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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

PURCHASES TRANSACTIONS J. B. Speck, owner of Speck’s Galleria, made the following purchases of merchandise on account during the month of September:

Sept. 3    Purchase Invoice No. 415, $2,650, from Smith Distributors.

8    Purchase Invoice No. 132, $3,830, from Michaels Wholesaler.

11    Purchase Invoice No. 614, $3,140, from J. B. Sanders & Co.

18    Purchase Invoice No. 329, $2,250, from Bateman & Jones, Inc.

Sept. 23    Purchase Invoice No. 767, $4,160, from Smith Distributors.

27    Purchase Invoice No. 744, $1,980, from Anderson Company.

30    Purchase Invoice No. 652, $2,780, from Michaels Wholesaler.

Required

  1. 1. Record the transactions starting with page 16 of a general journal.
  2. 2. Post from the general journal to the general ledger accounts and to the accounts payable ledger accounts. Use general ledger account numbers as shown in the chapter.

1.

To determine

Journalize the purchase transactions in the books of S Galleria.

Explanation

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 purchase transactions in the books of S Galleria.

Transaction on September 3:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
September3Purchases5012,650 
   Accounts Payable, S Distributors202/✓ 2,650
  (Record purchases made on account)   

Table (1)

Description:

  • Purchases is an expense account which records the cost of inventory purchased. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Accounts Payable, S Distributors is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 8:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
September8Purchases5013,830 
   Accounts Payable, M Wholesaler202/✓ 3,830
  (Record purchases made on account)   

Table (2)

Description:

  • Purchases is an expense account which records the cost of inventory purchased. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Accounts Payable, M Wholesaler is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 11:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
September11Purchases5013,140 
   Accounts Payable, Corporation S202/✓ 3,140
  (Record purchases made on account)   

Table (3)

Description:

  • Purchases is an expense account which records the cost of inventory purchased. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Accounts Payable, Corporation S is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on September 18:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
September18Purchases5012,250 
   Accounts Payable, Incorporation B202/✓ 2,250
  (Record purchases made on account)   

Table (4)

Description:

  • Purchases is an expense account which records the cost of inventory purchased...

2.

To determine

Post the given transactions into the accounts of the general ledger, and the suppliers account in accounts payable ledger.

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