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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
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 Nelson’s Hardware, a retailer, during September. Terms on sales on account are 1/10, n/30, FOB shipping point.

Sept. 4    Received cash from M. Alex in payment of August 25 invoice of $275, less cash discount.

7    Issued Ck. No. 8175, $915.75, to Top Tools, Inc., for invoice. no. 2256, recorded previously for $925, less cash discount of $9.25.

10    Sold merchandise in the amount of $175 on a credit card. Sales tax on this sale is 8%. The credit card fee the bank deducted for this transaction is $5.

11    Issued Ck. No. 8176, $653.40, to Snap Tools, Inc. for invoice no. 726, recorded previously on account for $660. A trade discount of 15% was applied at the time of purchase, and Snap Tools, Inc.’s credit terms are 1/10, n/45.

15    Received $95 cash in payment of August 20 invoice from N. Johnson. No cash discount applied.

19    Received $1,165 cash in payment of a $1,100 note receivable and interest of $65.

22    Voided Ck. No. 8177 due to error.

26    Received and paid telephone bill, $62; Ck. No. 8178, payable to Southern Telephone Company.

30    Paid wages recorded previously for the month, $3,266, Ck. No. 8179.

Required

  1. 1. Journalize the transactions for September in the cash receipts journal, the general journal (for the transaction on Sept. 10th), or the cash payments journal as appropriate. Assume the periodic inventory method is used.
  2. 2. If you are using Working Papers, total and rule the journals. Prove the equality of debit and credit totals.

1.

To determine

Journalize the transaction in cash receipt journal, general journal or the cash payment journal using periodic inventory method.

Explanation

Cash Receipts Journal:  It is a special book where only cash receipts transactions that are received from customers, merchandise sales and service made in cash and collection of accounts receivable are recorded.

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.

Cash payments journal: Cash payments journal refers to the journal that is used to record the all transaction which is involve the cash payments. For example, the business paid cash to employees (salary paid to employees). Cash payments journal is used to record merchandise purchases made in cash and payments of accounts payable. It also records all other cash payments to various purposes. To include all these transactions, companies use multi-column cash payments journal.

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 transaction in cash receipt journal.

Table (1)

Working note: 1

Calculate the amount of cash on 4th September.

Cash (debit) on4th september}=(Cash salesCash discount on sales)=[$275($275×1%)]=$275$2.75=$272.25

Journalize the transaction in general journal for 10th September.

2.

To determine

Show the equality of credit and debit total in the cash payment journal

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