c 5-10.doc
TRANSCRIPT
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P5-1A
SANSOMITE
Journal Entries
Date Account titles and explanations Ref Debit Credit
July
1
3
9
12
17
18
20
21
22
Merchandise invenTory
Accounts payable(To record good purchased on account ro! trun" !anuacturers#$%& destination# ter!s 2'10#n'30
120
201
112)01
*0*120
201120
101
)1)101112
112)01
*0*120
120201101
201120
)1)101
112
112
1*00
2000
1200
1*00
201980
1*00
900
1800
300
1*1)8*
22*0
1*00
2000
1200
30
1)70
2000
1*00
900
1700100
300
1*00
Accounts receivable+ales
(To record goods sold on account To satchel ,orld # ter!s 1'10#n'30-ost o goods sold ()0 . 30 Merchandise invenTory(To record cost o goods sold or )0 suitcases# /30 each
Accounts payable
Merchandise invenTory (1*00 . 2 -ash (1*00 300(To record paid the crediTor less discount
+ales discount (200.1-ash (2000 20 Accounts receivable(To record cash received ro! a'r at discount
Accounts receivable (30.*0 +ales(To record goods sold on account To the going concern# ter!s1'10#n'30-ost o goods sold (30.30
Merchandise invenTory(To record cost o goods sold or 30 suitcases# /30 eachassu!ed
Merchandise invenTory (1700100 Accounts payable -ash(To record good purchased on account ro! holiday!anuacturers# $%& shipping point# ter!s 1'10#n'30
Accounts payable (10.30 Merchandise invenTory(To record goods returned To ing!an !anuacturers
+ales discount (1*00.1
-ash (1*001* Accounts receivable(To record cash received ro! A'4 at discount
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30
31
)01
*0*120
201101
)12112
120*0*
13*0
1)00
200
120
22*0
13*0
1)00
200
120
Accounts receivable ()*.*0 +ales(To record goods sold on account To ly 5by 5 night ter!s1'10#n'30-ost o goods sold ()*.30 Merchandise invenTory
(To record cost o goods sold or )* suitcases# /30 eachAccounts payable (1700300 -ash(To record paid the crediTor ,ithout discount
+ales returns and allo,ance Accounts receivable(To record return o goodsMerchandise invenTory
cost o goods sold(To record cost o goods returned
P5-2A
(a)%la distributing co!pany
Journal entries
Date Account titles and explanations Ref Debit Credit
April 2
)
*
6
11
13
1)
16
Merchandise invenToryAccounts payable
(To record good purchased on account# ter!s 1'10#n'30
201120
112)01
*0*120
6))101
201120
201120101
)1)
101112
120101
101
300
**00
)100
2)0
*00
6)00
**
*))*
3800
*00
300
**00
)100
2)0
*00
6)6336
**00
3800
Accounts receivable+ales
(To record goods sold on account# ter!s 1'10#n'30-ost o goods sold Merchandise invenTory(To record cost o goods sold or )0 suitcases# /30 each
$reightout -ash(To record paid or $reightout
Accounts payableMerchandise invenTory
(To record cash received ro! A'4 at discount
Accounts payable (6900*00 Merchandise nvenTory (6)00.1 -ash (6)006)(To record paid the crediTor less discount
+ales iscount (**00.1-ash (**00** Accounts receivable(To record cash received ro! A'4 at discount
Merchandise invenTory -ash(To record good purchased or cash
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18
20
23
26
27
29
30
120
120201
120
101
101)01
*0*120
120101
201
120101
)12101
112)01
*0*120
)*00
100
6)00
*120
2300
)*00
60
3700
2800
*00
)*00
100
6)00
*120
2300
90))10
60
3700
2800
-ashMerchandise invenTory
(To record cash received or goods returned
Merchandise invenTory Accounts payable(To record good purchased on account ter!s 2'10# n'30
-ost o goods sold -ash(To record paid or $reight 5in
-ash+ales
(To record goods sold or cash-ost o goods sold Merchandise invenTory(To record cost o goods sold
Merchandise invenTory -ash(To record good purchased or cash
Accounts payable Merchandise nvenTory ()*00.2 -ash ()*0090(To record paid the crediTor less discount
+ales returns and allo,ance -ash(To record paid -ash cusTo!ers less scrap value
