 7%) Sold microwave oven on credit to Bridgette Huffman Sales Slip 103 12 Sales Returns and Allowances Sales Tax Payable ($200 × 7%) Accounts Receivable/Jim Peterson
Post Ref.
DEBIT
111
2 5 6 8 00
1 2
9 6 3 00
2 4 0 0 00 3 1 6 8 00 4 5 6 7 8
✔
401 221
111
✔
401 221
111
✔
2 1 4 00
401 221
421 221 111
2 0 0 00 1 4 00
✔
Accepted return of defective merchandise, Credit Memorandum 101; original sale made on Sales Slip 102 of September 3 15 Cash ($10,800 + $756) Sales Sales Tax Payable ($10,800 × 7%) Record cash sales, Sept. 1-15
101 401 221
16 Accounts Receivable/Kathy Sundstrand ($500 + $35)
111
Sales Sales Tax Payable ($500 × 7%) Sold gas dryer on credit to Kathy Sundstrand, Sales Slip 104
1
✔
11 5 5 6 00
5 3 5 00
401 221
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-14
CREDIT
9 0 0 00 9 6 3 00 10 11 12 13 14 2 0 0 00 15 1 4 00 16 17 18 19 20 21 2 1 4 00 22 23 24 25 26 27 10 8 0 0 00 28 7 5 6 00 29 30 31 32 5 0 0 00 33 3 5 00 34 35 36 37
PROBLEM 7.2A (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Sept. 17 Accounts Receivable/Mark Navalta ($2,400 + $168) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Sales Sales Tax Payable ($2,400 × 7%) Sold home entertainment system on credit to Mark Navalta, Sales Slip 105 18 Cash Accounts Receivable/Candy Cho
Post Ref.
DEBIT
111
2 5 6 8 00
✔
401 221
101 111
7 0 0 00
✔
Received partial payment on account from Candy Cho 20 Cash ($963 - $214) Accounts Receivable/Jim Peterson
101 111
7 4 9 00
✔
Received payment on account from Jim Peterson for sale of Sept. 3, less return of Sept. 12. 25 Sales Returns and Allowances Sales Tax Payable ($200 × 7%) Accounts Receivable/Mark Navalta
421 221 111
2 0 0 00 1 4 00
✔
Issued Credit Memorandum 102 due to scratches on home entertainment system 27 Cash Accounts Receivable/Bridgette Huffman
Sales Sales Tax Payable ($600 × 7%) Sold dishwasher on credit to Mark Navalta, Sales Slip 106 30 Cash Sales Sales Tax Payable ($11,100 × 7%) Record cash sales, Sept. 16 – 30
111
1 2 2 4 0 0 00 3 1 6 8 00 4 5 6 7 8 7 0 0 00 9 10 11 12 13 7 4 9 00 14 15 16 17 18 19 2 1 4 00 20
✔
✔
26 27 28
2 1 4 00
Received payment from Bridgette Huffman 29 Accounts Receivable/Mark Navalta
CREDIT
21 22 23 24 2 1 4 00 25
101 111
2
6 4 2 00
221
101 401 221
11 8 7 7 00
Analyze: $5,300 /$28,500 = 18.6%; 18.6% of the sales in September were for entertainment items.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-15
6 0 0 00 29 4 2 00 30 31 32 33 34 11 1 0 0 00 35 7 7 7 00 36 37 38
PROBLEM 7.3A GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 Sept. 15 18 20 27 30
Post Ref.
DEBIT
J1 J2 J2 J2 J2
11 5 5 6 00 7 0 0 00 7 4 9 00 2 1 4 00 11 8 7 7 00
CREDIT
11 5 5 12 2 5 13 0 0 13 2 1 25 0 9
2016 Sept. 1 3 7 12 16 17 18 20 25 27 29
DESCRIPTION
6 00 6 00 5 00 9 00 6 00
ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2 J2 J2 J2 J2 J2
2 5 6 8 00 9 6 3 00 2 1 4 00
CREDIT
2 1 4 00 5 3 5 00 2 5 6 8 00 7 0 0 00 7 4 9 00 2 1 4 00 2 1 4 00 6 4 2 00
BALANCE DEBIT CREDIT 2 5 6 3 5 3 3 7 4 3 5 3 4 0 6 6 6 3 5 9 3 5 1 8 4 9 7 4 7 5 5 3 9
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-16
8 00 1 00 5 00 1 00 6 00 4 00 4 00 5 00 1 00 7 00 9 00
PROBLEM 7.3A (continued) ACCOUNT NO. 221
ACCOUNT Sales Tax Payable DATE
DESCRIPTION
2016 Sept. 1 3 7 12 15 16 17 25 29 30
Post Ref. J1 J1 J1 J1 J1 J1 J2 J2 J2 J2
DEBIT
CREDIT
BALANCE DEBIT CREDIT
1 6 8 00 6 3 00 1 4 00 1 4 00 7 5 6 00 3 5 00 1 6 8 00
1 1 1 1 1
1 4 00 4 2 00 7 7 7 00
1 6 8 00 2 3 1 00 2 4 5 00 2 3 1 00 9 8 7 00 0 2 2 00 1 9 0 00 1 7 6 00 2 1 8 00 9 9 5 00
GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE
DESCRIPTION
2016 Sept. 1 3 7 15 16 17 29 30
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2 J2 J2
CREDIT
2 4 0 0 00 9 0 0 00 2 0 0 00 10 8 0 0 00 5 0 0 00 2 4 0 0 00 6 0 0 00 11 1 0 0 00
2016 Sept. 12 25
DESCRIPTION
2 3 3 14 14 17 17 28
4 0 0 00 3 0 0 00 5 0 0 00 3 0 0 00 8 0 0 00 2 0 0 00 8 0 0 00 9 0 0 00
ACCOUNT NO. 421
ACCOUNT Sales Returns and Allowances DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J1 J2
2 0 0 00 2 0 0 00
CREDIT
BALANCE DEBIT CREDIT 2 0 0 00 4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-17
PROBLEM 7.3A (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Candy Cho ADDRESS DATE
DESCRIPTION
2016 Sept. 1 Sales Slip 101 18
Post Ref.
DEBIT
J1 J2
2 5 6 8 00
Post Ref.
DEBIT
J1 J2
2 1 4 00
Post Ref.
DEBIT
J2 J2 J2
2 5 6 8 00
Post Ref.
DEBIT
J1 J1 J2
9 6 3 00
CREDIT
7 0 0 00
BALANCE
2 5 6 8 00 1 8 6 8 00
NAME Bridgette Huffman ADDRESS DATE
DESCRIPTION
2016 Sept. 7 Sales Slip 103 27
CREDIT
2 1 4 00
BALANCE
2 1 4 00 - 0 -
NAME Mark Navalta ADDRESS DATE
DESCRIPTION
2016 Sept. 17 Sales Slip 105 25 Credit Memorandum 102 29 Sales Slip 106
CREDIT
2 1 4 00 6 4 2 00
BALANCE
2 5 6 8 00 2 3 5 4 00 2 9 9 6 00
NAME Jim Peterson ADDRESS DATE
DESCRIPTION
2016 Sept. 3 Sales Slip 102 12 Credit Memorandum 101 20
CREDIT
2 1 4 00 7 4 9 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-18
BALANCE
9 6 3 00 7 4 9 00 - 0 -
PROBLEM 7.3A (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Kathy Sundstrand ADDRESS DATE 2016 Sept. 16 Sales Slip 104
DESCRIPTION
Post Ref.
DEBIT
J1
5 3 5 00
CREDIT
BALANCE
5 3 5 00
Exceptional Electronics Schedule of Accounts Receivable September 30, 2016 Candy Cho Bridgette Huffman Mark Navalta Jim Peterson Kathy Sundstrand Total
Analyze: The amount of sales tax owed at September 30, 2016 is $1,995.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-19
1 8 6 8 00 0 00 2 9 9 6 00 0 00 5 3 5 00 5 3 9 9 00
PROBLEM 7.4A PAGE
GENERAL JOURNAL DATE 1 2016 2 April 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
DESCRIPTION
1 Accounts Receivable/Alto Music Center Sales Sold merchandise on credit to Alto Music Center, Invoice 3912, 1/10, n/30 3 Sales Discounts Cash Accounts Receivable/Music Supply Store
Post Ref.
DEBIT
111
4 5 0 0 00
✔
401
452 101 111
2 0 00 1 9 8 0 00
✔
Received payment on account from Music Supply Store, Invoice 2718 5 Cash Sales Sold merchandise for cash to a new customer
101 401
1 7 2 5 00
7 Sales Returns and Allowances Cash Issued cash refund for merchandise sold on April 5
451 101
8 0 00
8 Accounts Receivable/Music Warehouse
111
Sales Sold merchandise on credit to Music Warehouse, Invoice 3913, 2/10, n/30 10 Sales Discounts ($4,500 * 1%) Cash ($4,500 - $45) Accounts Receivable/Alto Music Center
✔
6 5 0 0 00
401
452 101 111
4 5 00 4 4 5 5 00
✔
Received payment on account from Alto Music Center, Invoice 3912 15 Sales Returns and Allowances Accounts Receivable/Music Warehouse
451 111
2 3 0 0 00
✔
Accepted return of damaged merchandise, issued Credit Memorandum 105 to Music Warehouse Original sale made on Invoice 3913, April 8
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-20
11
CREDIT 1 2 4 5 0 0 00 3 4 5 6 7 8 2 0 0 0 00 9 10 11 12 13 1 7 2 5 00 14 15 16 17 8 0 00 18 19 20 21 6 5 0 0 00 22 23 24 25 26 27 4 5 0 0 00 28 29 30 31 32 2 3 0 0 00 33 34 35 36 37
PROBLEM 7.4A (continued) DATE
GENERAL JOURNAL DESCRIPTION
1 2016 2 April 17 Sales Discounts (($6,500 - $2,300) * 2%) 3 Cash ($4,200 - $84) 4 Accounts Receivable/Music Warehouse 5 Received payment on account from 6 Music Warehouse, Invoice 3913 7 8 19 Cash 9 Accounts Receivable/Oldies Sounds 10 Received payment on account from Oldies Sounds 11 Invoice 3850 12 13 20 Accounts Receivable/Hawk Music Center 14 Sales 15 Sold merchandise on credit to Hawk Music Center, 16 Invoice 3914, 2/10, n/30 17 18 25 Accounts Receivable/Modern Sounds 19 Sales 20 Sold merchandise on credit to Modern Sounds, 21 Invoice 3915, 2/10, n/30 22 23 26 Accounts Receivable/Country Tunes 24 Sales 25 Sold merchandise on credit to Country Tunes, 26 Invoice 3916, 2/10, n/30 27 28 27 Sales Returns and Allowances 29 Accounts Receivable/Modern Sounds 30 Accepted return of damaged merchandise, issued 31 Credit Memorandum 106 to Modern Sounds. 32 Original sale made on Invoice 3915, April 25 33 34 29 Sales Discounts ($11,200 * 2%) 35 Cash ($11,200 - $224) 36 Accounts Receivable/Hawk Music Center 37 38 39
Post Ref.
✔
1 2 3 4 2 0 0 00 4 5 6 7 8 2 3 0 0 00 9 10 11 12 13 11 2 0 0 00 14 15 16 17 18 10 8 0 0 00 19 20 21 22 23 8 6 0 0 00 24 25 26 27 28 5 0 0 00 29 30 31 32 33 34 35 11 2 0 0 00 36
✔
37 38 39
452 101 111
111
8 4 00 4 1 1 6 00
✔
101 111
DEBIT
2 3 0 0 00
✔
✔
11 2 0 0 00
401
111
✔
10 8 0 0 00
401
111
✔
8 6 0 0 00
401
451 111
5 0 0 00
✔
452 101 111
2 2 4 00 10 9 7 6 00
Received payment on account, Invoice 3914 30 Accounts Receivable/Oldies Sounds
111
PAGE 12 CREDIT
3 2 0 0 00
40 Sales 401 41 Sold merchandise on credit to Oldies Sounds, 42 Invoice 3917, 2/10, n/30 43 Analyze: The amount of the cash discount taken by Hawk Music Center on April 29 was $224.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-21
3 2 0 0 00 40 41 42 43
PROBLEM 7.5A GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 April 1 Balance 3 5 7 10 17 19 29
Post Ref.
J11 J11 J11 J11 J12 J12 J12
DEBIT
CREDIT
1 9 8 0 00 1 7 2 5 00 8 0 00 4 4 5 5 00 4 1 1 6 00 2 3 0 0 00 10 9 7 6 00
DESCRIPTION
2016 April 1 Balance 1 3 8 10 15 17 19 20 25 26 27 29 30
27 4 0 0 00 29 3 8 0 00 31 1 0 5 00 31 0 2 5 00 35 4 8 0 00 39 5 9 6 00 41 8 9 6 00 52 8 7 2 00 ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
BALANCE DEBIT CREDIT
Post Ref.
J11 J11 J11 J11 J11 J12 J12 J12 J12 J12 J12 J12 J12
DEBIT
CREDIT DEBIT
4 5 0 0 00 2 0 0 0 00 6 5 0 0 00 4 5 0 0 00 2 3 0 0 00 4 2 0 0 00 2 3 0 0 00 11 2 0 0 00 10 8 0 0 00 8 6 0 0 00 5 0 0 00 11 2 0 0 00 3 2 0 0 00
BALANCE CREDIT
4 3 0 0 00 8 8 0 0 00 6 8 0 0 00 13 3 0 0 00 8 8 0 0 00 6 5 0 0 00 2 3 0 0 00 - 0 11 2 0 0 00 22 0 0 0 00 30 6 0 0 00 30 1 0 0 00 18 9 0 0 00 22 1 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-22
EXERCISE 7.5A (continued) GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE
DESCRIPTION
2016 April 1 5 8 20 25 26 30
Post Ref.
DEBIT
J11 J11 J11 J12 J12 J12 J12
CREDIT
4 5 0 0 00 1 7 2 5 00 6 5 0 0 00 11 2 0 0 00 10 8 0 0 00 8 6 0 0 00 3 2 0 0 00
DESCRIPTION
2016 April 7 15 27
Post Ref.
DEBIT
J11 J11 J12
8 0 00 2 3 0 0 00 5 0 0 00
CREDIT
DESCRIPTION
2016 April 3 Balance 10 17 29
BALANCE DEBIT CREDIT 8 0 00 2 3 8 0 00 2 8 8 0 00
ACCOUNT NO. 452
ACCOUNT Sales Discounts DATE
4 5 0 0 00 6 2 2 5 00 12 7 2 5 00 23 9 2 5 00 34 7 2 5 00 43 3 2 5 00 46 5 2 5 00 ACCOUNT NO. 451
ACCOUNT Sales Returns and Allowances DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J11 J11 J12 J12
2 0 00 4 5 00 8 4 00 2 2 4 00
CREDIT
BALANCE DEBIT CREDIT 2 0 00 6 5 00 1 4 9 00 3 7 3 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-23
PROBLEM 7.5A (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Alto Music Center ADDRESS DATE
DESCRIPTION
2016 April 1 Invoice 3912 10
Post Ref.
DEBIT
J11 J11
4 5 0 0 00
Post Ref.
DEBIT
J12
8 6 0 0 00
Post Ref.
DEBIT
J12 J12
11 2 0 0 00
Post Ref.
DEBIT
J12 J12
10 8 0 0 00
CREDIT
BALANCE
4 5 0 0 00
4 5 0 0 00 - 0 -
CREDIT
BALANCE
NAME Country Tunes ADDRESS DATE
DESCRIPTION
2016 April 26 Invoice 3916
8 6 0 0 00
NAME Hawk Music Center ADDRESS DATE
DESCRIPTION
2016 April 20 Invoice 3914 29
CREDIT
BALANCE
11 2 0 0 00
11 2 0 0 00 - 0 -
CREDIT
BALANCE
NAME Modern Sounds ADDRESS DATE
DESCRIPTION
2016 April 25 Invoice 3915 27 Credit Memorandum 106
5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-24
10 8 0 0 00 10 3 0 0 00
PROBLEM 7.5A (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Music Supply Store ADDRESS DATE
DESCRIPTION
2016 April 1 Balance 3
Post Ref.
DEBIT
✔ J11
CREDIT
BALANCE
2 0 0 0 00
2 0 0 0 00 - 0 -
CREDIT
BALANCE
2 3 0 0 00 4 2 0 0 00
6 5 0 0 00 4 2 0 0 00 - 0 -
CREDIT
BALANCE
2 3 0 0 00
2 3 0 0 00 - 0 3 2 0 0 00
NAME Music Warehouse ADDRESS DATE
DESCRIPTION
2016 April 8 Invoice 3913 15 Credit Memorandum 105 17
Post Ref.
DEBIT
J11 J11 J12
6 5 0 0 00
Post Ref.
DEBIT
NAME Oldies Sounds ADDRESS DATE 2016 April 1 Balance 19 30 Invoice 3917
DESCRIPTION
✔ J12 J12
3 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-25
PROBLEM 7.5A (continued) Incredible Sounds Schedule of Accounts Receivable April 30, 2016 Alto Music Center Country Tunes Hawk Music Center Modern Sounds Music Supply Store Music Warehouse Oldies Sounds Total
Analyze: The total sales on account in April, prior to any returns, allowances, or discounts were $46,525.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-26
- 0 8 6 0 0 00 - 0 10 3 0 0 00 - 0 - 0 3 2 0 0 00 22 1 0 0 00
PROBLEM 7.6A PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 1 Accounts Receivable/Beautiful Kitchens 3 Sales [$5,000 – ($5,000 × 30%)] 4 Sold crystal goods on credit to Beautiful Kitchens, 5 a wholesale customer, Invoice 5950, n/15 6 7 15 Cash ($9,500 + $760) 8 Sales 9 Sales Tax Payable ($9,500 × 8%) 10 Record cash sales, February 1 – 15 11 12 15 Credit Card Expense ($13,000 + $1,040) × 2% 13 Cash ($13,000 + $1,040 - $280.80) 14 Sales 15 Sales Tax Payable ($13,000 × 8%) 16 Record credit card sales, February 1 – 15 17 18 16 Cash 19 Accounts Receivable/Beautiful Kitchens 20 Received payment on account, Invoice 5950 21 22 16 Accounts Receivable/American Express 23 Sales 24 Sales Tax Payable ($9,000 × 8%) 25 Sold merchandise to customers using 26 American Express 27 28 17 Accounts Receivable/Incredible Bedrooms 29 Sales [$9,000 – ($9,000 × 20%)] 30 Sold a set of Roman statues on credit to 31 Incredible Bedrooms, a wholesale customer, 32 Invoice 5951, n/15 33
Post Ref.
DEBIT
121 401
3 5 0 0 00
101 401 222
10 2 6 0 00
521 101 401 222
2 8 0 80 13 7 5 9 20
101 121
3 5 0 0 00
121 401 222
9 7 2 0 00
121 401
7 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-27
10
CREDIT 1 2 3 5 0 0 00 3 4 5 6 7 9 5 0 0 00 8 7 6 0 00 9 10 11 12 13 13 0 0 0 00 14 1 0 4 0 00 15 16 17 18 3 5 0 0 00 19 20 21 22 9 0 0 0 00 23 7 2 0 00 24 25 26 27 28 7 2 0 0 00 29 30 31 32 33
PROBLEM 7.6A (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 20 Credit Card Expense ($9,720 × 3%) 3 Cash ($9,720 - $291.60) 4 Accounts Receivable/American Express 5 Received payment from American Express for 6 amount billed on February 16 7 8 27 Cash 9 Accounts Receivable/Incredible Bedrooms 10 Received payment on account, Invoice 5951 11 12 28 Cash ($7,750 + $620) 13 Sales 14 Sales Tax Payable ($7,750 × 8%) 15 Record cash sales, February 16 – 28 16 17 28 Credit Card Expense ($15,000 + $1,200) × 2% 18 Cash ($15,000 + $1,200 - $324) 19 Sales 20 Sales Tax Payable ($15,000 × 8%) 21 Record credit card sales, February 16 – 28 22 23 28 Accounts Receivable/American Express 24 Sales 25 Sales Tax Payable ($10,200 × 8%) 26 Sold merchandise to customers using 27 American Express 28
Post Ref.
DEBIT
521 101 121
2 9 1 60 9 4 2 8 40
101 121
7 2 0 0 00
101 401 222
8 3 7 0 00
521 101 401 222
3 2 4 00 15 8 7 6 00
121 401 222
11 0 1 6 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-28
11
CREDIT 1 2 3 9 7 2 0 00 4 5 6 7 8 7 2 0 0 00 9 10 11 12 7 7 5 0 00 13 6 2 0 00 14 15 16 17 18 15 0 0 0 00 19 1 2 0 0 00 20 21 22 23 10 2 0 0 00 24 8 1 6 00 25 26 27 28
PROBLEM 7.6A (continued) GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 Feb. 1 Balance 15 15 16 20 27 28 28
Post Ref. ✔ J10 J10 J10 J11 J11 J11 J11
DEBIT
CREDIT
23 2 3 0 00 33 4 9 0 00 47 2 4 9 20 50 7 4 9 20 60 1 7 7 60 67 3 7 7 60 75 7 4 7 60 91 6 2 3 60
10 2 6 0 00 13 7 5 9 20 3 5 0 0 00 9 4 2 8 40 7 2 0 0 00 8 3 7 0 00 15 8 7 6 00
ACCOUNT NO. 121
ACCOUNT Accounts Receivable DATE
DESCRIPTION
2016 Feb. 1 16 16 17 20 27 28
Post Ref.
DEBIT
J10 J10 J10 J10 J11 J11 J11
3 5 0 0 00
CREDIT
3 5 0 0 00 9 7 2 0 00 7 2 0 0 00 9 7 2 0 00 7 2 0 0 00 11 0 1 6 00
2016 Feb. 15 15 16 28 28 28
DESCRIPTION
BALANCE DEBIT CREDIT 3 5 0 0 00 - 0 9 7 2 0 00 16 9 2 0 00 7 2 0 0 00 - 0 11 0 1 6 00
ACCOUNT NO. 222
ACCOUNT Sales Tax Payable DATE
BALANCE DEBIT CREDIT
Post Ref. J10 J10 J10 J11 J11 J11
DEBIT
CREDIT
BALANCE DEBIT CREDIT
7 6 0 00 1 0 4 0 00 7 2 0 00 6 2 0 00 1 2 0 0 00 8 1 6 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-29
7 6 0 00 1 8 0 0 00 2 5 2 0 00 3 1 4 0 00 4 3 4 0 00 5 1 5 6 00
PROBLEM 7.6A (continued) GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE
DESCRIPTION
2016 Feb. 1 15 15 16 17 28 28 28
Post Ref.
DEBIT
J10 J10 J10 J10 J10 J11 J11 J11
CREDIT
3 5 0 0 00 9 5 0 0 00 13 0 0 0 00 9 0 0 0 00 7 2 0 0 00 7 7 5 0 00 15 0 0 0 00 10 2 0 0 00
2016 Feb. 15 20 28
DESCRIPTION
3 5 0 0 00 13 0 0 0 00 26 0 0 0 00 35 0 0 0 00 42 2 0 0 00 49 9 5 0 00 64 9 5 0 00 75 1 5 0 00
ACCOUNT NO. 521
ACCOUNT Credit Card Expense DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J10 J10 J11
2 8 0 80 2 9 1 60 3 2 4 00
CREDIT
BALANCE DEBIT CREDIT 2 8 0 80 5 7 2 40 8 9 6 40
Analyze: The total credit card expense incurred in February is $896.40.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-30
PROBLEM 7.1B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Oct. 1 Accounts Receivable/Luis Beltazar, CPA ($600 + $30) 3 Sales 4 Sales Tax Payable ($600 × 5%) 5 Sold merchandise on credit to Luis Beltazar, CPA 6 Sales Slip 101 7 8 4 Accounts Receivable/Cervantes Consulting ($360 + $18) 9 Sales 10 Sales Tax Payable ($360 × 5%) 11 Sold merchandise on credit to Cervantes Consulting 12 Sales Slip 102 13 14 12 Accounts Receivable/Andrew Mitchell ($450 + $22.50) 15 Sales 16 Sales Tax Payable ($450 × 5%) 17 Sold merchandise on credit to Andrew Mitchell, 18 Attorney at Law, Sales Slip 103 19 20 15 Cash ($3,825 + $191.25) 21 Sales 22 Sales Tax Payable ($3,825 × 5%) 23 Record cash sales, October 1 – 15 24 25 25 Accounts Receivable/A.D. & M. Escrow ($980 + $49) 26 Sales 27 Sales Tax Payable ($980 × 5%) 28 Sold merchandise on credit to A.D. & M. Escrow, 29 Sales Slip 104 30 31 28 Cash 32 Accounts Receivable/Cervantes Consulting 33 Received partial payment on account from 34 Cervantes Consulting 35
Post Ref.
DEBIT
111 401 221
6 3 0 00
111 401 221
3 7 8 00
111 401 221
4 7 2 50
101 401 221
4 0 1 6 25
111 401 221
1 0 2 9 00
101 111
1 7 5 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-31
1
CREDIT 1 2 6 0 0 00 3 3 0 00 4 5 6 7 8 3 6 0 00 9 1 8 00 10 11 12 13 14 4 5 0 00 15 2 2 50 16 17 18 19 20 3 8 2 5 00 21 1 9 1 25 22 23 24 25 9 8 0 00 26 4 9 00 27 28 29 30 31 1 7 5 00 32 33 34 35
PROBLEM 7.1B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Oct. 31 Cash ($4,350 + $217.50) 3 Sales 4 Sales Tax Payable ($4,350 × 5%) 5 Record cash sales, October 16 – 31 6 7 31 Cash 8 Accounts Receivable/Luis Beltazar, CPA 9 Received full payment on account from 10 Luis Beltazar, CPA 11
Post Ref.
DEBIT
101 401 221
4 5 6 7 50
101 111
6 3 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-32
2
CREDIT 1 2 4 3 5 0 00 3 2 1 7 50 4 5 6 7 6 3 0 00 8 9 10 11
PROBLEM 7.1B (continued) GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 Oct. 15 28 31 31
Post Ref.
DEBIT
J1 J1 J2 J2
4 0 1 6 25 1 7 5 00 4 5 6 7 50 6 3 0 00
CREDIT
4 0 1 6 25 4 1 9 1 25 8 7 5 8 75 9 3 8 8 75
ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
DESCRIPTION
2016 Oct. 1 4 12 25 28 31
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2
6 3 0 00 3 7 8 00 4 7 2 50 1 0 2 9 00
CREDIT
1 7 5 00 6 3 0 00
2016 Oct. 1 4 12 15 25 31
DESCRIPTION
BALANCE DEBIT CREDIT 6 3 0 00 1 0 0 8 00 1 4 8 0 50 2 5 0 9 50 2 3 3 4 50 1 7 0 4 50
ACCOUNT NO. 221
ACCOUNT Sales Tax Payable DATE
BALANCE DEBIT CREDIT
Post Ref. J1 J1 J1 J1 J1 J2
DEBIT
CREDIT
BALANCE DEBIT CREDIT
3 0 00 1 8 00 2 2 50 1 9 1 25 4 9 00 2 1 7 50
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-33
3 0 00 4 8 00 7 0 50 2 6 1 75 3 1 0 75 5 2 8 25
PROBLEM 7.1B (continued) GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE 2016 Oct. 1 4 12 15 25 31
DESCRIPTION
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2
CREDIT
BALANCE DEBIT CREDIT
6 0 0 00 3 6 0 00 4 5 0 00 3 8 2 5 00 9 8 0 00 4 3 5 0 00
Analyze: At October 31, $528.25 is owed for sales taxes.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-34
6 0 0 00 9 6 0 00 1 4 1 0 00 5 2 3 5 00 6 2 1 5 00 10 5 6 5 00
PROBLEM 7.2B PAGE
GENERAL JOURNAL DATE 1 2016 2 Nov. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
DESCRIPTION
1 Accounts Receivable/Alice Chu ($550 + $33)
Post Ref. 111
✔
Sales Sales Tax Payable ($550 × 6%) Sold a dishwasher on credit to Alice Chu, Sales Slip 101
401 221
2 Accounts Receivable/Jane Peters ($825 + $49.50) Sales Sales Tax Payable ($825 × 6%) Sold stereo equipment on credit to Jane Peters, Sales Slip 102
111
7 Accounts Receivable/Bob Huffington ($410 + $24.60) Sales Sales Tax Payable ($410 × 6%) Sold trash compactor on credit to Bob Huffington, Sales Slip 103
111
12 Sales Returns and Allowances Sales Tax Payable ($95 × 6%) Accounts Receivable/Jane Peters
✔
DEBIT
5 8 3 00
8 7 4 50
401 221
✔
4 3 4 60
401 221
421 221 111
9 5 00 5 70
✔
Accept return of defective merchandise, Credit Memorandum 101; original sales made on Sales Slip 102 of November 2 15 Cash ($10,050 + $603) Sales Sales Tax Payable ($10,050 × 6%) Record cash sales, November 1 – 15
101 401 221
16 Accounts Receivable/Gina Silvestri ($550 + $33)
111
Sales Sales Tax Payable ($550 × 6%) Sold microwave oven on credit to Gina Silvestri, Sales Slip 104
✔
10 6 5 3 00
5 8 3 00
401 221
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-35
1
CREDIT 1 2 5 5 0 00 3 3 3 00 4 5 6 7 8 8 2 5 00 9 4 9 50 10 11 12 13 14 4 1 0 00 15 2 4 60 16 17 18 19 20 21 1 0 0 70 22 23 24 25 26 27 10 0 5 0 00 28 6 0 3 00 29 30 31 32 5 5 0 00 33 3 3 00 34 35 36 37
PROBLEM 7.2B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Nov. 17 Accounts Receivable/Dennis Newcombe ($1,375 + $82.50) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Sales Sales Tax Payable ($1,375 × 6%) Sold home entertainment system on credit to Dennis Newcombe, Sales Slip 105 18 Cash Accounts Receivable/Alice Chu
Post Ref. 111
✔
DEBIT
1 4 5 7 50
401 221
101 111
3 2 0 00
✔
Received partial payment on account from Alice Chu 20 Cash ($874.50 - $100.70) Accounts Receivable/Jane Peters
101 111
7 7 3 80
✔
Received full payment on account from Jane Peters less return on November 12 24 Sales Returns and Allowances Sales Tax Payable ($120 × 6%) Accounts Receivable/Dennis Newcombe
421 221 111
1 2 0 00 7 20
✔
Issued allowance due to scratches on home entertainment system, Credit Memorandum 102 28 Cash Accounts Receivable/Bob Huffington
Sales Sales Tax Payable ($675 × 6%) Sold gas stove on credit to Bob Huffington, Sales Slip 106
111
1 2 1 3 7 5 00 3 8 2 50 4 5 6 7 8 3 2 0 00 9 10 11 12 13 7 7 3 80 14 15 16 17 18 19 1 2 7 20 20
✔
✔
26 27 28
4 3 4 60
Received full payment on acct from Bob Huffington 29 Accounts Receivable/Bob Huffington
CREDIT
21 22 23 24 4 3 4 60 25
101 111
2
7 1 5 50
401 221
30 Cash 101 10 9 7 1 00 Sales 401 Sales Tax Payable ($10,350 × 6%) 221 Record cash sales, November 16 – 30 Analyze: The total amount due from Bob Huffington for the November 29 sale is $715.50.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-36
6 7 5 00 29 4 0 50 30 31 32 33 34 10 3 5 0 00 35 6 2 1 00 36 37
PROBLEM 7.3B GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 Nov. 15 18 20 28 30
Post Ref.
DEBIT
J1 J2 J2 J2 J2
10 6 5 3 00 3 2 0 00 7 7 3 80 4 3 4 60 10 9 7 1 00
CREDIT
10 6 5 3 00 10 9 7 3 00 11 7 4 6 80 12 1 8 1 40 23 1 5 2 40
ACCOUNT NO. 111
ACCOUNT Accounts Receivable DESCRIPTION 2016 Nov.
1 2 7 12 16 17 18 20 24 28 29
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2 J2 J2 J2 J2 J2
5 8 3 00 8 7 4 50 4 3 4 60
CREDIT
1 0 0 70 5 8 3 00 1 4 5 7 50 3 2 0 00 7 7 3 80 1 2 7 20 4 3 4 60 7 1 5 50
BALANCE DEBIT CREDIT 5 8 3 00 1 4 5 7 50 1 8 9 2 10 1 7 9 1 40 2 3 7 4 40 3 8 3 1 90 3 5 1 1 90 2 7 3 8 10 2 6 1 0 90 2 1 7 6 30 2 8 9 1 80
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-37
PROBLEM 7.3B (continued) ACCOUNT NO. 221
ACCOUNT Sales Tax Payable DATE 2016 Nov.
DESCRIPTION
1 2 7 12 15 16 17 24 29 30
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J1 J2 J2 J2 J2
CREDIT
BALANCE DEBIT CREDIT
3 3 00 4 9 50 2 4 60
3 3 00 8 2 50 1 0 7 10 1 0 1 40 7 0 4 40 7 3 7 40 8 1 9 90 8 1 2 70 8 5 3 20 1 4 7 4 20
5 70 6 0 3 00 3 3 00 8 2 50 7 20 4 0 50 6 2 1 00
GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE 2016 Nov.
DESCRIPTION
1 2 7 15 16 17 29 30
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J2 J2 J2
CREDIT
5 5 0 00 8 2 5 00 4 1 0 00 10 0 5 0 00 5 5 0 00 1 3 7 5 00 6 7 5 00 10 3 5 0 00
2016 Nov. 12 24
DESCRIPTION
5 5 0 00 1 3 7 5 00 1 7 8 5 00 11 8 3 5 00 12 3 8 5 00 13 7 6 0 00 14 4 3 5 00 24 7 8 5 00
ACCOUNT NO. 421
ACCOUNT Sales Returns and Allowances DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J1 J2
9 5 00 1 2 0 00
CREDIT
BALANCE DEBIT CREDIT 9 5 00 2 1 5 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-38
PROBLEM 7.3B (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Alice Chu ADDRESS DATE
DESCRIPTION
2016 Nov. 1 Sales Slip 101 18
Post Ref.
DEBIT
J1 J2
5 8 3 00
Post Ref.
DEBIT
J1 J2 J2
4 3 4 60
Post Ref.
DEBIT
J2 J2
1 4 5 7 50
Post Ref.
DEBIT
J1 J1 J2
8 7 4 50
CREDIT
3 2 0 00
BALANCE
5 8 3 00 2 6 3 00
NAME Bob Huffington ADDRESS DATE
DESCRIPTION
2016 Nov. 7 Sales Slip 103 28 29 Sales Slip 106
CREDIT
4 3 4 60 7 1 5 50
BALANCE
4 3 4 60 - 0 7 1 5 50
NAME Dennis Newcombe ADDRESS DATE
DESCRIPTION
2016 Nov. 17 Sales Slip 105 24 Credit Memorandum 102
CREDIT
1 2 7 20
BALANCE
1 4 5 7 50 1 3 3 0 30
NAME Jane Peters ADDRESS DATE
DESCRIPTION
2016 Nov. 2 Sales Slip 102 12 Credit Memorandum 101 20
CREDIT
1 0 0 70 7 7 3 80
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-39
BALANCE
8 7 4 50 7 7 3 80 - 0 -
PROBLEM 7.3B (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Gina Silvestri ADDRESS DATE 2016 Nov. 16 Sales Slip 104
DESCRIPTION
Post Ref.
DEBIT
CREDIT
5 8 3 00
BALANCE
5 8 3 00
Appliances for Less Schedule of Accounts Receivable November 30, 2016 Alice Chu Bob Huffington Dennis Newcombe Jane Peters Gina Silvestri Total
Analyze: Damaged or defective goods decreased sales by $215. This is 0.9% of sales ($215/$24,785).
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-40
2 6 3 00 7 1 5 50 1 3 3 0 30 - 0 5 8 3 00 2 8 9 1 80
PROBLEM 7.4B PAGE
GENERAL JOURNAL DATE 1 2016 2 May 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
DESCRIPTION
1 Accounts Receivable/Annie’s Flowers Sales Sold floral arrangements on credit to Annie’s Flowers, Invoice 9312, 2/10, n/30 4 Sales Discounts Cash Accounts Receivable/Orange County Florist
Post Ref. 111
✔
DEBIT
4 5 0 00
401
452 101 111
2 4 00 1 1 7 6 00
✔
Received payment on account from Orange County Florist, Invoice 9299 6 Cash Sales Sold merchandise for cash to a new customer
101 401
9 2 5 00
7 Sales Returns and Allowances Cash Issued cash refund for merchandise sold on May 6
451 101
2 5 00
8 Accounts Receivable/Rosa’s Flowers and Gifts
111
Sales Sold floral arrangements on credit to Rosa’s Flowers and Gifts, Invoice 9313, 2/10, n/30 10 Sales Discounts Cash Accounts Receivable/Annie’s Flowers
✔
1 5 0 0 00
401
452 101 111
9 00 4 4 1 00
✔
Received payment on account from Annie’s Flowers, Invoice 9312 14 Sales Returns and Allowances Accounts Receivable/Rosa’s Flowers and Gifts
451 111
2 0 0 00
✔
Issued allowance due to withered flowers, Credit Memorandum 109; original sale made on Invoice 9313, May 8, to Rosa’s Flowers and Gifts
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-41
12
CREDIT 1 2 4 5 0 00 3 4 5 6 7 8 1 2 0 0 00 9 10 11 12 13 9 2 5 00 14 15 16 17 2 5 00 18 19 20 21 1 5 0 0 00 22 23 24 25 26 27 4 5 0 00 28 29 30 31 32 2 0 0 00 33 34 35 36 37
PROBLEM 7.4B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 May 17 Sales Discounts 3 Cash 4 Accounts Receivable/Rosa’s Flowers and Gifts 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Post Ref. 452 101 111
DEBIT
CREDIT
2 6 00 1 2 7 4 00
1 2 3 1 3 0 0 00 4
✔
Received payment on account from Rosa’s Flowers and Gifts, Invoice 9313 19 Cash Accounts Receivable/White Lily Florists, Inc
✔
5 6 7 8 2 9 0 0 00 9
✔
5 8 0 00
10 11 12 13
4 8 0 00
5 8 0 00 14 15 16 17 18
8 5 0 00
4 8 0 00 19 20 21 22 23
101 111
2 9 0 0 00
Received payment on account from White Lily Florists, Inc. Invoice 9279 20 Accounts Receivable/Grand Party Supply Sales Sold table arrangements on credit to Grand Party Supply, Invoice 9314, 2/10, n/30 24 Accounts Receivable/Miyata Floral Designs Sales Sold roses on credit to Miyata Floral Designs, Invoice 9315, 2/10, n/30 26 Accounts Receivable/Cancino’s Flower Shop Sales Sold potted plants on credit to Cancino’s Flower Shop, Invoice 9316, 2/10, n/30 27 Sales Returns and Allowances Accounts Receivable/Miyata Floral Designs
111
401
111
✔
401
111
✔
401
451 111
13
✔
Accept a return of damaged roses and issued Credit Memorandum 110 to Miyata Floral Designs. Original sale made on Invoice 9315, May 24
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-42
4 8 00
8 5 0 00 24 25 26 27 28 4 8 00 29 30 31 32 33
PROBLEM 7.4B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 May 29 Sales Discounts 3 Cash 4 Accounts Receivable/Grand Party Supply 5 6 7 8 9 10 11
Post Ref.
✔
✔
5 6 7
1 1 60 5 6 8 40
Received payments on account, Invoice 9314 30 Accounts Receivable/White Lily Flowers, Inc. Sales Sold plants on credit to White Lily Flowers, Inc., Invoice 9317, 2/10, n/30
111
CREDIT 1 2 3 5 8 0 00 4
452 101 111
DEBIT
14
1 2 0 0 00
401
Analyze: The amount of the discount taken by Annie's Flowers on May 10 was $9.00.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-43
1 2 0 0 00 8 9 10 11
PROBLEM 7.5B GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 May 1 Balance 4 6 7 10 17 19 29
Post Ref. ✔ J12 J12 J12 J12 J13 J13 J14
DEBIT
CREDIT
1 1 7 6 00 9 2 5 00 2 5 00 4 4 1 00 1 2 7 4 00 2 9 0 0 00 5 6 8 40
BALANCE DEBIT CREDIT 25 8 0 0 00 26 9 7 6 00 27 9 0 1 00 27 8 7 6 00 28 3 1 7 00 29 5 9 1 00 32 4 9 1 00 33 0 5 9 40
ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE 2016 May 1 Balance 1 4 8 10 14 17 19 20 24 26 27 29 30
DESCRIPTION
Post Ref.
DEBIT
J12 J12 J12 J12 J12 J13 J13 J13 J13 J13 J13 J14 J14
4 5 0 00
CREDIT
1 2 0 0 00 1 5 0 0 00 4 5 0 00 2 0 0 00 1 3 0 0 00 2 9 0 0 00 5 8 0 00 4 8 0 00 8 5 0 00 4 8 00 5 8 0 00 1 2 0 0 00
BALANCE DEBIT CREDIT 4 1 0 0 00 4 5 5 0 00 3 3 5 0 00 4 8 5 0 00 4 4 0 0 00 4 2 0 0 00 2 9 0 0 00 - 0 5 8 0 00 1 0 6 0 00 1 9 1 0 00 1 8 6 2 00 1 2 8 2 00 2 4 8 2 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-44
PROBLEM 7.5B (continued) GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE
DESCRIPTION
2016 May 1 6 8 20 24 26 30
Post Ref.
DEBIT
J12 J12 J12 J13 J13 J13 J14
CREDIT
BALANCE DEBIT CREDIT
4 5 0 00 9 2 5 00 1 5 0 0 00 5 8 0 00 4 8 0 00 8 5 0 00 1 2 0 0 00
4 5 0 00 1 3 7 5 00 2 8 7 5 00 3 4 5 5 00 3 9 3 5 00 4 7 8 5 00 5 9 8 5 00
ACCOUNT NO. 451
ACCOUNT Sales Returns and Allowances DATE
DESCRIPTION
2016 May 7 14 27
Post Ref.
DEBIT
J12 J12 J13
2 5 00 2 0 0 00 4 8 00
CREDIT
BALANCE DEBIT CREDIT 2 5 00 2 2 5 00 2 7 3 00
ACCOUNT NO. 452
ACCOUNT Sales Discounts DATE 2016 May 4 10 17 29
DESCRIPTION
Post Ref. J12 J12 J13 J14
DEBIT
CREDIT
BALANCE DEBIT CREDIT
2 4 00 9 00 2 6 00 1 1 60
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-45
2 4 00 3 3 00 5 9 00 7 0 60
PROBLEM 7.5B (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Annie’s Flowers ADDRESS DATE
DESCRIPTION
2016 May 1 Invoice 9312 10
Post Ref.
DEBIT
J12 J12
4 5 0 00
Post Ref.
DEBIT
J13
8 5 0 00
Post Ref.
DEBIT
J13 J14
5 8 0 00
CREDIT
4 5 0 00
BALANCE
4 5 0 00 - 0 -
NAME Cancino’s Flower Shop ADDRESS DATE
DESCRIPTION
2016 May 26 Invoice 9316
CREDIT
BALANCE
8 5 0 00
NAME Grand Party Supply ADDRESS DATE 2016 May 20 Invoice 9314 29
DESCRIPTION
CREDIT
5 8 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-46
BALANCE
5 8 0 00 - 0 -
PROBLEM 7.5B (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Miyata Floral Designs ADDRESS DATE
DESCRIPTION
2016 May 24 Invoice 9315 27 Credit Memorandum 110
Post Ref.
DEBIT
J13 J13
4 8 0 00
Post Ref.
DEBIT
CREDIT
4 8 00
BALANCE
4 8 0 00 4 3 2 00
NAME Orange County Florist ADDRESS DATE
DESCRIPTION
2016 May 1 Balance 4
✔ J12
CREDIT
BALANCE
1 2 0 0 00
1 2 0 0 00 - 0 -
CREDIT
BALANCE
2 0 0 00 1 3 0 0 00
1 5 0 0 00 1 3 0 0 00 - 0 -
NAME Rosa’s Flowers and Gifts ADDRESS DATE
DESCRIPTION
2016 May 8 Invoice 9313 14 Credit Memorandum 109 17
Post Ref.
DEBIT
J12 J12 J13
1 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-47
PROBLEM 7.5B (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME White Lily Florists, Inc. ADDRESS DATE 2016 May 1 Balance 19 30 Invoice 9317
DESCRIPTION
Post Ref.
J13 J14
DEBIT
CREDIT
BALANCE
2 9 0 0 00
2 9 0 0 00 - 0 1 2 0 0 00
1 2 0 0 00
The Urban Florist Schedule of Accounts Receivable May 31, 2016 Annie’s Flowers Cancino’s Flower Shop Grand Party Supply Miyata Floral Designs Orange County Florist Rosa’s Flowers and Gifts White Lily Florists, Inc. Total
- 0 8 5 0 00 - 0 4 3 2 00 - 0 - 0 1 2 0 0 00 2 4 8 2 00
The balance of the Accounts Receivable control account is $2,482.00. Analyze: The total sales on account in May, prior to any returns, allowances, or discounts is $5,060.00 ($5,985.00 – $925.00).
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-48
PROBLEM 7.6B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 1 Accounts Receivable/Wine Country Kitchens 3 Sales [$6,000 - ($6,000 × 30%)] 4 Sold crystal goods on credit to Wine Country 5 Kitchens, a wholesale customer, Invoice 6920, n/15 6 7 15 Cash ($10,200 + $816) 8 Sales 9 Sales Tax Payable ($10,200 × 8%) 10 Record cash sales, June 1 - 15 11 12 15 Credit Card Expense ($14,200 + $1,136) × 3% 13 Cash ($14,200 + $1,136 - $460.08) 14 Sales 15 Sales Tax Payable ($14,200 × 8%) 16 Record credit card sales, June 1 - 15 17 18 16 Cash 19 Accounts Receivable/Wine Country Kitchens 20 Received payment on account, Invoice 6920 21 22 16 Accounts Receivable/American Express 23 Sales 24 Sales Tax Payable ($9,000 × 8%) 25 Sold merchandise to customers using 26 American Express 27 28 17 Accounts Receivable/Victorian Decadence 29 Sales [$18,000 - ($18,000 × 40%)] 30 Sold a set of brass serving trays on credit to 31 Victorian Decadence, a wholesale customer, 32 Invoice 6921, n/15 33
Post Ref.
