Geoff and Sandy Harland own and operate Wayward Kennel and Pet Supply. Their motto is, “If your pet is not becoming to you, he should be coming to us.” The Harlands maintain a sales tax payable account throughout the month to account for the 6% sales tax. They use a general journal, general ledger, and accounts receivable ledger. The following sales and cash collections took place during the month of September:

Sept. 2    Sold a fish aquarium on account to Ken Shank, $125 plus tax of $7.50, terms n/30. Sale No. 101.

3    Sold dog food on account to Nancy Truelove, $68.25 plus tax of $4.10, terms n/30. Sale No. 102.

5    Sold a bird cage on account to Jean Warkentin, $43.95 plus tax of $2.64, terms n/30. Sale No. 103.

8    Cash sales for the week were $2,332.45 plus tax of $139.95.

10    Received cash for boarding and grooming services, $625 plus tax of $37.50.

11    Jean Warkentin stopped by the store to point out a minor defect in the bird cage purchased in Sale No. 103. The Harlands offered a sales allowance of $10 plus tax on the price of the cage which satisfied Warkentin.

12    Sold a cockatoo on account to Tully Shaw, $1,200 plus tax of $72, terms n/30. Sale No. 104.

14    Received cash on account from Rosa Alanso, $256.

15    Rosa Alanso returned merchandise, $93.28 including tax of $5.28.

15    Cash sales for the week were $2,656.85 plus tax of $159.41.

16    Received cash on account from Nancy Truelove, $58.25.

18    Received cash for boarding and grooming services, $535 plus tax of $32.10.

19    Received cash on account from Ed Cochran, $63.25.

20    Sold pet supplies on account to Susan Hays, $83.33 plus tax of $5, terms n/30. Sale No. 105.

21    Sold three Labrador Retriever puppies to All American Day Camp, $375 plus tax of $22.50, terms n/30. Sale No. 106.

22    Cash sales for the week were $3,122.45 plus tax of $187.35.

23    Received cash for boarding and grooming services, $515 plus tax of $30.90.

25    Received cash on account from Ken Shank, $132.50.

26    Received cash on account from Nancy Truelove, $72.35.

27    Received cash on account from Joe Gloy, $273.25.

28    Borrowed cash to purchase a pet limousine, $11,000.

29    Cash sales for the week were $2,835.45 plus tax of $170.13.

30    Received cash for boarding and grooming services, $488 plus tax of $29.28.

Wayward had the following general ledger account balances as of September 1:

Wayward also had the following accounts receivable ledger balances as of September 1:

New customers opening accounts during September were as follows:

All American Day Camp

3025 Old Mill Run

Bloomington, IN 47408-1080

Tully Shaw

3315 Longview Avenue

Bloomington, IN 47401-7223

Susan Hays

1424 Jackson Creek Road

Nashville, IN 47448-2245

Jean Warkentin

1813 Deep Well Court

Bloomington, IN 47401-5124

Ken Shank

6422 E. Bender Road

Bloomington, IN 47401-7756

REQUIRED

1. 1. Enter the transactions for the month of September in a general journal. (Begin with page 7.)
2. 2. Post the entries to the general and subsidiary ledgers. Open new accounts for any customers who did not have a balance as of September 1.
3. 3. Prepare a schedule of accounts receivable.
4. 4. Compute the net sales for the month of September.

Journalize the transactions for the month of September.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the transactions for the month of September.

Transaction on September 2:

Table (1)

Description:

• Accounts Receivable, KS is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
• Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 3:

Table (2)

Description:

• Accounts Receivable, NT is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
• Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 5:

Table (3)

Description:

• Accounts Receivable, JW is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
• Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 8:

Table (4)

Description:

• Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
• Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 10:

Table (5)

Description:

• Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
• Boarding and Grooming Revenue is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 11:

Table (6)

Description:

• Sales Returns and Allowances is a contra-revenue account, and contra-revenue accounts decrease the equity value, and a decrease in equity is debited.
• Sales Tax Payable is a liability account. Since the payable decreased due to returns, the liability decreased, and a decrease in liability is debited.
• Accounts Receivable, JW is an asset account. Since sales allowance is granted, amount to be received has decreased, asset account is decreased, and a decrease in asset is credited.

Working Note 1:

Compute sales tax payable amount.

Sales tax payable = Sales returns×Sales tax percentage= $10×6%= $0.60

Working Note 2:

Compute accounts receivable amount (Refer to Working Note 1 for value of sales tax payable).

Accounts receivable, JW = Sales returns+Sales tax payable= $10.00+$0.60= $10.60

Transaction on September 12:

Table (7)

Description:

• Accounts Receivable, TS is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
• Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 14:

Table (8)

Description:

• Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
• Accounts Receivable, RA is an asset account. Since amount to be received has decreased, asset account decreased, and a decrease in asset is credited.

Transaction on September 15:

Table (9)

Description:

• Sales Returns and Allowances is a contra-revenue account, and contra-revenue accounts decrease the equity value, and a decrease in equity is debited.
• Sales Tax Payable is a liability account. Since the payable decreased due to returns, the liability decreased, and a decrease in liability is debited.
• Accounts Receivable, RA is an asset account. Since inventory is returned, amount to be received has decreased, asset account is decreased, and a decrease in asset is credited.

Transaction on September 15:

Table (10)

Description:

• Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
• Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
• Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 16:

Post the journalized entries into the accounts of the general ledger, and the customer accounts in accounts receivable ledger.

Prepare the schedule of accounts receivable for W Kennel and P Supply as at September 30, 20--.

Ascertain the net sales for W Kennel and P Supply for the month of September.