Accounts receivable+ales
(To record goods sold on account# ter!s n'30-ost o goods sold
Merchandise invenTory(To record cost o goods sold
(b)
%A$ +T4&:T;< -%M=A;>(
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Accounts receivable ;o?112
MerchndiseinvenTory ;o?120
Date Explanation Ref Debit Credit Balance
April 2
## )## 6## 11## 1)## 16## 18## 20## 23## 26## 27## 30
J1
J1J1J1J1J1J1J1J1J1J1J1
6900
3800
)*00100
2300
)100*006)
*00
*120
902800
6900
2800230022366036**361003610136*01673167226))26
Accounts payable ;o?201Date Explanation Ref Debit Credit Balance
April 2## 6## 11## 18## 27
J1J1J1
*006)00
)*00
6900
)*00
69006)000)*000
M# %A$ -apital ;o?301
Date Explanation Ref Debit Credit Balance
April 1 &alance 9000 9000
+ales ;o?)01
Date Explanation Ref Debit Credit Balance
April )## 23## 30
J1J1J1
**006)003700
**00119001*600
+ales returns and allo,ance ;o?)12
Date Explanation Ref Debit Credit Balance
April29 J1 60 60
+ales discount ;o?)1)
Date Explanation Ref Debit Credit BalanceApril13 J1 ** **
-ost o goods sold ;o?*0*
Date Explanation Ref Debit Credit Balance
April )## 23## 30
J1J1J1
)100*1202800
)100922012020
Date Explanation Ref Debit Credit Balance
April )## 13## 30
J1J1J1
**00
3700**00
**0003700
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$reightout ;o?6))
Date Explanation Ref Debit Credit Balance
April 3 J1 2)0 2)0
(c) %la istributing -o!panynco!e state!ent (partial
$or the !onth ended April 30# 2008
+ales 4evenue? +ales
ess ? +ales returns and allo,ance ess ? +ales discount ;et +ales
ess ? -ost o goods soldGross profit
Aount Aount
/1*600
(60
(**
/1*)8*(12020
/3)6*
P5-!A
(a)
MA;@ @=A4TM@;T +T%4@;-%M@ +TAT@M@;T (Multi 5+tep
$or year ended ece!ber 31#2008
Particulars Aount Aount Aount
+ales revenues? +ales
ess? sales return and allo,ance
ess? cost o goods soldGross Profit
ess ?operatin" expanse# +elling epanse ?
epB @panse 5eCuip!ent +ales salaries epanse +ales co!!issions epanses nsurance epanse (7200.60 :tilities epanse(12000.60
Total selling epanse Adinistrati$e expanse#
B epB @pansebuilding insurance epanses(7200.)0 oice salaries property ta epanses :tilities epanses (12000.)0 Total selling epanse
Total operating epanse %ncoe fro operationsAdd#ot&er re$enues and "ains #
nterest revenue
'ess#ot&er re$enues and losses# nterest epanses
et incoe
13300760001)*00)3207200
6280000(8000
620000()12700
11*320
*)880
207300
(170200
10)002880
32000)800)800
37100
)000
)1100
(11000
3)100
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MA;@ @=A4TM@;T +T%4@
%,ners eCuity state!ent$or year ended ece!ber 31#2008
Particulars Aount Aount
& B!aine Bcapital #Danuary
Add ?net inco!e
ess ? & B!aine #dra,ing& B!aine Bcapital #ece!ber
176600
30100206700(28000
178700
MA;@ @=A4TM@;T +T%4@
&alance sheetece!ber 31#2008
Assets and liabilities Aount Aount
AssetsCurrent assets#
-ashAccounts receivable=repaid insuranceMerchandise nvenTory
Total current assets'on" ter assets #
&uilding 90000ess ?accu!ulated depB &uilding (*2*00@Cuip!ent 110000ess ?accu!ulated dep @Cuip!ent
()2900()2900Total longter! assets
otal assets'iabilities
Current'iabilitiesAccounts payablenterest payable:tilities epanse payableMortgage payable (current portion=roperty ta payable+ales co!!ission payable
Total current liabilities'on" ter liabilities?Mortgage payable (80000200000
Total longter! liabilities
Total liabilities *+ners e,uit # E Bord capital #ece!ber 31
otal liabilities and o+ners e,uit
23800*03002)007*000
1*1*00
20)600
137*00
67100
793008000100020000)800)300
3*6100
117)00
6000060000
177)00
178700
3*6100
(b)MA;@ @=A4TM@;T +T%4@
AdDusting Dournal entries
o Date Accounts titles and explanations Ref Debit Credit
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1
2
3
)
*
6
ec31