DEBIT
121 401
4 2 0 0 00
101 401 222
11 0 1 6 00
521 101 401 222
4 6 0 08 14 8 7 5 92
101 121
4 2 0 0 00
121 401 222
9 7 2 0 00
121 401
10 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-49
15
CREDIT 1 2 4 2 0 0 00 3 4 5 6 7 10 2 0 0 00 8 8 1 6 00 9 10 11 12 13 14 2 0 0 00 14 1 1 3 6 00 15 16 17 18 4 2 0 0 00 19 20 21 22 9 0 0 0 00 23 7 2 0 00 24 25 26 27 28 10 8 0 0 00 29 30 31 32 33
PROBLEM 7.6B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 19 Credit Card Expense ($9,720 × 4%) 3 Cash ($9,720 - $388.80) 4 Accounts Receivable from American Express 5 Received payment from American Express for 6 amount billed on June 16 7 8 29 Cash 9 Accounts Receivable/Victorian Decadence 10 Received payment on account, Invoice 6921 11 12 30 Cash ($9,550 + $764) 13 Sales 14 Sales Tax Payable ($9,550 × 8%) 15 Record cash sales, June 16 - 30 16 17 30 Credit Card Expense ($11,700 + $936) × 3% 18 Cash ($11,700 + $936 - $379.08) 19 Sales 20 Sales Tax Payable ($11,700 × 8%) 21 Record credit card sales, June 16 - 30 22 23 30 Accounts Receivable/American Express 24 Sales 25 Sales Tax Payable ($8,200 × 8%) 26 Sold merchandise to customers using 27 American Express 28
Post Ref.
DEBIT
521 101 121
3 8 8 80 9 3 3 1 20
101 121
10 8 0 0 00
101 401 222
10 3 1 4 00
521 101 401 222
3 7 9 08 12 2 5 6 92
121 401 222
8 8 5 6 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-50
16
CREDIT 1 2 3 9 7 2 0 00 4 5 6 7 8 10 8 0 0 00 9 10 11 12 9 5 5 0 00 13 7 6 4 00 14 15 16 17 18 11 7 0 0 00 19 9 3 6 00 20 21 22 23 8 2 0 0 00 24 6 5 6 00 25 26 27 28
PROBLEM 7.6B (continued) GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE 2016 June
DESCRIPTION
1 Balance 15 15 16 19 29 30 30
Post Ref. ✔ J15 J15 J15 J16 J16 J16 J16
DEBIT
CREDIT
30 1 5 5 00 41 1 7 1 00 56 0 4 6 92 60 2 4 6 92 69 5 7 8 12 80 3 7 8 12 90 6 9 2 12 102 9 4 9 04
11 0 1 6 00 14 8 7 5 92 4 2 0 0 00 9 3 3 1 20 10 8 0 0 00 10 3 1 4 00 12 2 5 6 92
ACCOUNT NO. 121
ACCOUNT Accounts Receivable DATE 2016 June
DESCRIPTION
1 16 16 17 19 29 30
Post Ref.
DEBIT
J15 J15 J15 J15 J16 J16 J16
4 2 0 0 00
CREDIT
4 2 0 0 00 9 7 2 0 00 10 8 0 0 00 9 7 2 0 00 10 8 0 0 00 8 8 5 6 00
2016 June 15 15 16 30 30 30
DESCRIPTION
BALANCE DEBIT CREDIT 4 2 0 0 00 - 0 9 7 2 0 00 20 5 2 0 00 10 8 0 0 00 - 0 8 8 5 6 00
ACCOUNT NO. 222
ACCOUNT Sales Tax Payable DATE
BALANCE DEBIT CREDIT
Post Ref. J15 J15 J15 J16 J16 J16
DEBIT
CREDIT
BALANCE DEBIT CREDIT
8 1 6 00 1 1 3 6 00 7 2 0 00 7 6 4 00 9 3 6 00 6 5 6 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-51
8 1 6 00 1 9 5 2 00 2 6 7 2 00 3 4 3 6 00 4 3 7 2 00 5 0 2 8 00
PROBLEM 7.6B (continued) GENERAL LEDGER ACCOUNT NO. 401
ACCOUNT Sales DATE 2016 June
DESCRIPTION
1 15 15 16 17 30 30 30
Post Ref.
DEBIT
J15 J15 J15 J15 J15 J16 J16 J16
CREDIT
4 2 0 0 00 10 2 0 0 00 14 2 0 0 00 9 0 0 0 00 10 8 0 0 00 9 5 5 0 00 11 7 0 0 00 8 2 0 0 00
2016 June 15 19 30
DESCRIPTION
4 2 0 0 00 14 4 0 0 00 28 6 0 0 00 37 6 0 0 00 48 4 0 0 00 57 9 5 0 00 69 6 5 0 00 77 8 5 0 00
ACCOUNT NO. 521
ACCOUNT Credit Card Expense DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J15 J16 J16
4 6 0 08 3 8 8 80 3 7 9 08
CREDIT
BALANCE DEBIT CREDIT 4 6 0 08 8 4 8 88 1 2 2 7 96
Analyze: The total credit card expense incurred in June is $1,227.96.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-52
CRITICAL THINKING PROBLEM 7.1 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 March 1 Accounts Receivable/Mark Everest ($700 + $56) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Post Ref. 111
DEBIT
✔
111
✔
7 5 6 00
3 2 4 00
7 0 0 00 3 5 6 00 4 5 6 7 8
✔
3 0 0 00 9 2 4 00 10 11 12 13 14 15 1 0 8 00 16
✔
17 18 19 20 21 6 4 8 00 22
✔
23 24 25
Sales Sales Tax Payable ($300 × 8%) Sold merchandise on credit to Emily Ancheta, Sales Slip 102 8 Sales Returns and Allowances Sales Tax Payable Accounts Receivable/Mark Everest
1 0 0 00 8 00 111
Accept return of defective merchandise, Credit Memorandum 1; original sales made on Sales Slip 101 of March 1 10 Cash ($756 - $108) Accounts Receivable/Mark Everest
6 4 8 00 111
Received cash from Mark Everest on account 12 Accounts Receivable/Annie Han ($450 + $36)
111
4 8 6 00
Sales Sales Tax Payable ($450 × 8%) Sold merchandise on credit to Annie Han, Sales Slip 103 15 Cash ($5,000 + $400) Sales Sales Tax Payable ($5,000 × 8%) Record cash sales, March 1 - 15
CREDIT 1 2
Sales Sales Tax Payable ($700 × 8%) Sold merchandise on credit to Mark Everest, Sales Slip 101 3 Accounts Receivable/Emily Ancheta ($300 + $24)
1
5 4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-53
4 5 0 00 26 3 6 00 27 28 29 30 31 5 0 0 0 00 32 4 0 0 00 33 34 35
CRITICAL THINKING PROBLEM 7.1 (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 March 15 Credit Card Expense ($7,000 + $560) × 3% 3 Cash ($7,000 + $560 - $226.80) 4 Sales 5 Sales Tax Payable ($7,000 × 8%) 6 Record sales to customers using bank credit cards, 7 March 1 -15 8 9 25 Accounts Receivable / Jason Cataldo ($300 + $24) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Post Ref.
DEBIT
3 2 4 00
3 2 4 0 00
3 0 0 00 10 2 4 00 11 12 13 14
✔
Sales Sales Tax Payable ($300 × 8%) Sold merchandise on credit to Jason Cataldo, Sales Slip 104 26 Accounts Receivable / American Express ($3,000 + $240)
111
✔
✔
3 0 0 0 00 15 2 4 0 00 16 17 18 19 1 0 0 00 20
✔
21 22 23 5 5 0 0 00 24 4 4 0 00 25 26 27 28 29 3 2 4 0 00 30
Sales Sales Tax Payable ($3,000 × 8%) Record sales to customers using American Express 28 Cash Accounts Receivable / Annie Han
1 0 0 00 111
Received partial payment on account from Annie Han 31 Cash ($5,500 + $440) Sales Sales Tax Payable ($5,500 × 8%) Record cash sales, March 16 - 31
5 9 4 0 00
31 Credit Card Expense ($3,240 × 4%) Cash ($3,240 - $129.60) Accounts Receivable / American Express
1 2 9 60 3 1 1 0 40
31
Received payment from American Express
32 33 34 35 36 37 38
31 Credit Card Expense ($4,000 + $320) × 3% Cash ($4,000 + $320 - $129.60) Sales Sales Tax Payable ($4,000 × 8%) Record sales to customers using bank credit cards, March 16 – 31
111
CREDIT 1 2 3 7 0 0 0 00 4 5 6 0 00 5 6 7 8 9
2 2 6 80 7 3 3 3 20
111
2
31 1 2 9 60 4 1 9 0 40
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-54
32 33 34 4 0 0 0 00 35 3 2 0 00 36 37 38
CRITICAL THINKING PROBLEM 7.1 (continued) GENERAL LEDGER ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
DESCRIPTION
2016 March 1 3 8 10 12 25 26 28 31
Post Ref.
DEBIT
CREDIT
J1 J1 J1 J1 J1 J2 J2 J2 J2
7 5 6 00 3 2 4 00 1 0 8 00 6 4 8 00 4 8 6 00 3 2 4 00 3 2 4 0 00 1 0 0 00 3 2 4 0 00
BALANCE DEBIT CREDIT 7 5 6 00 1 0 8 0 00 9 7 2 00 3 2 4 00 8 1 0 00 1 1 3 4 00 4 3 7 4 00 4 2 7 4 00 1 0 3 4 00
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Emily Ancheta ADDRESS DATE
DESCRIPTION
2016 March 3 Sales Slip 102
Post Ref.
DEBIT
J1
3 2 4 00
Post Ref.
DEBIT
J2 J2
3 2 4 0 00
CREDIT
BALANCE
3 2 4 00
NAME American Express ADDRESS DATE 2016 March 26 31
DESCRIPTION
CREDIT
BALANCE
3 2 4 0 00
3 2 4 0 00 - 0 -
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-55
CRITICAL THINKING PROBLEM 7.1 (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Jason Cataldo ADDRESS DATE DESCRIPTION 2016 March 25 Sales Slip 104
NAME Mark Everest ADDRESS DATE DESCRIPTION 2016 March 1 Sales Slip 101 8 CM 1 10
NAME Annie Han ADDRESS DATE
DESCRIPTION
2016 March 12 Sales Slip 103 28
Post Ref.
DEBIT
J2
3 2 4 00
Post Ref.
DEBIT
J1 J1 J1
7 5 6 00
Post Ref.
DEBIT
J1 J2
4 8 6 00
CREDIT
BALANCE
3 2 4 00
CREDIT
1 0 8 00 6 4 8 00
CREDIT
1 0 0 00
BALANCE
7 5 6 00 6 4 8 00 - 0 -
BALANCE
4 8 6 00 3 8 6 00
Athletic X-Press Sporting Goods Schedule of Accounts Receivable March 31, 2016 Emily Ancheta American Express Jason Cataldo Mark Everest Annie Han Total
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-56
3 2 4 00 - 0 3 2 4 00 - 0 3 8 6 00 1 0 3 4 00
CRITICAL THINKING PROBLEM 7.2 1.
An electronic system would prevent this mistake because the computer would automatically post and update the customer’s subsidiary ledger account. This mistake would not be identified in a manual system until the Accounts Receivable general ledger account was reconciled to the schedule of accounts receivable.
2.
The use of an electronic scanner should reduce unrecorded sales. Each item has to be passed over the scanner, which automatically records the price. This process reduces the chance that an item is overlooked; but with either system, it is possible for the salesclerk to deliberately not charge a customer for a purchase. The owner and supervisors must be alert to this possibility and need to check the salesclerk’s work on a regular basis Discrepancies in the inventory may identify extensive abuses of this nature.
3.
The computer can be programmed to alert the salesclerk by means of a code number or flashing sign on the register/terminal display screen that a particular credit card number has been reported stolen. The register/ terminal will halt processing the transaction or instruct the salesclerk to check with a supervisor before proceeding with the transaction. With a manual system, the salesclerk would have to consult a separate list of stolen numbers before processing a credit card transaction. Provided the stolen credit card numbers are entered promptly in the computer files, the electronic system would prevent charging a sale on a stolen credit card.
4.
An electronic scanner would prevent customers from being charged an incorrect price. Because the computer would be programmed with the sale prices, the scanner would automatically record the correct price. A manual system depends on the salesclerk’s memory of price changes or requires new price tags to be placed on sale items. An electronic system would be more dependable and efficient in this situation.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-57
Solutions to Business Connections Managerial Focus: 1. Measures damaged or poor quality goods or late deliveries. 2. Advantages: minimized risk of receivable losses; reduced staffing costs. Disadvantages: discount fees; loss of sales if customers do not have credit cards 3. The actual filing of a tax return is procedural, but expert advice is needed to comply with tax laws and minimize taxes. 4. 5. 6. 7. 8.
Credit policies, customer account documentation. Increase sales volume. Losses from uncollectible accounts. Aid in extending credit, identify slow-paying customers. Accurate and complete records.
Ethical Dilemma: Watch when a customer pays a bill to see if Wes puts the money in the cash register or just puts it in his pocket and writes a credit memo to remove it from the Accounts Receivable Ledger. Financial Statement Analysis: 1. Sales Returns and Allowances. 2. 9.9% ($74,754 - $67,997) ÷ $67,997 = 9.9% Analyze Online: Answers will vary depending on the year. Teamwork: Sales associate would not record a transaction. Louisa’s A/P clerk would process a purchase order for $50,000 and record a debit to purchases and a credit to A/P. The A/R clerk would create a sales invoice and record a debit to A/R and credit to Sales. Internet Connection: Auto creation of P.O. from Sales Order, create A/P and A/R Credit memos, quick conversion to other programs, invoice customers, track payments and sales taxes, print checks and create purchase orders from estimates.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-58
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. FALSE 6. FALSE 7. FALSE
8. FALSE 9. TRUE 10. TRUE 11. TRUE 12. TRUE 13. FALSE 14. FALSE
15. 16. 17. 18. 19. 20.
TRUE FALSE TRUE FALSE FALSE FALSE
Part B Matching 1. g 2. c 3. e 4. a 5. b 6. d 7. f Part C Exercises 1. The balance was carried over from December 2015. 2. By referring to a copy of Sales Slip 101. It was most likely a sales return or allowance. Refer to the January 17 entry on page 1 of the 3. general journal.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-59
Part D Exercises PAGE
GENERAL JOURNAL DATE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
2016 April
DESCRIPTION
1 Accounts Receivable/Kisling's Kitchens
Post Ref.
DEBIT
CREDIT
3 5 0 0 00
1 2
2 5 0 00
3 5 0 0 00 3 4 5 6 7
6 5 00
2 5 0 00 8 9 10 11 12
3 1 8 5 00
13
Sales Sold merchandise on account to Kisling's Kitchens, Invoice 1001, terms 2/10, n/30. 5 Sales Returns and Allowances Accounts Receivable/Kisling's Kitchens Issued Credit Memorandum 102 to Kisling's Kitchens for damaged merchandise. 10 Sales Discounts (2% * ($3,500 - $250)) Cash ($3,250 - $65)
#
Accounts Receivable/Kisling's Kitchens Received payment from Kisling's Kitchens for Invoice 1001 dated April 1, less return on April 5.
© 2015 McGraw-Hill Education. This is proprietary marterial solely for authorized instructor use. Not authorized for sale or distribution in any manner. 7-60
3 2 5 0 00 14 15 16 17
CHAPTER 8 ACCOUNTING FOR PURCHASES, ACCOUNTS PAYABLE, AND CASH PAYMENTS Chapter Opener: Thinking Critically Companies want to pay their bills on time to maintain a good relationship with their vendors as well as take advantage of early payment discount opportunities. Fast Facts • Net revenues for fiscal 2012 increased 9%, and exceeded $4 billion for the first time in their company's history. • Williams-Sonoma, Inc. owns and operates separate, home-centered retail businesses: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBTeen, Rejuvenation, Mark and Graham, and West Elm. • The company operates 590 retail stores.
Managerial Implications: Thinking Critically Answers will vary. Students should recognize the need for checks and balances for avoiding theft and waste. • Discussion Questions These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1.
Authorization of purchase, check-in of goods, verification of invoice, proper authorization of payment, division of labor and tasks, use of prenumbered forms.
2. 3. 4. 5.
Documentation of credit issued. Return of unsatisfactory merchandise. Allowance made for damaged merchandise. The Accounts Payable account is the control account. It summarizes the balances of the creditor accounts.
6.
List of all creditors and the balance owed by each. Prepared so that its total can be proved against the balance of the Accounts Payable account.
7. 8. 9.
Individual accounts of all creditors. Helps pay bills promptly and maintain a good credit reputation. Add Freight In to Purchases, then deduct Purchases Returns and Allowances and Purchases Discounts.
10. 11. 12. 13. 14.
Equipment. Purchase invoice denotes incoming merchandise, sales invoice denotes outgoing (sold) merchandise. Debit. Income Statement in the Cost of Goods Sold section. Provides a separate record.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-1
15.
a. Net amount of the invoice is due 30 days after the date of the invoice. b. If the invoice is paid within 10 days of its date, a 2 percent discount may be taken; otherwise, the total amount is due in 30 days. c. The amount of the invoice is due 10 days after the end of the month in which the invoice is issued. d. Payment in full is due 20 days after date of the invoice. e. If the invoice is paid within 10 days of its date, 1% discount may be taken; otherwise, the total amount is due in 20 days. f. If payment is made within 5 days of its date, a 3 percent discount may be taken; otherwise, the total amount is due in 30 days. g. Payment in full is due 15 days after the end of the month in which the invoice is issued.
16. 17. 18.
(a) Purchases (b) Merchandise Inventory (a) Purchases Returns and Allowances (b) Merchandise Inventory (a) Freight In (b) Merchandise Inventory
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-2
EXERCISE 8.1 Dr Purchases Cr Purchases Return and Allowances
Cr Purchases Discounts Dr Freight In
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-3
EXERCISE 8.2 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 4 Purchases 3 Accounts Payable/Sanchez Company 4 Purchased merchandise on account, 5 Invoice 100, n/30 6 7 15 Purchases 8 Cash 9 Purchased merchandise for cash 10 11 30 Accounts Payable/Sanchez Company 12 Cash 13 Paid amount due, Invoice 100 14
Post Ref.
DEBIT 9 5 5 00
1 4 4 0 00
9 5 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-4
CREDIT 1 2 9 5 5 00 3 4 5 6 7 1 4 4 0 00 8 9 10 11 9 5 5 00 12 13 14
EXERCISE 8.3 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Apr. 1 Purchases 3 Cash 4 Purchased merchandise for cash 5 6 2 Cash 7 Purchases Returns and Allowances 8 Returned merchandise purchased April 1 for refund 9 10 4 Purchases 11 Freight In 12 Accounts Payable/Ramos Distributors 13 Purchased merchandise on account, 14 Invoice 125, n/30 15 16 7 Accounts Payable/Ramos Distributors 17 Purchases Returns and Allowances 18 Received Credit Memo 202 for return of 19 damaged merchandise 20 21 30 Accounts Payable/Ramos Distributors ($717 – $53) 22 Cash 23 Paid amount due on Invoice 125 after receipt 24 of Credit Memo 202, check 1458 25
Post Ref.
DEBIT 1 3 1 0 00
1 1 8 00
6 7 1 00 4 6 00
5 3 00
6 6 4 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-5
CREDIT 1 2 1 3 1 0 00 3 4 5 6 1 1 8 00 7 8 9 10 11 7 1 7 00 12 13 14 15 16 5 3 00 17 18 19 20 21 6 6 4 00 22 23 24 25
EXERCISE 8.4 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Apr. 1 Purchases 3 Freight In 4 Accounts Payable/O’Rourke Fabricators 5 Purchased merchandise on account, 6 Invoice 885, 1/10, n/30 7 8 9 Accounts Payable/O’Rourke Fabricators 9 Purchases Discounts (1% x $3,000) 10 Cash ($3,020 - $30) 11 Paid amount due on Invoice 885, Check 457 12 13 15 Purchases 14 Freight In 15 Accounts Payable/Kroll Company 16 Purchased merchandise on account, 17 Invoice 145, 1/10, n/30 18 19 17 Accounts Payable/Kroll Company 20 Purchases Returns and Allowances 21 Received Credit Memo 332 for return of 22 damaged merchandise 23 24 24 Accounts Payable/Kroll Company ($1,325 - $50) 25 Purchases Discounts (1% x ($1,250 - $50)) 26 Cash ($1,275 - $12) 27 Paid amount due on Invoice 145, 28 Check 470 29
Post Ref.
DEBIT 3 0 0 0 00 2 0 00
3 0 2 0 00
1 2 5 0 00 7 5 00
5 0 00
1 2 7 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-6
CREDIT 1 2 3 3 0 2 0 00 4 5 6 7 8 3 0 00 9 2 9 9 0 00 10 11 12 13 14 1 3 2 5 00 15 16 17 18 19 5 0 00 20 21 22 23 24 1 2 00 25 1 2 6 3 00 26 27 28 29
EXERCISE 8.5 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
Post Ref.
1 2016 2 March 8 Purchases ($5,000 - $1,500 = $3,500; $3,500 - $700 = $2,800) 3 Accounts Payable/Lovely Accessories 4 Purchased merchandise on account, 5 Invoice 1091, 3/10, n/30 6 7 17 Accounts Payable/Lovely Accessories 8 Purchases Discounts (3% x $2,800) 9 Cash ($2,800 - $84) 10 Paid amount due on Invoice 1091, 11 Check 185 12
DEBIT 2 8 0 0 00
2 8 0 0 00
CREDIT 1 2 2 8 0 0 00 3 4 5 6 7 8 4 00 8 2 7 1 6 00 9 10 11 12
EXERCISE 8.6 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 10 Purchases 3 Accounts Payable/Schmidt, Inc. 4 Purchased merchandise on account., 5 Invoice 1980, terms 1/10, n/30 6 7 13 Accounts Payable/Schmidt, Inc. 8 Purchases Returns and Allowances 9 Received Credit Memorandum 230 for return 10 of damaged merchandise, Invoice 1980 11 12 19 Accounts Payable/Schmidt, Inc. ($3,000 - $200) 13 Purchases Discounts ($3,000 - $200) x 1% 14 Cash ($2,800 - $28) 15 Paid amount owed on Invoice 1980 16 less return of February 13, Check #2010 17
Post Ref.
DEBIT 3 0 0 0 00
2 0 0 00
2 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-7
20
CREDIT 1 2 3 0 0 0 00 3 4 5 6 7 2 0 0 00 8 9 10 11 12 2 8 00 13 2 7 7 2 00 14 15 16 17
EXERCISE 8.6 (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 10 Accounts Receivable/Brown Company 3 Sales 4 Sold merchandise on account., 5 Invoice 1980, terms 1/10, n/30 6 7 13 Sales Returns and Allowances 8 Accounts Receivable/Brown Company 9 Accepted return of damaged merchandise, Credit 10 Memorandum 230; original sale made on 11 Invoice 1980, February 10 12 13 19 Sales Discounts 14 Cash 15 Accounts Receivable/Brown Company 16 Received payment on on Invoice 1980, 17 less sales discount 18
Post Ref.
DEBIT 3 0 0 0 00
2 0 0 00
2 8 00 2 7 7 2 00
CREDIT 1 2 3 0 0 0 00 3 4 5 6 7 2 0 0 00 8 9 10 11 12 13 14 2 8 0 0 00 15 16 17 18
EXERCISE 8.7 Purchases Add freight in Delivered Cost of Purchases Less Purchase Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases
$41,795 2,326 44,121 $2,910 2,150
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-8
20
5,060 $39,061
EXERCISE 8.8 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Jan. 8 Accounts Payable/Stamos Distributors 3 Cash 4 Made partial payment on account, check 1240 5 6 10 Accounts Payable/Evans Enterprises 7 Purchases Returns and Allowances 8 Received Credit Memorandum 123 as allowance 9 for discolored merchandise 10
Post Ref. 202
202
DEBIT
✔
3 0 0 00
✔
2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-9
40
CREDIT 1 2 3 0 0 00 3 4 5 6 2 0 0 00 7 8 9 10
EXERCISE 8.8 (continued) ACCOUNT NO. 202
ACCOUNT Accounts Accounts Payable Payable DATE 2016 Jan.
ITEM
✔ J40 J40
1 Balance 8 10
NAME
Post Ref.
DEBIT
CREDIT
BALANCE DEBIT CREDIT 6 6 0 0 00 6 3 0 0 00 6 1 0 0 00
3 0 0 00 2 0 0 00
TERMS
Evans Enterprises
ADDRESS DATE 2016 Jan.
DESCRIPTION
✔ J40
1 Balance 10 CM 123
NAME
Post Ref.
DEBIT
CREDIT
BALANCE
1 6 0 0 00 1 4 0 0 00
2 0 0 00
TERMS
Stamos Distributors
ADDRESS DATE 2016 Jan.
NAME
DESCRIPTION
Post Ref. ✔ J40
1 Balance 8
DEBIT
CREDIT
BALANCE
3 1 0 0 00 2 8 0 0 00
3 0 0 00
TERMS
Tonetta Company
ADDRESS DATE 2016 Jan.
DESCRIPTION
1 Balance
Post Ref.
DEBIT
CREDIT
✔
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-10
BALANCE
1 9 0 0 00
EXERCISE 8.9 Bioplast Jewelry, Inc. Schedule of Accounts Payable January 31, 2016 Evans Enterprises Stamos Distributors Tonetta Company Total
1 4 0 0 00 2 8 0 0 00 1 9 0 0 00 6 1 0 0 00
2. Does the total of your accounts payable schedule agree with the balance of the accounts payable account in the general ledger at January 31, 2016? Yes. The total of the schedule of accounts payable is $6,100, and the balance of the Accounts Payable account is $6,100.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-11
EXERCISE 8.10 GENERAL JOURNAL DATE 1 2016 2 July 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
DESCRIPTION
PAGE Post Ref.
DEBIT
3 Merchandise Inventory Accounts Payable/Fashion Expo Purchased dresses on account from Fashion Expo, Invoice 101 dated July 1. Freight charges of $120 added to invoice. Terms 2/10, n/30.
3 6 2 0 00
5 Accounts Receivable/Alice Chu Sales Cost of Goods Sold Merchandise Inventory Sold two dresses to Alice Chu, Sales Slip 788; terms 30 days. The cost of the dresses was $400.
6 0 0 00
7 Accounts Payable/Fashion Expo Merchandise Inventory Received Credit Memorandum 210 for damaged dresses returned; the goods were originally purchased on Invoice 101 dated July 1.
5 5 0 00
9 Sales Returns and Allowances Accounts Receivable/Alice Chu Merchandise Inventory Cost of Goods Sold Issued Credit Memorandum 89 for $200 to Alice Chu for a returned dress; the dress was originally sold on Sales Slip 788 dated July 5. The cost of the returned dress was $135.
2 0 0 00
12
15
Accounts Payable/Fashion Expo ($3,620 - $550) Merchandise Inventory (($3,620 - $120 - $550) * 2%) Cash ($3,070 - $59) Paid amount due on Invoice 101 to Fashion Expo after receipt of Credit Memo 210, Check 1255 Sales Discounts (($600 - $200) * 1%) Cash ($600 - $200 - $4) Accounts Receivable/Alice Chu ($600 - $200) Received amount due from Alice Chu for sale of July 5, less return of July 9 and less cash discount
CREDIT
3 6 2 0 00
6 0 0 00 4 0 0 00 4 0 0 00
5 5 0 00
2 0 0 00 1 3 5 00 1 3 5 00
3 0 7 0 00 5 9 00 3 0 1 1 00
4 00 3 9 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-12
8
4 0 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
PROBLEM 8.1A PAGE 1
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 April 1 Purchases 3 Freight In 4 Accounts Payable/Camera & Film Products 5 Purchased merchandise on account, 6 Invoice 825, n/30 7 8 3 Purchases 9 Accounts Payable/Vision Supplies, Inc. 10 Purchased lenses on account, 11 Invoice 998, n/30 12 13 11 Purchases 14 Accounts Payable/Optical Products 15 Purchased DVD camcorders on account, 16 Invoice 4101, n/30 17 18 15 Purchases 19 Cash 20 Recorded various cash purchases for April 1 – 15. 21 22 26 Purchases 23 Freight In 24 Accounts Payable/Myers Brothers Camera Supplies 25 Purchased lighting equipment on account, 26 Invoice 9288, n/30 27 28 27 Accounts Payable/Vision Supplies, Inc. 29 Cash 30 Issued Check 102 for partial payment of Invoice 998 31 32 30 Purchases 33 Cash 34 Recorded various cash purchases for April 16 – 30. 35 36 30 Accounts Payable/Camera & Film Products 37 Cash 38 Issued Check 103 for full payment of Invoice 825 39
Post Ref.
DEBIT
501 502 205
1 0 1 5 00 2 1 00
501 205
8 6 0 00
501 205
5 7 0 0 00
501 101
2 6 0 0 00
501 502 205
6 5 0 0 00 2 2 8 00
205 101
5 9 0 00
501 101
3 0 7 0 00
205 101
1 0 3 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-13
CREDIT 1 2 3 1 0 3 6 00 4 5 6 7 8 8 6 0 00 9 10 11 12 13 5 7 0 0 00 14 15 16 17 18 2 6 0 0 00 19 20 21 22 23 6 7 2 8 00 24 25 26 27 28 5 9 0 00 29 30 31 32 3 0 7 0 00 33 34 35 36 1 0 3 6 00 37 38 39
PROBLEM 8.1A (continued) GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash Accounts Payable DATE 2016 April
DESCRIPTION
1 Balance 15 27 30 30
Post Ref.
DEBIT
CREDIT
J1 J1 J1 J1
2 6 0 0 00 5 9 0 00 3 0 7 0 00 1 0 3 6 00
2016 April
DESCRIPTION
1 3 11 26 27 30
Post Ref. J1 J1 J1 J1 J1 J1
DEBIT
CREDIT DEBIT
2016 April
DESCRIPTION
1 3 11 15 26 30
BALANCE CREDIT
1 0 3 6 00 8 6 0 00 5 7 0 0 00 6 7 2 8 00
1 0 3 6 00 1 8 9 6 00 7 5 9 6 00 14 3 2 4 00 13 7 3 4 00 12 6 9 8 00
5 9 0 00 1 0 3 6 00
ACCOUNT NO. 501
ACCOUNT Purchases Accounts Payable DATE
11 9 0 0 00 9 3 0 0 00 8 7 1 0 00 5 6 4 0 00 4 6 0 4 00
ACCOUNT NO. 205
ACCOUNT Accounts Accounts Payable Payable DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J1 J1 J1 J1 J1 J1
1 0 1 5 00 8 6 0 00 5 7 0 0 00 2 6 0 0 00 6 5 0 0 00 3 0 7 0 00
CREDIT
BALANCE DEBIT CREDIT 1 0 1 5 00 1 8 7 5 00 7 5 7 5 00 10 1 7 5 00 16 6 7 5 00 19 7 4 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-14
PROBLEM 8.1A (continued) GENERAL LEDGER ACCOUNT NO. 502
ACCOUNT Freight Accounts InPayable DATE 2016 April
Analyze:
DESCRIPTION
1 26
Post Ref.
DEBIT
J1 J1
2 1 00 2 2 8 00
CREDIT
BALANCE DEBIT CREDIT 2 1 00 2 4 9 00
The total cash payments on account during April were $1,626.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-15
PROBLEM 8.2A PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Sept. 2 Purchases 3 Freight In 4 Accounts Payable/Colorado Ski Shop 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34
Post Ref. 501 502 201
DEBIT
CREDIT
6 6 0 0 00 3 1 0 00
1 2 3 6 9 1 0 00 4
Purchased ski boots on account, Invoice 6672, n/30 3 Purchases Accounts Payable/Alaska Supply Company
5 6 7 8 12 2 0 0 00 9
10 11 12 13
501 201
12 2 0 0 00
Purchased skis on account, Invoice 5916, terms 3/10, n/30 7 Accounts Payable/Colorado Ski Shop Purchases Returns and Allowances Received Credit Memorandum 165 for $1,000 for damaged ski boots purchased on Sept. 2. 11 Purchases Accounts Payable/Cold Mountain Clothing Company
201
1 0 0 0 00
503
1 0 0 0 00 14 15 16 17 18 19 5 0 0 0 00 20
21 22 23 24
501 201
5 0 0 0 00
Purchased ski jackets on account, Invoice 4091, n/30 12 Accounts Payable/Alaska Supply Company Purchases Discounts ($12,200 x 3%) Cash ($12,200 - $366) Paid amount due on Invoice 5916, Check 104 22 Purchases Freight In Accounts Payable/Alaska Supply Company
201
12 2 0 0 00
504 101
501 502 201
1
4 7 6 0 00 1 7 0 00
Purchased ski poles on account, Invoice 5950, terms 3/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-16
3 6 6 00 25 11 8 3 4 00 26 27 28 29 30 4 9 3 0 00 31 32 33 34
PROBLEM 8.2A (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Sept. 23 Purchases 3 Accounts Payable/Swenson Ski Goods 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Post Ref.
DEBIT
CREDIT
3 2 5 0 00
1 2 3 2 5 0 00 3
4 5 6 7
501 201
Purchased ski pants on account, Invoice 528, n/30 25 Accounts Payable/Swenson Ski Goods Purchases Return and Allowances Received Credit Memorandum 245 for $400 for defective ski pants, original purchase made on Sept. 23. 27 Purchases Freight In Accounts Payable/Colorado Ski Shop
201
4 0 0 00
503
4 0 0 00 8 9 10 11 12 13 14 3 7 5 0 00 15
16 17 18 19
501 502 201
3 6 0 0 00 1 5 0 00
Purchased ski sweaters on account, Invoice 6722, n/30 30 Accounts Payable/Colorado Ski Shop Cash ($6,910 - $1,000) Paid amount due on Invoice 6672 less return of Sept. 7, Check 110
201
2
5 9 1 0 00
101
Analyze: The amount of the cash discount on September 12 was $366.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-17
5 9 1 0 00 20 21 22 23
PROBLEM 8.3A GENERAL LEDGER ACCOUNT Cash DATE 2016 Sept
DESCRIPTION
1 Balance 12 30
ACCOUNT NO. Post Ref.
DEBIT
CREDIT
J1 J2
11 5
8 3 4 00 9 1 0 00
BALANCE DEBIT CREDIT 27 15 9
ACCOUNT Accounts Payable DATE 2016 Sept
DESCRIPTION
2 3 7 11 12 22 23 25 27 30
J1 J1 J1 J1 J1 J1 J2 J2 J2 J2
DEBIT
1 12
CREDIT
6 12
9 1 0 00 2 0 0 00
5
0 0 0 00
4 3
9 3 0 00 2 5 0 00
3
7 5 0 00
6 9 1 0 00 19 1 1 0 00 18 1 1 0 00 23 1 1 0 00 10 9 1 0 00 15 8 4 0 00 19 0 9 0 00 18 6 9 0 00 22 4 4 0 00 16 5 3 0 00
0 0 0 00 2 0 0 00
4 0 0 00 5
2016 Sept
DESCRIPTION
9 1 0 00
2 3 11 22 23 27
ACCOUNT NO. Post Ref. J1 J1 J1 J1 J2 J2
DEBIT
6 12 5 4 3 3
6 0 0 00 2 0 0 00 0 0 0 00 7 6 0 00 2 5 0 00 6 0 0 00
201
BALANCE DEBIT CREDIT
ACCOUNT Purchases DATE
0 0 0 00 1 6 6 00 2 5 6 00
ACCOUNT NO. Post Ref.
101
CREDIT
501
BALANCE DEBIT CREDIT 6 18 23 28 31 35
6 0 0 00 8 0 0 00 8 0 0 00 5 6 0 00 8 1 0 00 4 1 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-18
PROBLEM 8.3A (continued) ACCOUNT Freight In DATE 2016 Sept
DESCRIPTION
2 22 27
ACCOUNT NO. Post Ref. J1 J1 J2
DEBIT
CREDIT
3 1 0 00 1 7 0 00 1 5 0 00
2016 Sept
DESCRIPTION
7 25
Post Ref.
ACCOUNT NO. DEBIT
J1 J2
CREDIT
1
2016 Sept
DESCRIPTION
12
1 0 0 0 00 1 4 0 0 00
ACCOUNT NO. Post Ref. J1
DEBIT
CREDIT
503
BALANCE DEBIT CREDIT
0 0 0 00 4 0 0 00
ACCOUNT Purchases Discounts DATE
BALANCE DEBIT CREDIT 3 1 0 00 4 8 0 00 6 3 0 00
ACCOUNT Purchases Returns and Allowances DATE
502
504
BALANCE DEBIT CREDIT
3 6 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-19
3 6 6 00
PROBLEM 8.3A (continued)
NAME
ACCOUNTS PAYABLE SUBSIDIARY LEDGER Alaska Supply Company
TERMS
3/10, n/30
ADDRESS DATE 2016 Sept.
DESCRIPTION
3 Invoice 5916 12 22 Invoice 5950
NAME
Post Ref. J1 J1 J1
DEBIT
CREDIT
BALANCE
12 2 0 0 00
12 2 0 0 00 - 0 4 9 3 0 00
12 2 0 0 00 4 9 3 0 00
TERMS
Cold Mountain Clothing Company
n/30
ADDRESS DATE
DESCRIPTION
2016 Sept. 11 Invoice 4091
NAME
Post Ref.
DEBIT
J1
CREDIT
BALANCE
5 0 0 0 00
5 0 0 0 00
TERMS
Colorado Ski Shop
n/30
ADDRESS DATE 2016 Sept.
DESCRIPTION
2 Invoice 6672 7 CM 165 27 Invoice 6722 30
NAME
Post Ref. J1 J1 J2 J2
DEBIT
CREDIT
BALANCE
6 9 1 0 00
6 9 1 0 00 5 9 1 0 00 9 6 6 0 00 3 7 5 0 00
1 0 0 0 00 3 7 5 0 00 5 9 1 0 00
TERMS
Swenson Ski Goods
n/30
ADDRESS DATE 2016 Sept. 23 Invoice 528 25 CM 245
DESCRIPTION
Post Ref. J2 J2
DEBIT
CREDIT
BALANCE
3 2 5 0 00
3 2 5 0 00 2 8 5 0 00
4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-20
PROBLEM 8.3A (continued) Big Country Ski Shop Schedule of Accounts Payable September 30, 2016 Alaska Supply Company Cold Mountain Clothing Company Colorado Ski Shop Swenson Ski Goods Total
The balance of the Accounts Payable control account is $16,530. Analyze: $6,600 + $5,000 + $3,250 + $3,600 = $18,450. The portion of purchases in September for clothing items is $18,450.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-21
4 9 3 0 00 5 0 0 0 00 3 7 5 0 00 2 8 5 0 00 1 6 5 3 0 00
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 8.4A PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 1 Purchases 3 Cash 4 Purchased merchandise, Check 101 5 6 3 Purchases 7 Accounts Payable/BioCenter Inc. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Post Ref.
DEBIT
501 101
4 5 0 0 00
501
1 7 0 0 00
201
Purchased merchandise on account, Invoice 606, terms 2/10, n/30 5 Purchases Freight In Accounts Payable/New Concepts Corporation
Purchases Discounts ($1,700 x 2%) Cash ($1,700 - $34) Paid amount due to Invoice 606, Check 102 10 Accounts Payable/New Concepts Corporation Purchases Returns and Allowances Received Credit Memorandum 227 for return of damaged merchandise 11 Purchases Accounts Payable/BioCenter Inc.
201
1 7 0 0 00
14 15 16 17
1 5 0 00
3 4 00 18 1 6 6 6 00 19 20 21 22 23
1 6 8 0 00 +
1 5 0 00 24 25 26 27 28 1 6 8 0 00 29
503
201
502
501 201
1 2 4 5 0 0 00 3 4 5 6 1 7 0 0 00 7
5 8 5 0 00 1 1 0 00
Purchased merchandise on account, Invoice 1011, terms 2/10, n/30 9 Accounts Payable/BioCenter Inc.
CREDIT
8 9 10 11 12 5 9 6 0 00 13
501 504 201
1
Purchased merchandise on account, Invoice 612, terms 2/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-22
30 31 32
PROBLEM 8.4A (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 14 Accounts Payable/New Concepts Corporation ($5,960 - $150) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Purchases Discounts (($5,850-150) x 2%) Cash ($5,810 - $114) Paid amount owed on Invoice 1011, Check 103 15 Purchases ($9,200-$1,840 = $7,360; $7,360-$1,104 = $6,256) Accounts Payable/Park Research
Post Ref. 201
DEBIT
501 201
6 2 5 6 00
Purchased merchandise on account, Invoice 1029, terms n/30 20 Purchases Cash Purchased merchandise, Check 104
501 101
3 0 0 0 00
25 Cash Purchases Returns and Allowances Received cash for return of defective merchandise purchased June 20
101 502
2 8 0 00
30 Purchases Freight In Accounts Payable/New Concepts Corporation
501 504
3 2 0 0 00 8 5 00
201
CREDIT 1 2
5 8 1 0 00
503 101
1 1 4 00 3 5 6 9 6 00 4 5 6 7 8 6 2 5 6 00 9 10 11 12 13 3 0 0 0 00 14 15 16 17 2 8 0 00 18 19 20 21 22 23 3 2 8 5 00 24
Purchased merchandise on account, Invoice 1080, terms 2/10, n/30
Analyze: The amount of trade discounts received on the June 15 purchase from Park Research was $2,944 (List price, $9,200, less purchase price, $6,256).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-23
2
25 26 27
PROBLEM 8.5A GENERAL LEDGER ACCOUNT DATE 2016 June
DESCRIPTION
1 Balance 1 9 14 20 25
ACCOUNT
Accounts Payable
DATE
DESCRIPTION
2016 June
3 5 9 10 11 14 15 30
ACCOUNT
Post Ref.
DEBIT
CREDIT
J1 J1 J2 J2 J2
4 5 0 0 00 1 6 6 6 00 5 6 9 6 00 3 0 0 0 00 2 8 0 00
Post Ref.
J1 J1 J1 J1 J1 J2 J2 J2
DESCRIPTION
1 3 5 11 15 20 30
BALANCE DEBIT CREDIT 37 4 0 0 00 32 9 0 0 00 31 2 3 4 00 25 5 3 8 00 22 5 3 8 00 22 8 1 8 00
ACCOUNT NO. 201 DEBIT
CREDIT
BALANCE DEBIT CREDIT
1 7 0 0 00 5 9 6 0 00
1 7 0 0 00 7 6 6 0 00 5 9 6 0 00 5 8 1 0 00 7 4 9 0 00 1 6 8 0 00 7 9 3 6 00 11 2 2 1 00
1 7 0 0 00 1 5 0 00 1 6 8 0 00 5 8 1 0 00 6 2 5 6 00 3 2 8 5 00
ACCOUNT NO. 501
Purchases
DATE 2016 June
ACCOUNT NO. 101
Cash
Post Ref.
J1 J1 J1 J1 J2 J2 J2
DEBIT
4 5 0 0 00 1 7 0 0 00 5 8 5 0 00 1 6 8 0 00 6 2 5 6 00 3 0 0 0 00 3 2 0 0 00
CREDIT
BALANCE DEBIT CREDIT 4 5 0 0 00 6 2 0 0 00 12 0 5 0 00 13 7 3 0 00 19 9 8 6 00 22 9 8 6 00 26 1 8 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-24
PROBLEM 8.5A (continued) ACCOUNT DATE 2016 June
DESCRIPTION
10 25
Purchases Discounts
DATE
DESCRIPTION
9 14
ACCOUNT
DEBIT
CREDIT
5 30
1 5 0 00 4 3 0 00
ACCOUNT NO. 503 Post Ref.
DEBIT
J1 J2
DESCRIPTION
BALANCE DEBIT CREDIT
1 5 0 00 2 8 0 00
CREDIT
BALANCE DEBIT CREDIT
3 4 00 1 1 4 00
3 4 00 1 4 8 00
ACCOUNT NO. 504
Freight In
DATE 2016 June
Post Ref.
J1 J2
ACCOUNT
2016 June
ACCOUNT NO. 502
Purchases Returns and Allowances
Post Ref.
J1 J2
DEBIT
CREDIT
BALANCE DEBIT CREDIT
1 1 0 00 8 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-25
1 1 0 00 1 9 5 00
PROBLEM 8.5A (continued)
NAME
ACCOUNTS PAYABLE SUBSIDIARY LEDGER BioCenter Inc.
TERMS
2/10, n/30
ADDRESS DATE 2016 June
DESCRIPTION
3 Invoice 606 9 11 Invoice 612
NAME
Post Ref. J1 J1 J1
DEBIT
CREDIT
BALANCE
1 7 0 0 00
1 7 0 0 00 0 00 1 6 8 0 00
1 7 0 0 00 1 6 8 0 00
TERMS
New Concepts Corporation
2/10, n/30
ADDRESS DATE 2016 June
DESCRIPTION
5 Invoice 1011 10 CM 227 14 30 Invoice 1080
NAME
Post Ref. J1 J1 J2 J2
DEBIT
CREDIT
BALANCE
5 9 6 0 00
5 9 6 0 00 5 8 1 0 00 0 00 3 2 8 5 00
1 5 0 00 5 8 1 0 00 3 2 8 5 00
TERMS
Park Research
n/30
ADDRESS DATE
DESCRIPTION
2016 June 15 Invoice 1029
Post Ref. J2
DEBIT
CREDIT
BALANCE
6 2 5 6 00
6 2 5 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-26
PROBLEM 8.5A (continued) NewTech Medical Devices Schedule of Accounts Payable June 30, 2016 BioCenter Inc. New Concepts Corporation Park Research Total
1 3 6 11
6 8 0 00 2 8 5 00 2 5 6 00 2 2 1 00
Analyze: The amount of merchandise returned to vendors by NewTech Medical Devices in June was $430.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-27
PROBLEM 8.6A Bruno Company PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Jan. 8 Accounts Payable/Smith, Inc. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Post Ref. 201
✔
DEBIT 3 0 0 0 00
Purchases Discounts Cash Paid amount owed on Invoice 1885 less cash discount, Check # 2101 10 Purchases Accounts Payable/Smith, Inc.
