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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Purchases, accounts payable subsidiary account, and accounts payable ledger

Sterling Forest Landscaping designs and installs landscaping. The landscape designers and office staff use office supplies, while field supplies (rock, bark, etc.) are used in the actual landscaping. Purchases on account completed by Sterling Forest Landscaping during October 2016 are as follows:

Oct. 2. Purchased office supplies on account from Meade Co., $400.

5. Purchased office equipment on account from Peach Computers Co., $3,980.

9. Purchased office supplies on account from Executive Office Supply Co., $320.

13. Purchased field supplies on account from Yamura Co., $1,420.

14. Purchased field supplies on account from Omni Co., $2,940.

17. Purchased field supplies on account from Yamura Co., $1,890.

24. Purchased field supplies on account from Omni Co., $3,880.

29. Purchased office supplies on account from Executive Office Supply Co., $310.

31. Purchased field supplies on account from Omni Co., $1,800.

Instructions

1. Insert the following balances in the general ledger as of October 1:

Chapter 5, Problem 5.3APR, Purchases, accounts payable subsidiary account, and accounts payable ledger Sterling Forest

2. Insert the following balances in the accounts payable subsidiary ledger as of October 1:

Executive Office Supply Co. $390
Meade Co. 780
Omni Co.
Peach Computers Co.
Yamura Co.

3. Journalize the transactions for May, using a purchases journal (p. 30) similar to the one illustrated in this chapter. Prepare the purchases journal with columns for Accounts Payable, Field Supplies, Office Supplies, and Other Accounts. Post to the creditor accounts in the accounts payable subsidiary ledger immediately after each entry.

4. Post the purchases journal to the accounts in the general ledger.

5. a. What is the sum of the creditor balances in the subsidiary ledger at May 31?

b. What is the balance of the accounts payable controlling account at May 31?

6. What type of e-commerce application would be used to plan and coordinate transactions with suppliers?

(1) and (4)

To determine

General Journal

The journal where the debit and credit entries of the accounting transactions are recorded in a chronological order are referred to as general journal.

Special Journal

Special journal records a single kind of transactions that occurs frequently. For example: Revenue Journal is a special journal which records all revenue earned on account.

General ledger

It is the primary ledger, which contains all balance sheet and income statement accounts. For example: Cash Account, Equipment Accounts, and Rent Accounts etc.

Subsidiary ledger

This is a ledger in which individual balance of every account is recorded. This is an expansion of the general ledger. The subsidiary ledger records the individual balances and hence there is no need to record the individual balances in the general ledger.

Controlling Account

Each subsidiary ledger is represented in the general ledger by a summarizing account, called a controlling account. For example: Accounts Receivable Subsidiary ledger is represented in Accounts Receivable ledger.

To record: The transactions in General ledger.

Explanation

Field supplies are assets for the business, so the balance is posted in the debit column.

Office Supplies Account Number 15
Date Items Post Ref. Debit Credit Balance
Debit Credit
 2016
Oct 1 Balance 750
31 P30 1,030 1,780

Table (2)

Office supplies are assets for the business, so the balance is posted in the debit column.

Account: Office Equipment Account Number 18
Date Items Post Ref...

(2) and (3)

To determine

To record: The balances in the accounts payable subsidiary ledger and the transactions for October in journal.

(3) and (4)

To determine

To prepare: The purchase journal.

(5)a.

To determine

The sum of the balances of the creditors accounts in the subsidiary ledger at 31st October 2016.

b.

To determine

 The balance of the accounts receivable controlling account.

(6)

To determine

To indicate:  The type of e-commerce application would be used to plan and coordinate transactions with suppliers.

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