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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307

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BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307
Textbook Problem

Journalizing and posting

On January 7, 2016, Captec Company purchased $4,175 of supplies on account. In Captec Company's chart of accounts, the supplies account is No. 15, and the accounts payable account is No. 21.

  • a. Journalize the January 7, 2016, transaction on page 33 of Captec Company's two-column journal. Include an explanation of the entry.
  • b. Prepare a four-column account for Supplies. Enter a debit balance of $2,200 as of January 1, 2016. Place a check mark (✓) in the Posting Reference column.
  • c. Prepare a four-column account for Accounts Payable. Enter a credit balance of $18,430 as of January 1, 2016. Place a check mark (✓) in the Posting Reference column.
  • d. Post the January 7, 2016, transaction to the accounts.
  • e. Do the rules of debit and credit apply to all companies?

(a)

To determine

Journal:

Journal is the book of original entry. Journal consists of the day-to-day financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

To Journalize: The transaction occurred on January 7, 2016.

Explanation

Journalize the purchase of supplies on account:

                                                   Journal                                           Page 33
Date Description Post...

(b), (c) and (d)

To determine

To prepare: A four- column account for supplies.

(d)

To determine

To explain: Whether the rules of debit and credit apply to all companies.

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