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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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All journals and general ledger; trial balance

The transactions completed by AM Express Company during March 2016, the first month of the fiscal year, were as follows:

Mar. 1. Issued Check No. 205 for March rent, $2,450.

2. Purchased a vehicle on account from McIntyre Sales Co., $26,900.

3. Purchased office equipment on account from Office Mate Inc., $1,570.

5. Issued Invoice No. 91 to Ellis Co., $7,000.

6. Received check for $7,950 from Chavez Co. in payment of invoice.

7. Issued Invoice No. 92 to Trent Co., $9,840.

9. Issued Check No. 206 for fuel expense, $820.

10. Received check for $10,000 from Sajeev Co. in payment of invoice.

10. Issued Check No. 207 to Office City in payment of $450 invoice.

Mar. 10. Issued Check No. 208 to Bastille Co. in payment of $1,890 invoice.

11. Issued Invoice No. 93 to Jarvis Co., $7,200.

11. Issued Check No. 209 to Porter Co. in payment of $415 invoice.

12. Received check for $7,000 from Ellis Co. in payment of March 5 invoice.

13. Issued Check No. 210 to McIntyre Sales Co. in payment of $26,900 invoice of

March 2.

16. Cash fees earned for March 1-16, $26,800.

16. Issued Check No. 211 for purchase of a vehicle, $28,500.

17. Issued Check No. 212 for miscellaneous administrative expense, $4,680.

18. Purchased maintenance supplies on account from Bastille Co., $2,430.

18. Received check for rent revenue on office space, $900.

19. Purchased the following on account from Master Supply Co. Maintenance supplies, $2,640, and office supplies, $1,500.

20. Issued Check No. 213 in payment of advertising expense, $8,590.

20. Used maintenance supplies with a cost of $4,400 to repair vehicles.

21. Purchased office supplies on account from Office City, $990.

24. Issued Invoice No. 94 to Sajeev Co., $9,200.

25. Received check for $14,000 from Chavez Co. in payment of invoice.

25. Issued Invoice No. 95 to Trent Co., $6,300.

26. Issued Check No. 214 to Office Mate Inc. in payment of $1,570 invoice of March 3.

27. Issued Check No. 215 to J. Wu as a personal withdrawal, $4,000.

30. Issued Check No. 216 in payment of driver salaries, $33,300.

31. Issued Check No. 217 in payment of office salaries, $21,200.

31. Issued Check No. 218 for office supplies, $600.

31. Cash fees earned for March 17-31, $29,400.

Instructions

1. Enter the following account balances in the general ledger as of March 1:

Chapter 5, Problem 5.5BPR, All journals and general ledger; trial balance The transactions completed by AM Express Company

2. Journalize the transactions for March 2016, using the following journals similar to those illustrated in this chapter: single-column revenue journal (p. 35), cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

3. Post the appropriate individual entries to the general ledger.

4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances.

5. Prepare a trial balance.

(1), (3) and (4)

To determine

General Journal

It is a chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount. It has two columns i.e. Debit column and Credit column.

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

A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called subsidiary ledger. For example: Accounts Receivable subsidiary ledger or customer ledger.

Trial balance

A trial balance is the summary of all the ledger accounts. The trial balance is prepared to check the total balance of the debit with the total of the balance of the credit column, which must be equal. The trial balance is usually prepared to check accuracy of ledger balances. In trial balance the debit balances are recorded in the left column, and credit balances are recorded in the right column.

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

The balances of different accounts are posted in the general ledger of AME Company during the period March 2016.

General Ledger

Figure (1)

Figure (2)

Figure (3)

Figure (4)

Figure (5)

Figure (6)

Figure (7)

Figure (8)

Figure (9)

(2) and (4)

To determine

To record: The respective transactions in purchase, revenue, cash receipt and cash payment journal, and to post total of each column of special journal in general ledger.

(3)

To determine

To post: The individual entry in the general ledger.

(5)

To determine

To prepare: A trial balance of AME Company.

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