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College Accounting (Book Only): A ...

13th Edition
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ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

The following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer.

Jan. 2    Issued Ck. No. 6981 to JSS Management Company for monthly rent, $775.

2    J. Hammond, the owner, invested an additional $3,500 in the business.

4    Bought merchandise on account from Valencia and Company, invoice no. A691, $2,930; terms 2/10, n/30; dated January 2.

4    Received check from Vega Appliance for $980 in payment of $1,000 invoice less discount.

4    Sold merchandise on account to L. Paul, invoice no. 6483, $850.

6    Received check from Petty, Inc., $637, in payment of $650 invoice less discount.

7    Issued Ck. No. 6982, $588, to Fischer and Son, in payment of invoice no. C1272 for $600 less discount.

7    Bought supplies on account from Doyle Office Supply, invoice no. 1906B, $108; terms net 30 days.

7    Sold merchandise on account to Ellison and Clay, invoice no. 6484, $787.

9    Issued credit memo no. 43 to L. Paul, $54, for merchandise returned.

11    Cash sales for January 1 through January 10, $4,863.20.

11    Issued Ck. No. 6983, $2,871.40, to Valencia and Company, in payment of $2,930 invoice less discount.

14    Sold merchandise on account to Vega Appliance, invoice no. 6485, $2,050.

Jan. 18    Bought merchandise on account from Costa Products, invoice no. 7281D, $4,854; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to the invoice, $147 (total $5,001).

21    Issued Ck. No. 6984, $194, to M. Miller for miscellaneous expenses not recorded previously.

21    Cash sales for January 11 through January 20, $4,591.

23    Issued Ck. No. 6985 to Forbes Freight, $96, for freight charges on merchandise purchased on January 4.

23    Received credit memo no. 163, $376, from Costa Products for merchandise returned.

29    Sold merchandise on account to Bruce Supply, invoice no. 6486, $1,835.

31    Cash sales for January 21 through January 31, $4,428.

31    Issued Ck. No. 6986, $53, to M. Miller for miscellaneous expenses not recorded previously.

31    Recorded payroll entry from the payroll register: total salaries, $6,200; employees’ federal income tax withheld, $872; FICA Social Security tax withheld, $384.40, FICA Medicare tax withheld, $89.90.

31    Recorded the payroll taxes: Social Security tax, $384.40, FICA Medicare tax, $89.90; state unemployment tax, $334.80; federal unemployment tax, $37.20.

31    Issued Ck. No. 6987, $4,853.70, for salaries for the month.

31    J. Hammond, the owner, withdrew $1,000 for personal use, Ck. No. 6988.

Required

  1. 1. Record the transactions in the general journal for January. If you are using Working Papers, start with page 1 in the journal. Assume the periodic inventory method is used.

The chart of accounts is as follows:

images

  1. 2. Post daily all entries involving customer accounts to the accounts receivable ledger.
  2. 3. Post daily all entries involving creditor accounts to the accounts payable ledger.
  3. 4. Post daily the general journal entries to the general ledger. Write the owner’s name in the Capital and Drawing accounts.
  4. 5. Prepare a trial balance.
  5. 6. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?

1.

To determine

Journalize the transactions in the general journal using the periodic inventory method.

Explanation

General journal is a record of financial transaction. The transactions are recorded in the journal prior to posting them to the accounts in the general ledger.

Periodic inventory system: The method or system of recording the transactions related to inventory occasionally or periodically are referred to as periodic inventory system.

Journalize the transactions in the general journal.

                GENERAL JOURNAL                                            PAGE     1

Date Description Post Ref. Debit ($) Credit ($)
20--        
Jan 2 Rent Expense 627 775  
      Cash 111   775
    (Record the paid month rent, Ck.No.6981)      
           
  2 Cash 111 3,500  
      Mr. H, Capital 311   3,500
    (Record the additional capital invested by the owner)      
           
  4 Purchases 511 2,930  
      Accounts Payable, V Company 212/   2,930
    (Purchased merchandise from V Company, invoice no.A691,invoice dated January 2,terms 2/10, n/30)      
           
  4 Cash 111 980  
    Sales Discount 413 20  
      Accounts Receivable 113/   1,000
    (Payment of invoice less discount)      
           
  4 Accounts Receivable Mr. P 113/ 850  
      Sales 411   850
    (Record the sale of merchandise to Mr. P, invoice no.6483)      
           
  6 Cash 111 637  
    Sales Discount 413 13  
      Accounts Receivable, Petty, Inc. 113/   650
    (Record the payment of invoice less discount)      
           
  7 Accounts Payable, F Company 212/ 600  
      Purchase Discount 513   12
      Cash 111   588
    (Record the paid invoice no.C1272, Ck.No.6982)      

                                       GENERAL JOURNAL                                                 PAGE     2

  7 Supplies 115 108  
      Accounts Payable, D Company 212   108
    (Record the office supply, Invoice no. 1906B,term net 30)      
           
  7 Accounts Receivable, Mr. E & C 113/ 787  
      sales 411   787
    (Record the sale of merchandise to Mr. E & C invoice no.6484)      
           
  9 Sales Return and Allowance 412 54  
      Accounts Receivable, Mr. P 113/   54
    (Record the issued credit memo no.43)      
           
  11 Cash 111 4,863.20  
      Sales 411   4,863.20
    (Record the cash sales, January 1-10)      
           
  11 Accounts Payable, V Company 212/ 2,930  
      Cash 111   2,871.40
      Purchase Discount 513   58...

2.

To determine

Record the entries from customer accounts to the accounts receivable ledger.

3.

To determine

Record the entries from customer accounts to the accounts payable ledger.

4.

To determine

Record the journal entries to the general ledger.

5.

To determine

Prepare a trial balance of H Company.

6.

To determine

Prepare a schedule of accounts receivable and accounts payable.

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