2 0 0 0 00 201
✔
Purchased merchandise on account, Invoice 1920, terms 2/10, n/30 15 Accounts Payable/Smith, Inc. Purchases Returns and Allowances Received Credit Memorandum 320 for return of damaged merchandise, Invoice 1920
201 ✔
19 Accounts Payable/Smith, Inc. ($2,000 - $200)
201
✔
2 0 0 00
1 8 0 0 00
Purchases Discounts ($2,000 - $200) x 2% Cash Paid amount owed on Invoice 1920 less return of January 15, Check # 2130 30 Purchases Accounts Payable/Smith, Inc.
4 2 0 0 00 201
✔
Purchased merchandise on account, Invoice 1950, terms 2/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-28
21
CREDIT 1 2 6 0 00 3 2 9 4 0 00 4 5 6 7 8 2 0 0 0 00 9 10 11 12 13 2 0 0 00 14 15 16 17 18 3 6 00 19 1 7 6 4 00 20 21 22 23 24 4 2 0 0 00 25 26 27 28
PROBLEM 8.6A (continued) Smith, Inc. PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Jan. 8 Sales Discounts 3 Cash 4 Accounts Receivable/Bruno Company 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Post Ref.
111
DEBIT
CREDIT
6 0 00 2 9 4 0 00 ✔
1 2 3 3 0 0 0 00 4
✔
5 6 7 8
Received payment on Invoice 1885, less sales discount 10 Accounts Receivable/Bruno Company
111
2 0 0 0 00
Sales Sold merchandise on account, Invoice 1920, terms 2/10, n/30 15 Sales Returns and Allowances Accounts Receivable/Bruno Company
✔
2 0 0 0 00 9 10 11 12 13 2 0 0 00 14
✔
15 16 17 18 19 20 1 8 0 0 00 21
✔
22 23 24 25
2 0 0 00 111
Accepted return of damaged merchandise, Credit Memorandum 320; original sale made on Invoice 1920, January 10 19 Sales Discounts Cash Accounts Receivable/Bruno Company
3 6 00 1 7 6 4 00 111
Received payment on Invoice 1920, less sale discount 30 Accounts Receivable/Bruno Company
111
21
4 2 0 0 00
Sales Sold merchandise on account, Invoice 1950, 2/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-29
4 2 0 0 00 26 27 28 29
PROBLEM 8.6A (continued) GENERAL LEDGER – Bruno Company ACCOUNT Accounts Payable DATE 2016 Jan.
DESCRIPTION
1 Balance 8 10 15 19 30
ACCOUNT NO. 201 Post Ref.
DEBIT
CREDIT
BALANCE DEBIT CREDIT
J21 J21 J21 J21 J21
3 0 0 0 00 - 0 2 0 0 0 00 1 8 0 0 00 - 0 4 2 0 0 00
3 0 0 0 00 2 0 0 0 00 2 0 0 00 1 8 0 0 00 4 2 0 0 00
ACCOUNTS PAYABLE SUBSIDIARY LEDGER – Bruno Company TERMS 2/10, n/30 Smith, Inc.
NAME ADDRESS DATE 2016 Jan.
Post Ref. 1 Balance 8 10 15 19 30
DEBIT
CREDIT
J21 J21 J21 J21 J21
3 0 0 0 00 2 0 0 0 00 2 0 0 00 1 8 0 0 00 4 2 0 0 00
BALANCE
3 0 0 0 00 - 0 2 0 0 0 00 1 8 0 0 00 - 0 4 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-30
PROBLEM 8.6A (continued) GENERAL LEDGER – Smith, Inc. ACCOUNT DATE 2016 Jan.
Accounts Receivable DESCRIPTION Post Ref.
1 Balance 8 10 15 19 30
NAME
DEBIT
ACCOUNT NO. 111 BALANCE DEBIT CREDIT
CREDIT
J21 J21 J21 J21 J21
3 0 0 0 00 - 0 2 0 0 0 00 1 8 0 0 00 - 0 4 2 0 0 00
3 0 0 0 00 2 0 0 0 00 2 0 0 00 1 8 0 0 00 4 2 0 0 00
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER – Smith, Inc. TERMS Bruno Company
ADDRESS DATE 2016 Jan.
1 Balance 8 10 15 19 30
Post Ref.
DEBIT
CREDIT
J21 J21 J21 J21 J21
3 0 0 0 00 2 0 0 0 00 2 0 0 00 1 8 0 0 00 4 2 0 0 00
BALANCE
3 0 0 0 00 - 0 2 0 0 0 00 1 8 0 0 00 - 0 4 2 0 0 00
Analyze: The balance of the accounts payable for Smith, Inc. in the Bruno Company accounts payable subsidiary ledger is $4,200. The balance of the accounts receivable for Bruno Company in the Smith, Inc. accounts receivable subsidiary ledger is $4,200.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-31
PROBLEM 8.1B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 1 Purchases 3 Freight In 4 Accounts Payable/Mow Down Corporation 5 Purchased lawn mowers on account, 6 Invoice 925, n/30 7 8 5 Purchases 9 Accounts Payable/Patio Furniture, Inc. 10 Purchased outdoor chairs and tables on account, 11 Invoice 992, n/30 12 13 9 Purchases 14 Accounts Payable/Summer Lawn Center 15 Purchased grass seed on account, 16 Invoice 4001, n/30 17 18 15 Purchases 19 Cash 20 Recorded various cash purchases for June 1 – 15. 21 22 20 Purchases 23 Freight In 24 Accounts Payable/Mason Industries 25 Purchased sprinkler system on account, 26 Invoice 9228, n/30 27 28 27 Accounts Payable/Patio Furniture, Inc. 29 Cash 30 Issued chk 104 for partial payment of Invoice 992 31 32 30 Purchases 33 Cash 34 Recorded various cash purchases for June 16 – 30. 35 36 30 Accounts Payable/Mow Down Corporation 37 Cash 38 Issued chk 105 for full payment of Invoice 925 39
Post Ref.
DEBIT
501 502 205
5 0 2 5 00 1 2 5 00
501 205
6 7 6 0 00
501 205
9 4 8 00
501 101
2 9 0 0 00
501 502 205
7 2 5 0 00 3 2 0 00
205 101
3 0 0 0 00
501 101
2 6 5 0 00
205 101
5 1 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-32
1
CREDIT 1 2 3 5 1 5 0 00 4 5 6 7 8 6 7 6 0 00 9 10 11 12 13 9 4 8 00 14 15 16 17 18 2 9 0 0 00 19 20 21 22 23 7 5 7 0 00 24 25 26 27 28 3 0 0 0 00 29 30 31 32 2 6 5 0 00 33 34 35 36 5 1 5 0 00 37 38 39
PROBLEM 8.1B (continued) GENERAL LEDGER ACCOUNT Cash DATE 2016 June
DESCRIPTION
1 Balance 15 27 30 30
ACCOUNT NO. 101 Post Ref.
DEBIT
CREDIT
J1 J1 J1 J1
2 9 0 0 00 3 0 0 0 00 2 6 5 0 00 5 1 5 0 00
ACCOUNT Accounts Payable DATE 2016 June
DESCRIPTION
1 5 9 20 27 30
Post Ref. J1 J1 J1 J1 J1 J1
2016 June
DESCRIPTION
1 5 9 15 20 30
20 0 0 0 00 17 1 0 0 00 14 1 0 0 00 11 4 5 0 00 6 3 0 0 00
ACCOUNT NO. 205 DEBIT
CREDIT
BALANCE DEBIT CREDIT
5 1 5 0 00 6 7 6 0 00 9 4 8 00 7 5 7 0 00
5 1 5 0 00 11 9 1 0 00 12 8 5 8 00 20 4 2 8 00 17 4 2 8 00 12 2 7 8 00
3 0 0 0 00 5 1 5 0 00
ACCOUNT Purchases DATE
BALANCE DEBIT CREDIT
ACCOUNT NO. 501 Post Ref.
DEBIT
J1 J1 J1 J1 J1 J1
5 0 2 5 00 6 7 6 0 00 9 4 8 00 2 9 0 0 00 7 2 5 0 00 2 6 5 0 00
CREDIT
BALANCE DEBIT CREDIT 5 0 2 5 00 11 7 8 5 00 12 7 3 3 00 15 6 3 3 00 22 8 8 3 00 25 5 3 3 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-33
PROBLEM 8.1B (continued) GENERAL LEDGER ACCOUNT Freight In DATE 2016 June
DESCRIPTION
1 20
ACCOUNT NO. 502 Post Ref.
DEBIT
J1 J1
1 2 5 00 3 2 0 00
CREDIT
BALANCE DEBIT CREDIT 1 2 5 00 4 4 5 00
Analyze: The total freight costs incurred during June were $445.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-34
PROBLEM 8.2B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 April 2 Purchases 3 Freight In 4 Accounts Payable/Mailing and Packing Center 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Post Ref. 501 502
DEBIT
CREDIT
2 3 0 0 00 2 1 0 00
1 2 3 2 5 1 0 00 4
201
Purchased copy paper on account, Invoice 3772, n/30 8 Purchases Accounts Payable/Special Occasion Cards
201
5 6 7 8 1 9 0 0 00 9
201
10 11 12 13
501
1 9 0 0 00
Purchased gift cards on account, Invoice 9516, terms 1/10, n/30 9 Accounts Payable/Mailing and Packing Center Purchases Returns and Allowances Received Credit Memorandum 155 for water-damaged copy paper purchased on April 2 12 Purchases Accounts Payable/Specialty Cards
2 2 0 00
503
201
2 2 0 00 14 15 16 17 18 1 2 0 0 00 19
201
20 21 22 23
501
1 2 0 0 00
Purchased novelty items on account, Invoice 4901, n/30 17 Accounts Payable/Special Occasion Cards Purchases Discounts ($1,900 x 1%) Cash ($1,900 - $19) Paid amount due on Invoice 9516, Check 105 22 Purchases Accounts Payable/Specialty Cards
1
1 9 0 0 00
504 101
501
7 5 0 00
201
Purchased cards on account, Invoice 4921, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-35
1 9 00 24 1 8 8 1 00 25 26 27 28 29 7 5 0 00 30 31 32 33
PROBLEM 8.2B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2010 2 April 23 Purchases 3 Freight In 4 Accounts Payable/Business Forms, Inc. 5 7 8 9 10 11 13 14 15 16 17 18 19 20 21 22 23 24
Post Ref.
DEBIT
CREDIT
1 9 8 0 00 7 0 00
201
1 2 3 2 0 5 0 00 4
201
5 7 8
501 502
Purchased forms on account, Invoice 2020, n/30 25 Accounts Payable/Specialty Cards Purchases Returns and Allowances Received Credit Memorandum 225 for return of defective cards originally purchased on April 22
2
7 5 00
201
7 5 00 9 10 11 13 14 15 2 8 6 0 00 16
30 Accounts Payable/Mailing and Packing Center
201
17 18 19 20
Cash ($2,510 - $220) Paid amount due on Invoice 3772 less return of April 9, Check 111
101
27 Purchases Freight In Accounts Payable/Business Forms, Inc.
503
501 502
2 7 7 5 00 8 5 00
Purchased toner and other office supplies on account, Invoice 2029, n/30 2 2 9 0 00
Analyze: The cost per card was $1.50 ($750 ÷ 500 cards).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-36
2 2 9 0 00 21 22 23 24
PROBLEM 8.3B GENERAL LEDGER ACCOUNT Cash DATE 2016 April
DESCRIPTION
1 Balance 17 30
ACCOUNT NO. 101 Post Ref.
DEBIT
CREDIT
J1 J2
1 8 8 1 00 2 2 9 0 00
ACCOUNT Accounts Payable DATE 2016 April
DESCRIPTION
2 8 9 12 17 22 23 25 27 30
Post Ref. J1 J1 J1 J1 J1 J1 J2 J2 J2 J2
2016 April
DESCRIPTION
2 8 12 22 23 27
12 5 0 0 00 10 6 1 9 00 8 3 2 9 00
ACCOUNT NO. 201 DEBIT
CREDIT
BALANCE DEBIT CREDIT
2 5 1 0 00 1 9 0 0 00
2 5 1 0 00 4 4 1 0 00 4 1 9 0 00 5 3 9 0 00 3 4 9 0 00 4 2 4 0 00 6 2 9 0 00 6 2 1 5 00 9 0 7 5 00 6 7 8 5 00
2 2 0 00 1 2 0 0 00 1 9 0 0 00 7 5 0 00 2 0 5 0 00 7 5 00 2 8 6 0 00 2 2 9 0 00
ACCOUNT Purchases DATE
BALANCE DEBIT CREDIT
ACCOUNT NO. 501 Post Ref.
DEBIT
J1 J1 J1 J1 J2 J2
2 3 0 0 00 1 9 0 0 00 1 2 0 0 00 7 5 0 00 1 9 8 0 00 2 7 7 5 00
CREDIT
BALANCE DEBIT CREDIT 2 3 0 0 00 4 2 0 0 00 5 4 0 0 00 6 1 5 0 00 8 1 3 0 00 10 9 0 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-37
PROBLEM 8.3B (continued) ACCOUNT Freight In DATE 2016 April
DESCRIPTION
2 23 27
ACCOUNT NO. 502 Post Ref.
DEBIT
J1 J2 J2
2 1 0 00 7 0 00 8 5 00
CREDIT
2 1 0 00 2 8 0 00 3 6 5 00
ACCOUNT NO. 503
ACCOUNT Accounts PurchasesPayable Returns and Allowances DATE 2016 April
DESCRIPTION
9 25
Post Ref.
DEBIT
J1 J2
CREDIT
2016 April
DESCRIPTION
17
BALANCE DEBIT CREDIT
2 2 0 00 7 5 00
2 0 0 00 2 9 5 00
ACCOUNT NO. 504
ACCOUNT Accounts PurchasesPayable Discounts DATE
BALANCE DEBIT CREDIT
Post Ref. J1
DEBIT
CREDIT
BALANCE DEBIT CREDIT
1 9 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-38
1 9 00
PROBLEM 8.3B (continued)
NAME
ACCOUNTS PAYABLE SUBSIDIARY LEDGER Business Forms, Inc.
TERMS
1/10, n/30
ADDRESS DATE
DESCRIPTION
2016 April 23 Invoice 2020 27 Invoice 2029
NAME
Post Ref.
DEBIT
J2 J2
CREDIT
BALANCE
2 0 5 0 00 2 8 6 0 00
2 0 5 0 00 4 9 1 0 00
TERMS
Mailing and Packing Center
n/30
ADDRESS DATE 2016 April
DESCRIPTION
2 Invoice 3772 9 CM 155 30
NAME
Post Ref. J1 J1 J2
DEBIT
CREDIT
BALANCE
2 5 1 0 00
2 5 1 0 00 2 2 9 0 00 - 0 -
2 2 0 00 2 2 9 0 00
TERMS
Special Occasion Cards
n/30
ADDRESS DATE 2016 April
DESCRIPTION
8 Invoice 9516 17
NAME
Post Ref. J1 J1
DEBIT
CREDIT
BALANCE
1 9 0 0 00
1 9 0 0 00 - 0 -
1 9 0 0 00
TERMS
Specialty Cards
n/30
ADDRESS DATE 2016 April 12 Invoice 4901 22 Invoice 4921 25 CM 225
DESCRIPTION
Post Ref. J1 J1 J2
DEBIT
CREDIT
BALANCE
1 2 0 0 00 7 5 0 00
1 2 0 0 00 1 9 5 0 00 1 8 7 5 00
7 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-39
PROBLEM 8.3B (continued) Tara's Card and Novelty Shop Schedule of Accounts Payable April 30, 2016 Business Forms, Inc. Mailing and Packing Center Special Occasion Cards Specialty Cards Total
The balance of the Accounts Payable control account is $6,785. Analyze: The amount of purchase discounts in April was $19.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-40
4 9 1 0 00 - 0 - 0 1 8 7 5 00 6 7 8 5 00
PROBLEM 8.4B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Aug. 1 Purchases 3 Cash 4 Purchased merchandise, Check 101 5 6 2 Purchases 7 Accounts Payable/Brown Dental Corporation 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Post Ref.
DEBIT
501 101
2 5 0 0 00
501
2 2 0 0 00
201
Purchased merchandise on account, Invoice 866, terms 1/10, n/30 5 Purchases Freight In Accounts Payable/Dental Concepts
Purchases Discounts ($2,200 x 1%) Cash ($2,200 - $22) Paid amount due on Invoice 866, Check 102 10 Accounts Payable/Dental Concepts Purchases Returns and Allowances Received Credit Memorandum 272 for return of damaged merchandise purchased on August 5 11 Purchases Accounts Payable/Brown Dental Corporation
201
2 2 0 0 00
14 15 16 17
3 0 0 00
2 2 00 18 2 1 7 8 00 19 20 21 22 23
503 101
201
502
501 201
1 2 2 5 0 0 00 3 4 5 6 2 2 0 0 00 7
3 9 0 0 00 1 0 0 00
Purchased merchandise on account, Invoice 2111, terms 2/10, n/30 10 Accounts Payable/Brown Dental Corporation
CREDIT
8 9 10 11 12 4 0 0 0 00 13
501 504 201
1
1 7 0 0 00
Purchased merchandise on account, Invoice 898, terms 1/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-41
3 0 0 00 24 25 26 27 28 1 7 0 0 00 29 30 31 32
PROBLEM 8.4B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Aug. 14 Accounts Payable/Dental Concepts ($4,000 - $300) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Purchases Discounts ($3,600 x 2%) Cash Paid amount owed on Invoice 2111, less return of August 10, Check 103 15 Purchases Accounts Payable/Surgical Supplies
Post Ref. 201
DEBIT 3 7 0 0 00
503 101
501 201
2 8 8 0 00
Purchased merchandise on account, Invoice 1902, terms n/30 $4,000 - ($4,000 x 20%) = $3,200 $3,200 - ($3,200 x 10%) = $2,880 20 Purchases Cash Purchased merchandise, Check 104
501 101
1 9 0 0 00
24 Cash Purchases Returns and Allowances Received cash for return of defective merchandise purchased August 20
101 502
1 7 5 00
30 Purchases Freight In Accounts Payable/Dental Concepts
501 504
2 1 2 5 00 7 5 00
201
Purchased merchandise on account, Invoice 2285, terms 2/10, n/30
Analyze: 2.5% ($100 ÷ $4,000).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-42
2
CREDIT 1 2 7 2 00 3 3 6 2 8 00 4 5 6 7 8 2 8 8 0 00 9 10 11 12 13 14 15 1 9 0 0 00 16 17 18 19 1 7 5 00 20 21 22 23 24 25 2 2 0 0 00 26 27 28 29
PROBLEM 8.5B GENERAL LEDGER ACCOUNT Cash DATE 2016 Aug.
DESCRIPTION
1 Balance 1 10 14 20 24
ACCOUNT NO. 101 Post Ref.
DEBIT
CREDIT
J1 J1 J2 J2 J2
2 5 0 0 00 2 1 7 8 00 3 6 2 8 00 1 9 0 0 00 1 7 5 00
ACCOUNT Accounts Payable DATE 2016 Aug.
DESCRIPTION
2 5 10 10 11 14 15 30
Post Ref. J1 J1 J1 J1 J1 J2 J2 J2
2016 Aug.
DESCRIPTION
1 2 5 11 15 20 30
39 7 0 0 00 37 2 0 0 00 35 0 2 2 00 31 3 9 4 00 29 4 9 4 00 29 6 6 9 00
ACCOUNT NO. 201 DEBIT
CREDIT
BALANCE DEBIT CREDIT
2 2 0 0 00 4 0 0 0 00
2 2 0 0 00 6 2 0 0 00 4 0 0 0 00 3 7 0 0 00 5 4 0 0 00 1 7 0 0 00 4 5 8 0 00 6 7 8 0 00
2 2 0 0 00 3 0 0 00 1 7 0 0 00 3 7 0 0 00 2 8 8 0 00 2 2 0 0 00
ACCOUNT Purchases DATE
BALANCE DEBIT CREDIT
ACCOUNT NO. 501 Post Ref.
DEBIT
J1 J1 J1 J1 J2 J2 J2
2 5 0 0 00 2 2 0 0 00 3 9 0 0 00 1 7 0 0 00 2 8 8 0 00 1 9 0 0 00 2 1 2 5 00
CREDIT
BALANCE DEBIT CREDIT 2 5 0 0 00 4 7 0 0 00 8 6 0 0 00 10 3 0 0 00 13 1 8 0 00 15 0 8 0 00 17 2 0 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-43
PROBLEM 8.5B (continued) ACCOUNT Purchases Returns and Allowances DATE 2016 Aug.
DESCRIPTION
10 24
Post Ref.
DEBIT
J1 J2
ACCOUNT NO. 502 CREDIT
3 0 0 00 1 7 5 00
ACCOUNT Purchases Discounts DATE 2016 Aug.
DESCRIPTION
10 14
Post Ref.
DEBIT
J1 J2
2016 Aug.
DESCRIPTION
5 30
3 0 0 00 4 7 5 00
ACCOUNT NO. 503 CREDIT
BALANCE DEBIT CREDIT
2 2 00 7 2 00
ACCOUNT Freight In DATE
BALANCE DEBIT CREDIT
2 2 00 9 4 00
ACCOUNT NO. 504 Post Ref.
DEBIT
J1 J2
1 0 0 00 7 5 00
CREDIT
BALANCE DEBIT CREDIT 1 0 0 00 1 7 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-44
PROBLEM 8.5B (continued)
NAME
ACCOUNTS PAYABLE SUBSIDIARY LEDGER Brown Dental Corporation
TERMS
1/10, n/30
ADDRESS DATE 2016 Aug.
DESCRIPTION
2 Invoice 866 10 11 Invoice 898
NAME
Post Ref. J1 J1 J1
DEBIT
CREDIT
BALANCE
2 2 0 0 00
2 2 0 0 00 - 0 1 7 0 0 00
2 2 0 0 00 1 7 0 0 00
TERMS
Dental Concepts
2/10, n/30
ADDRESS DATE 2016 Aug.
DESCRIPTION
5 Invoice 2111 10 CM 272 14 30 Invoice 2285
NAME
Post Ref. J1 J1 J2 J2
DEBIT
CREDIT
BALANCE
4 0 0 0 00
4 0 0 0 00 3 7 0 0 00 - 0 2 2 0 0 00
3 0 0 00 3 7 0 0 00 2 2 0 0 00
TERMS
Surgical Supplies
n/30
ADDRESS DATE 2016 Aug. 15 Invoice 1902
DESCRIPTION
Post Ref. J2
DEBIT
CREDIT
BALANCE
2 8 8 0 00
2 8 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-45
PROBLEM 8.5B (continued) Dental Supplies, Inc. Schedule of Accounts Payable August 31, 2016 Brown Dental Corporation Dental Concepts Surgical Supplies Total
Analyze: On August 31, Dental Supplies, Inc. owes Dental Concepts $2,200.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-46
1 2 2 6
7 0 0 00 2 0 0 00 8 8 0 00 7 8 0 00
PROBLEM 8.6B Banh Company PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 8 Accounts Payable/Santoni, Inc. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Post Ref.
DEBIT
201
6 0 0 0 00
Purchases Discounts Cash Paid amount owed on Invoice 1985, less cash discount, Check 2001 9 Purchases Accounts Payable/Santoni, Inc.
201
4 0 0 00
10 11 12 13
3 4 0 0 00
4 0 0 00 14 15 16 17 18
3 8 0 0 00
201
Purchases Discounts ($3,400 x 2%) Cash ($3,400 - $68) Paid amount owed on Invoice 1990, less return of February 15, Check 2009 28 Purchases Accounts Payable/Santoni, Inc.
1 2
201
Purchases Returns and Allowances Received Credit Memorandum 220 for return of damaged merchandise, Invoice 1990 18 Accounts Payable/Santoni, Inc. ($3,800 - $400)
CREDIT
1 2 0 00 3 5 8 8 0 00 4 5 6 7 8 3 8 0 0 00 9
Purchased merchandise on account, Invoice 1990, terms 2/10, n/30 15 Accounts Payable/Santoni, Inc.
12
6 2 0 0 00 201
Purchased merchandise on account, Invoice 2008, terms 2/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-47
6 8 00 19 3 3 3 2 00 20 21 22 23 24 6 2 0 0 00 25 26 27 28
PROBLEM 8.6B (continued) Santoni, Inc. PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 8 Sales Discounts 3 Cash 4 Accounts Receivable/Banh Company 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
Post Ref.
DEBIT
CREDIT
1 2 0 00 5 8 8 0 00 111
1 2 3 6 0 0 0 00 4
111
5 6 7 8
Received payment for Invoice 1985, less sales discount 9 Accounts Receivable/Banh Company
3 8 0 0 00
Sales Sold merchandise on account, Invoice 1990, 2/10, n/30 15 Sales Returns and Allowances Accounts Receivable/Banh Company
111
3 8 0 0 00 9 10 11 12 13 4 0 0 00 14
111
15 16 17 18 19 20 3 4 0 0 00 21
111
22 23 24 25
4 0 0 00
Accepted return for damaged merchandise, Credit Memorandum 220; original sale made on Invoice 1990, February 9. 18 Sales Discounts ($3,800 - $400) x 2% Cash Accounts Receivable/Banh Company
6 8 00 3 3 3 2 00
Received payment for Invoice 1990, less sale discount 28 Accounts Receivable/Banh Company
12
6 2 0 0 00
Sales Sold merchandise on account, Invoice 2008, 2/10, n/30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-48
6 2 0 0 00 26 27 28 29
PROBLEM 8.6B (continued) GENERAL LEDGER – Banh Company ACCOUNT Accounts Payable DATE 2016 Jan.
DESCRIPTION
1 Balance 8 9 15 18 28
NAME ADDRESS
Post Ref.
DEBIT
CREDIT
BALANCE DEBIT CREDIT
J12 J12 J12 J12 J12
6 0 0 0 00 - 0 3 8 0 0 00 3 4 0 0 00 - 0 6 2 0 0 00
6 0 0 0 00 3 8 0 0 00 4 0 0 00 3 4 0 0 00 6 2 0 0 00
ACCOUNTS PAYABLE SUBSIDIARY LEDGER – Banh Company TERMS 2/10, n/30 Santoni, Inc.
DATE 2016 Jan.
ACCOUNT NO. 201
Post Ref. 1 Balance 8 9 Invoice 1990 15 CM 220 18 28 Invoice 2008
DEBIT
CREDIT
J12 J12 J12 J12 J12
6 0 0 0 00 3 8 0 0 00 4 0 0 00 3 4 0 0 00 6 2 0 0 00
BALANCE
6 0 0 0 00 - 0 3 8 0 0 00 3 4 0 0 00 - 0 6 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-49
PROBLEM 8.6B (continued) GENERAL LEDGER – Santoni, Inc ACCOUNT Accounts Receivable DATE DESCRIPTION 2016 Jan.
1 Balance 8 9 15 18 28
Post Ref.
DEBIT
CREDIT
J12 J12 J12 J12 J12
6 0 0 0 00 3 8 0 0 00 4 0 0 00 3 4 0 0 00 6 2 0 0 00
ACCOUNT NO. 111 BALANCE DEBIT CREDIT 6 0 0 0 00 - 0 3 8 0 0 00 3 4 0 0 00 - 0 6 2 0 0 00
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER – Santoni, Inc. NAME Banh Company ADDRESS DATE Post DEBIT CREDIT BALANCE Ref. 2016 Jan.
1 Balance 8 9 15 18 28
J12 J12 J12 J12 J12
6 0 0 0 00 3 8 0 0 00 4 0 0 00 3 4 0 0 00 6 2 0 0 00
6 0 0 0 00 - 0 3 8 0 0 00 3 4 0 0 00 - 0 6 2 0 0 00
Analyze: The balance of the accounts payable for Santoni, Inc. in the Banh Company accounts payable subsidiary ledger is $6,200. The balance of the accounts receivable for Banh Company in the Santoni, Inc. accounts receivable subsidiary ledger is $6,200.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-50
CRITICAL THINKING PROBLEM 8.1 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Jan. 1 Cash 3 Supplies 4 William Evans, Capital 5 Original investments by owner 6 7 2 Purchases 8 Cash 9 Purchased merchandise, Check 100 10 11 3 Accounts Receivable/Chu Corporation 12 Sales 13 Sold merchandise on account, Invoice 1001, 14 terms 2/10, n/30 15 16 4 Purchases 17 Accounts Payable/Whitson Company 18 Purchased merchandise on account, 19 Invoice 1125, terms 1/10, n/30 20 21 5 Freight In 22 Cash 23 Paid freight charges for January 4 purchase, Check 101 24 25 10 Sales Returns and Allowances 26 Accounts Receivable/Chu Corporation 27 Issued Credit Memorandum 101 for return of 28 merchandise 29 30 11 Sales Discounts ($750 - $100 = $650; $650 x 2% = $13) 31 Cash ($750 - $100 - $13) 32 Accounts Receivable/Chu Corporation ($750 - $100) 33 Received payment for invoice 1001 34 35 13 Accounts Payable/Whitson Company 36 Purchases Discounts ($1,800 x 1%) 37 Cash ($1,800 - $18) 38 Paid amount owed on Invoice 1125, Check 102
Post Ref.
DEBIT 49 0 0 0 00 1 0 0 0 00
10 5 0 0 00
7 5 0 00
1 8 0 0 00
1 0 0 00
1 0 0 00
1 3 00 6 3 7 00
1 8 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-51
1
CREDIT 1 2 3 50 0 0 0 00 4 5 6 7 10 5 0 0 00 8 9 10 11 7 5 0 00 12 13 14 15 16 1 8 0 0 00 17 18 19 20 21 1 0 0 00 22 23 24 25 1 0 0 00 26 27 28 29 30 31 6 5 0 00 32 33 34 35 1 8 00 36 1 7 8 2 00 37 38
CRITICAL THINKING PROBLEM 8.1 (continued)
DATE
GENERAL JOURNAL DESCRIPTION
1 2016 2 Jan. 15 Cash 3 Sales 4 Recorded cash sales, January 1 – 15 5 6 15 Credit Card Expense ($1,200 x 3%) 7 Cash ($1,200 - $36) 8 Sales 9 Recorded sales to customers using bank credit 10 cards, January 1 – 15 11 12 15 Wages Expense 13 Cash 14 Paid wages, Check 103 15 16 16 Equipment 17 Cash 18 Purchased equipment, Check 104 19 20 17 Equipment 21 Cash 22 Paid freight for equipment purchase of January 16, 23 Check 105 24 25 18 Purchases ($4,500 - $1,800) 26 Accounts Payable/Terri Manufacturing 27 Purchased merchandise on account, 28 Invoice 2078, terms 1/10, n/30 29 30 20 Accounts Receivable/Moloney Corp. 31 Sales 32 Sold merchandise on account, 33 Invoice 1002, terms 1/10, n/30 34
PAGE Post Ref.
DEBIT 5 7 5 0 00
3 6 00 1 1 6 4 00
1 4 0 0 00
1 7 5 0 00
2 5 0 00
2 7 0 0 00
2 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-52
2
CREDIT 1 2 5 7 5 0 00 3 4 5 6 7 1 2 0 0 00 8 9 10 11 12 1 4 0 0 00 13 14 15 16 1 7 5 0 00 17 18 19 20 2 5 0 00 21 22 23 24 25 2 7 0 0 00 26 27 28 29 30 2 5 0 0 00 31 32 33 34
CRITICAL THINKING PROBLEM 8.1 (continued)
DATE
GENERAL JOURNAL DESCRIPTION
1 2016 2 Jan. 21 Purchases 3 Freight In 4 Accounts Payable/Schmidt Company 5 Purchased merchandise on account, 6 Invoice 3204, terms 1/10, n/30 7 8 27 Accounts Payable/Terri Manufacturing 9 Purchases Discounts ($2,700 x 1%) 10 Cash ($2,700 - $27) 11 Paid amount owed on Invoice 2078, 12 Check 106 13 14 29 Sales Discounts ($2,500 x 1%) 15 Cash ($2,500 - $25) 16 Accounts Receivable/Moloney Corp. 17 Received payment for Invoice 1002 18 19 30 Accounts Payable/Schmidt Company 20 Purchases Discounts ($3,000 x 1%) 21 Cash 22 Paid amount due on Invoice 3204, Check 107 23 24 31 Cash 25 Sales 26 Recorded cash sales, January 16 – 31 27 28 31 Credit Card Expense ($2,200 x 3%) 29 Cash ($2,200 - $66) 30 Sales 31 Recorded sales to customers using bank credit 32 cards, January 16 – 31 33
PAGE Post Ref.
DEBIT 3 0 0 0 00 7 0 00
2 7 0 0 00
2 5 00 2 4 7 5 00
3 0 7 0 00
6 2 0 0 00
6 6 00 2 1 3 4 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-53
3
CREDIT 1 2 3 3 0 7 0 00 4 5 6 7 8 2 7 00 9 2 6 7 3 00 10 11 12 13 14 15 2 5 0 0 00 16 17 18 19 3 0 00 20 3 0 4 0 00 21 22 23 24 6 2 0 0 00 25 26 27 28 29 2 2 0 0 00 30 31 32 33
CRITICAL THINKING PROBLEM 8.2 1.
To determine whether Sensual Linens Shop was billed in error: a. Review Sensual Linens Shop's purchase order file for duplicate orders to Passionate Linens Company. If two orders were placed for the same merchandise, check the receiving reports to determine if both shipments were received. If Sensual Linens Shop does not prenumber its purchase orders, two orders may have been issued for the same merchandise. If only one purchase order was placed, check the receiving reports for a duplicate shipment. b. If no duplicate purchase order or duplicate receipt of merchandise is found, ask Passionate Linens Company to identify why they made two shipments of sheets. If Passionate Linens Company made the second shipment in error, they will be obligated to accept return of the sheets.
2.
To prevent this situation from occuring again: a. Prenumber all purchase order forms and periodically check to be sure that all forms can be accounted for. b. Require all purchase orders to have proper authorization before they are issued. Celeste can authorize all purchase orders, or she can designate appropriate personnel to handle this function. c. Require all shipments of merchandise received by the shop to be compared to the corresponding purchase order and the invoice received from the supplier. Any shipment for which there is no purchase order should be questioned immediately. d. Require the purchase order and corresponding receiving report to be attached to the invoice before it is presented for payment. Celeste can establish internal control procedures to reduce the possibility of issuing duplicate purchase orders, but she cannot prevent suppliers from making duplicate shipments in error. If the appropriate documentation accompanies invoices, though, she will know that the error was not commited by Sensual Linens Shop.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-54
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Maintenance of good credit reputation, taking advantage of cash discounts. 2. Allows a business to buy on credit, using resources more effectively. 3. It is important to establish a good credit rating for future cash needs. Additionally, cash could be used for other purposes. 4. 5. 6.
Creates a storage problem, risks obsolescence of the merchandise, and ties up funds. Ensure authorized-only purchases, verifies receipt of goods and accuracy of invoices, distributes tasks. Protect against fraud and excessive investment in merchandise.
Ethical Dilemma: Anna’s actions are not ethical. If she cannot get a raise from this company, she should find a new job. When she performs the unethical action of getting money from a fictitious vendor she is stealing dollar for dollar from her company. Her money comes from the net income of this company. When Anna finds how easy it is to perpetrate this fraud, she will create more vendors and more invoices. To prevent these actions, the controller should require each new vendor to receive his/her approval. The procedure to only view the checks over $100 can still be maintained with this one approval process.
Financial Statement Analysis: 1. 2013: 65.6% ($48,912 ÷ $74,574). 2012: 65.5% ($46,133 ÷ $70,395). 2. Answers will vary. Students may suggest price changes on merchandise from suppliers, discounts, or shipping costs variances. Analyze Online: Answers will vary depending on the year. Teamwork: The most advantageous would be net 45 days to pay the vendors, with customers on terms of 2/10 net 30. Your customers would then be paying you before you need to pay vendors. Internet Connection: Your Company address and phone number and the vendor’s name and address. The amount of the check or purchase order. Reference for the purchase order number of purchase requisition.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-55
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. FALSE 4. FALSE 5. TRUE 6. TRUE 7. FALSE
8. 9. 10. 11. 12. 13. 14.
FALSE TRUE TRUE FALSE FALSE FALSE TRUE
15. 16. 17. 18. 19. 20.
FALSE TRUE FALSE FALSE TRUE TRUE
Part B Exercises 1. $1,200.00 2. $2,475.00 3. $3,600.00 4. $3,140.00 5. $3,318.00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 8-56
CHAPTER 9 CASH Chapter Opener: Thinking Critically Business’s should write checks for most expenses as it provides proof of payment and provides assurance that outlays of cash are for legitimate business purposes. However, sometimes payment by check is impractical and businesses use a Petty Cash account.
Fast Facts • In 1990, Gary Erickson lived in a garage with his dog. • In 2000, Clif Bar was nearly sold to Quaker Oats for $120 million—Erickson backed out of the deal when he experienced panic attacks about the sale. The company has tripled in size since. • •
Clif Bar currently has 330 employees. In 2012, Clif Bar & Co.'s 10-year compounded annual growth rate was 17%.
Managerial Implications: Thinking Critically Answers will vary, but should recognize the need to weigh the earning power (interest income) and the need • for liquidity (access to the cash). Discussion Questions These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Balance of Cash account in the general ledger. 2. To reconcile any difference between depositor’s checkbook, Cash account, and bank statement. 3. Day-by-day checking account activity, as well as beginning and ending balances. 4. Outstanding checks, deposits in transit, service charges. 5. To record items that have not yet been entered in firm’s records. 6. Access to checkbook is restricted; use of prenumbered check forms; checks examined by someone who did not prepare them before they are signed; bank statement reconciled by someone other than employees who handle cash. 7.
Signed, authorized written order instructing a bank to pay a specific sum of money to a designated person.
8.
Date, amount, payee, current balance, purpose of check. Stub should be prepared before the check so that it will not be forgotten.
9. 10. 11. 12.
Electronic processing of documents. Restrictive endorsement. Shortages are debited and overages are credited to the Cash Short or Over account. Use only for minor payments; establishment check made out to person to be in charge of funds; keep funds locked; payments made from funds should be documented with signatures of recipient.
13. At month-end or when petty cash is replenished. 14. Written promise to pay amount on specific date. Dr. Cash, Cr. Notes Rec., Cr. Interest Income. © 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-1
15. Employees are investigated by an insurance company, and, if their backgrounds are satisfactory, their employer is insured against losses that may occur because of employee theft or mishandling of funds. 16. Only approved employees can handle cash; keep cash in locked location; record cash receipts as they arrive; check funds against receipt log before bank deposits are made; make deposits promptly; separation of cash deposits, recording, reconciliation duties. 17. Payments made by check and issued only with approved invoice; invoices approved only by designated personnel; checks prepared and recorded in the checkbook or check register by someone different from the person who approves the payments; use prenumbered checks. 18. See Glossary for terms and definitions.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-2
EXERCISE 9.1 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
Post Ref.
1 2016 2 Apr. 29 Cash 3 Cash Short and Over 4 Sales 5 Record sales and cash shortage 6 7 30 Cash 8 Cash Short and Over 9 Sales 10 Record sales and cash overage 11
DEBIT
1 5 1 4 00 6 00
1 4 3 2 00
1
CREDIT 1 2 3 1 5 2 0 00 4 5 6 7 1 00 8 1 4 3 1 00 9 10 11
EXERCISE 9.2 PAGE
GENERAL JOURNAL DATE 1 2016 2 Jan. 3 4 5
DESCRIPTION
Post Ref.
2 Petty Cash Fund Cash Establish Petty Cash Fund, Check No. 2108
DEBIT
1
CREDIT 1 2 3 5 0 00 3 4 5
3 5 0 00
EXERCISE 9.3 PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Jan. 31 Supplies 3 Delivery Expense 4 Miscellaneous Expense 5 Cash 6 Replenish Petty Cash Fund, Check No. 3159 7
Post Ref.
DEBIT
4 8 00 8 9 00 2 4 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-3
3
CREDIT 1 2 3 4 1 6 1 00 5 6 7
EXERCISE 9.4 Chan Corporation Bank Reconciliation Statement October 31, 2016 Balance on bank statement Additions: Deposit in transit
Deductions for outstanding checks: Check 7017 Check 7098 Check 7107 Total outstanding checks Adjusted bank balance Balance in books Deductions: Bank service charge NSF check from James Dear Adjusted book balance
14 7 0 0 00 8 5 7 00 15 5 5 7 00
1 2 4 00 5 5 00 1 5 6 0 00 1 7 3 9 00 13 8 1 8 00 14 2 6 2 00 2 0 00 4 2 4 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-4
4 4 4 00 13 8 1 8 00
EXERCISE 9.4 (continued) PAGE 14
GENERAL JOURNAL DATE
DESCRIPTION
Post Ref.
DEBIT
1 2016 2 Oct. 31 Miscellaneous Expense 3 Cash 4 Bank service charge for October 5 6 31 Accounts Receivable/James Dear 7 Cash 8 To record NSF check returned by bank 9
2 0 00
4 2 4 00
EXERCISE 9.5 Book Balance
Accounting Entry
2.
X
X
3.
X
X
4.
X
X
X
X
1.
5.
Bank Balance X
X
6. 7.
X
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-5
CREDIT 1 2 2 0 00 3 4 5 6 4 2 4 00 7 8 9
EXERCISE 9.6 Di Sisto Office Supply Company Bank Reconciliation Statement March 31, 2016 Balance on bank statement Additions: Deposit in transit Check incorrectly charged Deductions for outstanding checks: Check 3782 Check 3840 Total outstanding checks Adjusted bank balance
68 0 0 5 00 3 7 0 0 00 2 4 8 00
2 2 0 0 00 1 5 1 00 2 3 5 1 00 69 6 0 2 00
Balance in books Additions: Noninterest-bearing note collected by bank Deductions: Bank collection fee for note NSF check from Wilson Construction Company Adjusted book balance
3 9 4 8 00 71 9 5 3 00
69 4 8 7 00 6 3 0 0 00 75 7 8 7 00 5 0 00 6 1 3 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-6
6 1 8 5 00 69 6 0 2 00
EXERCISE 9.6 (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 March 31 Cash 3 Notes Receivable 4 To record receipt of note collected by bank 5 6 31 Miscellaneous Expense 7 Cash 8 To record bank collection fee 9 10 31 Accounts Receivable/Wilson Construction Company 11 Cash 12 To record NSF check returned by bank 13
Post Ref.
DEBIT
6 3 0 0 00
5 0 00
6 1 3 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-7
8
CREDIT 1 2 6 3 0 0 00 3 4 5 6 5 0 00 7 8 9 10 6 1 3 5 00 11 12 13
EXERCISE 9.7 Fierro Company Bank Reconciliation Statement November 30, 2016 Balance on bank statement Additions: Check incorrectly charged Check 2782 written for $200; paid by bank as $1,200 Check 2920 written for $85 paid by the bank twice
12 8 0 0 00 1 5 1 00 1 0 0 0 00 8 5 00 1 2 3 6 00 14 0 3 6 00
Deductions: November 22 deposit of $580 credited by bank for $850 Outstanding checks Adjusted bank balance
2 7 0 00 2 1 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-8
2 4 2 0 00 11 6 1 6 00
EXERCISE 9.8 PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
DATE DESCRIPTION 2016 Sept. 22 Robert Savage, Drawing Cash To record ATM withdrawal by Robert Savage for personal use. 22 Cash Accounts Receivable/Edwards UK To record wire-transfer of funds received on account from Edwards UK 23 Utilities Expense Cash To record on-line payment to Waste Control Trash Services 24 Note Payable Cash To record loan payment to Central Motors
POST. REF.
DEBIT
21
CREDIT
2 4 0 00 2 4 0 00
8 9 0 0 00 8 9 0 0 00
3 6 05 3 6 05
3 5 0 0 00 3 5 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-9
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PROBLEM 9.1A PAGE
GENERAL JOURNAL DATE 1 2016 2 June 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
DESCRIPTION
25 Cash Cash Short and Over Sales 26 Cash Cash Short and Over Sales 27 Cash Cash Short and Over Sales 28 Cash Cash Short and Over Sales
Post Ref.
DEBIT
620
1 2 2 1 00 6 00
620
1 3 3 2 00 8 00
1 3 5 3 00 620
620
29 Cash Cash Short and Over Sales
620
30 Cash Cash Short and Over Sales
620
1 2 7 4 00 8 00
1 1 3 1 00
1 3 6 0 00 8 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-10
1
CREDIT 1 2 3 1 2 2 7 00 4 5 6 7 1 3 4 0 00 8 9 10 5 00 11 1 3 4 8 00 12 13 14 15 1 2 8 2 00 16 17 18 2 00 19 1 1 2 9 00 20 21 22 23 1 3 6 8 00 24 25
PROBLEM 9.1A (continued) GENERAL LEDGER ACCOUNT NO. 620
ACCOUNT Cash Short and Over DATE 2016 June 25 26 27 28 29 30
DESCRIPTION
Post Ref. J1 J1 J1 J1 J1 J1
DEBIT
CREDIT
6 00 8 00 5 00 8 00 2 00 8 00
BALANCE DEBIT CREDIT 6 00 1 4 00 9 00 1 7 00 1 5 00 2 3 00
Analyze: The $23 debit balance in Cash Short and Over will be reported as expense on the Income Statement.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-11
PROBLEM 9.2A PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 June 1 Petty Cash Fund 3 Cash 4 Establish Petty Cash Fund, Check No. 550 5 6 30 Supplies 7 Delivery Expense 8 Miscellaneous Expense 9 Rosa Calderon, Drawing 10 Cash 11 Replenish Petty Cash Fund, Check No. 590 12
Post Ref.
DEBIT
3 5 0 00
5 0 00 9 8 00 9 8 00 6 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-12
8
CREDIT 1 2 3 5 0 00 3 4 5 6 7 8 9 3 0 6 00 10 11 12
PROBLEM 9.2A (continued) PAGE 1
PETTY CASH ANALYSIS SHEET DATE VOU NO.