## 31
## 31
## 31
## 31
## 31
epreciation epanse building (*2*00)21000Accu!ulated epreciation building(To adDust epreciation epanse on building
10)00
13300
7200
8000
)800
)300
10)00
13300
7200
8000
)800
)300
epreciation epanse eCuip!ent ()290029600 Accu!ulated epreciation eCuip!ent(To adDust epreciation epanse on eCuip!ent
nsurance epanse =repaid nsurance(To adDust nsurance epanse during the year
nterest epanse nterest payable(To adDust nterest epanse during the year
=roperty ta epanse =roperty ta payable(To adDust =roperty ta epanse during the year
+ales co!!ission epanse +ales co!!ission payable
(To adDust +ales co!!ission epanse
(c)
MA;@ @=A4TM@;T +T%4@-losing Dournal entries
o Date Accounts titles and explanations Ref Debit Credit
1
2
3
)
ec 31
## 31
## 31
## 31
+alesnterest revenue
nco!e su!!ary(To close revenue accounts
62800)000
601900
30100
28000
632000
)12700
10)001330072001100032000)800760001)*00800012000
30100
28000
nco!e su!!ary -ost o goods sold
epreciation epanse 5 building epreciation epanse eCuip!ent
nsurance epanse nterest epanse %ice supplies epanse =roperty ta epanse +ales salaries epanse +ales co!!ission epanse +ales returns and epanse :tilities epanse(To close epanse accounts
nco!e su!!ary(632000601900
& B!aine capital(To close net inco!e To capital
& B!aine capital & B!aine dra,ing(To close dra,ings account To capital
P5-.A
(a)EA$;@4+ T@;;+ +E%=
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Journal entries
Date Account titles and explanations Ref Debit Credit
April )
6
8
10
11
13
1)
1*
17
18
20
21
Merchandise nvenToryAccounts payable
(To record goods purchased on account ro! Day !ac
co!pany #ter!s 2'10#n'30
120201
120101
112)01
*0*120
201
120
120101
201120101
120201
101120
120101
112)01
101112
201120101
8)0
)0
11*0
790
)0
)20
800
900
*0
30
810
*00
900
8)0
)0
11*0
790
)0
)20
1678)
900
*0
30
810
*00
27873
Merchandise nvenTory-ash
(To record goods sold on account #ter!s 1'10#n'30
Accounts receivable+ales
(To record goods sold on account #ter!s n'30-ost o goods sold
Merchandise nvenTory(To record cost o goods sold
Accounts payable
Merchandise nvenTory(To record goods returned To Day !ac co
Merchandise nvenTory-ash
(To record goods purchased or cash
Accounts payable (8)0)0 Merchandise nvenTory (800.2 -ash(80016(To record paid the crediTor less discount
Merchandise nvenToryAccounts payable
(To record goods purchased on account ro! serenassports,ear ter!s 2'10#n'30
-ashMerchandise nvenTory
(To record goods returned To supplier and received cash
Merchandise nvenTory -ash(To record paid cash or goods reightin
Accounts receivable+ales
(To record goods sold on account ter!s n'30
-ashAccounts receivable
(To record cash received ro! !e!bers ro! on account
Accounts payableMerchandise nvenTory(900.3-ash (90027
(To record paid crediTor To the less discount
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27
29
)12112
101112
30
660
30
660
+ales returns and allo,anceAccounts receivable
(To record granted sales returns and allo,ance
-ash Accounts receivable
To record -ash received ro! !e!bers on account
(b)
EA$;@4+ T@;;+ +E%=(
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## 21 900 900
EA$;@4 -apital ;o?301
Date Explanation Ref Debit Credit Balance
April 1 &alance )200 )200
+ales ;o?)01
Date Explanation Ref Debit Credit Balance
April 8## 18
J1J1
11*0810
11*01960
+ales returns and allo,ance ;o?)12
Date Explanation Ref Debit Credit Balance
April27 J1 30 30
-ost o goods sold ;o?*0*
Date Explanation Ref Debit Credit Balance
April 8## 18
J1J1
790*30
7901320
(c) EA$;@4+ T@;;+ +E%=Tril balance
April 30#2008
Account no Account Ref Debit Credit
101
112120201301)01)12*0*
-ash
Accounts receivableMerchandise nvenToryAccounts payableJ EA$;@4+ capital+ales
+ales returns and allo,ance-ost o goods sold
