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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

Shirley’s Beauty Store records sales and purchase transactions in the general journal. In addition to a general ledger, Shirley’s Beauty Store also uses an accounts receivable ledger and an accounts payable ledger. Transactions for January related to the sales and purchase of merchandise are as follows:

Jan. 3    Bought 30 Mango Bath and Shower Gels from Madden, Inc., $660, invoice no. 3487, dated January 1; terms 2/10, n/30; FOB shipping point, freight prepaid and added to the invoice, $125.43 (total $785.43).

4    Bought ten Beauty Candle Travel Sets from Calhoun Candles, Inc., $420, invoice no. 4513, dated January 1; terms net 45; FOB destination.

12    Sold four Mango Bath and Shower Gels on account to R. Kielman, sales slip no. 1456, $120, plus sales tax of $9.60, total $129.60.

13    Received credit memo no. 8715 from Calhoun Candles, Inc., for merchandise returned, $84.

21    Bought five Winter Skin Essentials Kits from Whitney and Waters, $197.50, invoice no. A875, dated January 18; terms 2/15, n/45; FOB destination.

25    Sold three Winter Skin Essentials on account to A. Benner, sales slip no. 1457, $135.75, plus sales tax of $10.86, total $146.61.

27    Issued credit memo no. 33 to A. Benner for merchandise returned, $45.25 plus $3.62 sales tax, total $48.87.

Required

  1. 1. If using Working Papers, open the following accounts in the accounts receivable ledger and record the balances as of January 1: A. Benner, $45.77; R. Kielman, $175.39. 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, open the following accounts in the accounts payable ledger and record the balances as of January 1: Calhoun Candles, Inc., $355.23; Madden, Inc., $573.15; Whitney and Waters, $50.25. Write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
  3. 3. If using Working Papers, record the January 1 balances in the general ledger as given: Accounts Receivable 113 controlling account, $221.16; Accounts Payable 212 controlling account, $978.63; Sales Tax Payable 214, $128.45. Write Balance in the Item column and place a check mark in the Post. Ref. column. Skip this step if using CengageNow.
  4. 4. Record the transactions in the general journal. If using Working Papers, begin on page 25.
  5. 5. Post the entries to the general ledger and accounts receivable ledger or accounts payable ledger as appropriate.
  6. 6. Prepare a schedule of accounts receivable.
  7. 7. Prepare a schedule of accounts payable.
  8. 8. Compare the totals of the schedules with the balances of the controlling accounts.

4.

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 ($) Credit ($)
January3 Purchase 511 660.00  
  Freight in 514 125.43  
       Accounts payable 212   785.43
  (To record the purchase of merchandise from the Company M, invoice no.3487 terms n/30)      
         
January 4 Purchase 511 420.00  
       Accounts payable 212   420.0
  (To record the purchase of merchandise from the Company C, invoice no.4513 terms n/30)      
         
January12 Accounts receivable 113 129.60  
       Sales 411   120.00
       Sales tax payable 214   9.60
  (To record the sale of merchandise to Company K,  sales slip no.1456)      
         
January13 Accounts payable 212 84...

1 , 2 ,3 and 5

To determine

Enter the opening balance, post the transactions and close the balance of the respective accounts in the general ledger and accounts payable ledger and accounts receivable ledger.

6, 7 and 8

To determine

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

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