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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

May’s Beauty Store records sales and purchase transactions in the general journal. In addition to a general ledger, May’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. 2    Bought nine Matte Nail Color Kits from Mejia, Inc., $450, invoice no. 4521, dated January 1; terms 2/10, n/30; FOB shipping point, freight prepaid and added to the invoice, $87.50 (total $537.50).

5    Bought 30 Perfume Cocktail Rings from Braun, Inc., $1,200, invoice no. 37A, dated January 3; terms 2/10, n/30; FOB destination.

8    Sold two Matte Nail Color Kits on account to J. Herbert, sales slip no. 113, $110, plus sales tax of $8.80, total $118.80.

11    Received credit memo no. 455 from Braun, Inc., for merchandise returned, $315.25.

18    Bought 15 Eye Palettes from Vargas, Inc., $660, invoice no. 910, dated January 14; terms net 30; FOB destination.

23    Sold four Eye Palettes on account to T. Cantrell, sales slip no. 114, $200, plus sales tax of $16, total $216.

26    Issued credit memo no. 12 to T. Cantrell for merchandise returned, $50 plus $4 sales tax, total $54.

Required

  1. 1. If using Working Papers, open the following accounts in the accounts receivable ledger and record the balances as of January 1: T. Cantrell, $86.99; J. Hebert, $63.47. 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: Braun, Inc., $513.20; Mejia, Inc., $113.40; Vargas, Inc., $67.15. 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, $150.46; Accounts Payable 212 controlling account, $693.75; Sales Tax Payable 214, $237.89. 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 17.
  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 ($) Credit ($)
January2 Purchase 511 450.00  
  Freight in 514 87.50  
       Accounts payable 212   537.50
  (To record the purchase of merchandise from the Company M, invoice no.4521 terms n/30)      
         
January 5 Purchase 511 1,200.00  
       Accounts payable 212   1,200.00
  (To record the purchase of merchandise from the Company B, invoice no.37A terms n/30)      
         
January8 Accounts receivable 113 118.80  
       Sales 411   110.00
       Sales tax payable 214   80.00
  (To record the sale of merchandise to Company H,  sales slip no.113)      
         
January11 Accounts payable 212 315...

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 M’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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