/1*63
7702)77
301320
/0)2001960
Totals 6160 6160
P5-5A
ear @nded ece!ber 31# 2008
4evenues ro! sales?+alesess? +ales returns and allo,ances
7#18#000(8#000
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;et sales-ost o
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8
10
11
13
1)
1*
17
18
20
21
27
30
900
)0
300
700
600
*0
30
1#000
*00
600
30
*00
900
)0
300
21679
600
*0
30
1#000
*00
12*88
30
*00
Accounts 4eceivable +ales(To record goods sold on account# ter!s n'30
Accounts =ayable =urchase 4eturns and Allo,ances
(To record purchase returns and allo,ances=urchases -ash(To record goods purchased or cash
Accounts =ayable =urchase iscounts -ash(To record cash pay!ent ,ith discount
=urchases Accounts =ayable(To record goods purchased on account# ter!s 2'10#
n'60-ash =urchase 4eturns and Allo,ances(To record purchase returns and allo,ances
$reightin -ash(To record reightin epense
Accounts 4eceivable +ales(To record goods sold on account# ter!s n'30
-ash
Accounts 4eceivable(To record cash received ro! debTor
Accounts =ayable =urchase iscounts -ash(To record cash pay!ent To crediTors ,ith discount
+ales 4eturns and Allo,ances Accounts 4eceivable(To record sales returns and allo,ances
-ash Accounts 4eceivable
(To record cash received ro! debTors
(b)
Iillage Tennis +hopT Accounts
-ash
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&eginning balance b'd 2#*00April 1* *0April 20 *00April 30 *00
3#**0
April 7 60April 11 300April 13 686April 17 30April 21 *88@nding balance c'd 1#886
3#**0
Accounts 4eceivable
April 8 900April 18 1#000
1#900
April 20 *00April 27 30April 30 *00@nding balance c'd 870 1#900
Merchandise nvenTory
&eginning balance b'd 1#700
1#700
@nding balance c'd 1#700
1#700
Angie ilbert# -apital
&eginning balance c'd )#200 )#200
@nding balance b'd )#200 )#200
Accounts =ayable
April 10 )0April 13 700April 21 600
1#3)0
April ) 7)0April 1) 600
1#3)0
+ales
@nding balance c'd 1#900
3#**0
April 8 900April 18 1#000 3#**0
+ales 4eturns and Allo,ances
April 27 30 30
@nding balance c'd 30 30
=urchases
April ) 7)0April 11 300April 1) 600
1#6)0
@nding balance c'd 1#6)0
1#6)0
=urchases 4eturns and Allo,ances
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@nding balance c'd 90
90
April 10 )0April 1* *0 90
=urchases iscounts
@nding balance c'd 26
26
April 13 1)
April 21 12 26
$reightin
April 6 60April 17 30
90
@nding balance c'd 90
90
(c)
Iillage Tennis +hopTrial &alanceApril 30# 2008
Account itles Ref Debit Credit
-ashAccounts 4eceivableMerchandise nvenToryAccounts =ayableAngie ilbert# -apital+ales+ales 4eturns and Allo,ances=urchases=urchases 4eturns and Allo,ances=urchase iscounts$reightin
1#886870
1#700
301#6)0
90
0)#2001#900
9026
6#216 6#216(d)
Iillage Tennis +hopnco!e +tate!ent
$or the Month @nded April 30# 2008
4evenue ro! sales? +ales ess? +ales 4eturns and Allo,ances ;et sales-ost o goods sold? &eginning Merchandise nvenTory =urchase
ess? =urchase iscounts =urchases 4eturns and Allo,ances
;et =urchase Add? $reightin
-ost o goods purchased-ost o goods available or sale
@nding Merchandise nvenTory-ost o
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Gross Profit **2
P5-A
(a)
Terry Manning $ashion -entreor" +heet
$or the >ear @nded ;ove!ber 30# 2008
Account itlesrial Balance Ad3ustents Ad3usted rial Balance %ncoe 4tateent Balance 4&eet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
-ash 28#700 28#700 28#700
Accounts 4eceivable 30#700 30#700 30#700
MerchandisenvenTory
))#700 () 300 ))#)00 ))#)00
+Tore +upplies 6B200 (1 3#700 2#*00 2#*00
+Tore @Cuip!ent 8*#000 8*#000 8*#000
Accu!ulated epB +Tore @Cuip!ent
22#000 (2 9#000 31#000 31#000
elivery @Cuip!ent )8#000 )8#000 )8#000
Accu!ulated epB elivery @Cuip!ent
6#000 (2 *#000 11#000 11#000
;otes =ayable *1#000 *1#000 *1#000