2016 June
1 5 8 15 22 25 29 30 30 30 30 30
— 1 2 3 4 5 6 — — — — —
DESCRIPTION
RECEIPTS
PAYMENTS
DISTRIBUTION OF PAYMENTS SUPPLIES DEBIT
Establish fund Office supplies Postage stamps Delivery service Personal withdrawal Store windows washed service Delivery Totals Balance on hand Balance on hand Replenish fund Carried forward
MISC. EXPENSE DEBIT
OTHER ACCOUNTS DEBIT ACCOUNT NAME
AMOUNT
3 5 0 00
3 5 0 00 3 5 0 00 4 4 00 3 0 6 00 3 5 0 00
5 0 00 5 1 00 3 8 00 6 0 00 4 7 00 6 0 00 3 0 6 00 4 4 00 3 5 0 00
Analyze: The total payments from the petty cash fund were $306 in June.
9-13
DELIVERY EXPENSE DEBIT
5 0 00 5 1 00 3 8 00 Rosa Calderon, Drawing
6 0 00
4 7 00 5 0 00
6 0 00 9 8 00
9 8 00
6 0 00
PROBLEM 9.3A HPF Vacations Bank Reconciliation Statement April 30, 2016 Balance on bank statement Additions: Deposit of April 30 in transit
3 6 3 9 00 2 0 0 00 3 8 3 9 00
Deductions for outstanding checks: Check 1214 of April 28 Check 1215 of April 30 Total outstanding checks Adjusted bank balance
1 8 00 1 5 00 3 3 00 3 8 0 6 00
Balance in books Deductions: NSF check from Doris Fisher Bank charges Adjusted book balance
3 9 7 2 00 1 6 0 00 6 00
PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 April 30 Accounts Receivable/Doris Fisher 3 Cash 4 To record NSF check returned by bank 5 6 30 Miscellaneous Expense 7 Cash 8 To record bank charges 9
1 6 6 00 3 8 0 6 00
POST. REF.
DEBIT
1
CREDIT
1 6 0 00 1 6 0 00
6 00
Analyze: Outstanding checks are 1214 and 1215 totaling $33.00.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-14
6 00
1 2 3 4 5 6 7 8 9
PROBLEM 9.4A Sonoma Inn Bank Reconciliation Statement August 31, 2016 Balance on bank statement Additions: Deposit of August 30 in transit Deposit of August 31 in transit Deductions for outstanding checks: Check 712 Check 713 Check 716 Check 736 Check 739 Check 741 Total outstanding checks Adjusted bank balance Balance in books Additions: Note receivable collected by bank Interest on note receivable Deductions: NSF check from Art Corts Bank service charge Adjusted book balance
13 1 9 7 00 1 4 5 0 00 7 0 1 00
2 1 5 1 00 15 3 4 8 00
1 1 0 00 1 2 5 00 2 3 8 00 5 7 7 00 7 8 00 1 2 0 00 1 2 4 8 00 14 1 0 0 00 12 2 8 1 00 2 0 8 4 00 6 3 00
3 2 0 00 8 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-15
2 1 4 7 00 14 4 2 8 00
3 2 8 00 14 1 0 0 00
PROBLEM 9.4A (continued) PAGE 10
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Aug. 31 Cash 3 Notes Receivable 4 Interest Income 5 To record receipt of amount due on note 6 plus interest collected by bank in August 7 8 31 Accounts Receivable/Art Corts 9 Cash 10 To record NSF check returned by bank 11 12 31 Miscellaneous Expense 13 Cash 14 To record bank service charge for August 15
Post Ref.
DEBIT
CREDIT
2 1 4 7 00
3 2 0 00
8 00
1 2 2 0 8 4 00 3 6 3 00 4 5 6 7 8 3 2 0 00 9 10 11 12 8 00 13 14 15
Analyze: Net effect on the accounting equation of the journal entries recorded as a result of the bank reconciliation was an increase in assets by $55 and an increase in equity by $55 ($63 - $8).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-16
PROBLEM 9.5A A. Fontes Consultancy Bank Reconciliation Statement April 30, 2016 Balance in books Additions: Check 2206 dated April 17 was recorded as $695; check was actually written for $14 Deductions: Check 2247 dated April 20 was recorded as $130; check was actually written for $164 Adjusted book balance
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-17
20 2 7 5 00
6 8 1 00 20 9 5 6 00
3 4 00 20 9 2 2 00
PROBLEM 9.5A (continued) PAGE 11
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Apr. 30 Cash 3 Supplies 4 To correct error in entry for check 2206 5 of April 17 6 7 30 Utilities Expense 8 Cash 9 To correct error in entry for check 2247 10 of April 20 11
Post Ref.
DEBIT
6 8 1 00
3 4 00
Analyze: Net income would have been overstated by $34.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-18
CREDIT 1 2 6 8 1 00 3 4 5 6 7 3 4 00 8 9 10 11
PROBLEM 9.6A Western Imports Bank Reconciliation Statement July 31, 2016 Balance on Bank Statement Additions: Deposit of July 31 in transit Check 1422 for $1,200 incorrectly charged as $1,280 Deductions for outstanding checks: Check 1429 Check 1430 Total outstanding checks Adjusted Bank Balance
28 7 6 0 00 9 0 0 00 8 0 00
1 2 4 9 00 1 4 1 00 1 3 9 0 00 28 3 5 0 00
Balance in Books Additions: EFT received on account from Foncier Ricard Deductions: Check 1425 written for $90; incorrectly recorded as $60 Online payment on July 31 to CentralComm Adjusted Bank Balance
9 8 0 00 29 7 4 0 00
14 0 4 2 00 14 6 0 0 00 28 6 4 2 00 3 0 00 2 6 2 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-19
2 9 2 00 28 3 5 0 00
PROBLEM 9.6A (continued) PAGE 19
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 July 31 Cash 3 Accounts Receivable/Foncier Ricard 4 EFT received on account from Foncier Ricard 5 on July 31 6 7 31 Supplies 8 Cash 9 To correct error for Check 1425 10 11 31 Telephone Expense 12 Cash 13 To record online payment to CentralComm
Post Ref.
DEBIT
14 6 0 0 00
3 0 00
2 6 2 00
Analyze: Total expenses increased by $262 as a result of the general journal entries recorded.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-20
CREDIT 1 2 14 6 0 0 00 3 4 5 6 7 3 0 00 8 9 10 11 2 6 2 00 12 13
PROBLEM 9.1B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 April 25 Cash 3 Cash Short and Over 4 Sales 5 6 26 Cash 7 Cash Short and Over 8 Sales 9 10 27 Cash 11 Cash Short and Over 12 Sales 13 14 28 Cash 15 Cash Short and Over 16 Sales 17 18 29 Cash 19 Cash Short and Over 20 Sales 21 22 30 Cash 23 Cash Short and Over 24 Sales 25
Post Ref.
620
DEBIT
1 2 9 9 00 1 00
1 0 5 1 00 620
620
1 2 2 7 00 3 00
1 1 8 6 00 620
1 0 8 3 00 620
1 2 1 9 00 620
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-21
1
CREDIT 1 2 3 1 3 0 0 00 4 5 6 1 00 7 1 0 5 0 00 8 9 10 11 1 2 3 0 00 12 13 14 4 00 15 1 1 8 2 00 16 17 18 1 00 19 1 0 8 2 00 20 21 22 2 00 23 1 2 1 7 00 24 25
PROBLEM 9.1B (continued) GENERAL LEDGER ACCOUNT NO. 620
ACCOUNT Cash Short and Over DATE 2016 April 25 26 27 28 29 30
DESCRIPTION
Post Ref. J1 J1 J1 J1 J1 J1
DEBIT
CREDIT
1 00 1 00 3 00
BALANCE DEBIT CREDIT 1 00 0 00 3 00
4 00 1 00 2 00
Analyze: The $4 credit balance in Cash Short and Over will be reported as revenue on the Income Statement.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-22
1 00 2 00 4 00
PROBLEM 9.2B PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Sept. 4 Petty Cash Fund 3 Cash 4 Establish Petty Cash Fund, Check No. 910 5 6 30 Supplies 7 Delivery Expense 8 Miscellaneous Expense 9 Fred Chin, Drawing 10 Cash 11 Replenish Petty Cash Fund, Check No. 950 12
Post Ref.
DEBIT
2 5 0 00
3 2 00 5 4 00 3 0 00 7 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-23
7
CREDIT 1 2 2 5 0 00 3 4 5 6 7 8 9 1 9 1 00 10 11 12
PROBLEM 9.2B (continued) PAGE
PETTY CASH ANALYSIS SHEET DATE VOU NO.
2016 Sept. 4 6 12 18 24 28 30 30 30 30 30
— 1 2 3 4 5 — — — — —
DESCRIPTION
RECEIPTS
PAYMENTS
DISTRIBUTION OF PAYMENTS SUPPLIES DEBIT
Establish fund Delivery service Bought office supplies Personal withdrawal Bought stamps Delivery service Totals Balance on hand Balance on hand Replenish fund Carried forward
DELIVERY EXPENSE DEBIT
MISC. EXPENSE DEBIT
OTHER ACCOUNTS DEBIT ACCOUNT NAME
AMOUNT
2 5 0 00
2 5 0 00 2 5 0 00 5 9 00 1 9 1 00 2 5 0 00
2 2 00 3 2 00 7 5 00 3 0 00 3 2 00 1 9 1 00 5 9 00 2 5 0 00
2 2 00 3 2 00 Fred Chin, Drawing
7 5 00
3 0 00 3 2 00
Analyze: The balance of the petty cash fund on September 30, after replenishment, is $250.
9-24
1
3 2 00 5 4 00
3 0 00
7 5 00
PROBLEM 9.3B Peter Chen, Attorney-at-Law Bank Reconciliation Statement September 30, 2016 Balance on bank statement Additions: Deposit of September 28 in transit Deductions for outstanding checks: Check 108 of September 15 Check 112 of September 27 Total outstanding checks Adjusted bank balance Balance in books Deductions: NSF check Bank service charge Adjusted book balance
7 3 2 3 50 9 0 0 00 8 2 2 3 50 7 5 00 1 4 0 00 2 1 5 00 8 0 0 8 50 8 1 3 4 00 1 1 8 00 7 50
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-25
1 2 5 50 8 0 0 8 50
PROBLEM 9.3B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Sept. 30 Accounts Receivable/Annette Cole 3 Cash 4 To record NSF check returned by bank 5 6 30 Miscellaneous Expense 7 Cash 8 To record bank service charge for September 9
Post Ref.
DEBIT
1
CREDIT
1 1 8 00
7 50
Analyze: Seven checks were paid.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-26
1 2 1 1 8 00 3 4 5 6 7 50 7 8 9
PROBLEM 9.4B Gourmet Kitchen Appliances Bank Reconciliation Statement July 31, 2016 Balance on bank statement Additions: Deposit of July 31 in transit
Deductions for outstanding checks: Check 533 Check 535 Check 537 Total outstanding checks Adjusted bank balance Balance in books Additions: Note receivable collected by bank Interest on note receivable Deductions: NSF check from Robert Briggs Bank service charge Adjusted book balance
8 4 4 2 03 1 0 9 4 07 9 5 3 6 10
1 4 8 95 1 2 2 50 6 2 5 40 8 9 6 85 8 6 3 9 25 7 3 1 8 59 1 4 5 0 00 3 0 00
1 4 5 00 1 4 34
1 4 8 0 00 8 7 9 8 59
1 5 9 34 8 6 3 9 25
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-27
PROBLEM 9.4B (continued) PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
DATE 2016 July 31 Cash
DESCRIPTION
POST. REF.
DEBIT
1
CREDIT
1 4 8 0 00 Notes Receivable Interest Income To record receipt of amount due on note plus interest collected
1 4 5 0 00 3 0 00
31 Accounts Receivable/Robert Briggs Cash To record NSF check returned by bank
1 4 5 00
31 Miscellaneous Expense Cash To record bank service charge for July
1 4 34
1 4 5 00
Analyze: After all journal entries have been posted, the balance in the Cash account is $8,639.25.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-28
1 4 34
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
PROBLEM 9.5B Big Dudes Moving Corporation Bank Reconciliation Statement February 29, 2016 Balance in books Additions: Check 1301 dated February 18 was recorded as $316; check was actually written for $308 Deductions: Check 1322 dated February 24 was recorded as $404; check was actually written for $440 Adjusted book balance
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-29
19 8 5 1 00
8 00 19 8 5 9 00
3 6 00 19 8 2 3 00
PROBLEM 9.5B (continued) PAGE
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Feb. 29 Cash 3 Hauling Expense 4 To correct error in entry for check 1301 5 of February 18 6 7 29 Telephone Expense 8 Cash 9 To correct error in entry for check 1322 10 of February 24 11
Post Ref.
DEBIT
1
CREDIT
8 00
3 6 00
Analyze: The net change to the Cash account was an decrease of $28.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-30
1 2 8 00 3 4 5 6 7 3 6 00 8 9 10 11
PROBLEM 9.6B Euro Specialty Products Bank Reconciliation Statement November 30, 2016 Balance on Bank Statement Additions: Deposit of November 30 in transit Deductions: Deductions for outstanding checks: Check 4129 Check 4130 Total outstanding checks Check 4122 written for $1,200, paid by bank as $1,000 Adjusted Bank Balance Balance in Books Additions: EFT received on account from Cantori Cucine Check 4125 written for $890; incorrectly recorded as $980
29 7 3 4 00 1 2 2 4 00 30 9 5 8 00
1 3 2 2 00 2 3 9 00 1 5 6 1 00 2 0 0 00 29 1 9 7 00 16 6 3 0 00 12 8 0 0 00 9 0 00
Deductions: Online payment on November 30 to ClearComm Adjusted book balance
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-31
12 8 9 0 00 29 5 2 0 00 3 2 3 00 29 1 9 7 00
PROBLEM 9.6B (continued) PAGE 44
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Nov 30 Cash 3 Accounts Receivable/Cantori Cucine 4 EFT received on account from Cantori Cucine 5 6 30 Cash 7 Equipment 8 To correct error for Check 4125 9 10 30 Telephone Expense 11 Cash 12 To record online payment to ClearComm
Post Ref.
DEBIT
12 8 0 0 00
9 0 00
3 2 3 00
Analyze: Total assets decreased by $323 as a result of the general journal entries recorded.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-32
CREDIT 1 2 12 8 0 0 00 3 4 5 6 9 0 00 7 8 9 10 3 2 3 00 11 12
CRITICAL THINKING PROBLEM 9.1 1. DATE
CASH COUNT
BANK DEPOSIT
SALES, PER CASH REGISTER TAPE
AMOUNT SHORT
$2,496.20
LESS: CHANGE FUND $400.00
August 1
$2,096.20
$2,222.50
$ (126.30)
August 2
2,352.80
$400.00
1,952.80
2,135.90
(183.10)
August 3
2,451.45
$400.00
2,051.45
2,303.45
(252.00)
August 4
2,597.20
$400.00
2,197.20
2,287.30
(90.10)
August 5
2,644.05
$400.00
2,244.05
2,335.45
(91.40)
August 6
2,460.10
$400.00
2,060.10
2,155.50
(95.40)
August 7
2,592.40
$400.00
2,192.40
2,255.90
(63.50)
Totals
$17,594.20
$14,794.20
$15,696.00
$ (901.80)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-33
CRITICAL THINKING PROBLEM 9.1 (continued) 2. PAGE 56
GENERAL JOURNAL DATE 1 2016 2 Aug. 7 Cash 3 Cash Short and Over 4 Sales 5
DESCRIPTION
Post Ref.
DEBIT
14 7 9 4 20 9 0 1 80
CREDIT 1 2 3 15 6 9 6 00 4 5
3. Jim should count the cash in the cash register with George at the end of his shift. Jim should print a cash register tape and compare it with the amount of cash in the cash register, less the $400 change fund. Jim should perform the same procedure with Alice at the end of her shift. Jim should also compare the amount of the sales for the day per the cash register tape with the amount of the bank deposit, and investigate any significant variances.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-34
CRITICAL THINKING PROBLEM 9.2 Lucci Contractors Bank Reconciliation Statement August 31, 2016 Balance on bank statement Addition: Deposit in transit, August 28 Deductions for outstanding checks Check 1590 Check 1680 Check 1724 Check 1780 Check 1784 Check 1806 Total outstanding checks Adjusted bank balance Balance in books Deduction: Bank service charge Adjusted book balance Less: Cash shortage Corrected adjusted book balance
16 5 8 9 00 4 8 8 2 00 21 4 7 1 00 2 6 3 00 1 2 1 8 00 4 8 6 00 7 9 2 00 1 8 1 9 00 3 8 4 00 4 9 6 2 00 16 5 0 9 00 18 7 8 6 00 1 0 00 18 7 7 6 00 2 2 6 7 00 16 5 0 9 00
The cash shortage is the difference between the adjusted bank balance of $16,509 and the adjusted book balance of $18,776. This is the amount needed to have both parts of the bank reconciliation equal. Gloria concealed her theft by omitting checks 1590 ($263), 1680 ($1,218), and 1724 ($486). The total amount of these checks is $1,967. Additionally, Gloria purposely understated the total outstanding checks on her bank reconiliation by $300. The ommision of the three outstanding checks, added with the $300 error, equals the total cash shortage of $2,267. Since Gloria handled all cash records, it was relatively easy for her to conceal her theft. Mike should separate the jobs of receiving cash, making disbursements, maintaining accounting records, and preparing bank reconciliations. If the company is not large enough to permit different people to handle these jobs, then Mike should oversee the cash/accounting functions more closely, including reconciliation of the bank account. If Mike does not have the time to do this, he should consider hiring an independent accountant to review the cash/accounting records on a monthly basis and then report any discrepancies to him.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-35
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. a. No assurance money taken actually accounted for. b. A gap in the control of cash exists, and unauthorized expenditures can be made. c. Increases the opportunity for theft; no current cash position is known. d. Increases risk of theft. e. Weakens internal control over cash receipts. 2. Payment of bills in timely fashion, anticipation of fund shortages or overages, take advantage of investment opportunities. 3. Loss of control and check-and-balance system. 4. a. Yes. Blank endorsements are not secure. b. Yes. Checkbook should be kept in a locked drawer and should be available only to specified employee. c. Yes. To deter fraud, different tasks should be assigned to different employees. d. Yes. Reconciliation should be done soon after receiving bank statement. e. Yes. Financial records should be maintained for a reasonable number of years in case of a tax audit or if records are destroyed. f. No. The task would be impractical for a large firm. 5. Essential assets should be safeguarded against loss and theft. 6. Up-to-date cash position; information for day-to-day business decisions. 7. Insures again losses. 8. Control of cash; audit trail. Ethical Dilemma: Daniel should be sure to pay this $30 to petty cash immediately. He can then record cash short/over the next month. Daniel should be sure to never borrow money from petty cash, as it is not his money. Financial Statement Analysis: 1. 6.1% ($2,494 ÷ $41,084) 2. Increased by $507 million ($2,494 - $1,987) 3. The balance reported for “Cash and cash equivalents” would be understated by $125,000. Teamwork: A sales invoice for each job should be given to each customer with a place to incorporate any additions or subtractions for service. Any changes must be communicated to the home office and an approval number will be given. The Sales Invoice, as well as each change, should be signed by the customer. Only cash and money orders should be allowed since the families have just moved and do not currently have a local bank. Internet Connection: Each bank should list the possible interest rates, both variable and fixed. Most banks will be within a few tenths of points of each other.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-36
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. FALSE 3. FALSE 4. FALSE 5. TRUE 6. FALSE 7. FALSE 8. TRUE
Part B Matching 1. a 2. c 3. j 4. k 5. l 6. b 7. e
9. 10. 11. 12. 13. 14. 15. 16.
TRUE TRUE FALSE FALSE TRUE FALSE TRUE FALSE
8. 9. 10. 11. 12. 13.
f h g d i m
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 9-37
CHAPTER 10 PAYROLL COMPUTATIONS, RECORDS, AND PAYMENT Chapter Opener: Thinking Critically Federal and state income taxes. Some employees may also work in locations that require local income taxes be withheld. In addition, there are a host of other voluntary deductions like retirement savings plans, health, dental, vision, life, accidental death & dismemberment, short-term and long-term disability insurance, savings bonds and employee stock purchase plans. Some additional non-voluntary deductions may be associated with past-due child support payments or taxes owed to the IRS. Fast Facts • H&R Block worked with the IRS to file the first electronic tax returns in 1986, 22,000 in all. Since 1994, H&R Block has filed over 50 million tax returns electronically. •
The company’s 100,000 tax professionals have an average of five years experience and more than 300 hours of training.
•
In fiscal 2013, H&R Block had annual revenues of $2.9 billion with 25.4 million tax returns worldwide.
Managerial Implications: Thinking Critically Answers will vary, but students may suggest payroll audits, monitoring of cards, and division of labor for payroll tasks. Discussion Questions Note to instructor: These questions are designed to check students’ understanding of new concepts, and procedures presented in the chapter. 1. Earnings during the pay period, length of pay period, marital status, number of allowances. 2. Sets minimum hourly wages and maximum work hours per week. Applies to firms engaged directly or indirectly in interstate commerce. 3. Fair Labor Standards Act sets the minimum hourly rate of pay and maximum hours of work per week. It is also referred to as the Wage and Hour Law. 4. Two common payroll frauds are overstating hours worked and the issuance of checks to nonexistent employees. 5. Salaried employees who hold supervisory or managerial positions, not subject to maximum hours and overtime. 6. The Federal amounts can be reduced by amount charged by the state government. 7. No, levied on the employer only. 8. Number of hours worked is multiplied by the hourly wage. For hours above 40 in a week, the rate used is one and one-half times the regular hourly rate. 9. To provide medical care for the employee and the employee’s spouse after each has reached 65 years of age. 10. Used to finance retirement benefits for the employee, benefits for dependents of the retired employee, and benefits for a disabled employee. 11. Funds are automatically deposited in the employee’s account from the employer’s bank. 12. Hourly-rate, salary, commission, piece-rate. 13. Withholding tables 14. Circular E 15. One depends solely on the number of hours worked each week; the other is a fixed amount per month, per week, or other pay period. © 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-1
EXERCISE 10.1 EMPLOYEE NO.
HOURLY RATE
HOURS WORKED
GROSS EARNINGS
1 2 3 4
$9.71 9.25 9.92 9.13
38 30 33 32
$368.98 $277.50 $327.36 $292.16
OVERTIME RATE
REGULAR HOURS WORKED
OVERTIME HOURS WORKED
46 47 38 48
6 7 0 8
DECEMBER SALARY
YEAR TO DATE EARNINGS THROUGH NOVEMBER 30
SOC. SEC. TAXABLE EARNINGS DECEMBER
SOCIAL SECURITY TAX 6.20%
$9,900.00 10,000.00 10,709.00 10,000.00
$98,900.00 73,000.00 106,800.00 100,000.00
$9,900.00 10,000.00 6,900.00 10,000.00
$613.80 620.00 427.80 620.00
EXERCISE 10.2
HOURLY RATE
$11.00 10.62 10.46 10.80
$16.50 15.93 15.69 16.20
REGULAR PAY
OVERTIME PAY
GROSS PAY
$440.00 424.80 397.48 432.00
$99.00 111.51 0.00 129.60
$539.00 536.31 397.48 561.60
EXERCISE 10.3
EMPLOYEE NO.
1 2 3 4
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-2
EXERCISE 10.4
EMPLOYEE NO. 1 2 3 4
DECEMBER SALARY
MEDICARE TAXABLE EARNINGSDECEMBER
$9,900.00 10,000.00 10,709.00 10,000.00
$9,900.00 10,000.00 10,709.00 10,000.00
MEDICARE TAX 1.45% $143.55 145.00 155.28 145.00
EXERCISE 10.5 EMPLOYEE NO.
MARITAL STATUS
WITHHOLDING ALLOWANCES
WEEKLY SALARY
INCOME TAX WITHHOLDING
1 2 3 4
M S M S
2 1 2 1
$675 565 665 495
$47 61 45 51
EXERCISE 10.6 GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12 13
DATE 2016 Aug.
DESCRIPTION 7 Office Salaries Expense Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Salaries Payable Payroll for week 7 Salaries Payable Cash Issued checks, weekly payroll
PAGE POST. REF.
DEBIT
16
CREDIT
1 2 7 1 0 00 2 1 6 8 02 3 3 9 30 4 6 1 2 48 5 1 8 9 0 20 6 7 8 1 8 9 0 20 9 1 8 9 0 20 10 11 12 13
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-3
EXERCISE 10.7 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 July 31 Sales Salaries Expense 3 Office Salaries Expense 4 Social Security Tax Payable 5 Medicare Tax Payable 6 Employee Income Tax Payable 7 Salaries Payable Payroll for month ended July 31, 2016 8 9 10 11 12 13 14 15
POST. REF.
DEBIT
20
CREDIT
31 2 5 8 46 8 3 4 1 54 2 4 5 5 20 5 7 4 20 3 1 3 5 16 33 4 3 5 44
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
PROBLEM 10.1A 1. EMPLOYEE NO.
REGULAR HOURS, HOURLY RATE
Kathy Burnett
$13.44
Gross Pay Less: Social Security Tax Medicare Tax Income Tax Withholding Health & Disability Charitable Contribution U.S. Savings Bond Net Pay 2.
1 2 3 4 5
HOURS WORKED
REGULAR TIME EARNINGS
OVERTIME EARNINGS
GROSS EARNINGS
42
$537.60
$40.32
$577.92
$577.92 35.83 8.38 24.00 161.00 18.00 100.00 $230.71 GENERAL JOURNAL
DATE DESCRIPTION 2016 Dec. 31 Salaries Payable Cash Issued check for weekly payroll
PAGE POST. REF.
DEBIT
54
CREDIT
2 3 0 71 2 3 0 71
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-5
1 2 3 4 5
PROBLEM 10.1A (continued) Analyze: Kathy earned overtime pay of $1,622.72, calculated as follows: Cumulative earnings, prior to December 31 payroll Add: gross pay for week ending December 31 Gross pay for the year Less: regular pay (40 hrs X 52 weeks X $13.44) Overtime pay for the year
$29,000.00 577.92 $29,577.92 27,955.20 $1,622.72
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-6
PROBLEM 10.2A WEEK BEGINNING
PAYROLL REGISTER
June 24, 2016 EARNINGS
NAME Nelda Anderson Earl Benson Frank Cortez Winnie Wu
NO. OF ALLOW. 1 4 1 2
10-7
MARITAL STATUS M M M S
CUMULATIVE NO. OF EARNINGS HRS. RATE 17 6 4 0 00 48 $12.70 16 9 7 5 00 48 11.50 16 0 8 0 00 40 11.20 14 6 6 0 00 50 10.70
REGULAR TIME EARNINGS 5 0 8 00 4 6 0 00 4 4 8 00 4 2 8 00
65 3
1 8 4 4 00
5 5
00
OVERTIME EARNINGS 1 5 2 40 1 3 8 00
GROSS AMOUNT 6 6 0 40 5 9 8 00 4 4 8 00 5 8 8 50
CUMULATIVE EARNINGS 18 3 0 0 40 17 5 7 3 00 16 5 2 8 00 15 2 4 8 50
4 5 0 90 2 2 9 4 90
67 6 4 9 90
1 6 0 50
PROBLEM 10.2A (continued) AND ENDING
June 30, 2016
TAXABLE WAGES SOCIAL SECURITY MEDICARE FUTA 6 6 0 40 6 6 0 40 5 9 8 00 5 9 8 00 4 4 8 00 4 4 8 00 5 8 8 50 5 8 8 50 2 2 9 4 90 2 2 9 4 90
10-8
PAID July 3, 2016
DEDUCTIONS DISTRIBUTION CHECK SOCIAL INCOME NET WAGES NO. SECURITY MEDICARE TAX AMOUNT EXPENSE 4 0 94 9 58 5 4 00 5 5 5 88 6 6 0 40 3 7 08 8 67 2 0 00 5 3 2 25 5 9 8 00 2 7 78 6 50 2 3 00 3 9 0 72 4 4 8 00 3 6 49 8 53 5 5 00 4 8 8 48 5 8 8 50 1 4 2 29 3 3 28 1 5 2 00 1 9 6 7 33 2 2 9 4 90
PROBLEM 10.2A (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 June 30 Wages Expense 3 Social Security Tax Payable 4 Medicare Tax Payable 5 Employee Income Tax Payable 6 Wages Payable 7 Weekly payroll 8 9 July 3 Wages Payable 10 Cash 11 Issued check for weekly payroll 12
POST. REF.
DEBIT
15
CREDIT
2 2 9 4 90 1 4 2 29 3 3 28 1 5 2 00 1 9 6 7 33
1 9 6 7 33 1 9 6 7 33
Analyze: Nelda Anderson’s cumulative earnings at June 30, 2016 are $18,300.40.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-9
1 2 3 4 5 6 7 8 9 10 11 12
PROBLEM 10.3A WEEK BEGINNING
PAYROLL REGISTER
December 15, 2016 EARNINGS
NAME Gloria Bahamon Alex Garcia Ron Price Sara Russell
NO. OF ALLOW. 4 1 3 0
10-10
MARITAL STATUS M S M S
CUMULATIVE NO. OF EARNINGS HRS. RATE 32 8 6 0 00 47 $16.70 57 3 0 0 00 43 28.50 53 9 7 2 00 49 26.90 26 6 2 0 00 40 13.70
REGULAR TIME EARNINGS 6 6 8 00 1 1 4 0 00 1 0 7 6 00 5 4 8 00
OVERTIME EARNINGS 1 7 5 35 1 2 8 25 3 6 3 15
170 7 5 2 00
3 4 3 2 00
6 6 6 75
GROSS AMOUNT 8 4 3 35 1 2 6 8 25 1 4 3 9 15 5 4 8 00
CUMULATIVE EARNINGS 33 7 0 3 35 58 5 6 8 25 55 4 1 1 15 27 1 6 8 00
4 0 9 8 75 174 8 5 0 75
PROBLEM 10.3A (continued) AND ENDING
December 21, 2016
TAXABLE WAGES SOCIAL MEDICARE SECURITY 8 4 3 35 8 4 3 35 1 2 6 8 25 1 2 6 8 25 1 4 3 9 15 1 4 3 9 15 5 4 8 00 5 4 8 00 4 0 9 8 75
4 0 9 8 75
10-11
FUTA
PAID December 23, 2016 DEDUCTIONS SOCIAL SECURITY MEDICARE 5 2 29 1 2 23 7 8 63 1 8 39 8 9 23 2 0 87 3 3 98 7 95 2 5 4 13
5 9 44
INCOME TAX 1 1 2 00 3 2 3 00 2 5 8 00 6 7 00
NET AMOUNT 6 6 6 83 8 4 8 23 1 0 7 1 05 4 3 9 07
7 6 0 00
3 0 2 5 18
DISTRIBUTION CHECK OFFICE NO. WAGES 8 4 3 35
DELIVERY WAGES 1 2 6 8 25 1 4 3 9 15
5 4 8 00 1 3 9 1 35
2 7 0 7 40
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 10.3A (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 21 Office Wages 3 Delivery Wages 4 Social Security Tax Payable 5 Medicare Tax Payable 6 Employee Income Tax Payable 7 Wages Payable 8 Weekly payroll 9 10 23 Wages Payable 11 Cash 12 Payment of payroll 13
POST. REF.
DEBIT
32
CREDIT
1 3 9 1 35 2 7 0 7 40 2 5 4 13 5 9 44 7 6 0 00 3 0 2 5 18
3 0 2 5 18 3 0 2 5 18
Analyze: Delivery wages were 66.1% of total taxable wages.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-12
1 2 3 4 5 6 7 8 9 10 11 12 13
PROBLEM 10.4A
EMPLOYEE CUMULATIVE NAME. EARNINGS
Sara Parker Carolyn Wells James Wu Totals
$171,700 152,700 52,800 $377,200
MONTHLY PAY
SOCIAL SECURITY
$20,400 16,600 6,000 $43,000
372 $372
EMPLOYEE INCOME TAX MEDICARE WITHHOLDING
$295.80 240.70 87.00 $623.50
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Oct. 31 Salaries Expense 3 Social Security Tax Payable 4 Medicare Tax Payable 5 Employee Income Tax Payable 6 Salaries Payable 7 8 31 Salaries Payable 9 Cash 10 11 Analyze:
$5,348 4,668 1,377 $11,393 PAGE
POST. REF.
DEBIT
NET PAY
$14,756.20 11,691.30 4,164.00 $30,611.50
22
CREDIT
1 43 0 0 0 00 2 3 7 2 00 3 6 2 3 50 4 11 3 9 3 00 5 30 6 1 1 50 6 7 30 6 1 1 50 8 30 6 1 1 50 9 10 11
An employee is hired by and works under the control and direction of the employer. An independent contractor is paid by the company to carry out a specific task but is not under the direct supervision or control of the company.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-13
PROBLEM 10.1B 1. EMPLOYEE NO.
REGULAR HOURS, HOURLY RATE
HOURS WORKED
Juan Padronas
$13.00
48
Gross Pay Less: Social Security Tax Medicare Tax Income Tax Withholding Health Insurance Charitable Contribution Credit Union Savings Net Pay 2.
1 2 3 4 5 6
REGULAR TIME OVERTIME EARNINGS EARNINGS $520.00
$156.00
GROSS EARNINGS $676.00
$676.00 41.91 9.80 38.00 150.00 20.00 25.00 $391.29 GENERAL JOURNAL
DATE DESCRIPTION 2016 Dec. 31 Salaries Payable Cash Issued check for weekly payroll
PAGE
POST. REF.
DEBIT 3 9 1 29
18
CREDIT 1 2 3 9 1 29 3 4 5 6
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-14
PROBLEM 10.1B (continued) Analyze:
Juan earned overtime pay of $1,636.00, calculated as follows: Cumulative earnings, prior to December 31 payroll Add: gross pay for week ending December 31 Gross pay for the year Less: regular pay (40 hrs. X 52 weeks X $13.00) Overtime pay for the year
$28,000.00 676.00 $28,676.00 27,040.00 $1,636.00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-15
PROBLEM 10.2B PAYROLL REGISTER
WEEK BEGINNING
December 25, 2016 EARNINGS
NAME Betty Brooks Cynthia Carter Mary Easley James Periot
NO. OF ALLOW. 3 2 4 2
10-16
MARITAL STATUS M M M S
CUMULATIVE NO. OF RATE EARNINGS HRS. 44 1 7 9 00 45 $12.80 53 0 1 5 00 48 13.40 82 7 4 8 00 44 29.50 104 4 8 6 00 30 37.00
REGULAR TIME EARNINGS 5 1 2 00 5 3 6 00 1 1 8 0 00 1 1 1 0 00
OVERTIME GROSS CUMULATIVE EARNINGS AMOUNT EARNINGS 9 6 00 6 0 8 00 44 7 8 7 00 1 6 0 80 6 9 6 80 53 7 1 1 80 1 7 7 00 1 3 5 7 00 84 1 0 5 00 1 1 1 0 00 105 5 9 6 00
284 4
3 3 3 8 00
4 3 3 80 3 7 7 1 80 288 1 9 9 80
2 8
00
PROBLEM 10.2B (continued) AND ENDING
December 31, 2016
PAID December 31, 2016
TAXABLE WAGES SOCIAL SECURITY MEDICARE 6 0 8 00 6 0 8 00 6 9 6 80 6 9 6 80 1 3 5 7 00 1 3 5 7 00 1 1 1 0 00 1 1 1 0 00
DEDUCTIONS FUTA
3 7 7 1 80 3 7 7 1 80
SOCIAL SECURITY MEDICARE 3 7 70 8 82 4 3 20 1 0 10 8 4 13 1 9 68 6 8 82 1 6 10 2 3 3 85
10-17
5 4 70
INCOME TAX 2 7 00 5 0 00 2 3 5 00 2 3 8 00
NET AMOUNT 5 3 4 48 5 9 3 50 1 0 1 8 19 7 8 7 08
5 5 0 00
2 9 3 3 25
DISTRIBUTION CONSULTIN CHECK G WAGES NO. EXPENSE
OFFICE WAGES 6 0 8 00 6 9 6 #
1 3 5 7 00 1 1 1 0 00 2 4 6 7 00 1 3 0 4 #
PROBLEM 10.2B (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Consulting Wages Expense 3 Office Wages Expense 4 Social Security Tax Payable 5 Medicare Tax Payable 6 Employee Income Tax Payable 7 Wages Payable Payroll for week ending December 31 8 9 10 31 Wages Payable 11 Cash Paid wages for week ending December 31 12 13
POST. REF.
DEBIT
18
CREDIT
2 4 6 7 00 1 3 0 4 80 2 3 3 5 4 5 5 0 2 9 3 3
2 9 3 3 25 2 9 3 3
Analyze: The difference is the total deductions of $838.55, which must be remitted to the IRS.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-18
1 2 3 85 4 70 5 00 6 25 7 8 9 10 25 11 12 13
PROBLEM 10.3B PAYROLL REGISTER
WEEK BEGINNING
November 6, 2016 EARNINGS
NAME Kathryn Allen Calvin Cooke Maria Vasquez Hollie Visage
NO. OF ALLOW. 3 2 4 2
MARITAL STATUS M S M S
10-19
CUMULATIVE NO. OF EARNINGS HRS. RATE 26 5 6 5 00 43 10.50 25 9 3 3 00 36 10.25 75 2 6 8 00 45 29.75 82 8 5 8 00 41 32.75
REGULAR TIME EARNINGS 4 2 0 00 3 6 9 00 1 1 9 0 00 1 3 1 0 00
210 6 2 4 00
3 2 8 9 00
OVERTIME EARNINGS 4 7 25 2 2 3 13 4 9 13
GROSS AMOUNT 4 6 7 25 3 6 9 00 1 4 1 3 13 1 3 5 9 13
CUMULATIVE EARNINGS 27 0 3 2 25 26 3 0 2 00 76 6 8 1 13 84 2 1 7 13
3 1 9 51
3 6 0 8 51 214 2 3 2 51
PROBLEM 10.3B (continued) AND ENDING
November 12, 2016
TAXABLE WAGES SOCIAL SECURITY 4 6 7 25 3 6 9 00 1 4 1 3 13 1 3 5 9 13 3 6 0 8 51
MEDICARE 4 6 7 25 3 6 9 00 1 4 1 3 13 1 3 5 9 13 3 6 0 8 51
10-20
PAID November 12, 2016 DEDUCTIONS
FUTA
DISTRIBUTION
CHECK SOCIAL INCOME NET NO. SECURITY MEDICARE TAX AMOUNT 2 8 97 6 78 1 3 00 4 1 8 50 2 2 88 5 35 2 2 00 3 1 8 77 8 7 61 2 0 49 1 9 2 00 1 1 1 3 03 8 4 27 1 9 71 2 6 7 00 9 8 8 15 2 2 3 73 5 2 33 4 9 4 00 2 8 3 8 45
OFFICE WAGES 4 6 7 25 3 6 9 00
8 3 6 25
CONSULTING WAGES
1 1 2
4 3 7
1 3 13 5 9 13 7 2 26
PROBLEM 10.3B (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Nov. 12 Office Wages 3 Consulting Wages 4 Social Security Tax Payable 5 Medicare Tax Payable 6 Employee Income Tax Payable 7 Wages Payable 8 Record weekly Payroll 9 10 15 Wages Payable 11 Cash 12 Paid payroll 13 14 Analyze:
POST. REF.
DEBIT
32
CREDIT
8 3 6 25 2 7 7 2 26 2 2 3 73 5 2 33 4 9 4 00 2 8 3 8 45
2 8 3 8 45 2 8 3 8 45
Total deductions of $770.06 were taken from employee paychecks for the period ended November 12.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-21
1 2 3 4 5 6 7 8 9 10 11 12 13 14
PROBLEM 10.4B
EMPLOYEE NAME.
Tony Constantino Chris Stamos Elaine Hayakawa Totals
CUMULATIVE MONTHLY EARNINGS PAY
$180,000 150,000 64,000 $394,000
$18,000 15,000 6,400 $39,400
SOCIAL SECURITY
0 $0.00 396.80 $396.80
EMPLOYEE INCOME TAX MEDICARE WITHHOLDING NET PAY
$261.00 217.50 92.80 $571.30
GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11
$5,110 $12,629.00 3,700 11,082.50 1,200 4,710.40 $10,010 $28,421.90
PAGE 2
POST. REF. DATE DESCRIPTION DEBIT CREDIT 2016 Nov. 30 Salaries Expense 39 4 0 0 00 Social Security Tax Payable 3 9 6 80 Medicare Tax Payable 5 7 1 30 Employee Income Tax Payable 10 0 1 0 00 Salaries Payable 28 4 2 1 90 30 Salaries Payable Cash
28 4 2 1 90 28 4 2 1 90
24
1 2 3 4 5 6 7 8 9 10 11
Analyze: Chris Stamos reached the limit for social security withholdings in August 2016.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-22
CRITICAL THINKING PROBLEM 10.1
CUMULATIVE EARNINGS
MONTHLY PAY
Mark Anthony
$132,000.00
Carol Swartz
100,000.00
EMPLOYEE NAME
Henry House Totals
SOCIAL SECURITY
MEDICARE
$12,000.00
–0–
$174.00
$3,216.00
$8,610.00
10,000.00
620.00
145.00
2,646.00
6,589.00
NET PAY
71,500.00
6,500.00
403.00
94.25
1,244.00
4,758.75
$303,500.00
$28,500.00
$1,023.00
$413.25
$7,106.00
$19,957.75
GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11 12
EMPLOYEE INCOME TAX WITH HOLDING
DATE DESCRIPTION 2016 Dec. 31 Salaries Expense Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Salaries Payable Monthly payroll 31 Salaries Payable Cash Payment of Monthly Payroll
PAGE POST . REF.
DEBIT 28
CREDIT
0 0 00 1 0 2 3 4 1 3 7 1 0 6 19 9 5 7
19
32
00 25 00 75
5 7 75 19 9 5 7 75
1 2 3 4 5 6 7 8 9 10 11 12
Analyze: The balance after all entries have been posted is zero.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-23
CRITICAL THINKING PROBLEM 10.2 1. Some of the weaknesses in Tito’s Tacos payroll system include: a. Managers are able to add new employees to the payroll without written authorization or verification. There is no check on the qualifications of employees hired and managers could add bogus employees to the payroll. b. Employees should not have access to blank time cards. c. Payroll functions should be allocated to more than one employee; there are no checks on the accuracy of Anna’s work. d. Anna should not sign the payroll checks. The person who prepares the checks should not sign the checks. 2. Since there are no checks on who the managers hire, it would be possible for a manager to add a fictitious employee to the payroll. This fraud would be further aided because the manager is responsible for sending time cards to headquarters and distributes the paychecks. 3. To prevent fictitious employees from being placed on the payroll: a. New employees should not be added to the payroll without written authorization from headquarters. b. Payroll checks should not be distributed by the managers. The paychecks could be mailed directly to the employees or someone from headquarters could distribute the checks.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-24
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. If overtime is excessive, profits are drastically reduced. 2. Paying by check would eliminate security risk and reduce work involved in preparing pay envelopes. 3. Various federal, state, and local payroll laws require that detailed payroll records be maintained. These records provide management with information needed to make decisions about the firm’s needs. 4. Used by management to see that operations meet previously established goals and that related outlays for wages are within previously established limits. Ethical Dilemma: It is ethical for the company to offer the promotion, but they should allow the managers to decide whether to accept it. The managers should not accept the promotion since they will be receiving $10 less per day from $224 to $200. Financial Statement Analysis: 1. 12.3%. 2. Increased by $42 million. Teamwork: Employee signs the time card and gives it to the manager. The manager approves the hours and gives it to the payroll clerk. The payroll clerk runs the payroll and prints the checks. The treasurer signs the checks and gives them back to the payroll clerk who gives them to the manager. The controller enters any necessary adjusting entry. The manager gives the check to the employee. Internet Connection: Experience necessary is 3 out of 5 years preceding the date of the exam. Exam is offered in April and October at several testing sites. The fee for the CPP exam for the period September 11, 2010 to October 9, 2011 is $360. Testing includes: Core Payroll Concepts (27.5%), Compliance (23%), Principles of Paycheck Calculations (20%), Payroll Process and Systems (8.5%), Management and Administration (15%) and Accounting (6%).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-25
SOLUTIONS TO PRACTICE TEST Part A True-False 1. FALSE 2. FALSE 3. FALSE 4. TRUE 5. FALSE 6. FALSE 7. FALSE 8. FALSE 9. FALSE 10. TRUE 11. FALSE 12. FALSE Part B Matching 1. a 2. g 3. h 4. f 5. k 6. c 7. b 8. e 9. i 10. j
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 10-26
CHAPTER 11 PAYROLL TAXES, DEPOSITS, AND REPORTS Chapter Opener: Thinking Critically Companies can offer many benefits such as paid vacations, sick leave, flexible work schedules, health insurance, pension benefits, workman’s compensation, child care and even the use of company vehicles to name just a few. Fast Facts • John L. Marek started Marek Brothers Sheetrock company in 1938 with his brothers Bill and Ralph. • The company operates 8 different divisions in Austin, Dallas, Houston and San Antonio Texas as well as an Interior System division in Atlanta, Georgia.
Managerial Implications: Thinking Critically The 941 is prepared from the Quarterly Summary of Earnings. Discussion Questions Note to instructor : These questions are designed to check students’ understanding of the new Questions terms, concepts, and procedures presented in the chapter. 1. b, c, d 2. Federal deposits are due on the 15th day of the following month. 3. Federal deposits are due on either Wednesdays or Fridays, depending on the employer’s payday. 4. Electronic Federal Tax Payment System; use if the annual federal tax deposits are more than $200,000. 5. Unique ID number assigned by the federal government to employers. 6. SUTA, FUTA, social security, and Medicare 7. A four-quarter period ending June 30 of the preceding year. 8. Summarizes employees’ earnings and deductions for the year; sent with W-2 forms to Social Security Administration by last day of February following close of calendar year. 9. To each employee by January 31 following the close of the calendar year. 10. 11. 12. 13.
