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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 Ann Benton, owner of Benton’s Galleria, made the following purchases of merchandise on account during the month of October:

Oct. 2    Purchase Invoice No. 321, $1,950, from Boggs Distributors.

7    Purchase Invoice No. 152, $2,915, from Wolfs Wholesaler.

10    Purchase Invoice No. 634, $3,565, from Komuro & Co.

16    Purchase Invoice No. 349, $2,845, from Fritz & McCord, Inc.

24    Purchase Invoice No. 587, $3,370, from Boggs Distributors.

26    Purchase Invoice No. 764, $2,240, from Sanderson Company.

31    Purchase Invoice No. 672, $1,630, from Wolfs 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 B 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 B Galleria.

Transaction on October 2:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
October2Purchases5011,950 
   Accounts Payable, B Distributors202/✓ 1,950
  (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, B Distributors is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on October 7:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
October7Purchases5012,915 
   Accounts Payable, W Wholesaler202/✓ 2,915
  (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, W Wholesaler is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on October 10:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
October10Purchases5013,565 
   Accounts Payable, Corporation K202/✓ 3,565
  (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 K is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on October 16:

Page: 16
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
October16Purchases5012,845 
   Accounts Payable, Incorporation F202/✓ 2,8445
  (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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