Accounts =ayable )8#*00 )8#*00 )8#*00B =oorten# -apital 1#10#000 1#10#000 1#10#000
B =oorten# ra,ing 12#000 12#000 12#000
+ales 7#**#200 7#**#200 7#**#200
+ales 4eturns andAllo,ances
8#800 8#800 8#800
-ost o ear @nded ;ove!ber 30# 20084ales Re$enues#
+ales ess? +ales 4eturns and Allo,ances
et sales
'ess# Cost of Goods 4old#
7#**#2008#800
7#)6#)00
)#97#700
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-ost o goods soldGross profit
'ess# *peratin" Expenses
4ellin" Expenses# +alaries @pense (1#)0#000.70 :tilities @pense (1)#000.80
4ent @pense (2)#000.80 Advertising @pense elivery @pense epB @pense 5 +Tore @Cuip!ent epB @pense 5 elivery@Cuip!ent
otal sellin" expensesAdinistrati$e Expenses#
+alaries @pense (1#)0#000.30:tilities @pense (1)#000.20
4ent @pense (2)#000.20 4epair @pense
+upplies @penseotal adinistrati$e expenses
otal operatin" expenses
%ncoe fro operations
'ess# *t&er Expenses#
nterest epenseset loss
98#00011#200
19#2002)#)0016#7009#000*#000
1#83#*00
6*#)00
2#)8#700
2#)8#900
)2#0002#800
12#100)#8003#700
200
)#080
)#280
Terry Manning $ashion -entre%,nerKs @Cuity +tate!ent
$or the >ear @nded ;ove!ber 30# 2008
evin =oorten# -apital# ece!ber 1# 2007
ess? ;et oss
ess? evin =oorten# ra,ingevin =oorten# -apital# ;ove!ber 30# 2008
1#10#000
)#2801#0*#720
12#000
93#720
Terry Manning $ashion -entre&alance +heet
;ove!ber 30#2008
Assets
Current Assets#
-ashAccounts 4eceivableMerchandise nvenTory
+Tore +upplies Total -urrent Assets'on"-ter Assets#
+Tore @Cuip!entess? Accu!ulated epB +Tore @Cuip!ent
elivery @Cuip!entess? Accu!ulated epB elivery @Cuip!ent
8*#00031#000
28#70030#700))#)00
2#*00 1#06#300
*)#000
)8#00011#000
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Total ongter! AssetsTotal Assets
'iabilities
Current 'iabilities#
;otes =ayableAccounts =ayable
nterest payable Total -urrent iabilities'on"-ter 'iabilities#
Mortgage =ayableTotal ongter! iabilities
Total iabilities*+ners E,uit#
evin =oorten# -apital# ;ove!ber 30# 2008Total %,nerKs @CuityTotal iabilities and %,nerKs @Cuity
37#000 91#000
21#000
)8#*00)#080
1#97#300
73#*80
30#00030#000
93#720
1#03#*80
93#720
1#97#300
(c)
Terry Manning $ashion -entreAdDusting Journal
Date Account itles and Explanations Ref Debit Credit
2008;ov? 30
(1
(2
(3
()
+Tore +upplies @pense +Tore +upplies(To record sTore supplies epense
3#700
9#000*#000
)#080
300
3#700
9#000*#000
)#080
300
epreciation @pense 5 +Tore @Cuip!entepreciation @pense 5 elivery @Cuip!ent Accu!ulated epB 5 +Tore @Cuip!ent Accu!ulated epB 5 elivery @Cuip!ent(To record depreciation epense
nterest @pense nterest =ayable(To record accrued interest
-ost o
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(2
(3
()
7#*8#)80
)#280
12#000
8#800)#97#7001#)0#000
1)#000)#080
2)#)0016#7009#000*#000
12#1002#700
2)#000
)#280
12#000
nco!e +u!!ary +ales 4eturns and Allo,ances -ost o goods sold +alaries @pense
:tilities @pensenterest epense
Advertising @pense elivery @pense epB @pense 5 +Tore @Cuip!ent epB @pense 5 elivery @Cuip!ent 4epair @pense +upplies @pense 4ent @pense(To close epenses
evin =oorten# -apital nco!e +u!!ary(To transer net loss To the capital
evin =oorten# -apital evin =oorten# ra,ing
(To transer dra,ing To the capital(e)
Terry Manning $ashion -entre=ost 5closing Trial &alance
;ove!ber 30# 2008
Account itles Ref Debit Credit
-ashAccounts 4eceivableMerchandise nvenTory+Tore +upplies+Tore @Cuip!entAccu!ulated epB +Tore @Cuip!entelivery @Cuip!ent
Accu!ulated epB elivery @Cuip!ent;otes =ayableAccounts =ayablenterest =ayableevin =oorten# -apital# ;ove!ber 30# 2008
28#70030#700))#)00
2#*008*#000
)8#00031#000
11#000*1#000)8#*00
)#08093#720
2#39#300 2#39#300
P5-1B
4or$ino Boo6 7are&ouse
GEERA' 8*9RA' 81
Date Accounts ittles And Explanation Ref Debit Credit
2::o$-1
o$-!