Employer is responsible and must pay any taxes due. Circular E Start of the year Employer
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-1
Discussion Questions (continued) 14. Reports employee earnings subject to federal income, social security, and Medicare taxes. Filed quarterly. 15. Yes, if FUTA payable is $500 or more, deposit by last day of month following end of quarter. 16. 5.4 percent 17. Filed once a year, it reports net federal unemployment tax; indicates amount of additional tax due. 18. Intended to encourage states to adopt state unemployment tax programs. 19. To alleviate hardship on employees who lose their jobs.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-2
EXERCISE 11.1 1. No deposit is necessary at this time since tax due is less than $2,500. 2. No deposit is necessary at this time since the tax due is less than $2,500. 3. No deposit is necessary at this time since tax due is less than $2,500. 4. March 15, 2016. A deposit is required by the 15th of the month following the period where $2,500 or more in tax is owed. In 1, 2, and 3, the taxes may be paid with Form 941 on or before April 30, 2016.
EXERCISE 11.2 PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7
POST. REF.
DATE DESCRIPTION 2016 July 16 Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Cash Deposit payroll taxes
DEBIT
24
CREDIT
20 7 0 0 00 4 2 4 6 00 19 2 6 0 00 44 2 0 6 00
EXERCISE 11.3 TAX
BASE
RATE
AMOUNT
Social Security Medicare FUTA SUTA Total
$71,900.00 71,900.00 41,430.00 41,430.00
6.2% 1.45% 0.6% 5.4%
$4,457.80 1,042.55 248.58 2,237.22 $7,986.15
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-3
1 2 3 4 5 6 7
EXERCISE 11.4 PAGE
GENERAL JOURNAL
1 2 3 4 5
DATE DESCRIPTION 2016 Apr. 30 Federal Unemployment Tax Payable Cash FUTA deposit
POST. REF.
DEBIT
14
CREDIT
1 5 0 7 00 1 5 0 7 00
1 2 3 4 5
EXERCISE 11.5 SUTA = $1,400.70 ($100,050 x 0.014)
EXERCISE 11.6 PAGE
GENERAL JOURNAL
1 2 3 4 5
DATE DESCRIPTION 2016 July 31 State Unemployment Tax Payable Cash SUTA deposit
POST. REF.
DEBIT
CREDIT
2 1 4 8 00 2 1 4 8 00
EXERCISE 11.7 Gross tax (0.006 × $150,000) Less Deposit Net tax payable
= = =
30
$900.00 800.00 $100.00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-4
1 2 3 4 5
EXERCISE 11.8 WORK CLASSIFICATION
ESTIMATED EARNINGS
Office Factory Total
RATE
$215,000 970,000
ESTIMATED PREMIUM
$ .60/$100 $8.40/$100
$1,290.00 81,480.00 $82,770.00
PROBLEM 11.1A TAX Social Security Medicare FUTA SUTA Total
BASE
RATE $4,500.00 4,500.00 4,500.00 4,500.00
AMOUNT
6.2% 1.45% 0.6% 5.4%
PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7 8
DATE DESCRIPTION 2016 July 14 Payroll Taxes Expense Social Security Tax Payable Medicare Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Record employer’s payroll taxes
Analyze:
$279.00 65.25 27.00 243.00 $614.25
POST. REF.
DEBIT
30
CREDIT
6 1 4 25 2 7 9 00 6 5 25 2 7 00 2 4 3 00
Social Security and Medicare taxes are withheld from the employee paycheck and matched by the employer.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-5
1 2 3 4 5 6 7 8
PROBLEM 11.2A PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 April 8 Payroll Taxes Expense 3 Social Security Tax Payable 4 Medicare Tax Payable 5 Federal Unemployment Tax Payable 6 State Unemployment Tax Payable 7 Payroll tax expense 8 9 May 15 Social Security Tax Payable 10 Medicare Tax Payable 11 Employee Income Tax Payable 12 Cash 13 Deposit payroll taxes for April 14 15 June 17 Social Security Tax Payable 16 Medicare Tax Payable 17 Employee Income Tax Payable 18 Cash 19 Deposit payroll taxes for May 20
Analyze:
POST. REF.
DEBIT 4 6 4 10
1 9 3 4 40 4 5 2 40 1 4 7 7 00
1 7 8 5 60 4 1 7 60 1 4 3 0 00
12
CREDIT 1 2 2 1 0 80 3 4 9 30 4 2 0 40 5 1 8 3 60 6 7 8 9 10 11 3 8 6 3 80 12 13 14 15 16 17 3 6 3 3 20 18 19 20
The amounts of income tax withheld were determined based on tables for the filing status and withholding allowances claimed by each employee.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-6
PROBLEM 11.3A PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7
DATE DESCRIPTION 2016 July 15 Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Cash Deposit payroll taxes for June
Analyze:
POST. REF.
DEBIT
24
CREDIT
2 2 4 4 40 5 2 4 90 1 7 9 5 00 4 5 6 4 30
The balance of the Employee Income Tax Payable account is zero.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-7
1 2 3 4 5 6 7
PROBLEM 11.3A (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-8
PROBLEM 11.3A (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-9
PROBLEM 11.4A State unemployment insurance
=
0.017 × $27,363.00
=
$465.17
PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 April 30 State Unemployment Tax Payable 3 Cash 4 Payment of quarterly SUTA 5
Analyze:
POST. REF.
DEBIT
82
CREDIT
4 6 5 17 4 6 5 17
1 2 3 4 5
An employer’s experience rating determines the amount of state unemployment taxes paid. Generally, a more favorable rating will result in a lower state unemployment tax rate for the business.
PROBLEM 11.5A PAGE
GENERAL JOURNAL
1 2 3 4 5
DATE DESCRIPTION 2017 Jan. 28 Federal Unemployment Tax Payable Cash Pay balance of tax due
Analyze:
POST. REF.
DEBIT
15
CREDIT
8 2 41
The total debits made to liability accounts were $547.58.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-10
8 2 41
1 2 3 4 5
PROBLEM 11.5A (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-11
PROBLEM 11.5A (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-12
PROBLEM 11.6A 1. WORK CLASSIFICATION
Office work Shop work Total
ESTIMATED EARNINGS
INSURANCE RATE
$64,000 $308,000
ESTIMATED PREMIUMS
$0.30/$100 $6.00/$100
$192.00 18,480.00 $18,672.00
2. PAGE
GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2016 Jan. 15 Prepaid Workers’ Compensation Insurance Cash Pay estimated workers’ compensation for year
3. WORK CLASSIFICATION
Office work Shop work Total Estimated premiums paid Additional premium due
POST. REF.
DEBIT
8
CREDIT
18 6 7 2 00 18 6 7 2 00
ACTUAL EARNINGS
INSURANCE RATE
$69,960 $315,320
$0.30/$100 $6.00/$100
1 2 3 4 5 6
ACTUAL PREMIUMS
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-13
$209.88 18,919.20 19,129.08 18,672.00 $457.08
PROBLEM 11.6A (continued) 4. PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10
DATE DESCRIPTION 2016 Dec. 31 Workers’ Compensation Insurance Expense Workers’ Compensation Insurance Payable Adjust workers’ compensation insurance expense 31 Workers’ Compensation Insurance Expense Prepaid Workers' Compensation Insurance Adjust prepaid workers’ compensation insurance
POST. REF.
DEBIT
98
CREDIT
1 4 5 7 08 2 4 5 7 08 3 4 5 6 18 6 7 2 00 7 18 6 7 2 00 8 9 10
Analyze: The premium estimate would have been $22,320=($64,000+$308,000) x ($6.00/$100).
PROBLEM 11.1B TAX Social Security Medicare FUTA SUTA Total
BASE
RATE $4,000 4,000 4,000 4,000
AMOUNT
6.2% 1.45% 0.6% 2.2%
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-14
$248.00 58.00 24.00 88.00 $418.00
PROBLEM 11.1B (continued) PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7 8
DATE DESCRIPTION 2016 April 8 Payroll Taxes Expense Social Security Tax Payable Medicare Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Record taxes on payroll
Analyze:
POST. REF.
DEBIT
28
CREDIT
4 1 8 00 2 4 8 00 5 8 00 2 4 00 8 8 00
1 2 3 4 5 6 7 8
The total employer's payroll taxes would be $378.00 ($248 + $58 + $24 FUTA + $48 SUTA).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-15
PROBLEM 11.2B PAGE
GENERAL JOURNAL
DATE DESCRIPTION 2016 July 7 Payroll Taxes Expense Social Security Tax Payable Medicare Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Payroll taxes for week ended July 7
1 2 3 4 5 6 7 8 9 Aug. 15 Employee Income Tax Payable 10 Social Security Tax Payable 11 Medicare Tax Payable 12 Cash 13 Deposit of payroll taxes for July 14 15 Sept. 15 Employee Income Tax Payable 16 Social Security Tax Payable 17 Medicare Tax Payable 18 Cash 19 Deposit of payroll taxes for August 20
POST. REF.
DEBIT 2 0 9 00
7 0 0 00 1 0 0 1 92 2 3 4 32
8 4 0 00 1 1 7 8 00 2 7 5 50
31
CREDIT 1 2 1 2 4 00 3 2 9 00 4 1 2 00 5 4 4 00 6 7 8 9 10 11 1 9 3 6 24 12 13 14 15 16 17 2 2 9 3 50 18 19 20
Analyze: A SUTA rate of .015 would reduce the amount of tax by $14.00 [(0.022 – 0.015) x $2,000].
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-16
PROBLEM 11.3B PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Oct. 15 Employee Income Tax Payable 3 Social Security Tax Payable 4 Medicare Tax Payable 5 Cash 6 Deposit payroll taxes for September 7
POST. REF.
DEBIT
CREDIT
9 1 5 00 1 2 7 7 20 2 9 8 70 2 4 9 0 90
Analyze: The total taxes deposited with the IRS for the quarter ended September 30 was $6,720.64 determined as follows: Social Security - employer Social Security - employee Medicare - employer Medicare - employee Income tax withheld
31
$1,728.56 1,728.56 404.26 404.26 2,455.00 $6,720.64
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-17
1 2 3 4 5 6 7
PROBLEM 11.3B (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-18
PROBLEM 11.3B (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-19
PROBLEM 11.4B State unemployment insurance
=
0.023 × $20,335.00
=
PAGE
GENERAL JOURNAL
1 2 3 4 5
DATE DESCRIPTION 2016 April 30 State Unemployment Tax Payable Cash Paid state unemployment tax
$467.71
POST. REF.
DEBIT
21
CREDIT
4 6 7 71 4 6 7 71
1 2 3 4 5
Analyze: If Brian Morris made the same amount for the quarter ended June 30, 2016, $3,120 ($7,000 - $3,880) would be subject to the federal unemployment tax.
PROBLEM 11.5B PAGE
GENERAL JOURNAL
1 2 3 4 5
DATE DESCRIPTION 2017 Jan. 27 Federal Unemployment Tax Payable Cash Pay balance of tax due
POST. REF.
DEBIT
48
CREDIT
5 5 1 08 5 5 1 08
Analyze: The balance of the Federal Unemployment Tax Payable account is zero.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-20
1 2 3 4 5
PROBLEM 11.5B (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-21
PROBLEM 11.5B (continued)
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-22
PROBLEM 11.6B 1. WORK CLASSIFICATION Office work Delivery work Total
ESTIMATED EARNINGS $50,000 $308,000
INSURANCE RATE
ESTIMATED PREMIUMS
$0.50/$100 $6.00/$100
$250.00 18,480.00 $18,730.00
2. PAGE
GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2016 Jan. 17 Prepaid Workers’ Compensation Insurance Cash Pay estimated workers' compensation for year
POST. REF.
DEBIT
7
CREDIT
18 7 3 0 00 18 7 3 0 00
3. WORK CLASSIFICATION
ACTUAL EARNINGS
INSURANCE RATE
ACTUAL PREMIUMS
Office work Delivery work Total actual premiums Estimated premiums paid Additional premium due
$52,970 $316,240
$0.50/$100 $6.00/$100
$264.85 18,974.40 19,239.25 18,730.00 $509.25
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-23
1 2 3 4 5 6
4. PAGE
GENERAL JOURNAL
1 2 3 4 5 6 7 8 9 10 11
DATE DESCRIPTION 2016 Dec. 31 Workers’ Compensation Insurance Expense Workers' Compensation Insurance Payable Adjust workers’ compensation insurance expense 31 Workers’ Compensation Insurance Expense Prepaid Worker's Compensation Insurance Adjust prepaid workers’ compensation insurance
POST. REF.
DEBIT
88
CREDIT
1 5 0 9 25 2 5 0 9 25 3 4 5 6 18 7 3 0 00 7 18 7 3 0 00 8 9 10 11
Analyze: The balance of the Workers’ Compensation Insurance Expense account is $19,239.25 ($18,730.00 + $509.25).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-24
CRITICAL THINKING PROBLEM 11.1 1.
Payroll information needed: the hourly rate paid the truck drivers; the rates for social security, medicare, and federal and state unemployment taxes; and the employer’s obligations for workers’ compensation insurance and fringe benefits such as health insurance, pension contributions, and group life insurance.
YEARLY COST—CURRENT SYSTEM
2.
Truck Drivers: Wages (100 × $42,000) Social Security Tax ($4,200,000 × 0.062) Medicare Tax ($4,200,000 × 0.0145) State Unemployment Tax (100 × $7,000 × .05) Federal Unemployment Tax (100 × $7,000 × .006) Workers’ Compensation Insurance ($4,200,000 × $.70 ÷ 100) Health Insurance (100 × $300 × 12) Pensions (100 × $250 × 12) Total Payroll Costs Teenage Carriers: Payment per paper (90,000 × $0.04 × 5 days × 52 weeks) Liability Insurance Total Cost
$4,200,000 260,400 60,900 35,000 4,200 29,400 360,000 300,000 $5,249,900 936,000 100,000 $6,285,900
YEARLY COST—PROPOSED SYSTEM Truck Drivers: Wages (20 × $42,000) Social Security Tax ($840,000 × 0.0620) Medicare Tax ($840,000 × 0.0145) State Unemployment Tax (20 × $7,000 × 0.05) Federal Unemployment Tax (20 × $7,000 × .006) Workers’ Compensation Insurance ($840,000 × $0.70 ÷ 100) Health Insurance (20 × $300 × 12) Pensions (20 × $250 × 12) Total Payroll Costs Independent Contractor Payments (90,000 × $0.20 × 5 days × 52 weeks) Total Cost
$840,000 52,080 12,180 7,000 840 5,880 72,000 60,000 $1,049,980 4,680,000 $5,729,980
HARLEY would save $555,920 if the proposed system were adopted ($6,285,900-$5,729,980). NOTE:
3
Federal income tax withholding is not a factor in this analysis since it is the employees' obligation, not the employer’s.
In addition to analyzing payroll costs, Harley should consider costs of operating the fleet of delivery trucks. What is the current cost to operate the trucks? How much would be saved by reducing the fleet? He should also consider the effect on employee morale of terminating 80 truck drivers and the commitments the paper has to union contracts. He should also assess the dependability and stability of the independent contractors; it may be worthwhile to spend more in order to have control of the paper’s distribution system through its own employees and trucks.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-25
CRITICAL THINKING PROBLEM 11.2 1. 2. 3.
Tony is not an employee. A self-employed person cannot be his or her own employee. Guy is probably not an employee. He has the right to refuse jobs, which is not characteristic of an employee’s rights. Ken is an employee, paid on an hourly basis by Dr. Liu, who provides all facilities, supplies, and equipment. He is not hired by the patients for professional services.
4.
Lisa is not an employee. The employer does not provide a work place or tools, or meet other conditions for her to be classified as an employee.
5.
Ron is definitely a part-time employee. The titles of president, secretary, and treasurer make him officially an employee. Analyze: The employees are hired and work under the control and direction of the employer. The employer determines how the employee completes the job.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-26
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Only authorized persons able to add new employees to payroll; review of payroll by different employee; distribution of paychecks by yet another person. 2. Premiums for workers’ compensation insurance are based on the amount earned by classes of employees. 3. Penalties and fines for the employer. 4. Experience rating is a potential source of tax savings. Ethical Dilemma: Johan is paying $1,720 more per month for wages. The extra expense represents an additional employee that he did not hire. He should consult his accountant to find the approval for an additional sales associate. To prevent this from happening in the future, he should pass out the paychecks personally to match the paycheck to the person. Financial Statement Analysis: 1. $182,000,000/340,000 employees = $535.29 Teamwork: Hire temporary employees for jobs that occur seasonally. Only pay 98% of deposit required. The IRS states that 98% is considered in compliance. Stop any unnecessary overtime by requiring management approval for all overtime. Find less expensive benefits. Internet Connection: The 940 and 941 form is available to download and use. However, the W-2, W-3, W-4 and W-5 must be original forms.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-27
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. FALSE 3. FALSE 4. TRUE 5. FALSE 6. TRUE 7. FALSE 8. FALSE 9. TRUE 10. FALSE 11. TRUE 12. FALSE 13. TRUE 14. FALSE 15. FALSE 16. FALSE 17. FALSE 18. FALSE Part B Matching 1. j 2. i 3. h 4. a 5. g 6. e 7. f 8. b 9. d 10. c
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 11-28
CHAPTER 12 ACCRUALS, DEFERRALS, AND THE WORKSHEET Chapter Opener: Thinking Critically The store needs to evaluate which items are selling well and which are not. They need to consider the selling price of each of their products to determine if adjustments in prices need to be made. They also must decide what to do with items that didn’t sell. Furthermore, each store will need to take a physical count to verify that their accounting records match what is actually on the shelf. They made need to recognize some loss due to inventory shrinkage (theft, damage or obsolescence). Each store will need to use both the beginning inventory count as well as the ending inventory count in order to prepare their income statement at period end.
Fast Facts Urban Outfitters achieved compounded annual sales growth of approximately 13% from 2009 to • 2013, with sales of approximately $2.8 billion in fiscal year end Jan. 31, 2013. Urban Outfitters achieved compounded annual sales growth of approximately 13% from 2009 to • 2013, with sales of approximately $2.8 billion in fiscal year end Jan. 31, 2013. •
Urban Outfitters achieved compounded annual sales growth of approximately 13% from 2009 to 2013, with sales of approximately $2.8 billion in fiscal year end Jan. 31, 2013.
•
Urban Outfitters achieved compounded annual sales growth of approximately 13% from 2009 to 2013, with sales of approximately $2.8 billion in fiscal year end Jan. 31, 2013.
Managerial Implications: Thinking Critically Financial results and financial condition will be incorrectly stated. Discussion Questions Note to instructor : These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Dr. Uncollectible Accounts Expense, Cr. Allowance for Doubtful Accounts. 2. Debiting Allowance for Doubtful Accounts and Crediting Accounts Receivable. 3. To the Income Statement columns. 4. Transfers cost of asset to expense over life of asset. 5. Long-term assets whose usefulness is consumed over the life of the assets. (Buildings, furniture and fixtures, machinery.) 6. a. Estimated selling price upon disposal of an asset. b. Cost of asset less salvage value. c. Number of years that asset will be used. d. Equal amount of depreciation taken in each year of the asset’s useful life. 7. Dr. Depreciation Exp.— Office Equipment., Cr. Accum. Depr.—Office Equipment.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-1
Discussion Questions (continued) 8.
An expense that does not yet appear in the accounts. (Accrued salaries, accrued payroll taxes, and accrued interest on notes payable.)
9. 10.
Dr. Salaries Expense, Cr. Salaries Payable. Item that has been paid for and recorded in the accounts in advance of its use. (Prepaid rent, prepaid insurance, prepaid interest on notes payable.) Dr. Prepaid Insurance, Cr. Cash. Dr. Insurance Expense, Cr. Prepaid Insurance Charge cost to expense account at the time cost is incurred. At end of period, amount still prepaid is debited to prepaid expense account and credited to the expense account. Income earned but not yet received in cash or recorded as a receivable. (Interest on notes receivable.) Dr. Interest Receivable, Cr. Interest Income. Income for which payment has been received in advance, but which has not been earned. (Rent income received in advance; magazine subscriptions income received in advance.)
11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.
Dr. Cash, Cr. Unearned Income. Dr. Unearned Income, Cr. Income. Record amount received in advance as income at the time it is received in cash. At period end, unearned amount debited to Income and credited to Unearned Income. Liability. Provides a single location for all information necessary to journalize adjusting entries and to prepare the financial statements.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-2
EXERCISE 12.1 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Income Summary 3 Merchandise Inventory 4 5 31 Merchandise Inventory 6 Income Summary 7
POST. REF.
DEBIT
CREDIT
131 0 0 0 00 131 0 0 0 00 111 5 1 9 00 111 5 1 9 00
1 2 3 4 5 6 7
EXERCISE 12.2 Beginning Merchandise Inventory is $189,000 and ending Merchandise Inventory is $212,344.
EXERCISE 12.3 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Uncollectible Accounts Expense 3 Allowance for Doubtful Accounts 4 5 31 Depreciation Expense—Equipment 6 Accumulated Depreciation—Equipment 7 8 31 Wages Expense 9 Wages Payable 10 11 31 Payroll Taxes Expense 12 Social Security Tax Payable 13 Medicare Tax Payable 14 15 31 Payroll Taxes Expense 16 Federal Unemployment Tax Payable 17 State Unemployment Tax Payable 18
POST. REF.
DEBIT
CREDIT
4 9 5 0 00 4 9 5 0 00 3 1 9 0 00 3 1 9 0 00 5 7 0 0 00 5 7 0 0 00 4 3 6 05 3 5 3 40 8 2 65 3 4 2 00 3 4 20 3 0 7 80
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-3
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
EXERCISE 12.4 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Interest Expense 3 Interest Payable 4 5 31 Supplies Expense 6 Supplies 7 8 31 Insurance Expense 9 Prepaid Insurance 10 11 31 Advertising Expense 12 Prepaid Advertising 13
POST. REF.
DEBIT
CREDIT
2 8 5 00 2 8 5 00 4 6 2 0 00 4 6 2 0 00 5 6 0 0 00 5 6 0 0 00 10 6 2 0 00 10 6 2 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13
EXERCISE 12.5 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 1 Cash 3 Prepaid Interest 4 Notes Payable 5 6 31 Interest Expense 7 Prepaid Interest 8
POST. REF.
DEBIT
CREDIT
49 0 0 0 00 1 0 0 0 00 50 0 0 0 00 2 5 0 00 2 5 0 00
1 2 3 4 5 6 7 8
EXERCISE 12.6 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Interest Expense 3 Interest Payable 4
POST. REF.
DEBIT
CREDIT
6 4 0 00 6 4 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-4
1 2 3 4
EXERCISE 12.7 PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec. 31 Interest Receivable 3 Interest Income 4 5 31 Unearned Subscription Revenue 6 Subscription Revenue 7 8 31 Unearned Rent 9 Rent Income 10 11 31 Unearned Season Ticket Income 12 Season Ticket Income 13
POST. REF.
DEBIT
CREDIT
7 0 0 00 7 0 0 00 25 0 0 0 00 25 0 0 0 00 18 0 0 0 00 18 0 0 0 00 680 0 0 0 00 680 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-5
1 2 3 4 5 6 7 8 9 10 11 12 13
PROBLEM 12.1A PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 June 30 (Adjustment a) 3 Income Summary 4 Merchandise Inventory 5 6 30 (Adjustment b) 7 Merchandise Inventory 8 Income Summary 9 10 30 (Adjustment c) 11 Unearned Seminar Fees 12 Seminar Fees Income 13 14 30 (Adjustment d) 15 Insurance Expense 16 Prepaid Insurance 17 18 30 (Adjustment e) 19 Depreciation Expense - Store Equipment 20 Accumulated Depreciation - Store Equipment 21 22 30 (Adjustment f) 23 Wages Expense 24 Wages Payable 25 26 30 (Adjustment g) 27 Payroll Taxes Expense 28 State Unemployment Taxes Payable 29 Federal Unemployment Taxes Payable 30 Medicare Taxes Payable 31 Social Security Taxes Payable 32 33 30 (Adjustment h) 34 Uncollectible Accounts Expense 35 Allowance for Doubtful Accounts 36 37 30 (Adjustment i) 38 Rent Expense 39 Prepaid Rent
POST. REF.
DEBIT
18
CREDIT
8 5 0 0 00 8 5 0 0 00
9 0 0 0 00 9 0 0 0 00
2 8 0 0 00 2 8 0 0 00
6 0 0 0 00 6 0 0 0 00
5 1 0 00 5 1 0 00
3 5 0 00 3 5 0 00
3 9 38 1 0 50 2 10 5 08 2 1 70
30 0 0 0 00 30 0 0 0 00
5 4 0 0 00 5 4 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-6
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
PROBLEM 12.1A (continued) PAGE
GENERAL JOURNAL
41 42 43 44 45 46 47
DATE DESCRIPTION 30 (Adjustment j) Supplies Expense Supplies 30 (Adjustment k) Interest Expense Interest Payable
POST. REF.
DEBIT 3 0 0 00
1 0 1 00
18
CREDIT 41 42 3 0 0 00 43 44 45 46 1 0 1 00 47
Notes on calculations: a.-b. Amounts given. c. $7,000 cash received/5 seminars = $1,400/seminar. $1,400/seminar 2 seminars conducted = $2,800 earned. d. $18,000/6 months in policy = $3,000/month. $3,000/month 2 months expired (May and June) = $6,000 insurance expense. e. ($8,760 cost - $600 salvage value)/48 months = $170/month depreciation. $170/month 3 months of use (April, May and June) = $510. f. Amounts given. g. Amounts given. h. $3,000,000 1% = $30,000 i. $8,100/6 months in policy = $1,350/month; $1,350 4 months expired = $5,400. j. $500 balance - $200 supplies on hand = $300 of supplies used. k. $10,100 principal 12% interest rate 1/12 time factor = $101 Analyze: The balance of the Prepaid Rent account will be $2,700 ($8,100 - $5,400 expired).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-7
PROBLEM 12.2A 1. PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 July 1 Prepaid Rent 3 Cash 4 5 1 Cash 6 Prepaid Interest 7 Notes Payable 8 9 1 Cash 10 Unearned Accounting Fees 11 12 1 Office Equipment 13 Notes Payable 14 15 1 Prepaid Insurance 16 Cash 17 18 3 Office Furniture 19 Cash 20 Accounts Payable 21 22 5 Supplies 23 Cash 24
POST. REF.
DEBIT
1
CREDIT
14 7 0 0 00 14 7 0 0 00 38 8 0 0 00 1 2 0 0 00 40 0 0 0 00 84 0 0 0 00 84 0 0 0 00 15 9 0 0 00 15 9 0 0 00 1 7 4 0 00 1 7 4 0 00 16 0 8 0 00 8 4 8 0 00 7 6 0 0 00 2 0 1 0 00 2 0 1 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
PROBLEM 12.2A (continued) 2. GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 3 July 31 Rent Expense 4 Prepaid Rent 5 6 31 Interest Expense 7 Prepaid Interest 8 9 31 Unearned Accounting Fees 10 Accounting Fees 11 12 31 Interest Expense 13 Interest Payable 14 15 31 Depreciation Expense—Office Equipment 16 Accumulated Depreciation—Office Equipment 17 18 31 Insurance Expense 19 Prepaid Insurance 20 21 31 Depreciation Expense—Office Furniture 22 Accumulated Depreciation—Office Furniture 23 24 31 Supplies Expense 25 Supplies 26
Analyze:
PAGE POST. REF.
DEBIT
2
CREDIT
2 4 5 0 00 2 4 5 0 00 3 0 0 00 3 0 0 00 7 0 0 0 00 7 0 0 0 00 1 5 9 00 1 5 9 00 2 4 0 00 2 4 0 00 1 4 5 00 1 4 5 00 3 1 0 00 3 1 0 00 1 1 1 0 00 1 1 1 0 00
The Unearned Accounting Fees account would be $77,000.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-9
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
PROBLEM 12.3A Michael Domenici, Consultant Worksheet Month Ended July 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Supplies 4 Prepaid Rent 5 Prepaid Insurance 6 Prepaid Interest 7 Office Furniture 8 Accumulated Depreciation— 9 Office Furniture 10 Office Equipment 11 Accumulated Depreciation—Equipment 12 Notes Payable 13 Accounts Payable 14 Interest Payable 15 Unearned Consulting Fees 16 Michael Domenici, Capital 17 Michael Domenici, Drawing 18 Consulting Fees 19 Salaries Expense 20 Utilities Expense 21 Telephone Expense 22 Supplies Expense 23 Rent Expense 24 Insurance Expense 25 Depreciation Expense—Furniture 26 Depreciation Expense—Equipment 27 Interest Expense 28 29 Totals 30
Analyze:
TRIAL BALANCE DEBIT CREDIT 25 5 1 0 00 1 4 4 0 00 9 6 0 00 10 5 0 0 00 2 2 2 0 00 4 0 0 00 14 7 6 0 00
ADJUSTMENTS DEBIT CREDIT
(a) 3 3 0 00 (b) 1 7 5 0 00 (c) 1 8 5 00 (d) 1 0 0 00
(e)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 25 5 1 0 00 1 4 4 0 00 6 3 0 00 8 7 5 0 00 2 0 3 5 00 3 0 0 00 14 7 6 0 00
1 3 5 00
7 2 5 0 00
1 3 5 00 7 2 5 0 00
(f)
9 0 00
9 0 00
(g)
4 9 00
17 7 0 0 00 5 5 0 0 00 4 9 00 5 5 0 0 00 32 5 2 0 00
(h)
5 0 0 00
17 7 0 0 00 5 5 0 0 00 6 0 0 0 00 (h) 32 5 2 0 00
5 0 0 00
3 0 0 0 00
3 0 0 0 00 9 0 0 0 00
4 2 0 0 00 2 7 0 00 2 1 0 00 (a) 3 3 0 00 (b) 1 7 5 0 00 (c) 1 8 5 00 (e) 1 3 5 00
70 7 2 0 00 70 7 2 0 00
(f)
9 0 00
(d) (g)
1 0 0 00 4 9 00 3 1 3 9 00
9 5 0 0 00 4 2 0 0 00 2 7 0 00 2 1 0 00 3 3 0 00 1 7 5 0 00 1 8 5 00 1 3 5 00 9 0 00
3 1 3 9 00
The expense accounts of the business were adjusted by $2,639 ($3,139 - $500).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-10
1 0 0 00 4 9 00 70 9 9 4 00 70 9 9 4 00
PROBLEM 12.4A The Green Thumb Gardener Worksheet Year Ended December 31, 2016 TRIAL BALANCE 1 Cash
ACCOUNT NAME
DEBIT 6 7 0 0 00
2 Accounts Receivable
3 6 0 0 00
3 Allowance for Doubtful Accounts
ADJUSTMENTS
CREDIT
DEBIT
6 2 00
CREDIT
(c)
2 2 5 00
4 Merchandise Inventory
12 3 0 0 00
5 Supplies
1 3 0 0 00
(d)
9 7 5 00
6 Prepaid Advertising
1 0 8 0 00
(e)
5 4 0 00
7 Store Equipment
8 7 0 0 00 1 6 0 0 00
(f) 1
6 0 0 00
3 8 0 00
(g)
3 8 0 00
5 3 0 00
(i)
1 1 9 66
8 8 00
(i)
2 7 99
14 Federal Unemployment Tax Payable
(j)
1 1 58
15 State Unemployment Tax Payable
(j)
1 0 4 22
16 Salaries Payable
(h)
1 9 3 0 00
8 Accumulated Depr.—Store Equipment 9 Office Equipment
2 2 0 0 00
10 Accumulated Depr.—Office Equipment 11 Accounts Payable
2 7 2 5 00
12 Social Security Tax Payable 13 Medicare Tax Payable
17 Beth Argo, Capital 18 Beth Argo, Drawing
30 6 7 7 00 21 0 0 0 00
19 Sales
95 0 4 8 00
20 Sales Returns & Allowances
1 2 0 0 00
21 Purchases
49 4 0 0 00
22 Purchases Returns & Allowances 23 Rent Expense 24 Telephone Expense
(b) 13 3 2 1 00 (a) 12 3 0 0 00
5 3 0 00 7 0 0 0 00 6 9 0 00
25 Salaries Expense
15 1 0 0 00
(h) 1 9 3 0 00
26 Payroll Taxes Expense
1 3 7 0 00
(i)
1 4 7 65
27
(j)
1 1 5 80
28 Income Summary
(a) 12 3 0 0 00 (b) 13 3 2 1 00
29 Supplies Expense
(d)
9 7 5 00
30 Advertising Expense
(e)
5 4 0 00
31 Depreciation expense—Store Equipment
(f)
1 6 0 0 00
32 Depreciation expense—Office Equipment
(g)
3 8 0 00
33 Uncollectible accounts expense
(c)
2 2 5 00
34
131 6 4 0 00 131 6 4 0 00
31 5 3 4 45
31 5 3 4 45
35 Net income
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-11
PROBLEM 12.4A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 6 7 0 0 00 3 6 0 0 00 2 8 7 00 13 3 2 1 00 3 2 5 00 5 4 0 00 8 7 0 0 00 3 2 0 0 00 2 2 0 0 00 7 6 0 00 2 7 2 5 00 6 4 9 66 1 1 5 99 1 1 58 1 0 4 22 1 9 3 0 00 30 6 7 7 00 21 0 0 0 00 95 0 4 8 00 1 2 0 0 00 49 4 0 0 00 5 3 0 00 7 0 0 0 00 6 9 0 00 17 0 3 0 00 1 6 3 3 45 12
1
149
3 9 5 6 3 2 3
Analyze:
0 7 4 0 8 2 5
0 00 5 00 0 00 0 00 0 00 5 00 9 45
13 3 2 1 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 6 7 0 0 00 3 6 0 0 00 2 8 7 00 13 3 2 1 00 3 2 5 00 5 4 0 00 8 7 0 0 00 3 2 0 0 00 2 2 0 0 00 7 6 0 00 2 7 2 5 00 6 4 9 66 1 1 5 99 1 1 58 1 0 4 22 1 9 3 0 00 30 6 7 7 00 21 0 0 0 00
95 0 4 8 00 1 2 0 0 00 49 4 0 0 00 5 3 0 00 7 0 0 0 00 6 9 0 00 17 0 3 0 00 1 6 3 3 45
12 3 0 0 00 13 3 2 1 00 9 7 5 00 5 4 0 00 1 6 0 0 00 3 8 0 00 2 2 5 00 149 3 5 9 45 92 9 7 3 45 108 8 9 9 00 56 3 8 15 9 2 5 55 ## 8 9 9 00 108 8 9 9 00 56 3 8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 6 00 40 4 6 0 45 34 15 9 2 5 55 35 6 00 56 3 8 6 00
Adjustments decreased total assets (assets less accumulated depreciation) by $2,699.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-12
PROBLEM 12.5A Healthy Eating Foods Company Worksheet Year Ended December 31, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Allowance for Doubtful Accounts 4 Merchandise Inventory 5 Supplies 6 Prepaid Insurance 7 Office Equipment 8 Accumulated Depr.—Office Equipment 9 Warehouse Equipment 10 Accumulated Depr.—Warehouse Equipment 11 Notes Payable—Bank 12 Accounts Payable 13 Interest Payable 14 Social Security Tax Payable 15 Medicare Tax Payable 16 Federal Unemployment Tax Payable 17 State Unemployment Tax Payable 18 Salaries Payable 19 Phillip Tucker, Capital 20 Phillip Tucker, Drawing 21 Sales 22 Sales Returns and Allowances 23 Purchases 24 Purchases Returns and Allowance 25 Income Summary 26 Rent Expenses 27 Telephone Expense 28 Salaries Expense 29 Payroll Taxes Expense 30 31 Supplies Expense 32 Insurance Expense 33 Totals Carried Forward 34
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 30 1 0 0 00 35 2 0 0 00 4 2 0 00 (c) 2 8 0 0 00 86 0 0 0 00 (b) 78 0 0 0 00 (a) 86 0 0 0 00 10 4 0 0 00 (d) 9 2 2 0 00 5 4 0 0 00 (e) 3 6 0 0 00 8 3 0 0 00 2 6 5 0 00 (f) 1 3 2 5 00 28 0 0 0 00 9 6 0 0 00 (g) 4 8 0 0 00 32 0 0 0 00 12 2 0 0 00 (h) (j) (j) (k) (k) (i) 5
1 6 8 0 00 3 8 8 00
6 4 0 00 3 1 0 00 7 2 50 3 0 00 2 7 0 00 0 0 0 00
108 6 8 4 00 56 0 0 0 00 653 7 7 8 00 10 0 0 0 00 350 0 0 0 00 9 2 0 0 00 (a) 86 0 0 0 00 (b) 78 0 0 0 00 36 0 0 0 00 2 2 0 0 00 160 0 0 0 00 13 0 0 0 00
830 6 0 0 00 830 6 0 0 00
(i) 5 (j) (k) (d) 9 (e) 3
0 0 0 00 3 8 2 50 3 0 0 00 2 2 0 00 6 0 0 00
182 5 0 2 50
192 0 6 7 50
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-13
PROBLEM 12.5A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 30 1 0 0 00 35 2 0 0 00 3 2 2 0 00 78 0 0 0 00 1 1 8 0 00 1 8 0 0 00 8 3 0 0 00 3 9 7 5 00 28 0 0 0 00 14 4 0 0 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 30 1 0 0 00 35 2 0 0 00 3 2 2 0 00 78 0 0 0 00 1 1 8 0 00 1 8 0 0 00 8 3 0 0 00 3 9 7 5 00 28 0 0 0 00 14 4 0 0 00
32 0 0 0 00 12 2 0 0 00 6 4 0 00 1 9 9 0 00 4 6 0 50 3 0 00 2 7 0 00 5 0 0 0 00 108 6 8 4 00
32 0 0 0 00 12 2 0 0 00 6 4 0 00 1 9 9 0 00 4 6 0 50 3 0 00 2 7 0 00 5 0 0 0 00 108 6 8 4 00
56 0 0 0 00
56 0 0 0 00 653 7 7 8 00
10 0 0 0 00 350 0 0 0 00 86 0 0 0 00 36 0 0 0 00 2 2 0 0 00 165 0 0 0 00 13 6 8 2 50
9 2 0 0 00 78 0 0 0 00
9 2 2 0 00 3 6 0 0 00 914 2 8 2 50
653 7 7 8 00 10 0 0 0 00 350 0 0 0 00 86 0 0 0 00 36 0 0 0 00 2 2 0 0 00 165 0 0 0 00 13 6 8 2 50
9 2 0 0 00 78 0 0 0 00
9 2 2 0 00 3 6 0 0 00 923 8 4 7 50
675 7 0 2 50
740 9 7 8 00
238 5 8 0 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
182 8 6 9 50 33 34
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-14
PROBLEM 12.5A (continued)
ACCOUNT NAME 1 Totals Brought Forward 2 Depr. Expense—Office Equipment 3 Depr. Expense—Warehouse Equipment 4 Uncollectible Accounts Expense 5 Interest Expense 6 Totals 7 Net Income 8 9
TRIAL BALANCE DEBIT CREDIT 830 6 0 0 00 830 6 0 0 00
830 6 0 0 00
ADJUSTMENTS DEBIT CREDIT 182 5 0 2 50 192 0 6 7 50 (f) 1 3 2 5 00 (g) 4 8 0 0 00
(c) 2 8 0 0 00 (h) 6 4 0 00 830 6 0 0 00 192 0 6 7 50
192 0 6 7 50
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-15
PROBLEM 12.5A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 914 2 8 2 50 923 8 4 7 50 1 3 2 5 00 4 8 0 0 00 2 8 0 0 00 6 4 0 00 923 8 4 7 50 923 8 4 7 50
INCOME STATEMENT DEBIT CREDIT 675 7 0 2 50 740 9 7 8 00 1 3 2 5 00 4 8 0 0 00 2 8 0 0 00 6 4 0 00 685 2 6 7 50 740 9 7 8 00 55 7 1 0 50 740 9 7 8 00 740 9 7 8 00
BALANCE SHEET DEBIT CREDIT 238 5 8 0 00 182 8 6 9 50 1 2 3 4 5 238 5 8 0 00 182 8 6 9 50 6 55 7 1 0 50 7 238 5 8 0 00 238 5 8 0 00 8 9
Analyze: The net income will be $55,710.50.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-16
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 12.6A Artisan Wines Worksheet Year Ended December 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Prepaid Advertising 4 Supplies 5 Merchandise Inventory 6 Store Equipment 7 Accum. Depr., Store Equip. 8 Office Equipment 9 Accum. Depr., Office Equip. 10 Notes Payable, due 2017 11 Accounts Payable 12 Wages Payable 13 Social Security Tax Payable 14 Medicare Tax Payable 15 Unearned Seminar Fees 16 Interest Payable 17 Vincent Arroyo, Capital 18 Vincent Arroyo, Drawing 19 Income Summary 20 Sales 21 Sales Discounts 22 Seminar Fee Income 23 Purchases 24 Purchases Returns & Allow. 25 Freight In 26 Rent Expense 27 Wages Expense 28 Payroll Taxes Expense 29 Depreciation Exp., Store Equip. 30 Depreciation Exp., Office Equip. 31 Advertising Expense 32 Supplies Expense 33 Interest Expense 34 35 Net income 36
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 28 3 8 6 00 5 0 0 00 4 8 0 00 (c) 1 6 0 00 3 0 0 00 (d) 1 4 0 00 15 0 0 0 00 (a) 13 0 0 0 00 (b) 15 0 0 0 00 25 0 0 0 00 3 0 0 0 00 (e) 3 0 0 0 00 5 0 0 0 00 1 5 0 0 00 (f) 1 2 5 0 00 20 0 0 0 00 2 7 0 5 00 (h) 5 0 0 00 (i) 3 1 00 7 25 6 0 0 0 00 (g) 4 0 0 0 00 (j) 1 0 0 00 32 7 0 0 00 14 1 1 0 00 (b) 15 0 0 0 00 (a) 13 0 0 0 00 153 9 7 0 00 2 0 0 00 (g) 4 0 0 0 00 91 0 0 0 00 1 0 0 0 00 2 2 5 00 13 2 0 0 00 24 0 0 0 00 (h) 5 0 0 00 3 3 2 4 00 (i) 3 8 25 (e) 3 0 0 0 00 (f) 1 2 5 0 00 (c) 1 6 0 00 (d) 1 4 0 00 1 5 0 00 (j) 1 0 0 00 220 8 7 5 00
220 8 7 5 00
37 1 8 8 25
37 1 8 8
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-17
25
PROBLEM 12.6A (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 28 3 8 6 00 5 0 0 00 3 2 0 00 1 6 0 00 13 0 0 0 00 25 0 0 0 00 6 0 0 0 00 5 0 0 0 00 2 7 5 0 00 20 0 0 0 00 2 7 0 5 00 5 0 0 00 3 1 00 7 25 2 0 0 0 00 1 0 0 00 32 7 0 0 00 14 1 1 0 00 15 0 0 0 00 13 0 0 0 00 153 9 7 0 00 2 0 0 00 4 0 0 0 00 91 0 0 0 00 1 0 0 0 00 2 2 5 00 13 2 0 0 00 24 5 0 0 00 3 3 6 2 25 3 0 0 0 00 1 2 5 0 00 1 6 0 00 1 4 0 00 2 5 0 00 238 7 6 3 25
238 7 6 3 25
INCOME STATEMENT DEBIT CREDIT
15 0 0 0 00
BALANCE SHEET DEBIT CREDIT 28 3 8 6 00 5 0 0 00 3 2 0 00 1 6 0 00 13 0 0 0 00 25 0 0 0 00 6 0 0 0 00 5 0 0 0 00 2 7 5 0 00 20 0 0 0 00 2 7 0 5 00 5 0 0 00 3 1 00 7 25 2 0 0 0 00 1 0 0 00 32 7 0 0 00 14 1 1 0 00
13 0 0 0 00 153 9 7 0 00
2 0 0 00 4 0 0 0 00 91 0 0 0 00 1 0 0 0 00 2 2 5 00 13 2 0 0 00 24 5 0 0 00 3 3 6 2 25 3 0 0 0 00 1 2 5 0 00 1 6 0 00 1 4 0 00 2 5 0 00 152 2 8 7 25 171 9 7 0 00
86 4 7
6 00
19 6 8 2 75 171 9 7 0 00 171 9 7 0 00
86 4 7
6 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
66 7 9 3 25
34
19 6 8 2 75
35
86 4 7 6 00
36
Analyze: The amount of revenue earned by conducting seinars seminars during during thethe year year ended ended December 31, 2016 was $4,000.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-18
PROBLEM 12.1B PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 Dec 31 (Adjustment a) 3 Income Summary 4 Merchandise Inventory 5 6 31 (Adjustment b) 7 Merchandise Inventory 8 Income Summary 9 10 31 (Adjustment c) 11 Unearned Seminar Fees 12 Seminar Fees Income 13 14 31 (Adjustment d) 15 Insurance Expense 16 Prepaid Insurance 17 18 31 (Adjustment e) 19 Depreciation Expense - Store Equipment 20 Accumulated Depreciation - Store Equipment 21 22 31 (Adjustment f) 23 Wages Expense 24 Wages Payable 25 26 31 (Adjustment g) 27 Payroll Taxes Expense 28 State Unemployment Taxes Payable 29 Federal Unemployment Taxes Payable 30 Medicare Taxes Payable 31 Social Security Taxes Payable 32 33 31 (Adjustment h) 34 Uncollectible Accounts Expense 35 Allowance for Doubtful Accounts 36
POST. REF.
DEBIT
18
CREDIT
9 5 0 0 00 9 5 0 0 00
10 5 0 0 00 10 5 0 0 00
12 0 0 0 00 12 0 0 0 00
7 5 0 0 00 7 5 0 0 00
3 6 0 00 3 6 0 00
5 0 0 00 5 0 0 00
5 6 25 1 5 00 3 00 7 25 3 1 00
60 0 0 0 00 60 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-19
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
PROBLEM 12.1B (continued) PAGE
GENERAL JOURNAL
37 38 39 40 41 42 43 44 45 46 47
DATE DESCRIPTION 31 (Adjustment i) Rent Expense Prepaid Rent
POST. REF.
