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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Lowery’s Pet Depot records purchase transactions in the general journal. The company is located in Cleveland, Ohio. In addition to a general ledger, Lowery’s Pet Depot also uses an accounts payable ledger. Transactions for October related to the purchase of merchandise are as follows:

Oct. 3    Bought 12 Automatic Fish Feeders from Barrera Company, $959.88, invoice no. 5493, dated October 2; terms net 30 days; FOB shipping point, freight prepaid and added to the invoice, $79.45 (total $1,039.33).

4    Bought two 18 x 18 Terrarium Stands from Hickman Company, $259.98, invoice no. 2JYX, dated October 2; terms 2/10, n/30; FOB destination.

7    Bought four Chinchilla Bath Houses from Baldwin, Inc., $67.96, invoice no. 4183, dated October 6; terms 1/10, n/30; FOB destination.

10    Received credit memo no. 123 from Baldwin, Inc., for merchandise returned, $13.94.

Oct. 14    Bought 20 Zoo Slider Hoods from Douglas, Inc., $2,599.80, invoice no. X431, dated October 12; terms 2/10, n/30; FOB shipping point, freight prepaid and added to the invoice, $140.50 (total $2,740.30).

15    Bought four Hanging Bird Baths from Krause, Inc., $71.96, invoice no. A499, dated October 11; terms net 60 days; FOB destination.

24    Bought eight Automatic Cat Litter Boxes from Villa Manufacturing, $2,399.92, invoice no. 4429, dated October 21; terms net 30 days; FOB destination.

27    Received credit memo no. 452 from Villa Manufacturing for merchandise returned, $346.78.

Required

  1. 1. If using Working Papers, open the following accounts in the accounts payable ledger and record the October 1 balances, if any, as given: Baldwin, Inc., $46.57; Barrera Company, $743.15; Douglas, Inc., $615.20; Hickman Company; Krause, Inc., $23.45; Villa Manufacturing, $725.64. For the accounts having balances, write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
  2. 2. If using Working Papers, record the October 1 balances in the general ledger as given: Accounts Payable 212 controlling account, $2,154.01; Purchases 511, $2,485.12; Purchases Returns and Allowances 512, $287.52; Freight In 514, $48.57. Write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
  3. 3. Record the transactions in the general journal. If using Working Papers, begin on page 95.
  4. 4. Post to the general ledger and the accounts payable ledger.
  5. 5. Prepare a schedule of accounts payable, and compare the balance of the Accounts Payable controlling account with the total of the schedule of accounts payable.

3.

To determine

Prepare journal entry to record the given transaction.

Explanation

Merchandise Inventory:

Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a trader, to be sold within a year. Merchandise Inventory is a current asset account which includes all the costs incurred to acquire merchandise, and process it further for sale.

Date Account Titles and explanation Post.Ref Debit ($) Credit ($)
October 3 Purchase 511 959.88  
  Freight in 514 79.45  
       Accounts payable 212   1,039.33
  (To record the purchase of merchandise from the Company B, invoice no.5493 terms n/30)      
         
October 4 Purchase 511 259.98  
       Accounts payable 212   259.98
  (To record the purchase of merchandise from the Company H, invoice no.2JYX terms n/30)      
         
October 7 Purchase 511 67.96  
       Accounts payable 212   67.96
  (To record the purchase of merchandise from the Company B, invoice no.4183 terms n/30)      
         
October 10 Accounts payable 212 13.94  
       Purchase returns and allowance 512   13...

1 , 2 and 4

To determine

Enter the opening balance and post the transactions to the respective general ledger and accounts payable ledger.

5.

To determine

Prepare Company L’s schedule of accounts payable and compare the total with accounts payable controlling ledger.

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