;erc&andise %n$enor
Accounts Paable
(o record purc&ase of Boo6s on Account)
12:
2:1
112
.:1
5:5
12:
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o$-/
o$-=
o$-15
o$-10
o$-2:
o$-2.
o$-2/
o$-2
o$-!:
(o record cost of ;erc&andise sold)
2:1
12:
2:1
1:112:
1:1
112
112
.:1
5:5
12:
12:
2:1
1:1
.1.
2:1
1:1
12:
112.:1
5:5
12:
.12
112
12:
5:5
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2::
o$-1
o$-2
o$-5
o$-=
o$-1:
o$-11
o$-15
o$-10
o$-1=
o$-2.
o$-25
o$-20
o$-2=
o$-!1
;erc&andise %n$enor
Accounts Paable
(o record purc&ase on Account)
12:
2:1
112
.:1
5:5
12:
2:1
12:
1:1
.1.
112
2:1
1:1
12:
12/
1:1
12:
1:1
12:
2:1
12:
1:1
1:1
.:1
5:5
12:
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Cost of Goods 4old
;erc&andise %n$enor
(o record cost of ;erc&andise sold)
.:1
5:5
12:
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o$-:5
o$-1:
o$-10
o$-25
o$-20
81
81
81
81
81
April-!1 Balance
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Cost of Goods 4old
-
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Assets and liabilities Aount Aount
AssetsCurrent assets#
-ashAccounts receivable=repaid insurance
Merchandise nvenTory Total current assets'on" ter assets #
elivery @Cuip!ent *7000ess ?accu!ulated depB elivery euipB(19680+Tore @Cuip!ent 2*000ess ?accu!ulated dep +Tore @Cuip!ent ()18000()18000
otal assets
'iabilities
Current'iabilitiesAccounts payable=roperty ta payable+ales co!!ission payable
Total current liabilities'on" ter liabilities?;otes payable Total longter! liabilities Total liabilities *+ners e,uit #Eu!ancapital # ;ove!ber 30# 2008
otal liabilities and o+ners e,uit
800011770)*00
36200 60)70
37320
83200
)73103*006000
120*20
*6810
)6000
)6000
102810
78180
180990
(b)
(c)
Eu!an epart!ent +Tore-losing Dournal entries
o Date Accounts titles and explanations Ref Debit Credit
>uffan Departent 4ore
AD894ED 8*9RA' ER 81Date Accounts ittles And Explanation Ref Debit Credit
2::
o$-!: (1)
(2)
(!)
(.)
(5)
%nsurance Expense
Prepaid %nsurance
(o record prepaid insurance)
Dep Expense of Deli$er E,uipent
Accuulated Dep - Deli$er E,uipent
(o record depreciation expense)
Dep Expense of 4ore E,uipent
Accuulated Dep 4ore E,uipent
(o record depreciation expense)
Propert ax expense Propert ax Paable
(o record accrued Propert ax expense)
4ales Coission expense
4ales Coission Paable
(o record accrued 4ales Coission expense)
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1
2
3
)
;ov 30
## 30
## 30
## 30
+alesnterest revenue
nco!e su!!ary(To close revenue accounts
8*0000*000
8)9020
*980
12000
8**000
633220
8200)0009*00900080003*0019000
1200001)0001000010600
*980
12000
nco!e su!!ary -ost o goods sold
elivery @penseepreciation epanse 5elivery
euip
epreciation epanse +Tore eCuipnsurance epanse
nterest epanse =roperty ta epanse 4ent epense +alaries epanse +ales co!!ission epanse +ales returns and epanse :tilities epanse
(To close epanse accounts nco!e su!!ary(632000601900 Eu!an# capital(To close net inco!e To capital
Eu!an# capital Eu!an# dra,ing(To close dra,ings account To capital
P5-.b#
(a)
Mi"eKs =ro +hopJournal @ntries
Date Account itles Explanation Ref Debit Credit2008
AprB*
7
9
10
12
Merchandise nvenTory Accounts =ayable(To record purchase on account# ter! 2'10# n'60
120201
120101
201120
112
)01
*0*120
120201
/1*00
80
100
1100
810
860
/1*00
80
100
1100
810
860
Merchandise nvenTory -ash(To record paid or reight in
Accounts =ayable Merchandise nvenTory(To record goods returned
Account receivable +ales(To record sell on account-ost o goods sold Merchandise nvenTory(To record cost o goods sold
Merchandise nvenTory Accounts =ayable(To record purchase on account# ter!s 1'10# n'30