DEBIT 6 0 0 0 00
31 (Adjustment j) Supplies Expense Supplies
3 7 5 00
31 (Adjustment k) Interest Expense Interest Payable
6 0 00
18
CREDIT 37 38 6 0 0 0 00 39 40 41 42 3 7 5 00 43 44 45 46 6 0 00 47
Notes on calculations: a.-b. Amounts given. c. $16,000 cash received /4 seminars = $4,000/seminar. $4,000/seminar × 3 seminars conducted = $12,000 earned. d. $15,000/6 months in policy = $2,500/month. $2,500/month × 3 months expired (October, November and December) = $7,500 insurance expense. e. f. g. h. i. j. k.
($6,000 cost - $600 salvage value) /60 months = $90/month depreciation. $90/month × 4 months of use (September, October, November and December) = $360. Amounts given. Amounts given. $4,000,000 × 1.5% = $60,000 $18,000/9 months prepaid = $2,000/month; $2,000 × 3 months expired = $6,000. $500 balance - $125 supplies on hand = $375 of supplies used. $12,000 principal × 6% interest rate × 1/12 time factor = $60
Analyze: The balance of the Unearned Seminar Fees account will be $4,000 ($16,000 - $12,000 earned).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-20
PROBLEM 12.2B PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 2016 2 June 1 Prepaid Rent 3 Cash 4 5 1 Cash 6 Prepaid Interest 7 Notes Payable 8 9 1 Cash 10 Unearned Advertising Fees 11 12 1 Office Equipment 13 Notes Payable 14 15 1 Prepaid Insurance 16 Cash 17 18 3 Office Furniture 19 Accounts Payable 20 Cash 21 22 5 Office Supplies 23 Cash 24
POST. REF.
DEBIT
1
CREDIT
18 0 0 0 00 18 0 0 0 00 17 5 5 0 00 4 5 0 00 18 0 0 0 00 54 6 0 0 00 54 6 0 0 00 15 4 0 0 00 15 4 0 0 00 1 9 4 4 00 1 9 4 4 00 17 4 0 0 00 9 0 0 0 00 8 4 0 0 00 2 8 1 0 00 2 8 1 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-21
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
PROBLEM 12.2B (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
POST. REF.
1 2 2016 3 June 30 Rent Expense 4 Prepaid Rent 5 6 30 Interest Expense 7 Prepaid Interest 8 9 30 Unearned Advertising Fees 10 Advertising Fees 11 12 30 Interest Expense 13 Interest Payable 14 15 30 Depreciation Expense—Office Equipment 16 Accumulated Depreciation—Office Equipment 17 18 30 Insurance Expense 19 Prepaid Insurance 20 21 30 Depreciation Expense—Office Furniture 22 Accumulated Depreciation—Office Furniture 23 24 30 Office Supplies Expense 25 Office Supplies 26
DEBIT
2
CREDIT
3 0 0 0 00 3 0 0 0 00 1 5 0 00 1 5 0 00 4 5 5 0 00 4 5 5 0 00 1 5 4 00 1 5 4 00 2 4 0 00 2 4 0 00 1 6 2 00 1 6 2 00 2 7 0 00 2 7 0 00 1 6 6 0 00 1 6 6 0 00
Analyze: Total Rent expense will be $18,000 at the end of the year.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-22
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
PROBLEM 12.3B Cross Timbers Company Partial Worksheet Month Ended September 30, 2016 ACCOUNT NAME 1 Cash 2 Supplies 3 Prepaid Rent 4 Prepaid Advertising 5 Prepaid Interest 6 Furniture 7 Accumulated Depreciation—Office Furniture 8 Equipment 9 Accumulated Depreciation—Equipment 10 Notes Payable 11 Accounts Payable 12 Interest Payable 13 Unearned Course Fees 14 Scott Nelson, Capital 15 Scott Nelson, Drawing 16 Course Fees 17 Salaries Expense 18 Telephone Expense 19 Entertainment Expense 20 Supplies Expense 21 Rent Expense 22 Advertising Expense 23 Depreciation Expense—Furniture 24 Depreciation Expense—Equipment 25 Interest Expense 26 27 Totals 28
TRIAL BALANCE DEBIT CREDIT 26 4 6 0 00 7 4 0 00 4 2 0 0 00 3 7 5 0 00 4 5 0 00 4 8 4 0 00
ADJUSTMENTS DEBIT CREDIT (a) (b) (c ) (d)
3 5 00 7 0 0 00 6 2 5 00 1 5 0 00
(e)
7 5 00
(f)
1 3 0 00
(g)
3 5 00
9 0 0 0 00
20 2 5 0 00 4 4 0 0 00 22 0 0 0 00 (h) 7 0 0 0 00 6 7 3 0 00 2 0 0 0 00 (h) 7 0 0 0 00 1 6 0 0 00 1 2 0 00 2 2 0 00
53 3 8 0 00
53 3 8 0 00
(a) (b) (c) (e)
3 5 00 7 0 0 00 6 2 5 00 7 5 00
(f)
1 3 0 00
(d) (g)
1 5 0 00 3 5 00 8 7 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-23
8 7 5 0 00
PROBLEM 12.3B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 26 4 6 0 00 7 0 5 00 3 5 0 0 00 3 1 2 5 00 3 0 0 00 4 8 4 0 00 7 5 00
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT
9 0 0 0 00 1 3 0 00 20 2 5 0 00 4 4 0 0 00 3 5 00 15 0 0 0 00 6 7 3 0 00
1 2 3 4 5 6 7 8 9
1 6 0 0 00 1 2 0 00 2 2 0 00 3 5 00 7 0 0 00 6 2 5 00 7 5 00
10 11 12 13 14 15 16 17 18 19 20 21 22 23
1 3 0 00
24
1 8 5 00
25 26
2 0 0 0 00 7 0 0 0 00
53 6 2 0 00
Analyze:
53 6 2 0 00
The net dollar effect of the adjustments is an increase of $5,250.00 in income.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-24
27 28
PROBLEM 12.4B Fun Depot Worksheet Year Ended December 31, 2016 TRIAL BALANCE ACCOUNT NAME 1 Cash
DEBIT 26 4 0 0 00
2 Accounts Receivable
22 7 0 0 00
3 Allowance for Doubtful Accounts
ADJUSTMENTS
CREDIT
DEBIT
3 2 0 00
CREDIT
(c ) 3
4 Merchandise Inventory
138 0 0 0 00
5 Supplies
11 6 0 0 00
(d) 8
6 4 0 00
6 Prepaid Advertising
5 2 8 0 00
(e) 3
5 2 0 00
7 Store Equipment
32 5 0 0 00 5 7 6 0 00
(f)
5
7 6 0 00
10 Accumulated Depr.—Office Equip.
1 4 4 0 00
(g) 1
4 4 0 00
11 Accounts Payable
8 6 0 0 00
12 Social Security Tax Payable
5 9 2 0 00
(i)
4 9 6 00
13 Medicare Tax Payable
1 3 6 8 00
(i)
1 1 6 00
14 Federal Unemployment Tax Payable
(j)
4 8 00
15 State Unemployment Tax Payable
(j)
4 3 2 00
16 Salaries Payable
(h) 8
0 0 0 00
8 Accumulated Depr.—Store Equip. 9 Office Equipment
112 2 5 0 00 100 0 0 0 00
19 Sales
1,043 6 6 2 00
20 Sales Returns and Allowances
17 2 0 0 00
21 Purchases
507 6 0 0 00
22 Purchases Returns and Allowances 23 Rent Expense
0 0 0 00 (a)138 0 0 0 00
8 4 0 0 00
17 Janie Fielder, Capital 18 Janie Fielder, Drawing
(b)148
0 8 0 00
5 0 4 0 00 125 0 0 0 00
24 Telephone Expense
4 2 8 0 00
25 Salaries Expense
164 2 0 0 00
(h) 8
0 0 0 00
26 Payroll Taxes Expense
15 2 0 0 00
(i)
6 1 2 00
27
(j)
4 8 0 00
28 Income Summary
(a)138
0 0 0 00 (b)148 0 0 0 00
(d) 8
6 4 0 00
(e) 3
5 2 0 00
31 Depreciation Expense—Store Equip.
(f)
5
7 6 0 00
32 Depreciation Expense—Office 33 Equipment Uncollectible Accounts Expense
(g) 1
4 4 0 00
(c) 3
0 8 0 00
29 Supplies Expense 30 Advertising Expense
34 Totals Carried Forward
6 0 0 0 00
1,184 3 6 0 00
1,184 3 6 0 00
317 5 3 2 00
317 5 3 2 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-25
PROBLEM 12.4B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 26 4 0 0 00 22 7 0 0 00 3 4 0 0 00
INCOME STATEMENT DEBIT CREDIT
148 0 0 0 00 2 9 6 0 00 1 7 6 0 00 32 5 0 0 00
BALANCE SHEET DEBIT CREDIT 26 4 0 0 00 22 7 0 0 00 3 4 0 0 00 148 0 0 0 00 2 9 6 0 00 1 7 6 0 00 32 5 0 0 00
11 5 2 0 00
11 5 2 0 00
8 4 0 0 00
8 4 0 0 00 2 8 8 0 00 8 6 0 0 00 6 4 1 6 00 1 4 8 4 00 4 8 00 4 3 2 00 8 0 0 0 00 112 2 5 0 00
2 8 8 0 00 8 6 0 0 00 6 4 1 6 00 1 4 8 4 00 4 8 00 4 3 2 00 8 0 0 0 00 112 2 5 0 00
100 0 0 0 00
100 0 0 0 00 1043 6 6 2 00
17 2 0 0 00 507 6 0 0 00
1043 6 6 2 00 17 2 0 0 00 507 6 0 0 00
5 0 4 0 00 125 0 0 0 00 4 2 8 0 00 172 2 0 0 00 16 2 9 2 00 138 0 0 0 00 8 6 4 0 00 9 5 2 0 00 5 7 6 0 00 1 4 4 0 00 3 0 8 0 00 1,351 7 3 2 00
5 0 4 0 00 125 0 0 0 00 4 2 8 0 00 172 2 0 0 00 16 2 9 2 00
148 0 0 0 00
1,351 7 3 2 00
138 0 0 0 00 8 6 4 0 00 9 5 2 0 00 5 7 6 0 00 1 4 4 0 00 3 0 8 0 00 1,009 0 1 2 00
148 0 0 0 00
1,196 7 0 2 00
342 7 2 0 00 155 0 3 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-26
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34
PROBLEM 12.4B (continued) Fun Depot Worksheet (Continued) Year Ended December 31, 2016 ACCOUNT NAME 1 Totals Brought Forward 2 Totals 3 Net Income 4 5
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 1,184 3 6 0 00 1,184 3 6 0 00 317 5 3 2 00 317 5 3 2 00 1,184 3 6 0 00 1,184 3 6 0 00 317 5 3 2 00 317 5 3 2 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-27
PROBLEM 12.4B (continued)
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT 1,351 7 3 2 00 1,351 7 3 2 00 1,009 0 1 2 00 1,196 7 0 2 00 342 7 2 0 00 155 0 3 0 00 1 187 6 9 0 00 187 6 9 0 00 2 1,196 7 0 2 00 1,196 7 0 2 00 342 7 2 0 00 342 7 2 0 00 3 4 5
Analyze: The resulting net income without the advertising adjustment would have been $191,210.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-28
PROBLEM 12.5B Whatnots Worksheet Year Ended December 31, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Allowance for Doubtful Accounts 4 Merchandise Inventory 5 Supplies 6 Prepaid Insurance 7 Store Equipment 8 Accumulated Depr.—Store Equipment 9 Store Fixtures 10 Accumulated Depr.—Store Fixtures 11 Notes Payable 12 Accounts Payable 13 Interest Payable 14 Social Security Tax Payable 15 Medicare Tax Payable 16 Federal Unemployment Tax Payable 17 State Unemployment Tax Payable 18 Salaries Payable 19 Preston Allen, Capital 20 Preston Allen, Drawing 21 Sales 22 Sales Returns and Allowances 23 Purchases 24 Purchases Returns and Allowance 25 Rent Expenses 26 Telephone Expense 27 Salaries Expense 28 Payroll Taxes Expense 29 30 Income Summary 31 Supplies Expense 32 Insurance Expense 33 Totals Carried Forward
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 3 2 3 5 00 6 9 1 0 00 6 0 0 00 (c) 1 2 8 0 00 16 9 8 5 00 (b) 15 8 4 0 00 (a) 16 9 8 5 00 7 5 0 00 (d) 5 0 5 00 2 4 0 0 00 (e) 1 2 0 0 00 6 0 0 0 00 2 0 0 0 00 (f) 1 0 0 0 00 15 7 6 0 00 4 1 0 0 00 (g) 2 0 5 0 00 4 0 0 0 00 6 0 0 00 (h) 9 0 00 (j) 8 9 90 (j) 2 1 03 (k) 8 70 (k) 7 2 50 (i) 1 4 5 0 00 39 7 8 0 00 8 0 0 0 00 236 5 6 0 00 6 0 0 0 00 160 0 0 0 00 2 0 0 0 00 18 0 0 0 00 2 4 0 0 00 40 0 0 0 00 (i) 1 4 5 0 00 3 2 0 0 00 (j) 1 1 0 93 (k) 8 1 20 (a) 16 9 8 5 00 (b) 15 8 4 0 00 (d) 5 0 5 00 (e) 1 2 0 0 00 289 6 4 0 00 289 6 4 0 00 36 1 7 2 13 40 5 9 2 13
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-29
PROBLEM 12.5B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 3 2 3 5 00 6 9 1 0 00 1 8 8 0 00 15 8 4 0 00 2 4 5 00 1 2 0 0 00 6 0 0 0 00 3 0 0 0 00 15 7 6 0 00 6 1 5 0 00 4 0 0 0 00 6 0 0 00 9 0 00 8 9 90 2 1 03 8 70 7 2 50 1 4 5 0 00 39 7 8 0 00 8 0 0 0 00 236 5 6 0 00 6 0 0 0 00 160 0 0 0 00 2 0 0 0 00 18 0 0 0 00 2 4 0 0 00 41 4 5 0 00 3 3 9 2 13 16 9 8 5 00 5 0 5 00 1 2 0 0 00 307 1 2 2 13
15 8 4 0 00
311 5 4 2 13
INCOME STATEMENT DEBIT CREDIT
BALANCE SHEET DEBIT CREDIT 3 2 3 5 00 6 9 1 0 00 1 8 8 0 00 15 8 4 0 00 2 4 5 00 1 2 0 0 00 6 0 0 0 00 3 0 0 0 00 15 7 6 0 00 6 1 5 0 00 4 0 0 0 00 6 0 0 00 9 0 00 8 9 90 2 1 03 8 70 7 2 50 1 4 5 0 00 39 7 8 0 00 8 0 0 0 00
236 5 6 0 00 6 0 0 0 00 160 0 0 0 00 2 0 0 0 00 18 0 0 0 00 2 4 0 0 00 41 4 5 0 00 3 3 9 2 13 16 9 8 5 00 5 0 5 00 1 2 0 0 00 249 9 3 2 13
15 8 4 0 00
254 4 0 0 00
57 1 9 0 00
57 1 4 2 13
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-30
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
PROBLEM 12.5B (continued)
ACCOUNT NAME 1 Totals Brought Forward 2 Depr. Expense—Store Equipment 3 Depr. Expense—Store Fixtures 4 Interest Expense 5 Uncollectible Accounts Expense 6 Totals 7 Net Income 8 9
TRIAL BALANCE DEBIT CREDIT 289 6 4 0 00 289 6 4 0 00
ADJUSTMENTS DEBIT CREDIT 36 1 7 2 13 40 5 9 2 13 (f) 1 0 0 0 00 (g) 2 0 5 0 00 (h) 9 0 00 (c) 1 2 8 0 00 289 6 4 0 00 289 6 4 0 00 40 5 9 2 13 40 5 9 2 13
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-31
PROBLEM 12.5B (continued)
1 2 3 4 5 6 7 8 9
ADJUSTED TRIAL BALANCE DEBIT CREDIT 307 1 2 2 13 311 5 4 2 13 1 0 0 0 00 2 0 5 0 00 9 0 00 1 2 8 0 00 311 5 4 2 13 311 5 4 2 13
INCOME STATEMENT DEBIT CREDIT 249 9 3 2 13 254 4 0 0 00 1 0 0 0 00 2 0 5 0 00 9 0 00 1 2 8 0 00 254 3 5 2 13 254 4 0 0 00 4 7 87 254 4 0 0 00 254 4 0 0 00
BALANCE SHEET DEBIT CREDIT 57 1 9 0 00 57 1 4 2 13 1 2 3 4 5 57 1 9 0 00 57 1 4 2 13 6 4 7 87 7 57 1 9 0 00 57 1 9 0 00 8 9
Analyze: The net book value of the company’s assets is $38,160. Add all the asset accounts in the "Balance Sheet" column of the worksheet, then deduct the accumulated depreciation and allowance for doubtful account amounts in the "Balance Sheet" column of the worksheet.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-32
PROBLEM 12.6B The Game Place Worksheet Year Ended December 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Prepaid Advertising 4 Supplies 5 Merchandise Inventory 6 Store Equipment 7 Accum. Depr., Store Equip. 8 Office Equipment 9 Accum. Depr., Office Equip. 10 Notes Payable, due 2017 11 Accounts Payable 12 Wages Payable 13 Social Security Tax Payable 14 Medicare Tax Payable 15 Unearned Seminar Fees 16 Interest Payable 17 Matt Huffman, Capital 18 Matt Huffman, Drawing 19 Income Summary 20 Sales 21 Sales Discounts 22 Seminar Fee Income 23 Purchases 24 Purchases Returns & Allow. 25 Freight In 26 Rent Expense 27 Wages Expense 28 Payroll Taxes Expense 29 Depreciation Exp., Store Equip. 30 Depreciation Exp., Office Equip. 31 Advertising Expense 32 Supplies Expense 33 Interest Expense 34 35 Net income 36
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 34 4 6 5 00 1 6 6 9 00 4 8 0 00 (c) 3 2 0 00 4 2 5 00 (d) 3 0 0 00 18 5 0 0 00 (a) 21 2 0 0 00 (b) 18 5 0 0 00 30 0 0 0 00 3 0 0 0 00 (e) 4 5 0 0 00 4 8 0 0 00 1 5 0 0 00 (f) 1 5 0 0 00 22 5 0 0 00 5 7 2 5 00 (h) 8 0 0 00 (i) 4 9 60 (i) 1 1 60 7 5 0 0 00 (g) 4 5 0 0 00 (j) 1 5 0 00 43 0 0 0 00 18 0 0 0 00 (b) 18 5 0 0 00 (a) 21 2 0 0 00 163 6 6 0 00 1 8 0 00 (g) 4 5 0 0 00 92 5 0 0 00 7 7 0 00 2 7 5 00 26 4 0 0 00 18 0 0 0 00 (h) 8 0 0 00 1 8 1 1 00 (i) 6 1 20 (e) 4 5 0 0 00 (f) 1 5 0 0 00 (c) 3 2 0 00 (d) 3 0 0 00 1 5 0 00 (j) 1 5 0 00 247 6 5 5 00 247 6 5 5 00 51 8 3 1 20 51 8 3 1 20
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-33
PROBLEM 12.6B (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 34 4 6 5 00 1 6 6 9 00 1 6 0 00 1 2 5 00 21 2 0 0 00 30 0 0 0 00 7 5 0 0 00 4 8 0 0 00 3 0 0 0 00 22 5 0 0 00 5 7 2 5 00 8 0 0 00 4 9 60 1 1 60 3 0 0 0 00 1 5 0 00 43 0 0 0 00 18 0 0 0 00 18 5 0 0 00 21 2 0 0 00 163 6 6 0 00 1 8 0 00 4 5 0 0 00 92 5 0 0 00 7 7 0 00 2 7 5 00 26 4 0 0 00 18 8 0 0 00 1 8 7 2 20 4 5 0 0 00 1 5 0 0 00 3 2 0 00 3 0 0 00 3 0 0 00 275 8 6 6 20
275 8 6 6 20
INCOME STATEMENT DEBIT CREDIT
18 5 0 0 00
BALANCE SHEET DEBIT CREDIT 34 4 6 5 00 1 6 6 9 00 1 6 0 00 1 2 5 00 21 2 0 0 00 30 0 0 0 00 7 5 0 0 00 4 8 0 0 00 3 0 0 0 00 22 5 0 0 00 5 7 2 5 00 8 0 0 00 4 9 60 1 1 60 3 0 0 0 00 1 5 0 00 43 0 0 0 00 18 0 0 0 00
21 2 0 0 00 163 6 6 0 00
1 8 0 00 4 5 0 0 00 92 5 0 0 00 7 7 0 00 2 7 5 00 26 4 0 0 00 18 8 0 0 00 1 8 7 2 20 4 5 0 0 00 1 5 0 0 00 3 2 0 00 3 0 0 00 3 0 0 00 165 4 4 7 20
190 1 3 0 00
110 4 1 9 00
24 6 8 2 80 190 1 3 0 00 Analyze:
190 1 3 0 00
110 4 1 9 00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
85 7 3 6 20
34
24 6 8 2 80
35
110 4 1 9 00
36
The balance of merchandise inventory increased by $2,700 during 2016 ($21,200 $18,500).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-34
CRITICAL THINKING PROBLEM 12.1 Ben’s Jewelers Worksheet Year Ended December 31, 2016
ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Allowance for Doubtful Accounts 4 Merchandise Inventory 5 Store Supplies 6 Office Supplies 7 Store Equipment 8 Accumulated Depr.—Store Equip. 9 Office Equipment 10 Accumulated Depr.—Office Equip. 11 Accounts Payable 12 Salaries Payable 13 Social Security Tax Payable 14 Medicare Tax Payable 15 Federal Unemployment Tax Payable 16 State Unemployment Tax Payable 17 Ben Waites, Capital 18 Ben Waites, Drawing 19 Income Summary 20 Sales 21 Sales Returns and Allowances 22 Purchases 23 Purchases Returns and Allowances 24 Purchases Discounts 25 Freight In 26 Salaries Expense—Sales 27 Rent Expense 28 Advertising Expense 29 Store Supplies Expense 30 Depreciation Expense—Store Equip. 31 Salaries Expense—Office 32 Total Carried Forward 33
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 13 0 5 0 00 49 9 0 0 00 2 0 0 0 00 (c) 1 0 0 0 00 105 9 0 0 00 (b) 98 7 0 0 00 (a)105 9 0 0 00 4 2 3 0 00 (d) 3 6 0 5 00 2 9 5 0 00 (e) 2 6 4 5 00 113 5 9 0 00 13 0 1 0 00 (f) 11 3 6 0 00 27 6 4 0 00 4 9 3 0 00 (g) 3 3 0 0 00 4 3 9 0 00 (h) 5 0 0 0 00 (i) 3 2 6 00 (i) 7 6 00 (j) 5 6 00 (j) 2 7 0 00 166 3 1 0 00 30 0 0 0 00 (a)105 9 0 0 00 (b) 98 7 0 0 00 862 2 3 0 00 7 5 8 0 00 504 8 1 0 00 4 2 4 0 00 10 7 7 0 00 7 0 0 0 00 75 9 5 0 00 (h) 4 0 0 0 00 35 5 0 0 00 12 3 0 0 00 (d) 3 6 0 5 00 (f) 11 3 6 0 00 77 4 8 0 00 (h) 1 0 0 0 00 1,067 8 8 0 00 1,067 8 8 0 00
224 5 6 5 00
232 2 3 8 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-35
CRITICAL THINKING PROBLEM 12.1 (continued)
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT 13 0 5 0 00 13 0 5 0 00 49 9 0 0 00 49 9 0 0 00 3 0 0 0 00 3 0 0 0 00 98 7 0 0 00 98 7 0 0 00 6 2 5 00 6 2 5 00 3 0 5 00 3 0 5 00 113 5 9 0 00 113 5 9 0 00 24 3 7 0 00 24 3 7 0 00 27 6 4 0 00 27 6 4 0 00 8 2 3 0 00 8 2 3 0 00 4 3 9 0 00 4 3 9 0 00 5 0 0 0 00 5 0 0 0 00 3 2 6 00 3 2 6 00 7 6 00 7 6 00 5 6 00 5 6 00 2 7 0 00 2 7 0 00 166 3 1 0 00 166 3 1 0 00 30 0 0 0 00 30 0 0 0 00 105 9 0 0 00 98 7 0 0 00 105 9 0 0 00 98 7 0 0 00 862 2 3 0 00 862 2 3 0 00 7 5 8 0 00 7 5 8 0 00 504 8 1 0 00 504 8 1 0 00 4 2 4 0 00 4 2 4 0 00 10 7 7 0 00 10 7 7 0 00 7 0 0 0 00 7 0 0 0 00 79 9 5 0 00 79 9 5 0 00 35 5 0 0 00 35 5 0 0 00 12 3 0 0 00 12 3 0 0 00 3 6 0 5 00 3 6 0 5 00 11 3 6 0 00 11 3 6 0 00 78 4 8 0 00 78 4 8 0 00 1,180 2 9 5 00
1,187 9 6 8 00 846 4 8 5 00 975 9 4 0 00 333 8 1 0 00 212 0 2 8 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-36
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
CRITICAL THINKING PROBLEM 12.1 (continued) Ben’s Jewelers Worksheet (Continued) Year Ended December 31, 2016
ACCOUNT NAME 1 Totals Brought Forward 2 Office Supplies Expense 3 Depreciation Expense—Office Equipment 4 Uncollectible Accounts Expense 5 Payroll Taxes Expense 6 7 Totals 8 Net Income 9
TRIAL BALANCE DEBIT CREDIT 1,067 8 8 0 00 1,067 8 8 0 00
1,067 8 8 0 00
ADJUSTMENTS DEBIT CREDIT 224 5 6 5 00 232 2 3 8 00 (e) 2 6 4 5 00 (g) 3 3 0 0 00 (c) 1 0 0 0 00 (i) 4 0 2 00 (j) 3 2 6 00 1,067 8 8 0 00 232 2 3 8 00 232 2 3 8 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-37
CRITICAL THINKING PROBLEM 12.1 (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 1,180 2 9 5 00 1,187 9 6 8 00 2 6 4 5 00 3 3 0 0 00 1 0 0 0 00 7 2 8 00
INCOME STATEMENT DEBIT CREDIT 846 4 8 5 00 975 9 4 0 00 2 6 4 5 00 3 3 0 0 00 1 0 0 0 00 7 2 8 00
1,187 9 6 8 00
854 1 5 8 00 121 7 8 2 00 975 9 4 0 00
1,187 9 6 8 00
975 9 4 0 00 975 9 4 0 00
BALANCE SHEET DEBIT CREDIT 333 8 1 0 00 212 0 2 8 00 1 2 3 4 5 6 333 8 1 0 00 212 0 2 8 00 7 121 7 8 2 00 8 333 8 1 0 00 333 8 1 0 00 9
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-38
CRITICAL THINKING PROBLEM 12.1 (continued) PAGE
GENERAL JOURNAL
DATE 1 2 2016 3 Dec. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
DESCRIPTION Adjusting Entries
Instruction 2 31 Income Summary Merchandise Inventory
POST. REF.
DEBIT
CREDIT
105 9 0 0 00 105 9 0 0
31 Merchandise Inventory Income Summary
98 7 0 0 00
31 Uncollectible Accounts Expense Allowance for Doubtful Accounts
1 0 0 0 00
31 Store Supplies Expense Store Supplies
3 6 0 5 00
31 Office Supplies Expense Office Supplies
2 6 4 5 00
31 Depreciation Expense—Store Equipment Accumulated Depreciation—Store Equipment
11 3 6 0 00
31 Depreciation Expense—Office Equipment Accumulated Depreciation—Office Equipment
3 3 0 0 00
31 Salaries Expense—Sales Salaries Expense—Office Salaries Payable
4 0 0 0 00 1 0 0 0 00
98 7 0 0
1 0 0 0
3 6 0 5
2 6 4 5
11 3 6 0
3 3 0 0
5 0 0 0
31 Payroll Taxes Expense Social Security Tax Payable Medicare Tax Payable
4 0 2 00
31 Payroll Taxes Expenses Federal Unemployment Tax Payable State Unemployment Tax Payable
3 2 6 00
30
3 2 6 7 6
5 6 2 7 0
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-39
1 2 3 00 4 5 6 00 7 8 9 00 10 11 12 00 13 14 15 00 16 17 18 00 19 20 21 00 22 23 24 25 00 26 27 28 00 29 00 30 31 32 00 33 00 34 35
CRITICAL THINKING PROBLEM 12.1 (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION
1 2 2016 Instruction 3 3 Dec. 31 Sales 4 Purchases Returns and Allowances 5 Purchases Discounts 6 Income Summary 7 8 31 Income Summary 9 Sales Returns and Allowances 10 Purchases 11 Freight In 12 Salaries Expense—Sales 13 Rent Expense 14 Advertising Expense 15 Store Supplies Expense 16 Depreciation Expense—Store Equipment 17 Office Salaries Expense 18 Uncollectible Accounts Expense 19 Depreciation Expense—Office Equipment 20 Office Supplies Expense 21 Payroll Taxes Expense 22 23 31 Income Summary 24 Ben Waites, Capital 25 26 31 Ben Waites, Capital 27 Ben Waites, Drawing 28
POST. REF.
DEBIT
32
CREDIT
1 2 862 2 3 0 00 3 4 2 4 0 00 4 10 7 7 0 00 5 877 2 4 0 00 6 7 748 2 5 8 00 8 7 5 8 0 00 9 504 8 1 0 00 10 7 0 0 0 00 11 79 9 5 0 00 12 35 5 0 0 00 13 12 3 0 0 00 14 3 6 0 5 00 15 11 3 6 0 00 16 78 4 8 0 00 17 1 0 0 0 00 18 3 3 0 0 00 19 2 6 4 5 00 20 7 2 8 00 21 22 121 7 8 2 00 23 121 7 8 2 00 24 25 30 0 0 0 00 26 30 0 0 0 00 27 28
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-40
CRITICAL THINKING PROBLEM 12.1 (continued) a. Net Sales
Sales Less Sales Returns and Allowances Net Sales
$862,230 7,580 $854,650
b. Net Delivered Cost of Purchases
Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases
$504,810 7,000 $511,810
c. Cost of Goods Sold
$4,240 10,770
Merchandise Inventory, January 1, 2016 Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, December 31, 2016 Cost of Goods Sold
$105,900 496,800 602,700 98,700 $504,000
d. Net Income (from worksheet) e. Capital, December 31
Analyze:
15,010 496,800
$121,782
Ben Waites, Capital, January 1, 2016 Net Income for Year Less Withdrawals for Year Ben Waites, Capital, December 31, 2016
$166,310 $121,782 30,000
The changes shown in Ben Waites, Capital in the statement of owner’s equity will be the net income, $121,782, and the withdrawal of $30,000.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-41
91,782 $258,092
CRITICAL THINKING PROBLEM 12.2 1. Under the accrual basis of accounting, expenses are recorded when incurred and not necessarily when paid. Thus, when a business reports expenses on the income statement that did not require the use of cash during the accounting period, the increase in the cash account will be greater than the net income.
2.
Increase in cash account Net Income from income statement Difference Expense not requiring the use of cash: Increase in Salaries Payable Decrease in Prepaid Insurance Decrease in Supplies Depreciation Expense Difference
$38,228 21,100 $17,128 $1,560 300 2,268 13,000 $17,128
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-42
SOLUTIONS TO BUSINESS CONNECTIONS Ethical Dilemma: You should count the row only once. Counting a row twice will misrepresent the amount of inventory and create false financial statements.
Financial Statement Analysis: 1. The Allowance for doubtful accounts, prepaid expenses and accumulated depreciation. 2. The Allowance for Doubtful Accounts: debit Uncollectible Accounts Expense and credit Allowance for Doubtful Accounts. Prepaid expenses: debit the appropriate expense account and credit Prepaid Expenses. Accumulated depreciation: debit Depreciation Expense and credit Accumulated Depreciation. 3. Cash and cash equivalents increased by 46.6 percent (($79.0 - $53.9) ÷ $53.9). Teamwork: Since service companies will not have inventory, the inventory adjustment would not be needed. Both types of companies would require an insurance and depreciation adjustment. Service companies that deal only with cash customers would not require an uncollectible account adjustment. A service company would need the accrued wages since the employee will be directly producing the service income but paid weekly instead of daily.
Internet Connection: The student’s answer will depend on the search engine used. In general, several Excel spreadsheets should be available to download.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-43
SOLUTIONS TO PRACTICE TEST Part A True-False 1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. FALSE 6. FALSE 7. FALSE 8. TRUE 9. TRUE 10. TRUE 11. TRUE 12. FALSE 13. TRUE
14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
TRUE FALSE FALSE FALSE TRUE TRUE FALSE TRUE TRUE FALSE TRUE TRUE
Part B Exercises PAGE
GENERAL JOURNAL
DATE 1 2 3 4 2016 5 Dec. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
DESCRIPTION Adjusting Entries
POST. REF.
DEBIT
(Adjustment 1) 31 Supplies Expense Store Supplies
1 4 0 0 00
(Adjustment 2) 31 Interest Expense Interest Payable
2 5 00
(Adjustment 3) 31 Interest Receivable Interest Income
7 0 00
(Adjustment 4) 31 Insurance Expense Prepaid Insurance (Adjustment 5) 31 Unearned Season Tickets Income Season Tickets Income
CREDIT
1 4 0 0 00
2 5 00
7 0 00
1 4 0 0 00 1 4 0 0 00
480 0 0 0 00 480 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 12-44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
CHAPTER 13 FINANCIAL STATEMENTS AND CLOSING PROCEDURES Chapter Opener: Thinking Critically A grocery store chain is going to have many of the same revenue and expense items that you would see on income statements of companies in other industries. For example, the Sales account is a common revenue account but Whole Foods also reports Bakery Sales, Meat Sales, Non-Perishable Food Sales, etc. The company also has very similar expense accounts. For example: Wages Expense, Rent Expense, Depreciation Expense, Advertising Expense and Insurance Expense. However, they may also report some unique expenses like Perishable-Food Waste and Grocery Cart Repairs.
Fast Facts Whole Foods operates 340 stores with an average store size of 38,000 square feet. • The stores feature over 30,000 natural and organic items. • To underscore the company’s focus on health, it recently created a new Core Company Value – • Promoting the health of our stakeholders through healthy eating education. Whole Foods employs 52,000 people in North America and the United Kingdom. • Managerial Implications: Thinking Critically Managers can use financial statements to learn about a company’s operating efficiency by using ratios and measurements to analyze the financial statement results and compare them to those measurements of prior periods and to similar businesses in the same industry. Discussion Questions Note to instructor : These questions are designed to check students’ understanding of new terms, concepts, and procedures presented in the chapter. 1. Other Revenue and Expense consists of items that are routine and recurring, but not properly included in Operating Expenses. To be an Extraordinary Gain and Loss, the item must be one that seldom occurs and is not a part of the normal business operation. 2.
The Cost of Goods Sold section contains this information.
3.
Operating expenses arise from the normal operating activities of the business. Financing expenses are generally excluded from operating expenses and included in Other Revenues and Expenses. It shows the firm’s financial position on a specific date through a presentation of the assets, liabilities and owner’s equity.
4. 5.
Cash, items that will be converted into cash within one year, and items that will be used up within one year are considered to be current assets. These include cash, accounts receivable, merchandise inventory, and prepaid expenses.
6.
Current liabilities are debts that must be paid within one year; long-term liabilities are debts that are due more than a year in the future.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-1
Discussion Questions (continued) It reports the beginning and ending owner’s equity and the changes that occurred in owner’s equity during the year. 8. a. Ending merchandise inventory is shown in both the income statement and the balance sheet. 7.
b. The owner’s ending capital is shown in both the balance sheet and the statement of owner’s equity. 9.
It assures that the general ledger is in balance after the adjusting and closing entries have been posted.
10.
The permanent accounts—assets, liabilities, and owner’s equity—appear on the post-closing trial balance. The likely problem is that the posting of either a debit amount or a credit amount of a closing entrytypes was entered as anentries incorrect to an asset account. The of adjusting thatfigure are reversed are:or (a)liability all accruals, (b) prepaid items such as prepaid insurance initially charged to the Insurance Expense account and (c) unearned income items initially credited to income accounts. A reversing entry with a debit to Interest Income and a credit to Interest Receivable would be recorded. Entries for (a) accrued payroll taxes and (e) accrued interest income would be reversed.
11. 12.
13. 14. 15. 16.
The additional investment would be shown in the Statement of Owner’s Equity as an addition to Beginning Capital. The steps in the accounting cycle are:
a. Analyze transactions b. Journalize the data about transactions c. Post the data about transactions to the accounts d. Prepare a worksheet e. Prepare financial statements f. Journalize and post adjusting entries g. Journalize and post closing entries h. Prepare a post closing trial balance i. Interpret the financial information j. A final step for some companies is to journalize and post reversing entries. 17. Kagan Company's inventory turnover decreased from 9 times in 2015 to 8 times in 2016. This indicates Kagan Company sold their inventory more slowly in 2016 than in 2015.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-2
EXERCISE 13.1 1. Purchase returns and Allowances 2. Telephone Expense 3. Sales Returns and Allowances 4. Purchases 5. Interest income
b c a b d
6. 7. 8. 9.
Merchandise Inventory Interest Expense Sales Depreciation expense – Store Equipment 10. Rent Expense
b e a c c
EXERCISE 13.2 1. Accounts Receivable 2. Delivery Van 3. Prepaid Insurance 4. Notes Payable, due 2017 5. Store Supplies
a b a c a
6. 7. 8. 9. 10.
Accounts Payable Merchandise Inventory Ray Lynch, Capital Cash Unearned Subscription Income
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-3
c a e a c
EXERCISE 13.3 Bridget's Office Supplies Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Returns and Allowance Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowance Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Selling Expenses Salaries Expense—Sales Store Supplies Expense Depreciation Expense—Store Equip. Total Selling Expense General and Administrative Expenses Rent Expense Utilities Expense Salaries Expense—Office Payroll Taxes Expense Depreciation Expense—Office Equip. Uncollectible Accounts Expense Total General and Admin. Expenses Total Operating Expenses Income from Operations Other Income Miscellaneous Income Other Expense Interest Expense Net Nonoperating Expenses Net Income for Year
248 9 0 0 00 4 3 5 0 00 244 5 5 0 00 59 7 7 5 00 103 6 0 0 00 1 9 7 5 00 105 5 7 5 00 3 6 0 0 00 1 8 0 0 00
5 4 0 0 00 100 1 7 5 00 159 9 5 0 00 52 7 2 5 00 107 2 2 5 00 137 3 2 5 00
45 3 0 0 00 2 3 1 0 00 1 5 1 0 00 49 1 2 0 00 13 5 0 0 00 3 0 0 0 00 21 1 0 0 00 6 0 0 0 00 5 7 0 00 7 2 0 00 44 8 9 0 00 94 0 1 0 00 43 3 1 5 00 4 0 0 00 7 4 0 00 3 4 0 00 42 9 7 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-4
EXERCISE 13.4 Bridget's Office Supplies Statement of Owner's Equity Year Ended December 31, 2016 Bridget Swanson, Capital, January 1, 2016 Net Income for Year Less Withdrawals for Year Increase in Capital Bridget Swanson, Capital, December 31, 2016
63 7 6 0 00 42 9 7 5 00 40 7 0 0 00 2 2 7 5 00 66 0 3 5 00
EXERCISE 13.5 Bridget's Office Supplies Balance Sheet December 31, 2016 Assets Current Assets Cash Change Fund Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Prepaid Expenses Store Supplies Prepaid Interest Total Current Assets Plant and Equipment Store Equipment Less Accumulated Depreciation Office Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liabilities and Owner’s Equity Current Liabilities Notes Payable Accounts Payable Interest Payable Sales Tax Payable Total Current Liabilities Owner’s Equity Bridget Swanson, Capital Total Liabilities and Owner’s Equity
5 6 0 5 00 5 0 0 00 5 1 4 0 00 8 6 0 00
1 1 0 0 00 1 3 0 00
11 2 0 0 00 1 1 8 0 00 3 4 0 0 00 5 0 0 00
4 2 8 0 00 52 7 2 5 00
1 2 3 0 00 64 3 4 0 00
10 0 2 0 00 2 9 0 0 00 12 9 2 0 00 77 2 6 0 00
5 5 0 0 00 3 7 2 5 00 1 1 0 00 1 8 9 0 00 11 2 2 5 00 66 0 3 5 00 77 2 6 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-5
EXERCISE 13.6 GENERAL JOURNAL
DATE
DESCRIPTION Closing Entries
1 2 2016 3 Dec. 31 Sales 4 Interest Income 5 Purchases Returns and Allowances 6 Purchases Discounts 7 Income Summary 8 9 31 Income Summary 10 Sales Returns and Allowances 11 Sales Discounts 12 Purchases 13 Freight In 14 Rent Expense 15 Utilities Expense 16 Telephone Expense 17 Salaries Expense 18 Payroll Taxes Expense 19 Supplies Expense 20 Depreciation Expense 21 Interest Expense 22 23 31 Income Summary 24 Armando Soto, Capital 25 26 31 Armando Soto, Capital 27 Armando Soto, Drawing 28 29 30 31 32 33 34 35 36 37
PAGE POST. REF.
DEBIT
259 5 0 0 00 2 2 0 00 2 5 0 0 00 1 6 3 0 00
237 2 8 0 00
29 8 7 0 00
26 7 0 0 00
16
CREDIT 1 2 3 4 5 6 263 8 5 0 00 7 8 9 4 4 0 0 00 10 3 4 0 0 00 11 135 4 0 0 00 12 2 7 0 0 00 13 9 0 0 0 00 14 3 0 3 0 00 15 1 6 4 0 00 16 67 1 0 0 00 17 5 3 7 0 00 18 1 8 0 0 00 19 3 0 0 0 00 20 4 4 0 00 21 22 23 29 8 7 0 00 24 25 26 26 7 0 0 00 27 28 29 30 31 32 33 34 35 36 37
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-6
EXERCISE 13.7 PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Reversing Entries
1 2 2017 3 Jan. 1 Salaries Payable 4 Salaries Expense—Office 5 To reverse adjustment (e) made on Dec. 31, 2016 6 7 1 Social Security Tax Payable 8 Medicare Tax Payable 9 Payroll Taxes Expense 10 To reverse adjustment (f) made on Dec. 31, 2016 11 12 1 Interest Payable 13 Interest Expense 14 To reverse adjustment (g) made on Dec. 31, 2016 15 16 1 Interest Income 17 Interest Receivable 18 To reverse adjustment (h) made on Dec. 31, 2016 19 20 21 22 23 24 25 26 27 28 29 30
POST. REF.
DEBIT
3 8 0 0 00
2 3 5 60 5 5 10
3 0 0 00
1 8 8 00
21
CREDIT 1 2 3 3 8 0 0 00 4 5 6 7 8 2 9 0 70 9 10 11 12 3 0 0 00 13 14 15 16 1 8 8 00 17 18 19 20 21 22 23 24 25 26 27 28 29 30
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-7
EXERCISE 13.8 Vandermeer Farm Supply Post-closing Trial Balance December 31, 2016 ACCOUNT NAME Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Insurance Equipment Accumulated Depreciation—Equipment Notes Payable Accounts Payable Social Security Tax Payable Medicare Tax Payable Ken Vandermeer, Capital Totals
DEBIT 19 6 0 0 00 60 8 0 0 00
CREDIT
2 2 0 00 187 2 0 0 00 7 2 4 0 00 3 1 6 0 00 52 0 0 0 00
330 0 0 0 00
18 8 0 0 00 10 5 0 0 00 9 7 0 0 00 1 4 9 0 00 4 1 0 00 288 8 8 0 00 330 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-8
EXERCISE 13.9 a. Net Sales
Sales Less Sales Discounts Net Sales
$530,000 3,200 $526,800
Gross profit
Net sales Less cost of goods sold Gross profit
$526,800 348,540 $178,260
The gross profit percentage
Gross profit Net sales
b. Current assets
=
$178,260 = $526,800
33.8%
Cash Accounts receivable Note receivable, due 2017 Merchandise inventory Prepaid insurance Supplies
$26,760 47,700 9,500 35,700 2,350 1,410 $123,420
Current liabilities
Note payable to bank, due 2017 Accounts payable Interest payable
$35,000 13,050 350 $48,400
Working capital
$123,420 - $48,400 =
$75,020
c. Current ratio
$123,420 $48,400
d. Inventory turnover
Cost of goods sold Average inventory
Average inventory
=
$35,700 + $58,500 = 2
2.55
=
$348,540 $47,100
=
7.40 times
$47,100
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-9
Exercise 13.10 a.
The accounts receivable turnover is 10.0 times, calculated as follows: Net sales Average accounts receivable
b.
