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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

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

PURCHASES JOURNAL, CASH PAYMENTS JOURNAL, AND GENERAL JOURNAL Freddy Flint owns a small retail business called Flint’s Fantasy. The cash account has a balance of $20,000 on July 1. The following transactions occurred during July:

July 1    Issued Check No. 414 in payment of July rent, $1,500.

1    Purchased merchandise on account from Tang’s Toys, Invoice No. 311, $2,700, terms 2/10, n/30.

July 3    Purchased merchandise on account from Sillas & Company, Invoice No. 812, $3,100, terms 1/10, n/30.

5    Returned merchandise purchased from Tang’s Toys, receiving a credit memo on the amount owed, $500.

8    Purchased merchandise on account from Daisy’s Dolls, Invoice No. 139, $1,900, terms 2/10, n/30.

11    Issued Check No. 415 to Tang’s Toys for merchandise purchased on account, less return of July 5 and less 2% discount.

13    Issued Check No. 416 to Sillas & Company for merchandise purchased on account, less 1% discount.

15    Returned merchandise purchased from Daisy’s Dolls, receiving a credit memo on the amount owed, $400.

18    Issued Check No. 417 to Daisy’s Dolls for merchandise purchased on account, less return of July 15 and less 2% discount.

25    Purchased merchandise on account from Allied Business, Invoice No. 489, $2,450, terms n/30.

26    Purchased merchandise on account from Tang’s Toys, Invoice No. 375, $1,980, terms 2/10, n/30.

29    Purchased merchandise on account from Sillas & Company, Invoice No. 883, $3,460, terms 1/10, n/30.

31    Freddy Flint withdrew cash for personal use, $2,000. Issued Check No. 418.

31    Issued Check No. 419 to Glisan Distributors for a cash purchase of merchandise, $975.

Required

  1. 1. Record the transactions in the purchases journal, cash payments journal, and general journal. Total and rule the purchases and cash payments journals. Prove the cash payments journal.
  2. 2. Post from the journals to the general ledger and accounts payable ledger accounts. Use general ledger account numbers as shown in the chapter.

1.

To determine

Prepare the given transactions in the purchase journal, cash payment journal, and general journal and verify the total column and rule the column

Explanation

Purchase Journal: Purchase journal records all the merchandise purchase on credit. In a single column purchase journal, debit aspect of inventory and credit aspect of accounts payable are recorded, and then posted to individual subsidiary supplier account.

Prepare the given transactions in the purchase journal:

Table (1)

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.

Prepare the given transactions in a cash payments journal and total the each column of cash payments journal:

Table (2)

Working note 1:

Calculate the amount of purchases discounts (credit) on dated 11th July:

Purchases discounts(credit)on dated 11thJuly}=(Issued check for merchandised purchased on account Return amount ofmerchandise ×Discount rate)=($2,700$500×2%)=$2,200×2%=$44

Working note 2:

Calculate the amount of purchases discounts (credit) on dated 13th July:

Purchases discounts(credit)on dated 13thJuly}=(Issued check for merchandised purchased on account ×Discount rate)=($3,100×1%)=$31

Working note 3:

Calculate the amount of purchases discounts (credit) on dated 18th July:

Purchases discounts(credit)on dated 18thJuly}=(Issued check for merchandised purchased on account 

2.

To determine

Post the purchase journal and cash payment journal to the general ledger and accounts payable ledger.

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