-
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1)
17
20
21
27
30
201120101
201120
112)01
*0*120
201120101
)12
112
101112
1)00
60
700
)90
800
)0
1000
281372
60
700
)90
8792
)0
1000
Accounts =ayable Merchandise nvenTory -ash(To record paid crediTors less discount
Accounts =ayable Merchandise nvenTory
(To record goods returnedAccount receivable +ales(To record sell on account-ost o goods sold Merchandise nvenTory(To record cost o goods sold
Accounts =ayable Merchandise nvenTory -ash(To record paid crediTors at discount
+ales returns L allo,ance Account receivable(To record granted sales returns
-ashAccount receivable
(To record cash received on account
(b)
Mi"eKs =ro +hop(
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;erc&andise %n$enor o12:
Date Explanation Ref Debit Credit Balance
AprB1 *
7 9
10121)172021
&alanceJ1J1J1
J1
3*001*0080
860
100
810
2860)908
3*00*000*080)980
)170*030*002)9)2))*2))))
Accounts paable o2:1
Date Explanation Ref Debit Credit Balance
AprB* 9 12 1) 17
21
J1J1J1J1J1J1
100
1)0060800
1*00
860
1*001)002260860800
0
;Palar? Capital o !:1
Date Explanation Ref Debit Credit Balance
AprB1 &alance 6000 6000
4ales o .:1
Date Explanation Ref Debit Credit Balance
AprB10 20
J1J1
1100700
11001800
4ales returns allo+ance o.12
Date Explanation Ref Debit Credit Balance
AprB27 J1 )0 )0
Cost of "oods sold o 5:5
Date Explanation Ref Debit Credit Balance
AprB10 20
J1J1
810)90
8101300
(c)
Mi"eKs =ro +hopTrial &alanceApril 30# 2008
Account o Account Ref Debit Credit
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101112120201301)01
)12*0*
-ashAccounts receivableMerchandise nvenToryAccounts payableMB=al!ar# -apital+ales
+ales returns L allo,ance-ost o goods sold
/12*6760
))))
)01300
/060001800
Totals /7800 /7800
P5-5B#
uc"all epart!ent +Torenco!e +tate!ent
$or the year ended ;ove!ber 30# 2008
Accounts Aount Aount Aount
4evenue ro! sales +ales ess?+ales returns L allo,ance
;et sales -ost o goodssold?&eginningMerchandise nvenTory=urchaseess? =urchase discount =urchase returnsL allo,ance ;et =urchaseAdd? $reightin-ost o goods =urchased-ost o goods available or sale@nding Merchandise nvenTory -ost o goods sold
Gross profit
/6*000070003000
/90000020000
/880000
6*3220
))360
6)*060
6)0000*060
689)2036200
226780
P5-/B#
(a)
2::5 2::/ 2::0 2::
%ncoe 4tateent Data
+ales-ost o goods sold?
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(b) According To the given data# the proitability declined as per the sales declineB The grossproit rates or 2006 To 2008 are 696)0'968*0F 71B91 # 61*)0'86680F 70B997 and*6230'82230F 68B39 indicate that the proitability declined over the 3year iscal periodB
P5-0b#
(a)
$our %a"s =ro shopJournal entries
Date Account itles Explanations Ref Debit Credit
Apr*
7
9
10
12
1)
17
20
21
27
30
=urchases Accounts payable(To record goods purchased on account
/2200
80
200
9*0
)60
2000
60
1000
)00
7*
1100
/2200
80
200
9*0
)60
)01960
60
1000
)396
7*
1100
$reightin -ash(To record paid or reight in
Accounts payable =urchase returnL allo,ance(To record =urchase return
Account receivable +ales(To record goods sold on account
=urchases Accounts payable(To record goods purchased on account
Accounts payable =urchase discount -ash(To record paid the crediTors# less discount
Accounts payable =urchase return L allo,ance
(To record =urchase returnAccount receivable +ales(To record goods sold on account
Accounts payable =urchase discount -ash(To record paid the crediTors# less discount
+ales return L allo,anceAccount receivable(To record granted +ales return L allo,ance
-ash Accountreceivable(To record cash received on account
(b)
$our %a"s =ro shop