=
$1,000,000 ($90,000 + $110,000) ÷
=
$1,000,000 $100,000
=
10.0
2
The inventory turnover is 9.5 times, calculated as follows: Cost of goods sold Average inventory
=
$570,000 ($55,000 + $65,000) ÷
=
$570,000 $60,000
=
9.5
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-10
2
PROBLEM 13.1A Quality Hardwoods Company Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Returns and Allowances Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, December 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Warehouse Expenses Warehouse Wages Expense Warehouse Supplies Expense Depreciation Expense—Warehouse Equipment Total Warehouse Expenses Selling Expenses Salaries Expense—Sales Travel and Entertainment Expense Delivery Wages Expense Depreciation Expense—Delivery Equipment Total Selling Expenses
13-11
1,685 0 0 0 00 18 2 0 0 00 1,666 8 0 0 00 244 0 0 0 00 767 0 0 0 00 13 8 0 0 00 780 8 0 0 00 8 4 4 0 00 11 1 6 0 00
19 6 0 0 00 761 2 0 0 00 1,005 2 0 0 00 234 0 0 0 00 771 2 0 0 00 895 6 0 0 00
199 6 0 0 00 7 1 0 0 00 5 8 0 0 00 212 5 0 0 00 269 2 0 0 00 21 5 0 0 00 60 3 3 0 00 9 8 0 0 00 360 8 3 0 00
PROBLEM 13.1A (continued) Quality Hardwoods Company Income Statement (continued) Year Ended December 31, 2016 General and Administrative Expenses Salaries Expense—Office Office Supplies Expense Insurance Expense Utilities Expense Telephone Expense Payroll Taxes Expense Property Taxes Expense Uncollectible Accounts Expense Depreciation Expense—Building Depreciation Expense—Office Equipment Total General and Administrative Exp. Total Operating Expenses Income from Operations Other Income Interest Income Other Expenses Interest Expense Net Nonoperating Expenses Net Income for Year
13-12
70 6 0 0 00 4 0 0 0 00 6 2 0 0 00 9 2 9 0 00 6 5 2 0 00 59 0 0 0 00 5 6 0 0 00 5 8 0 0 00 9 0 0 0 00 4 0 0 0 00 180 0 1 0 00 753 3 4 0 00 142 2 6 0 00 1 5 8 0 00 8 2 0 0 00 6 6 2 0 00 135 6 4 0 00
PROBLEM 13.1A (continued) Quality Hardwoods Company Statement of Owner's Equity Year Ended December 31, 2016 Chuck Kirby, Capital, January 1, 2016 Net Income for Year Less Withdrawals for Year Increase in Capital Chuck Kirby, Capital, December 31, 2016
462 4 6 0 00 135 6 4 0 00 127 0 0 0 00 8 6 4 0 00 471 1 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-13
PROBLEM 13.1A (continued) Quality Hardwoods Company Balance Sheet December 31, 2016 Assets Current Assets Cash Petty Cash Fund Notes Receivable Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Prepaid Expenses Warehouse Supplies Office Supplies Prepaid Insurance Total Current Assets Plant and Equipment Land Building Less Accumulated Depreciation Warehouse Equipment Less Accumulated Depreciation Delivery Equipment Less Accumulated Depreciation Office Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Notes Payable Accounts Payable Interest Payable Total Current Liabilities
24 1 0 0 00 5 0 0 00 11 8 0 0 00 96 0 0 0 00 6 0 0 0 00
2 8 6 0 00 1 4 2 0 00 10 2 0 0 00
90 0 0 0 00 234 0 0 0 00
14 4 8 0 00 374 8 8 0 00
46 0 0 0 00 178 0 0 0 00 54 0 0 0 00 37 0 0 0 00 17 4 0 0 00 51 0 0 0 00 19 6 0 0 00 25 0 0 0 00 12 0 0 0 00
124 0 0 0 00 19 6 0 0 00 31 4 0 0 00 13 0 0 0 00 234 0 0 0 00 608 8 8 0 00
20 2 0 0 00 39 0 0 0 00 5 8 0 00 59 7 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-14
PROBLEM 13.1A (continued) Quality Hardwoods Company Balance Sheet (continued) December 31, 2016 Long-Term Liabilities Mortgage Payable Loans Payable Total Long-Term Liabilities Total Liabilities Owner’s Equity Chuck Kirby, Capital Total Liabilities and Owner’s Equity
61 0 0 0 00 17 0 0 0 00 78 0 0 0 00 137 7 8 0 00 471 1 0 0 00 608 8 8 0 00
Analyze: The company’s current ratio is 6.27 to 1 ($374,880 ÷ $59,780).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-15
PROBLEM 13.2A Good to Go Auto Products Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Returns and Allowances Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Warehouse Expenses Warehouse Wages Expense Warehouse Supplies Expense Depreciation Exp.—Warehouse Equip. Total Warehouse Expenses Selling Expenses Salaries Expense—Sales Travel Expense Delivery Expense Total Selling Expenses
13-16
1,110 3 0 0 00 8 4 0 0 00 1,101 9 0 0 00 131 4 0 0 00 463 0 0 0 00 9 8 0 0 00 472 8 0 0 00 13 6 5 0 00 9 2 4 0 00
22 8 9 0 00 449 9 1 0 00 581 3 1 0 00 128 5 0 0 00 452 8 1 0 00 649 0 9 0 00
108 6 0 0 00 5 8 0 0 00 3 4 0 0 00 117 8 0 0 00 151 7 0 0 00 24 0 0 0 00 37 4 2 5 00 213 1 2 5 00
PROBLEM 13.2A (continued) Good to Go Auto Products Income Statement (continued) Year Ended December 31, 2016 General and Administrative Expenses Salaries Expense—Office Office Supplies Expense Insurance Expense Utilities Expense Telephone Expense Payroll Taxes Expense Building Repair Expense Property Taxes Expense Uncollectible Accounts Expense Depreciation Expense—Building Depreciation Expense—Office Equip. Total General and Administrative Exp. Total Operating Expenses Income from Operations Other Income Interest Income Other Expenses Interest Expense Net Nonoperating Expenses Net Income for Year
13-17
85 0 0 0 00 1 2 2 0 00 9 8 7 5 00 8 0 0 0 00 3 2 8 0 00 31 6 0 0 00 3 7 0 0 00 16 4 0 0 00 3 5 8 0 00 5 6 0 0 00 1 6 2 0 00 169 8 7 5 00 500 8 0 0 00 148 2 9 0 00 5 8 0 00 4 0 0 0 00 3 4 2 0 00 144 8 7 0 00
PROBLEM 13.2A (continued) Good to Go Auto Products Statement of Owner's Equity Year Ended December 31, 2016 Colin O’Brien, Capital, January 1, 2016 Net Income for Year Less Withdrawals for Year Increase in Capital Colin O’Brien, Capital, December 31, 2016
326 8 7 0 00 144 8 7 0 00 70 6 5 0 00 74 2 2 0 00 401 0 9 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-18
PROBLEM 13.2A (continued) Good to Go Auto Products Balance Sheet December 31, 2016 Assets Current Assets Cash Petty Cash Fund Notes Receivable Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Interest Receivable Prepaid Expenses Warehouse Supplies Office Supplies Prepaid Insurance Total Current Assets Plant and Equipment Land Building Less Accumulated Depreciation Warehouse Equipment Less Accumulated Depreciation Office Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Notes Payable Accounts Payable Interest Payable Total Current Liabilities
99 0 0 0 00 6 0 0 00 15 0 0 0 00 140 2 0 0 00 3 8 0 0 00 136 4 0 0 00 128 5 0 0 00 1 5 0 00 3 3 0 0 00 7 0 0 00 4 6 4 0 00
8 6 4 0 00 388 2 9 0 00
16 0 0 0 00 107 0 0 0 00 16 7 0 0 00 19 8 0 0 00 9 5 0 0 00 9 4 0 0 00 3 9 0 0 00
90 3 0 0 00 10 3 0 0 00 5 5 0 0 00 122 1 0 0 00 510 3 9 0 00
15 0 0 0 00 56 9 0 0 00 4 0 0 00 72 3 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-19
PROBLEM 13.2A (continued) Good to Go Auto Products Balance Sheet (continued) December 31, 2016 Long-Term Liabilities Mortgage Payable Loans Payable Total Long-Term Liabilities Total Liabilities Owner’s Equity Colin O'Brien, Capital Total Liabilities and Owner’s Equity
20 0 0 0 00 17 0 0 0 00 37 0 0 0 00 109 3 0 0 00
401 0 9 0 00 510 3 9 0 00
Analyze: The percentage of total operating expenses attributable to warehouse expense is 23.52% ($117,800 ÷ $500,800).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-20
PROBLEM 13.3A Artisan Wines Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Discount Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Net Delivered Cost of Purchases Goods Available for Sale Less Merchandise Inventory, December 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Rent Expense Wages Expense Payroll Taxes Expense Depreciation Expense, Store Equipment Depreciation Expense, Office Equipment Advertising Expense Supplies Expense Total Operating Expenses Income From Operations Other Income Seminar Fee Income Other Expenses Interest Expense Net Nonoperating Income Net Income for Year
153,970.00 200.00 153,770.00 15,000.00 91,000.00 225.00 91,225.00 1,000.00 90,225.00 105,225.00 13,000.00 92,225.00 61,545.00 13,200.00 24,500.00 3,362.25 3,000.00 1,250.00 160.00 140.00 45,612.25 15,932.75 4,000.00 250.00 3,750.00 19,682.75
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-21
PROBLEM 13.3A (continued) Artisan Wines Statement of Owner's Equity Year Ended December 31, 2016 Vincent Arroyo, Capital, January 1, 2016 Net Income for the Year Less Withdrawals for the Year Increase in Capital Vincent Arroyo, Capital, December 31, 2016
32,700.00 19,682.75 14,110.00 5,572.75 38,272.75
The Wine Shop Balance Sheet December 31, 2016 Assets Current Assets Cash Accounts Receivable Prepaid Advertising Supplies Merchandise Inventory Total Current Assets Plant and Equipment: Store Equipment 25,000.00 Less Accumulated Depreciation 6,000.00 Office Equipment 5,000.00 Less Accumulated Depreciation 2,750.00 Total Plant and Equipment Total Assets Liabilities and Owner's Equity Current Liabilities: Notes Payable, due 2017 Accounts Payable Wages Payable Social Security Tax Payable Medicare Tax Payable Unearned Seminar Fees Interest Payable Total Current Liabilities Owner's Equity Vincent Arroyo, Capital Total Liabilities and Owner's Equity
28,386.00 500.00 320.00 160.00 13,000.00 42,366.00
19,000.00 2,250.00 21,250.00 63,616.00
20,000.00 2,705.00 500.00 31.00 7.25 2,000.00 100.00 25,343.25 38,272.75 63,616.00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-22
PROBLEM 13.3A (continued) Analyze:
The inventory turnover for Artisan Wines is 6.59 times, calculated as follows: Cost of Goods Sold 92,225 = 6.59 Average Inventory 14,000 Average Inventory =
13,000 + 15,000 2
=
14,000
PROBLEM 13.4A PAGE
GENERAL JOURNAL
DATE
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
DESCRIPTION Adjusting Entries 2016 (Adjustment a) Dec. 31 Income Summary Merchandise Inventory To transfer beginning inventory (Adjustment b) 31 Merchandise Inventory Income Summary To record ending inventory (Adjustment c) 31 Uncollectible Accounts Expense Allowance for Doubtful Accounts To record estimated loss for 2016, based on 0.5% of net credit sales $560,000 (Adjustment d) 31 Supplies Expense Supplies To record supplies used during 2016 (Adjustment e) 31 Insurance Expense Prepaid Insurance To record expired insurance (Adjustment f) 31 Depreciation Expense—Office Equipment Accumulated Depreciation—Office Equipment To record depreciation for 2016 (schedule on file)
POST. REF.
DEBIT
25
CREDIT
86 0 0 0 00 86 0 0 0 00
78 0 0 0 00 78 0 0 0 00
2 8 0 0 00 2 8 0 0 00
9 2 2 0 00 9 2 2 0 00
3 6 0 0 00 3 6 0 0 00
1 3 2 5 00 1 3 2 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-23
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
PROBLEM 13.4A (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Adjusting Entries 2 2016 (Adjustment g) 3 Dec. 31 Depreciation Expense—Warehouse Equipment 4 Accumulated Depreciation—Warehouse Equipment 5 To record depreciation for 2016 (schedule on file) 6 7 (Adjustment h) 8 31 Interest Expense 9 Interest Payable 10 To record accrued interest on 4-month, 12% trade 11 note payable dated November 1, 2016 12 $32,000 × 0.12 × 2/12 = $640 13 14 (Adjustment i) 15 31 Salaries Expense 16 Salaries Payable 17 To record accrued salaries 18 19 (Adjustment j) 20 31 Payroll Taxes Expense 21 Social Security Tax Payable 22 Medicare Tax Payable 23 To record accrued payroll taxes on accrued 24 salaries for December: social security tax = 25 6.2% × $5000; Medicare tax = 1.45% × $5,000 26 27 (Adjustment k) 28 31 Payroll Taxes Expense 29 Federal Unemployment Tax Payable 30 State Unemployment Tax Payable 31 To record payroll taxes (state = 0.054 × $5,000, 32 federal = 0.006 × $5,000) 33 34 35
POST. REF.
DEBIT
26
CREDIT
1 2 4 8 0 0 00 3 4 8 0 0 00 4 5 6 7 6 4 0 00 8 6 4 0 00 9 10 11 12 13 14 5 0 0 0 00 15 5 0 0 0 00 16 17 18 19 3 8 2 50 20 3 1 0 00 21 7 2 50 22 23 24 25 26 27 3 0 0 00 28 3 0 00 29 2 7 0 00 30 31 32 33 34 35
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-24
PROBLEM 13.4A (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Closing Entries 2 2016 3 Dec. 31 Sales 4 Purchases Returns and Allowances 5 Income Summary 6 7 31 Income Summary 8 Sales Returns and Allowances 9 Purchases 10 Rent Expenses 11 Telephone Expense 12 Salaries Expense 13 Payroll Taxes Expense 14 Supplies Expense 15 Insurance Expense 16 Depreciation Expense—Office Equipment 17 Depreciation Expense—Warehouse Equipment 18 Uncollectible Accounts Expense 19 Interest Expense 20 21 31 Income Summary 22 Phillip Tucker, Capital 23 24 31 Phillip Tucker, Capital 25 Phillip Tucker, Drawing 26 27 28 29 30 31 32 33 34 35 36 37
POST. REF.
DEBIT
27
CREDIT
653 7 7 8 00 9 2 0 0 00 662 9 7 8 00 599 2 6 7 50 10 0 0 0 00 350 0 0 0 00 36 0 0 0 00 2 2 0 0 00 165 0 0 0 00 13 6 8 2 50 9 2 2 0 00 3 6 0 0 00 1 3 2 5 00 4 8 0 0 00 2 8 0 0 00 6 4 0 00 55 7 1 0 50 55 7 1 0 50 56 0 0 0 00 56 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-25
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
PROBLEM 13.4A (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Reversing Entries 2 2017 3 Jan. 1 Interest Payable 4 Interest Expense 5 To reverse adjusting entry (h) made Dec. 31, 2016 6 7 1 Salaries Payable 8 Salaries Expense 9 To reverse adjusting entry (i) made Dec. 31, 2016 10 11 1 Social Security Tax Payable 12 Medicare Tax Payable 13 Payroll Taxes Expense 14 To reverse adjusting entry (j) made Dec. 31, 2016 15 16 1 Federal Unemployment Tax Payable 17 State Unemployment Tax Payable 18 Payroll Taxes Expense 19 To reverse adjusting entry (k) made Dec. 31, 2016 20 21 22 23
POST. REF.
DEBIT
28
CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
6 4 0 00 6 4 0 00
5 0 0 0 00 5 0 0 0 00
3 1 0 00 7 2 50 3 8 2 50
3 0 00 2 7 0 00 3 0 0 00
Analyze: The following entry would be required: PAGE
GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2017 Jan. 3 Salaries Payable Salaries Expense Cash To record the payment of salaries
POST. REF.
DEBIT
29
CREDIT
5 0 0 0 00 1 0 0 0 00 6 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-26
1 2 3 4 5 6
PROBLEM 13.5A GENERAL JOURNAL
DATE DESCRIPTION 1 Adjusting Entries 2 2016 (Adjustment a) 3 Dec. 31 Rent Expense 4 Prepaid Rent 5 To record expired rent on 6-month lease of 6 $20,700 paid October 1, 2016 7 8 (Adjustment b) 9 31 Supplies Expense 10 Supplies 11 To record supplies used in 2016 12 13 (Adjustment c) 14 31 Depreciation Expense—Equipment 15 Accumulated Depreciation—Equipment 16 To record depreciation for 2016 17 18 (Adjustment d) 19 31 Salaries Expense 20 Salaries Payable 21 To record accrued salaries 22 23 31 (Adjustment e) 24 Payroll Taxes Expense 25 Social Security Tax Payable 26 Medicare Tax Payable 27 To record accrued payroll taxes on accrued 28 salaries 29 30 (Adjustment f) 31 31 Interest Receivable 32 Interest Income 33 To record accrued interest on 5-month, 34 6%, $5,500 note receivable dated 35 September 1, 2016 36
PAGE POST. REF.
DEBIT
10 3 5 0 00
9 6 8 0 00
9 2 0 0 00
5 4 0 0 00
4 1 3 10
1 1 0 00
25
CREDIT 1 2 3 10 3 5 0 00 4 5 6 7 8 9 9 6 8 0 00 10 11 12 13 14 9 2 0 0 00 15 16 17 18 19 5 4 0 0 00 20 21 22 23 24 3 3 4 80 25 7 8 30 26 27 28 29 30 31 1 1 0 00 32 33 34 35 36
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-27
PROBLEM 13.5A (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Reversing Entries 2 2017 3 Jan. 1 Salaries Payable 4 Salaries Expense 5 To reverse adjusting entry (d) made Dec. 31, 2016 6 7 1 Social Security Tax Payable 8 Medicare Tax Payable 9 Payroll Taxes Expense 10 To reverse adjusting entry (e) made Dec. 31, 2016 11 12 1 Interest Income 13 Interest Receivable 14 To reverse adjusting entry (f) made Dec. 31, 2016 15 16
POST. REF.
DEBIT
26
CREDIT
1 2 5 4 0 0 00 3 5 4 0 0 00 4 5 6 3 3 4 80 7 7 8 30 8 4 1 3 10 9 10 11 1 1 0 00 12 1 1 0 00 13 14 15 16
Analyze: The balance of the Prepaid Rent Account on January 1, 2017, is $10,350.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-28
PROBLEM 13.1B Lite Speed Electronics Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Returns and Allowances Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Warehouse Expenses Warehouse Wages Expense Warehouse Supplies Expense Depreciation Expense—Warehouse Equipment Total Warehouse Expenses Selling Expenses Salaries Expense—Sales Travel and Entertainment Expense Delivery Wages Expense Depreciation Expense—Delivery Equipment Total Selling Expenses
13-29
429 8 0 0 00 3 1 5 0 00 426 6 5 0 00 33 1 2 5 00 179 6 0 0 00 2 2 0 0 00 181 8 0 0 00 2 5 2 0 00 2 3 5 0 00
4 8 7 0 00 176 9 3 0 00 210 0 5 5 00 35 4 0 0 00 174 6 5 5 00 251 9 9 5 00
38 9 0 0 00 1 7 9 0 00 1 4 0 0 00 42 0 9 0 00 67 2 0 0 00 6 3 0 0 00 26 9 0 0 00 2 4 4 0 00 102 8 4 0 00
PROBLEM 13.1B (continued) Lite Speed Electronics Income Statement (continued) Year Ended December 31, 2016 General and Administrative Expenses Salaries Expense—Office Office Supplies Expense Insurance Expense Utilities Expense Telephone Expense Payroll Taxes Expense Property Taxes Expense Uncollectible Accounts Expense Depreciation Expense—Building Depreciation Expense—Office Equipment Total General and Administrative Expenses Total Operating Expenses Income from Operations Other Income Interest Income Other Expenses Interest Expense Net Nonoperating Expenses Net Income for Year
13-30
15 9 0 0 00 1 1 5 0 00 1 5 0 0 00 2 4 0 0 00 1 3 8 0 00 15 2 5 0 00 1 7 5 0 00 1 0 5 0 00 3 0 0 0 00 1 0 2 0 00 44 4 0 0 00 189 3 3 0 00 62 6 6 5 00 4 6 2 00 1 6 0 0 00 1 1 3 8 00 61 5 2 7 00
PROBLEM 13.1B (continued) Lite Speed Electronics Statement of Owner's Equity Year Ended December 31, 2016 Toshi Takahashi, Capital, January 1, 2016 Net Income for Year Less Withdrawals for Year Increase in Capital Toshi Takahashi, Capital, December 31, 2016
60 9 4 0 00 61 5 2 7 00 24 0 0 0 00 37 5 2 7 00 98 4 6 7 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-31
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.
PROBLEM 13.1B (continued) Lite Speed Electronics Balance Sheet December 31, 2016 Assets Current Assets Cash Petty Cash Fund Notes Receivable Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Prepaid Expenses Warehouse Supplies Office Supplies Prepaid Insurance Total Current Assets Plant and Equipment Land Building Less Accumulated Depreciation Warehouse Equipment Less Accumulated Depreciation Delivery Equipment Less Accumulated Depreciation Office Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Notes Payable Accounts Payable Interest Payable Total Current Liabilities
10 2 0 0 00 1 0 0 00 3 2 0 0 00 21 2 5 0 00 2 2 5 0 00
7 7 5 00 7 8 0 00 2 2 0 0 00
19 0 0 0 00 35 4 0 0 00
3 7 5 5 00 71 6 5 5 00
7 6 4 2 00 48 5 0 0 00 13 0 0 0 00 8 0 0 0 00 2 3 0 0 00 16 4 0 0 00 3 6 0 0 00 6 0 0 0 00 2 5 0 0 00
35 5 0 0 00 5 7 0 0 00 12 8 0 0 00 3 5 0 0 00 65 1 4 2 00 136 7 9 7 00
5 0 0 0 00 13 1 4 0 00 2 4 0 00 18 3 8 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-32
PROBLEM 13.1B (continued) Lite Speed Electronics Balance Sheet (continued) December 31, 2016 Long-Term Liabilities Mortgage Payable Loans Payable Total Long-Term Liabilities Total Liabilities
15 9 5 0 00 4 0 0 0 00
Owner’s Equity Toshi Takahashi, Capital Total Liabilities and Owner’s Equity
Analyze:
19 9 5 0 00 38 3 3 0 00
98 4 6 7 00 136 7 9 7 00
The gross profit percentage for the period is 59.06% ($251,995/$426,650).
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-33
PROBLEM 13.2B Hog Wild Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Returns and Allowances Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Warehouse Expenses Warehouse Wages Expense Warehouse Supplies Expense Depreciation Expense—Warehouse Equipment Total Warehouse Expenses Selling Expenses Salaries Expense—Sales Travel Expense Delivery Expense Total Selling Expenses
13-34
608 4 1 7 00 9 4 0 0 00 599 0 1 7 00 88 9 8 0 00 230 0 5 0 00 9 6 0 0 00 239 6 5 0 00 6 4 2 0 00 5 7 6 0 00
12 1 8 0 00 227 4 7 0 00 316 4 5 0 00 87 9 1 5 00 228 5 3 5 00 370 4 8 2 00
64 3 0 0 00 4 3 0 0 00 2 4 0 0 00 71 0 0 0 00 78 9 0 0 00 21 0 0 0 00 35 4 0 0 00 135 3 0 0 00
PROBLEM 13.2B (continued) Hog Wild Income Statement (continued) Year Ended December 31, 2016 General and Administrative Expenses Salaries Expense—Office Office Supplies Expense Insurance Expense Utilities Expense Telephone Expense Payroll Taxes Expense Property Taxes Expense Building Repair Expense Uncollectible Accounts Expense Depreciation Expense—Building Depreciation Expense—Office Equipment Total General and Administrative Expenses Total Operating Expenses Income from Operations Other Income Interest Income Other Expenses Interest Expense Net Nonoperating Expenses Net Income for Year
13-35
57 5 0 0 00 1 3 6 0 00 9 5 0 0 00 6 9 1 2 00 4 3 7 0 00 19 2 0 0 00 11 7 0 0 00 3 1 0 0 00 2 9 0 0 00 3 2 0 0 00 1 6 8 0 00 121 4 2 2 00 327 7 2 2 00 42 7 6 0 00 7 2 0 00 3 6 0 0 00 2 8 8 0 00 39 8 8 0 00
PROBLEM 13.2B (continued) Hog Wild Statement of Owner's Equity Year Ended December 31, 2016 Nick Henry, Capital, January 1, 2016 Net Income for Year Less Withdrawals for Year Decrease in Capital Nick Henry, Capital, December 31, 2016
198 7 1 0 00 39 8 8 0 00 56 0 0 0 00 16 1 2 0 00 182 5 9 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-36
PROBLEM 13.2B (continued) Hog Wild Balance Sheet December 31, 2016 Assets Current Assets Cash Petty Cash Fund Notes Receivable Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Interest Receivable Prepaid Expenses Warehouse Supplies Office Supplies Prepaid Insurance Total Current Assets Plant and Equipment Land Building Less Accumulated Depreciation Warehouse Equipment Less Accumulated Depreciation Office Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Notes Payable Accounts Payable Interest Payable Total Current Liabilities
14 3 5 0 00 2 0 0 00 6 0 0 0 00 54 6 0 0 00 5 0 0 0 00
3 7 0 0 00 1 8 0 0 00 6 9 0 0 00
49 6 0 0 00 87 9 1 5 00 2 0 0 00
12 4 0 0 00 170 6 6 5 00
20 4 0 0 00 53 1 0 0 00 8 4 0 0 00 24 0 0 0 00 4 0 0 0 00 12 8 0 0 00 1 8 0 0 00
44 7 0 0 00 20 0 0 0 00 11 0 0 0 00 96 1 0 0 00 266 7 6 5 00
8 0 0 0 00 32 5 0 0 00 1 8 0 0 00 42 3 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-37
PROBLEM 13.2B (continued) Hog Wild Balance Sheet (continued) December 31, 2016 Long-Term Liabilities Mortgage Payable Notes Payable-Long Term Total Long-Term Liabilities Total Liabilities Owner’s Equity Nick Henry, Capital Total Liabilities and Owner’s Equity
35 8 7 5 00 6 0 0 0 00 41 8 7 5 00 84 1 7 5 00
182 5 9 0 00 266 7 6 5 00
Analyze: The inventory turnover is 2.58 times ($228,535 COGS ÷ $88,448 Avg. Inventory). Average inventory is ($88,980 + $87,915) ÷ 2 = $88,448.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-38
PROBLEM 13.3B The Game Place Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Discount Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, December 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Rent Expense Wages Expense Payroll Taxes Expense Depreciation Expense, Store Equipment Depreciation Expense, Office Equipment Advertising Expense Supplies Expense Total Operating Expenses Net Income From Operations Other Income Seminar Fee Income Other Expenses Interest Expense Net Nonoperating Income Net Income for Year
163,660.00 180.00 163,480.00 18,500.00 92,500.00 275.00 92,775.00 770.00 92,005.00 110,505.00 21,200.00 89,305.00 74,175.00 26,400.00 18,800.00 1,872.20 4,500.00 1,500.00 320.00 300.00 53,692.20 20,482.80 4,500.00 300.00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-39
4,200.00 24,682.80
PROBLEM 13.3B (continued) The Game Place Statement of Owner's Equity Year Ended December 31, 2016 Matt Huffman, Capital, January 1, 2016 Net Income for the Year Less Withdrawals for the Year Increase in Capital Matt Huffman, Capital, December 31, 2016
43,000.00 24,682.80 18,000.00 6,682.80 49,682.80
The Game Place Balance Sheet December 31, 2016 Assets Current Assets Cash Accounts Receivable Prepaid Advertising Supplies Merchandise Inventory Total Current Assets Plant and Equipment Store Equipment 30,000.00 Less Accumulated Depreciation 7,500.00 Office Equipment 4,800.00 Less Accumulated Depreciation 3,000.00 Total Plant and Equipment Total Assets Liabilities and Owner's Equity Current Liabilities Notes Payable, due 2017 Accounts Payable Wages Payable Social Security Tax Payable Medicare Tax Payable Unearned Seminar Fees Interest Payable Total Current Liabilities Owner's Equity Matt Huffman, Capital Total Liabilities and Owner's Equity
34,465.00 1,669.00 160.00 125.00 21,200.00 57,619.00
22,500.00 1,800.00 24,300.00 81,919.00
22,500.00 5,725.00 800.00 49.60 11.60 3,000.00 150.00 32,236.20 49,682.80 81,919.00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-40
PROBLEM 13.3B (continued) Analyze: The amount of working capital is $25,382.80, calculated as follows: Current assets 57,619.00 Less current liabilities 32,236.20 Working capital 25,382.80 PROBLEM 13.4B PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 (Adjustment a) 3 Dec. 31 Income Summary 4 Merchandise Inventory 5 To transfer beginning inventory 6 7 (Adjustment b) 8 31 Merchandise Inventory 9 Income Summary 10 To record ending inventory 11 12 (Adjustment c) 13 31 Uncollectible Accounts Expense 14 Allowance for Doubtful Accounts 15 To record estimated loss for 2016, based 16 on 0.8% of net credit sales $160,000 17 18 (Adjustment d) 19 31 Supplies Expense 20 Supplies 21 To record supplies used during 2016 22 23 (Adjustment e) 24 31 Insurance Expense 25 Prepaid Insurance 26 To record expired insurance on one-year policy 27 28 (Adjustment f) 29 31 Depreciation Expense—Store Equipment 30 Accumulated Depreciation—Store Equipment 31 To record depreciation for 2016 (schedule on file) 32
POST. REF.
DEBIT
29
CREDIT
1 2 16 9 8 5 00 3 16 9 8 5 00 4 5 6 7 15 8 4 0 00 8 15 8 4 0 00 9 10 11 12 1 2 8 0 00 13 1 2 8 0 00 14 15 16 17 18 5 0 5 00 19 5 0 5 00 20 21 22 23 1 2 0 0 00 24 1 2 0 0 00 25 26 27 28 1 0 0 0 00 29 1 0 0 0 00 30 31 32
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-41
PROBLEM 13.4B (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Adjusting Entries 2 2016 (Adjustment g) 3 Dec. 31 Depreciation Expense—Store Fixtures 4 Accumulated Depreciation—Store Fixtures 5 To record depreciation for 2016 (schedule on file) 6 7 (Adjustment h) 8 31 Interest Expense 9 Interest Payable 10 To record accrued interest on six-month, $4,000, 11 9% trade note payable, dated October 1, 2016 12 $4,000 × 0.09 × 3/12 = $90 13 14 (Adjustment i) 15 31 Salaries Expense 16 Salaries Payable 17 To record accrued salaries 18 19 (Adjustment j) 20 31 Payroll Taxes Expense 21 Social Security Tax Payable 22 Medicare Tax Payable 23 To record accrued payroll taxes on accrued 24 salaries (Social Security = 0.062 × $1,450; 25 Medicare = 0.0145 × $1450) 26 27 (Adjustment k) 28 31 Payroll Taxes Expense 29 Federal Unemployment Tax Payable 30 State Unemployment Tax Payable 31 To record unemployment taxes on accrued 32 salaries (federal = .006 × $1,450; 33 state = .05 × $1,450) 34 35 36 37
POST. REF.
DEBIT
30
CREDIT
1 2 2 0 5 0 00 3 2 0 5 0 00 4 5 6 7 9 0 00 8 9 0 00 9 10 11 12 13 14 1 4 5 0 00 15 1 4 5 0 00 16 17 18 19 1 1 0 93 20 8 9 90 21 2 1 03 22 23 24 25 26 27 8 1 20 28 8 70 29 7 2 50 30 31 32 33 34 35 36 37
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-42
PROBLEM 13.4B (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Closing Entries 2 2016 3 Dec. 31 Sales 4 Purchases Returns and Allowances 5 Income Summary 6 7 31 Income Summary 8 Sales Returns and Allowances 9 Purchases 10 Rent Expenses 11 Telephone Expense 12 Salaries Expense 13 Payroll Taxes Expense 14 Supplies Expense 15 Insurance Expense 16 Depreciation Expense—Office Equipment 17 Depreciation Expense—Store Equipment 18 Uncollectible Accounts Expense 19 Interest Expense 20 21 31 Income Summary 22 Preston Allen, Capital 23 24 31 Preston Allen, Capital 25 Preston Allen, Drawing 26 27 28 29
POST. REF.
DEBIT
31
CREDIT
236 5 6 0 00 2 0 0 0 00 238 5 6 0 00 237 3 6 7 13 6 0 0 0 00 160 0 0 0 00 18 0 0 0 00 2 4 0 0 00 41 4 5 0 00 3 3 9 2 13 5 0 5 00 1 2 0 0 00 1 0 0 0 00 2 0 5 0 00 1 2 8 0 00 9 0 00 4 7 87 4 7 87 8 0 0 0 00 8 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-43
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
PROBLEM 13.4B (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Reversing Entries 2 2017 3 Jan. 1 Interest Payable 4 Interest Expense 5 To reverse adjusting entry (h) made Dec. 31, 2016 6 7 1 Salaries Payable 8 Salaries Expense 9 To reverse adjusting entry (i) made Dec. 31, 2016 10 11 1 Social Security Tax Payable 12 Medicare Tax Payable 13 Payroll Taxes Expense 14 To reverse adjusting entry (j) made Dec. 31, 2016 15 16 1 Federal Unemployment Tax Payable 17 State Unemployment Tax Payable 18 Payroll Taxes Expense 19 To reverse adjusting entry (k) made Dec. 31, 2016 20 21 22 23
POST. REF.
DEBIT
9 0 00
1 4 5 0 00
8 9 90 2 1 03
1 4 50 7 2 50
32
CREDIT 1 2 3 9 0 00 4 5 6 7 1 4 5 0 00 8 9 10 11 12 1 1 0 93 13 14 15 16 17 8 7 00 18 19 20 21 22 23
Analyze: The following entry would be required: PAGE
GENERAL JOURNAL
1 2 3 4 5 6
DATE DESCRIPTION 2017 Jan. 4 Salaries Payable Salaries Expense Cash To record the payment of salaries (ignoring payroll taxes)
POST. REF.
DEBIT
33
CREDIT
1 4 5 0 00 1 1 5 0 00 2 6 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-44
1 2 3 4 5 6
PROBLEM 13.5B PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Adjusting Entries 2 2016 (Adjustment a) 3 Dec. 31 Advertising Expense 4 Prepaid Advertising 5 To record expired advertising on $17,700, 6 6 month contract paid August 1, 2016 7 8 (Adjustment b) 9 31 Supplies Expense 10 Supplies 11 To record supplies used in 2016 12 13 (Adjustment c) 14 31 Depreciation Expense—Store Equipment 15 Accumulated Depreciation—Equipment 16 To record depreciation for 2016 17 18 (Adjustment d) 19 31 Salaries Expense 20 Salaries Payable 21 To record accrued salaries 22 23 31 (Adjustment e) 24 Payroll Taxes Expense 25 Social Security Tax Payable 26 Medicare Tax Payable 27 To record accrued payroll taxes on accrued 28 salaries 29 30 (Adjustment f) 31 31 Interest Receivable 32 Interest Income 33 To record accrued interest on 5-month, 34 6%, $5,500 note receivable dated 35 December 1, 2016 36
POST. REF.
DEBIT
25
CREDIT
14 7 5 0 00 14 7 5 0 00
8 0 8 0 00 8 0 8 0 00
9 8 0 0 00 9 8 0 0 00
4 4 0 0 00 4 4 0 0 00
3 3 6 60 2 7 2 80 6 3 80
2 7 50
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-45
2 7 50
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
PROBLEM 13.5B (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Reversing Entries
1 2 2017 3 Jan. 1 Salaries Payable 4 Salaries Expense 5 To reverse adjusting entry (d) made Dec. 31, 2016 6 7 1 Social Security Tax Payable 8 Medicare Tax Payable 9 Payroll Taxes Expense 10 To reverse adjusting entry (e) made Dec. 31, 2016 11 12 1 Interest Income 13 Interest Receivable 14 To reverse adjusting entry (f) made Dec. 31, 2016 15 16
POST. REF.
DEBIT
4 4 0 0 00
2 7 2 80 6 3 80
2 7 50
26
CREDIT 1 2 3 4 4 0 0 00 4 5 6 7 8 3 3 6 60 9 10 11 12 2 7 50 13 14 15 16
Analyze: The balance of the Prepaid Advertising Account on December 31 is $2,950.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-46
CRITICAL THINKING PROBLEM 13.1 Programs Plus Worksheet Year Ending December 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Allowance for Doubtful Accounts 4 Merchandise Inventory 5 Supplies 6 Prepaid Insurance 7 Equipment 8 Accumulated Depreciation—Equip. 9 Notes Payable 10 Accounts Payable 11 Social Security Tax Payable 12 Medicare Tax Payable 13 Salaries Payable 14 Interest Payable 15 Yasser Tousson, Capital 16 Yasser Tousson, Drawing 17 Income Summary 18 Sales 19 Sales Returns and Allowances 20 Purchases 21 Freight In 22 Purchases Returns and Allowances 23 Purchases Discounts 24 Rent Expense 25 Telephone Expense 26 Salaries Expense 27 Payroll Taxes Expense 28 Interest Expense 29 Supplies Expense 30 Insurance Expense 31 Depreciation Expense—Equipment 32 Uncollectible Accounts Expense 33 Totals 34 Net Income 35 36
TRIAL BALANCE ADJUSTMENTS DEBIT CREDIT DEBIT CREDIT 15 2 8 0 00 26 6 0 0 00 9 5 00 (c) 1 2 2 5 00 62 3 7 5 00 (b) 67 8 5 0 00 (a) 62 3 7 5 00 6 7 4 0 00 (d) 5 7 2 0 00 2 3 8 0 00 (e) 1 1 9 0 00 34 0 0 0 00 10 1 0 0 00 (f) 5 6 0 0 00 7 2 6 4 00 6 5 0 0 00 5 6 0 00 (i) 1 3 0 20 1 3 0 00 (i) 3 0 45 (h) 2 1 0 0 00 (g) 3 2 5 00 93 6 2 0 00 50 0 0 0 00 (a) 62 3 7 5 00 (b) 67 8 5 0 00 514 9 8 0 00 9 6 0 0 00 319 4 3 0 00 3 6 0 0 00 7 1 4 5 00 5 7 6 0 00 14 5 0 0 00 2 1 6 4 00 92 0 0 0 00 (h) 2 1 0 0 00 7 3 0 0 00 (i) 1 6 0 65 1 8 5 00 (g) 3 2 5 00 (d) 5 7 2 0 00 (e) 1 1 9 0 00 (f) 5 6 0 0 00 (c) 1 2 2 5 00 646 1 5 4 00 646 1 5 4 00 146 5 4 5 65 146 5 4 5 65
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-47
CRITICAL THINKING PROBLEM 13.1 (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 15 2 8 0 00 26 6 0 0 00 1 3 2 0 00 67 8 5 0 00 1 0 2 0 00 1 1 9 0 00 34 0 0 0 00 15 7 0 0 00 7 2 6 4 00 6 5 0 0 00 6 9 0 20 1 6 0 45 2 1 0 0 00 3 2 5 00 93 6 2 0 00 50 0 0 0 00 62 3 7 5 00 67 8 5 0 00 514 9 8 0 00 9 6 0 0 00 319 4 3 0 00 3 6 0 0 00 7 1 4 5 00 5 7 6 0 00 14 5 0 0 00 2 1 6 4 00 94 1 0 0 00 7 4 6 0 65 5 1 0 00 5 7 2 0 00 1 1 9 0 00 5 6 0 0 00 1 2 2 5 00 723 4 1 4 65 723 4 1 4 65
INCOME STATEMENT DEBIT CREDIT
62 3 7 5 00 9 6 0 0 00 319 4 3 0 00 3 6 0 0 00
14 5 0 0 00 2 1 6 4 00 94 1 0 0 00 7 4 6 0 65 5 1 0 00 5 7 2 0 00 1 1 9 0 00 5 6 0 0 00 1 2 2 5 00 527 4 7 4 65 68 2 6 0 35 595 7 3 5 00
BALANCE SHEET DEBIT CREDIT 15 2 8 0 00 1 26 6 0 0 00 2 1 3 2 0 00 3 67 8 5 0 00 4 1 0 2 0 00 5 1 1 9 0 00 6 34 0 0 0 00 7 15 7 0 0 00 8 7 2 6 4 00 9 6 5 0 0 00 10 6 9 0 20 11 1 6 0 45 12 2 1 0 0 00 13 3 2 5 00 14 93 6 2 0 00 15 50 0 0 0 00 16 67 8 5 0 00 17 514 9 8 0 00 18 19 20 21 7 1 4 5 00 22 5 7 6 0 00 23 24 25 26 27 28 29 30 31 32 595 7 3 5 00 195 9 4 0 00 127 6 7 9 65 33 68 2 6 0 35 34 595 7 3 5 00 195 9 4 0 00 195 9 4 0 00 35
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-48
CRITICAL THINKING PROBLEM 13.1 (continued) Programs Plus Income Statement Year Ended December 31, 2016 Operating Revenue Sales Less Sales Returns and Allowances Net Sales Cost of Goods Sold Merchandise Inventory, January 1, 2016 Purchases Freight In Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts Net Delivered Cost of Purchases Total Merchandise Available for Sale Less Merchandise Inventory, Dec. 31, 2016 Cost of Goods Sold Gross Profit on Sales Operating Expenses Rent Expense Telephone Expense Salaries Expense Payroll Taxes Expense Supplies Expense Insurance Expense Depreciation Expense—Equipment Uncollectible Accounts Expense Total Operating Expenses Income from Operations Other Expenses Interest Expense Net Income for Year
13-49
514 9 8 0 00 9 6 0 0 00 505 3 8 0 00 62 3 7 5 00 319 4 3 0 00 3 6 0 0 00 323 0 3 0 00 7 1 4 5 00 5 7 6 0 00
12 9 0 5 00 310 1 2 5 00 372 5 0 0 00 67 8 5 0 00 304 6 5 0 00 200 7 3 0 00 14 5 0 0 00 2 1 6 4 00 94 1 0 0 00 7 4 6 0 65 5 7 2 0 00 1 1 9 0 00 5 6 0 0 00 1 2 2 5 00 131 9 5 9 65 68 7 7 0 35 5 1 0 00 68 2 6 0 35
CRITICAL THINKING PROBLEM 13.1 (continued) Programs Plus Statement of Owner's Equity Year Ended December 31, 2016 Yasser Tousson, January 1, 2016 Net Income for Year Less Withdrawals for Year Increase in Capital Yasser Tousson, Capital, December 31, 2016
93 6 2 0 00 68 2 6 0 35 50 0 0 0 00 18 2 6 0 35 111 8 8 0 35
Programs Plus Balance Sheet December 31, 2016 Assets Current Assets Cash Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Prepaid Expenses Supplies Prepaid Insurance Total Current Assets Plant and Equipment Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Notes Payable Accounts Payable Interest Payable Social Security Tax Payable Medicare Tax Payable Salaries Payable Total Current Liabilities Owner’s Equity Yasser Tousson, Capital Total Liabilities and Owner’s Equity
15 2 8 0 00 26 6 0 0 00 1 3 2 0 00
1 0 2 0 00 1 1 9 0 00
34 0 0 0 00 15 7 0 0 00
25 2 8 0 00 67 8 5 0 00
2 2 1 0 00 110 6 2 0 00
18 3 0 0 00 18 3 0 0 00 128 9 2 0 00
7 2 6 4 00 6 5 0 0 00 3 2 5 00 6 9 0 20 1 6 0 45 2 1 0 0 00 17 0 3 9 65 111 8 8 0 35 128 9 2 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-50
CRITICAL THINKING PROBLEM 13.1 (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 (Adjustment a) 3 Dec. 31 Income Summary 4 Merchandise Inventory 5 To transfer beginning inventory 6 7 (Adjustment b) 8 31 Merchandise Inventory 9 Income Summary 10 To record ending inventory 11 12 (Adjustment c) 13 31 Uncollectible Accounts Expense 14 Allowance for Doubtful Accounts 15 To record estimated loss for 2016, based on 0.5% 16 of net credit sales of $245,000 17 18 (Adjustment d) 19 31 Supplies Expense 20 Supplies 21 To record supplies used during 2016 22 23 (Adjustment e) 24 31 Insurance Expense 25 Prepaid Insurance 26 To record expired insurance 27 28 (Adjustment f) 29 31 Depreciation Expense—Equipment 30 Accumulated Depreciation—Equipment 31 To record depreciation for 2016 (schedule on file) 32
POST. REF.
DEBIT
25
CREDIT
1 2 62 3 7 5 00 3 62 3 7 5 00 4 5 6 7 67 8 5 0 00 8 67 8 5 0 00 9 10 11 12 1 2 2 5 00 13 1 2 2 5 00 14 15 16 17 18 5 7 2 0 00 19 5 7 2 0 00 20 21 22 23 1 1 9 0 00 24 1 1 9 0 00 25 26 27 28 5 6 0 0 00 29 5 6 0 0 00 30 31 32
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-51
CRITICAL THINKING PROBLEM 13.1 (continued) PAGE
GENERAL JOURNAL
DATE
DESCRIPTION Adjusting Entries
1 2 2016 (Adjustment g) 3 Dec. 31 Interest Expense 4 Interest Payable 5 To record accrued interest on notes payable 6 7 (Adjustment h) 8 31 Salaries Expense 9 Salaries Payable 10 To record accrued salaries 11 12 (Adjustment i) 13 31 Payroll Taxes Expense 14 Social Security Tax Payable 15 Medicare Tax Payable 16 To record accrued payroll taxes on accrued 17 salaries for December: 18 Social Security tax = 6.2% × $2,100; 19 Medicare = 1.45% × $2,100 20 21 22 23
POST. REF.
DEBIT
26
CREDIT
3 2 5 00 3 2 5 00
2 1 0 0 00 2 1 0 0 00
1 6 0 65 1 3 0 20 3 0 45
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-52
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
CRITICAL THINKING PROBLEM 13.1 (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Closing Entries 2 2016 3 Dec. 31 Sales 4 Purchase Returns and Allowances 5 Purchase Discounts 6 Income Summary 7 8 31 Income Summary 9 Sales Returns and Allowances 10 Purchases 11 Freight In 12 Rent Expenses 13 Telephone Expense 14 Salaries Expense 15 Payroll Taxes Expense 16 Supplies Expense 17 Insurance Expense 18 Depreciation Expense—Equipment 19 Uncollectible Accounts Expense 20 Interest Expense 21 22 31 Income Summary 23 Yasser Tousson, Capital 24 25 31 Yasser Tousson, Capital 26 Yasser Tousson, Drawing 27 28 29
POST. REF.
DEBIT
27
CREDIT
514 9 8 0 00 7 1 4 5 00 5 7 6 0 00 527 8 8 5 00 465 0 9 9 65 9 6 0 0 00 319 4 3 0 00 3 6 0 0 00 14 5 0 0 00 2 1 6 4 00 94 1 0 0 00 7 4 6 0 65 5 7 2 0 00 1 1 9 0 00 5 6 0 0 00 1 2 2 5 00 5 1 0 00 68 2 6 0 35 68 2 6 0 35 50 0 0 0 00 50 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-53
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
CRITICAL THINKING PROBLEM 13.1 (continued) PAGE
GENERAL JOURNAL
DATE DESCRIPTION 1 Reversing Entries 2 2017 3 Jan. 1 Interest Payable 4 Interest Expense 5 To reverse adjusting entry (g) made Dec. 31, 2016 6 7 1 Salaries Payable 8 Salaries Expense 9 To reverse adjusting entry (h) made Dec. 31, 2016 10 11 1 Social Security Tax Payable 12 Medicare Tax Payable 13 Payroll Taxes Expense 14 To reverse adjusting entry (i) made Dec. 31, 2016 15 16 17 18 19 20 21 22 23 24 25
POST. REF.
DEBIT
3 2 5 00
2 1 0 0 00
1 3 0 20 3 0 45
28
CREDIT 1 2 3 3 2 5 00 4 5 6 7 2 1 0 0 00 8 9 10 11 12 1 6 0 65 13 14 15 16 17 18 19 20 21 22 23 24 25
Analyze: The owner’s capital account increased by 19.5% ($111,880.35 - $93,620.00) ÷ $93,620 = 19.5%.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-54
CRITICAL THINKING PROBLEM 13.2 Newport Jewelery Balance Sheet December 31, 2015 Assets Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Total Current Assets Plant and Equipment Store Fixtures and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Accounts Payable Salaries Payable Total Current Liabilities Long-Term Liabilities Notes Payable Total Liabilities Owner’s Equity Teagan Fitzgerald, Capital Total Liabilities and Owner’s Equity
150 0 0 0 00 45 0 0 0 00 105 0 0 0 00 6 0 0 0 00 306 0 0 0 00 180 0 0 0 00 486 0 0 0 00
132 0 0 0 00 18 0 0 0 00 150 0 0 0 00 90 0 0 0 00 240 0 0 0 00
246 0 0 0 00 486 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-55
CRITICAL THINKING PROBLEM 13.2 (continued) Newport Jewelry Balance Sheet December 31, 2016 Assets Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Total Current Assets Plant and Equipment Store Fixtures and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Accounts Payable Salaries Payable Total Current Liabilities Long-Term Liabilities Notes Payable Total Liabilities Owner’s Equity Teagan Fitzgerald, Capital Total Liabilities and Owner’s Equity
30 0 0 0 00 91 5 0 0 00 234 0 0 0 00 9 0 0 0 00 364 5 0 0 00 390 0 0 0 00 754 5 0 0 00
171 0 0 0 00 19 5 0 0 00 190 5 0 0 00 240 0 0 0 00 430 5 0 0 00
324 0 0 0 00 754 5 0 0 00
NOTE TO INSTRUCTOR: While detailed financial statement analysis is not presented in this chapter, we have included this problem to show students how classified statements provide more useful financial information than non-classified statements. 2. From 2015 to 2016, Newport Jewelry’s cash decreased by $120,000. At the same time, current liabilities increased from $150,000 to $190,500, or by $40,500. In spite of these changes, the ratio of current assets to current liabilities is still close to 2:1, a widely-used rule of thumb for this ratio as satisfactory. One strong factor is the growth in owner’s equity, resulting from profits. Newport Jewelry should be able to meet its obligations. However one development to be examined further is the large growth in inventory. 3. A classified balance sheet permits the reader to make more meaningful comparisons of balance sheet accounts. This allows the reader to make better decisions regarding the company's financial strength and financial future.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-56
SOLUTIONS TO BUSINESS CONNECTIONS Managerial Focus: 1. Timely receipt of financial data facilitates effective management and planning. 2. Increase in accounts receivable resulting from slow collections from customers or an unwarranted growth in inventories; payment of long-term debt or purchase of property. 3. May reflect that excess inventory has become obsolete or soiled. Growth in inventory ties up funds. 4. Reveal trends or changes in specific items that need to be investigated. 5. Yes. This indicates a strong possibility that there will be inadequate funds to cover the liabilities as they come due. 6. Yes, compare increase in selling expenses to the increase in sales. Investigate levels of sales returns and allowances. Review each selling expense account for accuracy. 7. Reveals variances out-of-line with industry averages; areas where costs should be controlled. Ethical Dilemma: You should follow the generally accepted accounting principles (GAAP) and do the proper adjusting entry. You might suggest the owner seek different forms of financing that would not require maintenance of a 1.5 current ratio. Additionally, you can offer to meet with the banker and try to obtain a waiver of the current ratio current ratio requirement for the current period. Financial Statement Analysis: 1. 2012: 1.1 ($1,285.4 ÷ $1,187.6) 2011: 1.2 ($1,222.9 ÷ $993.3) 2. The current ratio declined from 1.2 in 2011 to 1.1 in 2012. 3. 40.3% gross profit percentage ($1,617.8 ÷ $4,014.2) Teamwork: Answers will vary depending on the year. Internet Connection: Answers will vary depending on the corporation.
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-57
SOLUTIONS TO PRACTICE TEST Part A True-False 1. FALSE 2. TRUE 3. FALSE 4. FALSE 5. TRUE 6. TRUE 7. FALSE 8. FALSE 9. TRUE 10. FALSE 11. FALSE 12. TRUE 13. FALSE
14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
FALSE FALSE TRUE TRUE TRUE TRUE TRUE FALSE FALSE TRUE TRUE FALSE
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-58
MINI-PRACTICE SET 2 MERCHANDISING BUSINESS ACCOUNTING CYCLE PAGE 16
GENERAL JOURNAL DATE 1 2016 2 Oct. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
DESCRIPTION
Post Ref.
DEBIT
1 Rent Expense Cash Issued Check 601 to pay for monthly rent
629 101
4 2 0 0 00
1 Prepaid Advertising Cash Issued Check 602 for a three-month radio contract
135 101
4 8 0 0 00
101
5 2 0 00
2 Cash Accounts Receivable / Megan Greening Received payment from credit customer 2 Sales Tax Payable Cash Issued Check 603 for sales tax owed July – Sept.
111
17 8 2 0 00 231 101
2 Accounts Payable / A Fashion Statement Purchases Discounts Cash Issued Check 604 for payment of Invoice 9387
203
3 Accounts Receivable / Dimitri Sayegh Sales Tax Payable Sales Sold merchandise on credit; issued Sales Slip 241
111
4 Supplies Cash Issued Check 605 for supplies
131 101
7 8 3 0 00
504 101
2 6 0 4 00
231 401
1 0 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-59
CREDIT 1 2 4 2 0 0 00 3 4 5 6 4 8 0 0 00 7 8 9 10 5 2 0 00 11 12 13 14 17 8 2 0 00 15 16 17 18 1 5 6 60 20 7 6 7 3 40 19 21 22 23 1 2 4 00 24 2 4 8 0 00 25 26 27 28 1 0 5 0 00 29 30 31
MINI-PRACTICE SET 2 (continued) PAGE 17
GENERAL JOURNAL DATE 1 2016 2 Oct. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
DESCRIPTION
4 Accounts Payable / Today’s Woman Purchases Discounts Cash Issued Check 606 for payment of Invoice 5671 5 Cash Accounts Receivable / Emily Tran Received payment on account 5 Sales Returns and Allowances Sales Tax Payable Accounts Receivable / Dimitri Sayegh Issued Credit Memo 18 for damaged merchandise originally sold on Sales Slip 241, Oct. 3
Post Ref. 203
DEBIT
8 7 7 0 00
504 101
101 111
402 231 111
1 7 0 0 00
6 0 0 00 3 0 00
5 Accounts Payable / Classy Threads Purchases Discounts Cash Issued Check 607 for payment of Invoice 3292
203
6 Cash Sales Sales Tax Payable Cash sales during Oct. 1 – 6
101 401 231
19 5 3 0 00
101
8 3 2 00
8 Cash Accounts Receivable / James Helmer Received payment from credit customer 8 Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Cash Issued Check 608 for September payroll taxes
1 7 0 0 00
504 101
111
221 222 223 101
7 0 2 00 1 6 2 00 1 0 2 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-60
CREDIT 1 2 1 7 5 40 3 8 5 9 4 60 4 5 6 7 1 7 0 0 00 8 9 10 11 12 6 3 0 00 13 14 15 16 17 3 4 00 18 1 6 6 6 00 19 20 21 22 18 6 0 0 00 23 9 3 0 00 24 25 26 27 8 3 2 00 28 29 30 31 32 33 1 8 8 4 00 34 35 36
MINI-PRACTICE SET 2 (continued) PAGE 18
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Oct. 9 Accounts Receivable / Emma Maldonado 3 Sales 4 Sales Tax Payable 5 Sold merchandise on credit; issued Sales Slip 242 6 7 10 Advertising Expense 8 Cash 9 Issued Check 609 for advertisement 10 11 11 Purchases 12 Accounts Payable / A Fashion Statement 13 Purchased merchandise on account; 14 Invoice 9422, terms 2/10, n/30 15 16 12 Freight In 17 Cash 18 Issued Check 610 for freight charges 19 20 13 Cash 21 Sales 22 Sales Tax Payable 23 Cash sales during Oct. 8 – 13 24 25 15 Accounts Receivable / James Helmer 26 Sales 27 Sales Tax Payable 28 Sold merchandise on credit; issued Sales Slip 243 29 30 16 Purchases 31 Cash 32 Purchased discontinued merchandise, Check 611 33 34 16 Cash 35 Accounts Receivable / Dimitri Sayegh 36 Received payment from credit customer 37
Post Ref.
DEBIT
111
2 1 5 2 50
401 231
611 101
1 4 4 5 00
501
4 8 2 0 00
203
502 101
3 7 5 00
101 401 231
12 9 1 5 00
111
2 0 3 7 00
401 231
501 101
6 4 2 0 00
101
5 1 0 00
111
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-61
CREDIT 1 2 2 0 5 0 00 3 1 0 2 50 4 5 6 7 1 4 4 5 00 8 9 10 11 4 8 2 0 00 12 13 14 15 16 3 7 5 00 17 18 19 20 12 3 0 0 00 21 6 1 5 00 22 23 24 25 1 9 4 0 00 26 9 7 00 27 28 29 30 6 4 2 0 00 31 32 33 34 5 1 0 00 35 36 37
MINI-PRACTICE SET 2 (continued) PAGE 19
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Oct. 16 Accounts Payable / A Fashion Statement 3 Purchases Discounts 4 Cash 5 Issued Check 612 for payment of Invoice 9422 6 7 18 Teresa Lojay, Drawing 8 Cash 9 Issued Check 613 for personal use 10 11 20 Cash 12 Sales 13 Sales Tax Payable 14 Cash sales during Oct. 15 – 20 15 16 22 Utilities Expense 17 Cash 18 Issued Check 614 for monthly electric bill 19 20 24 Accounts Receivable / Megan Greening 21 Sales 22 Sales Tax Payable 23 Sold merchandise on credit; issued Sales Slip 244 24 25 25 Purchases 26 Accounts Payable / Classy Threads 27 Purchased merchandise on account; 28 Invoice 3418, terms 2/10, n/30 29 30 26 Telephone Expense 31 Cash 32 Issued Check 615 for monthly telephone bill 33 34 27 Cash 35 Sales 36 Sales Tax Payable 37 Cash sales during Oct. 22 – 27 38
Post Ref.
DEBIT
203
4 8 2 0 00
504 101
302 101
7 2 0 0 00
101 401 231
13 5 0 0 00
644 101
1 1 1 2 00
111
8 6 1 00
401 231
501 203
3 3 8 0 00
638 101
7 8 0 00
101 401 231
14 9 5 2 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-62
CREDIT 1 2 9 6 40 3 4 7 2 3 60 4 5 6 7 7 2 0 0 00 8 9 10 11 12 8 2 5 00 12 6 7 5 00 13 14 15 16 1 1 1 2 00 17 18 19 20 8 2 0 00 21 4 1 00 22 23 24 25 3 3 8 0 00 26 27 28 29 30 7 8 0 00 31 32 33 34 14 2 4 0 00 35 7 1 2 00 36 37 38
MINI-PRACTICE SET 2 (continued) PAGE 20
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Oct. 29 Accounts Payable / Classy Threads 3 Purchases Returns and Allowances 4 Received Credit Memo 175 for defective 5 goods returned; original purchase made on 6 Invoice 3418 7 8 29 Accounts Receivable / Emily Tran 9 Sales 10 Sales Tax Payable 11 Sold merchandise on credit; issued Sales Slip 245 12 13 29 Salaries Expense 14 Salaries Payable 15 Social Security Tax Payable 16 Medicare Tax Payable 17 Employee Income Tax Payable 18 To record October payroll 19 20 29 Payroll Taxes Expense 21 Social Security Tax Payable 22 Medicare Tax Payable 23 Federal Unemployment Tax Payable 24 State Unemployment Tax Payable 25 To record October payroll taxes 26 27 30 Purchases 28 Accounts Payable / Today’s Woman 29 Purchased merchandise on account; 30 Invoice 5821, terms 1/10, n/30 31 32 31 Salaries Payable 33 Cash 34 Issued Checks 616 – 619 for October payroll 35
Post Ref. 203
DEBIT
4 3 0 00
503
111
3 2 7 6 00
401 231
632 229 221 222 223
10 8 0 0 00
626 221 222 225 227
1 5 6 6 00
501
4 0 2 0 00
203
229 101
8 9 1 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-63
CREDIT 1 2 4 3 0 00 3 4 5 6 7 8 3 1 2 0 00 9 1 5 6 00 10 11 12 13 8 9 1 6 00 14 7 0 2 00 15 1 6 2 00 16 1 0 2 0 00 17 18 19 20 7 0 2 00 21 1 6 2 00 22 1 1 8 00 23 5 8 4 00 24 25 26 27 4 0 2 0 00 28 29 30 31 32 8 9 1 6 00 33 34 35
MINI-PRACTICE SET 2 (continued) PAGE 21
GENERAL JOURNAL DATE
DESCRIPTION
1 2016 2 Oct. 31 Janitorial Services Expense 3 Cash 4 Issued Check 620 for janitorial services 5 6 31 Cash 7 Sales 8 Sales Tax Payable 9 Cash sales during Oct. 29 – 31 10
Post Ref.
DEBIT
623 101
4 7 5 00
101 401 231
1 7 8 5 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-64
CREDIT 1 2 4 7 5 00 3 4 5 6 1 7 0 0 00 7 8 5 00 8 9 10
MINI-PRACTICE SET 2 (continued) PAGE 22
GENERAL JOURNAL DATE
DESCRIPTION
Adjusting Entries 1 2 2016 (Adjustment a) 3 Oct. 31 Uncollectible Accounts Expense 4 Allowance for Doubtful Accounts 5 To record estimated loss from uncollectible 6 accounts, based on 1.0% of net credit sales 7 8 (Adjustment b) 9 31 Supplies Expense 10 Supplies 11 To record supplies used 12 13 (Adjustment c) 14 31 Insurance Expense 15 Prepaid Insurance 16 To record expired insurance 17 18 (Adjustment d) 19 31 Advertising Expense 20 Prepaid Advertising 21 To record expired advertising 22 23 (Adjustment e) 24 31 Depreciation Expense – Equipment 25 Accumulated Depreciation – Equipment 26 To record depreciation for month 27 28 (Adjustment f) 29 31 Income Summary 30 Merchandise Inventory 31 To transfer beginning inventory 32 33 (Adjustment g) 34 31 Merchandise Inventory 35 Income Summary 36 To record ending inventory 37
Post Ref.
DEBIT
620 112
9 8 10
635 131
1 9 1 0 00
617 133
1 4 0 0 00
611 135
1 6 0 0 00
614 142
1 1 7 5 00
399 121
88 9 9 6 00
121 399
81 2 6 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-65
CREDIT 1 2 3 9 8 10 4 5 6 7 8 9 1 9 1 0 00 10 11 12 13 14 1 4 0 0 00 15 16 17 18 19 1 6 0 0 00 20 21 22 23 24 1 1 7 5 00 25 26 27 28 29 88 9 9 6 00 30 31 32 33 34 81 2 6 0 00 35 36 37
MINI-PRACTICE SET 2 (continued) PAGE 23
GENERAL JOURNAL DATE
DESCRIPTION
1 Closing Entries 2 2016 3 Oct. 31 Sales 4 Purchases Returns and Allowances 5 Purchases Discounts 6 Income Summary 7 8 31 Income Summary 9 Sales Returns and Allowances 10 Purchases 11 Freight In 12 Advertising Expense 13 Depreciation Expense – Equipment 14 Insurance Expense 15 Uncollectible Accounts Expense 16 Janitorial Services Expense 17 Payroll Taxes Expense 18 Rent Expense 19 Salaries Expense 20 Supplies Expense 21 Telephone Expense 22 Utilities Expense 23 24 31 Income Summary 25 Teresa Lojay, Capital 26 27 31 Teresa Lojay, Capital 28 Teresa Lojay, Drawing 29
Post Ref.
DEBIT
401 503 504 399
70 7 5 0 00 4 3 0 00 4 6 2 40
399 402 501 502 611 614 617 620 623 626 629 632 635 638 644
46 1 7 6 10
399 301
17 7 3 0 30
301 302
7 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-66
CREDIT 1 2 3 4 5 71 6 4 2 40 6 7 8 6 0 0 00 9 18 6 4 0 00 10 3 7 5 00 11 3 0 4 5 00 12 1 1 7 5 00 13 1 4 0 0 00 14 9 8 10 15 4 7 5 00 16 1 5 6 6 00 17 4 2 0 0 00 18 10 8 0 0 00 19 1 9 1 0 00 20 7 8 0 00 21 1 1 1 2 00 22 23 24 17 7 3 0 30 25 26 27 7 2 0 0 00 28 29
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 101
ACCOUNT Cash DATE
DESCRIPTION
2016 Oct. 1 Balance 1 1 2 2 2 4 4 5 5 6 8 8 10 12 13 16 16 16 18 20 22 26 27 31 31 31
Post Ref. J16 J16 J16 J16 J16 J16 J17 J17 J17 J17 J17 J17 J18 J18 J18 J18 J18 J19 J19 J19 J19 J19 J19 J20 J21 J21
DEBIT
CREDIT
4 2 0 0 00 4 8 0 0 00 5 2 0 00 17 8 2 0 00 7 6 7 3 40 1 0 5 0 00 8 5 9 4 60 1 7 0 0 00 1 6 6 6 00 19 5 3 0 00 8 3 2 00 1 8 8 4 00 1 4 4 5 00 3 7 5 00 12 9 1 5 00 6 4 2 0 00 5 1 0 00 4 7 2 3 60 7 2 0 0 00 14 1 7 5 00 1 1 1 2 00 7 8 0 00 14 9 5 2 00 8 9 1 6 00 4 7 5 00 1 7 8 5 00
BALANCE DEBIT CREDIT 59 8 0 0 00 55 6 0 0 00 50 0 8 0 00 51 3 2 0 00 33 5 0 0 00 25 8 2 6 60 24 7 7 6 60 16 1 8 2 00 17 8 8 2 00 16 2 1 6 00 35 7 4 6 00 36 5 7 8 00 34 6 9 4 00 33 2 4 9 00 32 8 7 4 00 45 7 8 9 00 39 3 6 9 00 39 8 7 9 00 35 1 5 5 40 27 9 5 5 40 42 1 3 0 40 41 0 1 8 40 40 2 3 8 40 55 1 9 0 40 46 2 7 4 40 45 7 9 9 40 47 5 8 4 40
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-67
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 111
ACCOUNT Accounts Receivable DATE
DESCRIPTION
2016 Oct. 1 Balance 2 3 5 5 Credit Memo 18 8 9 15 16 24 29
Post Ref. J16 J16 J17 J17 J17 J18 J18 J18 J19 J20
DEBIT
CREDIT
5 2 0 00 2 6 0 4 00 1 7 0 0 00 6 3 0 00 8 3 2 00 2 1 5 2 50 2 0 3 7 00 5 1 0 00 8 6 1 00 3 2 7 6 00
DESCRIPTION
2016 Oct. 1 Balance 31 Adjusting
Post Ref.
DEBIT
J22
CREDIT
DESCRIPTION
2016 Oct. 1 Balance 31 Adjusting 31 Adjusting
Post Ref. J22 J22
BALANCE DEBIT CREDIT 4 2 0 00 5 1 8 10
9 8 10
ACCOUNT NO. 121
ACCOUNT Merchandise Inventory DATE
6 2 1 0 00 5 6 9 0 00 8 2 9 4 00 6 5 9 4 00 5 9 6 4 00 5 1 3 2 00 7 2 8 4 50 9 3 2 1 50 8 8 1 1 50 9 6 7 2 50 12 9 4 8 50
ACCOUNT NO. 112
ACCOUNT Allowance for Doubtful Accounts DATE
BALANCE DEBIT CREDIT
DEBIT
CREDIT
88 9 9 6 00 81 2 6 0 00
BALANCE DEBIT CREDIT 88 9 9 6 00 - 0 81 2 6 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-68
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 131
ACCOUNT Supplies DATE
DESCRIPTION
2016 Oct. 1 Balance 4 31 Adjusting
Post Ref. J16 J22
DEBIT
CREDIT
1 0 5 0 00 1 9 1 0 00
DESCRIPTION
2016 Oct. 1 Balance 31 Adjusting
Post Ref.
DEBIT
J22
CREDIT
1 4 0 0 00
DESCRIPTION
2016 Oct. 1 31 Adjusting
Post Ref.
DEBIT
J16 J22
4 8 0 0 00
CREDIT
1 6 0 0 00
DESCRIPTION
2016 Oct. 1 Balance
8 4 0 0 00 7 0 0 0 00
BALANCE DEBIT CREDIT 4 8 0 0 00 3 2 0 0 00
ACCOUNT NO. 141
ACCOUNT Equipment DATE
BALANCE DEBIT CREDIT
ACCOUNT NO. 135
ACCOUNT Prepaid Advertising DATE
4 1 0 0 00 5 1 5 0 00 3 2 4 0 00
ACCOUNT NO. 133
ACCOUNT Prepaid Insurance DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
CREDIT
BALANCE DEBIT CREDIT 83 0 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-69
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT Accumulated Depreciation–Equipment DATE
DESCRIPTION
2016 Oct. 1 Balance 31 Adjusting
Post Ref.
DEBIT
J22
CREDIT
DESCRIPTION
2016 Oct. 1 Balance 2 4 5 11 16 25 29 30
DESCRIPTION
2016 Oct. 1 Balance 8 29 29
7 0 5 0 00 8 2 2 5 00
ACCOUNT NO. 203 Post Ref. J16 J17 J17 J18 J19 J19 J20 J20
DEBIT
CREDIT
Post Ref. J17 J20 J20
BALANCE DEBIT CREDIT 18 3 0 0 00 10 4 7 0 00 1 7 0 0 00 - 0 4 8 2 0 00 - 0 3 3 8 0 00 2 9 5 0 00 6 9 7 0 00
7 8 3 0 00 8 7 7 0 00 1 7 0 0 00 4 8 2 0 00 4 8 2 0 00 3 3 8 0 00 4 3 0 00 4 0 2 0 00
ACCOUNT NO. 221
ACCOUNT Social Security Tax Payable DATE
BALANCE DEBIT CREDIT
1 1 7 5 00
ACCOUNT Accounts Payable DATE
ACCOUNT NO. 142
DEBIT
CREDIT
BALANCE DEBIT CREDIT
7 0 2 00 7 0 2 00 7 0 2 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-70
7 0 2 00 - 0 7 0 2 00 1 4 0 4 00
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 222
ACCOUNT Medicare Tax Payable DATE
DESCRIPTION
2016 Oct. 1 Balance 8 29 29
Post Ref.
DEBIT
J17 J20 J20
CREDIT
DESCRIPTION
2016 Oct. 1 Balance 8 29
Post Ref. J17 J20
1 6 2 00 1 6 2 00
ACCOUNT NO. 223
DEBIT
CREDIT
DESCRIPTION
2016 Oct. 1 Balance 29
Post Ref.
DESCRIPTION
DEBIT
J20
2016 Oct. 1 Balance 29
Post Ref. J20
1 0 2 0 00 - 0 1 0 2 0 00
1 0 2 0 00
ACCOUNT NO. 225 CREDIT
BALANCE DEBIT CREDIT 5 1 2 00 6 3 0 00
1 1 8 00
ACCOUNT NO. 227
ACCOUNT State Unemployment Tax Payable DATE
BALANCE DEBIT CREDIT
1 0 2 0 00
ACCOUNT Federal Unemployment Tax Payable DATE
1 6 2 00 - 0 1 6 2 00 3 2 4 00
1 6 2 00
ACCOUNT Employee Income Tax Payable DATE
BALANCE DEBIT CREDIT
DEBIT
CREDIT
BALANCE DEBIT CREDIT
5 8 4 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-71
1 2 6 8 00 1 8 5 2 00
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 229
ACCOUNT Salaries Payable DATE
DESCRIPTION
2016 Oct. 29 31
Post Ref. J20 J20
DEBIT
CREDIT
8 9 1 6 00
DESCRIPTION
2016 Oct. 1 Balance 2 3 5 6 9 13 15 20 24 27 29 31
ACCOUNT NO. 231 Post Ref. J16 J16 J17 J17 J18 J18 J18 J19 J19 J19 J20 J21
DEBIT
CREDIT
DESCRIPTION
2016 Oct. 1 Balance 31 Closing 31 Closing
Post Ref. J23 J23
BALANCE DEBIT CREDIT 17 8 2 0 00 - 0 1 2 4 00 9 4 00 1 0 2 4 00 1 1 2 6 50 1 7 4 1 50 1 8 3 8 50 2 5 1 3 50 2 5 5 4 50 3 2 6 6 50 3 4 2 2 50 3 5 0 7 50
17 8 2 0 00 1 2 4 00 3 0 00 9 3 0 00 1 0 2 50 6 1 5 00 9 7 00 6 7 5 00 4 1 00 7 1 2 00 1 5 6 00 8 5 00
ACCOUNT NO. 301
ACCOUNT Teresa Lojay, Capital DATE
8 9 1 6 00 - 0 -
8 9 1 6 00
ACCOUNT Sales Tax Payable DATE
BALANCE DEBIT CREDIT
DEBIT
CREDIT
BALANCE DEBIT CREDIT
17 7 3 0 30 7 2 0 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-72
203 2 5 2 00 220 9 8 2 30 213 7 8 2 30
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 302
ACCOUNT Teresa Lojay, Drawing DATE
DESCRIPTION
2016 Oct. 18 31 Closing
Post Ref.
DEBIT
J19 J23
7 2 0 0 00
CREDIT
7 2 0 0 00
DESCRIPTION
2016 Oct. 31 Adjusting 31 Adjusting 31 Closing 31 Closing 31 Closing
Post Ref.
DEBIT
J22 J22 J23 J23 J23
88 9 9 6 00
CREDIT
81 2 6 0 00 71 6 4 2 40
DESCRIPTION
2016 Oct. 3 6 9 13 15 20 24 27 29 31 31 Closing
BALANCE DEBIT CREDIT 88 9 9 6 00 7 7 3 6 00 63 9 0 6 40 17 7 3 0 30 - 0 -
46 1 7 6 10 17 7 3 0 30
ACCOUNT NO. 401
ACCOUNT Sales DATE
7 2 0 0 00 - 0 -
ACCOUNT NO. 399
ACCOUNT Income Summary DATE
BALANCE DEBIT CREDIT
Post Ref. J16 J17 J18 J18 J18 J19 J19 J19 J20 J21 J23
DEBIT
CREDIT
BALANCE DEBIT CREDIT
2 4 8 0 00 18 6 0 0 00 2 0 5 0 00 12 3 0 0 00 1 9 4 0 00 13 5 0 0 00 8 2 0 00 14 2 4 0 00 3 1 2 0 00 1 7 0 0 00 70 7 5 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-73
2 4 8 0 00 21 0 8 0 00 23 1 3 0 00 35 4 3 0 00 37 3 7 0 00 50 8 7 0 00 51 6 9 0 00 65 9 3 0 00 69 0 5 0 00 70 7 5 0 00 - 0 -
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT Sales Returns and Allowances DATE
DESCRIPTION
2016 Oct. 5 31 Closing
ACCOUNT
Purchases
DATE
DESCRIPTION
2016 Oct. 11 16 25 30 31 Closing
ACCOUNT
Freight In
DATE
DESCRIPTION
2016 Oct. 12 31 Closing
Post Ref.
DEBIT
J17 J23
6 0 0 00
CREDIT
6 0 0 00
DESCRIPTION
2016 Oct. 29 31 Closing
BALANCE DEBIT CREDIT 6 0 0 00 - 0 -
ACCOUNT NO. 501 Post Ref.
DEBIT
J18 J18 J19 J20 J23
4 8 2 0 00 6 4 2 0 00 3 3 8 0 00 4 0 2 0 00
CREDIT
18 6 4 0 00
BALANCE DEBIT CREDIT 4 8 2 0 00 11 2 4 0 00 14 6 2 0 00 18 6 4 0 00 - 0 -
ACCOUNT NO. 502 Post Ref.
DEBIT
J18 J23
3 7 5 00
CREDIT
3 7 5 00
Post Ref. J20 J23
DEBIT
BALANCE DEBIT CREDIT 3 7 5 00 - 0 -
ACCOUNT NO. 503
ACCOUNT Purchases Returns and Allowances DATE
ACCOUNT NO. 402
CREDIT
BALANCE DEBIT CREDIT
4 3 0 00 4 3 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-74
4 3 0 00 - 0 -
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 504
ACCOUNT Purchases Discounts DATE
DESCRIPTION
Post Ref.
2016 Oct. 2 4 5 16 31 Closing
J16 J17 J17 J19 J23
DEBIT
CREDIT
1 5 6 60 1 7 5 40 3 4 00 9 6 40
DESCRIPTION
2016 Oct. 10 31 Adjusting 31 Closing
ACCOUNT NO. 611
Post Ref.
DEBIT
J18 J22 J23
1 4 4 5 00 1 6 0 0 00
CREDIT
3 0 4 5 00
ACCOUNT Depreciation Expense – Equipment DATE
DESCRIPTION
2016 Oct. 31 Adjusting 31 Closing
Post Ref.
DEBIT
J22 J23
1 1 7 5 00
DESCRIPTION
2016 Oct. 31 Adjusting 31 Closing
BALANCE DEBIT CREDIT 1 4 4 5 00 3 0 4 5 00 - 0 -
ACCOUNT NO. 614 CREDIT
1 1 7 5 00
BALANCE DEBIT CREDIT 1 1 7 5 00 - 0 -
ACCOUNT NO. 617
ACCOUNT Insurance Expense DATE
1 5 6 60 3 3 2 00 3 6 6 00 4 6 2 40 - 0 -
4 6 2 40
ACCOUNT Advertising Expense DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J22 J23
1 4 0 0 00
CREDIT
1 4 0 0 00
BALANCE DEBIT CREDIT 1 4 0 0 00 - 0 -
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-75
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT Uncollectible Accounts Expense DATE
DESCRIPTION
2016 Oct. 31 Adjusting 31 Closing
Post Ref. J22 J23
DEBIT
ACCOUNT NO. 620
CREDIT
9 8 10 9 8 10
DESCRIPTION
2016 Oct. 31 31 Closing
Post Ref.
DEBIT
J21 J23
4 7 5 00
CREDIT
4 7 5 00
DESCRIPTION
2016 Oct. 29 31 Closing
Post Ref.
DEBIT
J20 J23
1 5 6 6 00
CREDIT
1 5 6 6 00
DESCRIPTION
2016 Oct. 1 31 Closing
4 7 5 00 - 0 -
BALANCE DEBIT CREDIT 1 5 6 6 00 - 0 -
ACCOUNT NO. 629
ACCOUNT Rent Expense DATE
BALANCE DEBIT CREDIT
ACCOUNT NO. 626
ACCOUNT Payroll Taxes Expense DATE
9 8 10 - 0 -
ACCOUNT NO. 623
ACCOUNT Janitorial Services Expense DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J16 J23
4 2 0 0 00
CREDIT
4 2 0 0 00
BALANCE DEBIT CREDIT 4 2 0 0 00 - 0 -
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-76
MINI-PRACTICE SET 2 (continued) GENERAL LEDGER ACCOUNT NO. 632
ACCOUNT Salaries Expense DATE
DESCRIPTION
2016 Oct. 29 31 Closing
Post Ref.
DEBIT
J20 J23
10 8 0 0 00
CREDIT
10 8 0 0 00
DESCRIPTION
2016 Oct. 31 Adjusting 31 Closing
Post Ref.
DEBIT
J22 J23
1 9 1 0 00
CREDIT
1 9 1 0 00
DESCRIPTION
2016 Oct. 26 31 Closing
Post Ref.
DEBIT
J19 J23
7 8 0 00
CREDIT
7 8 0 00
DESCRIPTION
2016 Oct. 22 31 Closing
1 9 1 0 00 - 0 -
BALANCE DEBIT CREDIT 7 8 0 00 - 0 -
ACCOUNT NO. 644
ACCOUNT Utilities Expense DATE
BALANCE DEBIT CREDIT
ACCOUNT NO. 638
ACCOUNT Telephone Expense DATE
10 8 0 0 00 - 0 -
ACCOUNT NO. 635
ACCOUNT Supplies Expense DATE
BALANCE DEBIT CREDIT
Post Ref.
DEBIT
J19 J23
1 1 1 2 00
CREDIT
1 1 1 2 00
BALANCE DEBIT CREDIT 1 1 1 2 00 - 0 -
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-77
MINI-PRACTICE SET 2 (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Jennifer Brown DATE
DESCRIPTION
2016 Oct. 1 Balance
TERMS Post Ref.
DEBIT
DESCRIPTION
2016 Oct. 1 Balance 2 24 Sales Slip 244
TERMS Post Ref. J16 J19
DEBIT
DESCRIPTION
2016 Oct. 1 Balance 8 15 Sales Slip 243
CREDIT
5 2 0 00 8 6 1 00
NAME James Helmer DATE
TERMS Post Ref. J17 J18
BALANCE
7 9 5 00
NAME Megan Greening DATE
CREDIT
n/30
DEBIT
CREDIT
8 3 2 00 2 0 3 7 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-78
n/30 BALANCE
5 2 0 00 - 0 8 6 1 00
n/30 BALANCE
8 3 2 00 - 0 2 0 3 7 00
MINI-PRACTICE SET 2 (continued) ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER NAME Emma Maldonado DATE
DESCRIPTION
2016 Oct. 1 Balance 9 Sales Slip 242
Post Ref. J18
DEBIT
DESCRIPTION
Post Ref.
DEBIT
2016 Oct. 1 Balance 3 Sales Slip 241 5 Credit Memo 18 16
TERMS Post Ref. J16 J17 J18
DEBIT
CREDIT
2 6 0 4 00 6 3 0 00 5 1 0 00
NAME Emily Tran
TERMS DESCRIPTION
2016 Oct. 1 Balance 5 29 Sales Slip 245
Post Ref. J17 J20
BALANCE
n/30 BALANCE
1 6 2 1 00
NAME Dimitri Sayegh
DATE
CREDIT
DESCRIPTION
n/30
2 3 2 00 2 3 8 4 50
TERMS
2016 Oct. 1 Balance
DATE
CREDIT
2 1 5 0 50
NAME Jim Price DATE
TERMS
DEBIT
n/30 BALANCE
5 1 0 00 3 1 1 4 00 2 4 8 4 00 1 9 7 4 00
n/30
CREDIT
BALANCE
1 7 0 0 00
1 7 0 0 00 - 0 3 2 7 6 00
3 2 7 6 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-79
MINI-PRACTICE SET 2 (continued) ACCOUNTS PAYABLE SUBSIDIARY LEDGER NAME A Fashion Statement DATE
DESCRIPTION
2016 Oct. 1 Balance 2 11 Invoice 9422 16
Post Ref. J16 J18 J19
DEBIT
DESCRIPTION
2016 Oct. 1 Balance 5 25 Invoice 3418 29 Credit Memo 175
4 8 2 0 00 4 8 2 0 00
TERMS Post Ref. J17 J19 J20
DEBIT
2016 Oct. 1 Balance 4 30 Invoice 5821
DESCRIPTION
CREDIT
1 7 0 0 00 3 3 8 0 00 4 3 0 00
NAME Today’s Woman DATE
CREDIT
7 8 3 0 00
NAME Classy Threads DATE
TERMS
TERMS Post Ref. J17 J20
DEBIT
2/10, n/30 BALANCE
7 8 3 0 00 - 0 4 8 2 0 00 - 0 -
2/10, n/30 BALANCE 1 7 0 0 00 - 0 3 3 8 0 00 2 9 5 0 00
1/10, n/30
CREDIT
BALANCE
4 0 2 0 00
8 7 7 0 00 - 0 4 0 2 0 00
8 7 7 0 00
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-80
MINI-PRACTICE SET 2 (continued) The Fashion Rack Schedule of Accounts Payable October 31, 2016 A Fashion Statement Classy Threads Today’s Woman Total
0 00 2 9 5 0 00 4 0 2 0 00 6 9 7 0 00
The Fashion Rack Schedule of Accounts Receivable October 31, 2016 Jennifer Brown Megan Greening James Helmer Emma Maldonado Jim Price Dimitri Sayegh Emily Tran Total
7 9 5 00 8 6 1 00 2 0 3 7 00 2 3 8 4 50 1 6 2 1 00 1 9 7 4 00 3 2 7 6 00 12 9 4 8 50
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-81
MINI-PRACTICE SET 2 (continued) The Fashion Rack Worksheet For Month Ended October 31, 2016 ACCOUNT NAME 1 Cash 2 Accounts Receivable 3 Allowance for Doubtful Accounts 4 Merchandise Inventory 5 Supplies 6 Prepaid Insurance 7 Prepaid Advertising 8 Equipment 9 Accumulated Depreciation—Equipment 10 Accounts Payable 11 Social Security Tax Payable 12 Medicare Tax Payable 13 Employee Income Tax Payable 14 Federal Unemployment Tax Payable 15 State Unemployment Tax Payable 16 Salaries Payable 17 Sales Tax Payable 18 Teresa Lojay, Capital 19 Teresa Lojay, Drawing 20 Income Summary 21 Sales 22 Sales Returns and Allowances 23 Purchases 24 Freight In 25 Purchases Returns and Allowances 26 Purchases Discounts 27 Advertising Expense 28 Depreciation Expense—Equipment 29 Insurance Expense 30 Uncollectible Accounts Expense 31 Janitorial Services Expense 32 Payroll Taxes Expense 33 Rent Expense 34 Salaries Expense 35 Supplies Expense 36 Telephone Expense 37 Utilities Expense 38 Totals 39 Net Income 40
TRIAL BALANCE DEBIT CREDIT 47 5 8 4 40 12 9 4 8 50 4 2 0 00 88 9 9 6 00 5 1 5 0 00 8 4 0 0 00 4 8 0 0 00 83 0 0 0 00 7 0 5 0 00 6 9 7 0 00 1 4 0 4 00 3 2 4 00 1 0 2 0 00 6 3 0 00 1 8 5 2 00 0 00 3 5 0 7 50 203 2 5 2 00 7 2 0 0 00
ADJUSTMENTS DEBIT CREDIT
81 2 6 0 00
9 8 10 88 9 9 6 00 1 9 1 0 00 1 4 0 0 00 1 6 0 0 00 1 1 7 5 00
88 9 9 6 00
81 2 6 0 00
70 7 5 0 00 6 0 0 00 18 6 4 0 00 3 7 5 00 4 3 0 00 4 6 2 40 1 4 4 5 00 1 6 0 0 00 0 00 1 1 7 5 00 0 00 1 4 0 0 00 0 00 9 8 10 4 7 5 00 1 5 6 6 00 4 2 0 0 00 10 8 0 0 00 0 00 1 9 1 0 00 7 8 0 00 1 1 1 2 00 298 0 7 1 90 298 0 7 1 90 176 4 3 9 10 176 4 3 9 10
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-82
MINI-PRACTICE SET 2 (continued)
ADJUSTED TRIAL BALANCE DEBIT CREDIT 47 5 8 4 40 12 9 4 8 50 5 1 8 10 81 2 6 0 00 3 2 4 0 00 7 0 0 0 00 3 2 0 0 00 83 0 0 0 00 8 2 2 5 00 6 9 7 0 00 1 4 0 4 00 3 2 4 00 1 0 2 0 00 6 3 0 00 1 8 5 2 00 0 00 3 5 0 7 50 203 2 5 2 00 7 2 0 0 00 88 9 9 6 00 81 2 6 0 00 70 7 5 0 00 6 0 0 00 18 6 4 0 00 3 7 5 00 4 3 0 00 4 6 2 40 3 0 4 5 00 1 1 7 5 00 1 4 0 0 00 9 8 10 4 7 5 00 1 5 6 6 00 4 2 0 0 00 10 8 0 0 00 1 9 1 0 00 7 8 0 00 1 1 1 2 00 380 6 0 5 00 380 6 0 5 00
INCOME STATEMENT DEBIT CREDIT
88 9 9 6 00
BALANCE SHEET DEBIT CREDIT 47 5 8 4 40 12 9 4 8 50 5 1 8 10 81 2 6 0 00 3 2 4 0 00 7 0 0 0 00 3 2 0 0 00 83 0 0 0 00 8 2 2 5 00 6 9 7 0 00 1 4 0 4 00 3 2 4 00 1 0 2 0 00 6 3 0 00 1 8 5 2 00 0 00 3 5 0 7 50 203 2 5 2 00 7 2 0 0 00
81 2 6 0 00 70 7 5 0 00
6 0 0 00 18 6 4 0 00 3 7 5 00 4 3 0 00 4 6 2 40 3 0 4 5 00 1 1 7 5 00 1 4 0 0 00 9 8 10 4 7 5 00 1 5 6 6 00 4 2 0 0 00 10 8 0 0 00 1 9 1 0 00 7 8 0 00 1 1 1 2 00 135 1 7 2 10 17 7 3 0 30 152 9 0 2 40
152 9 0 2 40 0 00 152 9 0 2 40
245 4 3 2 90 0 00 245 4 3 2 90
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 227 7 0 2 60 38 17 7 3 0 30 39 245 4 3 2 90 40
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-83
MINI-PRACTICE SET 2 (continued) The Fashion Rack Income Statement For Month Ended October 31, 2016 Operating Revenue Sales
70 7 5 0 00
Less Sales Returns and Allowances
6 0 0 00
Net Sales
70 1 5 0 00
Cost of Goods Sold Merchandise Inventory, October 1, 2016
88 9 9 6 00
Purchases
18 6 4 0 00
Freight In
3 7 5 00
Delivered Cost of Purchases Less Purchases Returns and Allowances Purchases Discounts
19 0 1 5 00 4 3 0 00 4 6 2 40
8 9 2 40
Net Delivered Cost of Purchases
18 1 2 2 60
Total Merchandise Available for Sale
107 1 1 8 60
Less Merchandise Inventory, October 31, 2016
81 2 6 0 00
Cost of Goods Sold
25 8 5 8 60
Gross Profit on Sales
44 2 9 1 40
Operating Expenses Advertising Expense
3 0 4 5 00
Depreciation Expense—Equipment
1 1 7 5 00
Insurance Expense
1 4 0 0 00
Uncollectible Accounts Expense Janitorial Services Expense
9 8 10 4 7 5 00
Payroll Tax Expense
1 5 6 6 00
Rent Expense
4 2 0 0 00
Salaries Expense
10 8 0 0 00
Supplies Expense
1 9 1 0 00
Telephone Expense
7 8 0 00
Utilities Expense
1 1 1 2 00
Total Operating Expenses Income from Operations/Net Income for the Month
13-84
26 5 6 1 10 17 7 3 0 30
MINI-PRACTICE SET 2 (continued) The Fashion Rack Statement of Owner's Equity For Month Ended October 31, 2016 Teresa Lojay, Capital, October 1, 2016 Net Income for Month Less Withdrawals for Month Increase in Capital Teresa Lojay, Capital, October 31, 2016
203 2 5 2 00 17 7 3 0 30 7 2 0 0 00 10 5 3 0 30 213 7 8 2 30 The Fashion Rack Balance Sheet October 31, 2016
Assets Current Assets Cash Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Expenses Prepaid Insurance Prepaid Advertising Total Current Assets Plant and Equipment Equipment Less Accumulated Depreciation Total Plant and Equipment Total Assets Liability and Owner’s Equity Current Liabilities Accounts Payable Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Sales Tax Payable Total Liabilities Owner’s Equity Teresa Lojay, Capital Total Liabilities and Owner’s Equity
47 5 8 4 40 12 9 4 8 50 5 1 8 10
7 0 0 0 00 3 2 0 0 00
12 4 3 0 40 81 2 6 0 00 3 2 4 0 00
10 2 0 0 00 154 7 1 4 80
83 0 0 0 00 8 2 2 5 00 74 7 7 5 00 229 4 8 9 80
6 9 7 0 00 1 4 0 4 00 3 2 4 00 1 0 2 0 00 6 3 0 00 1 8 5 2 00 3 5 0 7 50 15 7 0 7 50 213 7 8 2 30 229 4 8 9 80
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-85
MINI-PRACTICE SET 2 (continued) The Fashion Rack Post-closing Trial Balance October 31, 2016 ACCOUNT NAME Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Equipment Accumulated Depreciation—Equipment Accounts Payable Social Security Tax Payable Medicare Tax Payable Employee Income Tax Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Sales Tax Payable Teresa Lojay, Capital Totals
DEBIT 47 5 8 4 40 12 9 4 8 50
CREDIT
5 1 8 10 81 2 6 0 00 3 2 4 0 00 7 0 0 0 00 3 2 0 0 00 83 0 0 0 00
238 2 3 2 90
8 2 2 5 00 6 9 7 0 00 1 4 0 4 00 3 2 4 00 1 0 2 0 00 6 3 0 00 1 8 5 2 00 3 5 0 7 50 213 7 8 2 30 238 2 3 2 90
© 2015 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. 13-86
Get complete Order files download link below htps://www.mediafire.com/file/wn9ymn9vwh54jnw/S M+College+Accoun�ng+A+Contemporary+Approach+3 e+David+Haddock+John+Ellis+Price+Michael+Farina.zip /file
If this link does not work with a click, then copy the complete Download link and paste link in internet explorer/firefox/google chrome and get all files download successfully.