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AprB1 30
&alance /2*001100
AprB7 1) 21
@nding balancec'd
/801960396116)
3600 3600
Accounts Recei$ableDate Explanations Aount Date Explanations Aount
BAprB10 20
/9*01000
AprB27 30
@nding balancec'd
/7*110077*
19*0 19*0
;erc&andise %n$enorDate Explanations Aount Date Explanations Aount
AprB1
&alance /3*00 @nding balancec'd
/3*00
3*00 3*00
Accounts paable
Date Explanations Aount Date Explanations Aount
AprB9 17 1) 21
20060
2000)00
AprB* 12
@nding balance c'd
2200)60
0
2660 2660
P&il ;ic6el? capitalDate Explanations Aount Date Explanations Aount
AprB31 &alance c'd 6000 AprB1 &alance 6000
6000 6000
4alesDate Explanations Aount Date Explanations Aount
AprB31@nding &alance c'd 19*0
AprB9 20
9*01000
19*0 19*0
4ales Returns allo+ances
Date Explanations Aount Date Explanations AountAprB27 7* AprB27 @nding &alance c'd 7*
7* 7*
Purc&aseDate Explanations Aount Date Explanations Aount
AprB* 20
2200)60
AprB31 @nding &alance c'd 2660
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2660 2660
Purc&ase Returns allo+ancesDate Explanations Aount Date Explanations Aount
AprB31 @nding &alance c'd 260
AprB9
17
200
60260 260
Purc&ase DiscountDate Explanations Aount Date Explanations Aount
AprB31 @nding &alance c'd ))AprB1) 21
)0)
)) ))
@rei"&t- inDate Explanations Aount Date Explanations Aount
AprB7 80 AprB31 @nding &alance c'd 80
80 80(c)
$our %a"s =ro shopTrial balance
April 31# 2008
Accounts titles ebit -redit
-ashAccounts 4eceivableMerchandise nvenToryAccounts payable=hil Mic"el# capital+ales+ales 4eturns L allo,ances=urchase=urchase 4eturns L allo,ances=urchase iscount$reight in
/116)77*
3*00
7*2660
80
0600019*0
260))
82*) 82*)
(d)
$our %a"s =ro shopnco!e +tate!ent
$or the !onth ended April#30 2008
Accounts A!ount A!ount A!ount
4evenue ro! sales
+ales ess?+ales returns L allo,ance;et sales
-ost o goods sold?&eginningMerchandise nvenTory=urchaseess? =urchase discount
/2660))260
/19*07*/187*
3*00
-
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=urchase returnsL allo,ance ;et =urchaseAdd? $reightin-ost o goods =urchased-ost o goods available or sale
@nding Merchandise nvenTory -ost o goods sold?Gross profit
2)36
1)12
23*680
*936)*2)
/)63
C&apter 0
Proble set c
(a)
=A-A4 -%M=A;>+ales Dournal
Date Accounts debited %n$oice no Ref Accounts recei$able dr
4ales cr
2008
Jan 3
## 11
## 22
## 2*
&B 4e!yJB $ine4Braves+B ngels&B 4e!y4B raves&B Eachins"iJB $ine
*10*11*12*13*1)*1**16*17
/310018001900900
3700800
3*006100
/21300
=urchase Dournal
Date Accounts credited %n$oice no Ref Purc&ase dr
Accounts paable cr2008Jan *
## 16
## 27
+B >ostB uB Moneno+B os"o+B >ostB MonenoB u+B >ost
/30002700
1*000139001*00
12*0012002*00
/*2600
-ash receipt DournalDate Accounts credited Ref Cas& dr Accounts recei$able dr 4ales cr
2008Jan 7
## 10## 13
+B ngels&B Eachins"i+ales&B 4e!yJB $ine( 1800300
/)00020001**0031001*00
/)0002000
31001*00
/1**00
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## 20## 21## 31
+ales+B ngels+ales
17900900
22920900
17900
22920
67)20 11*00 **920
-ash pay!ent Dournal
Date Accounts debited Ref *t&er accounts dr Accounts paable dr Purc&ase Cas& cr
2008Jan 8## 9
## 12## 1*## 17## 23
## 28## 31
$reight in+B os"oB Moneno4entithdra,al%ice suppliesB Moneno+B os"o%ice supplies+ales salaries%ice salaries
/180
1000800)00
200)3003600
/900011000
1*00013700
/1809000110001000800)00
1*00013700200)3003600
10)80 )8700 0 *91180
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## 31 11*00 23000
;otes receivable ;o? 11*
Date Explanation Ref Debit Credit Balance
2008Jan 1 /39000 /39000
Merchandise invenTory ;o? 120
Date Explanation Ref Debit Credit Balance
2008Jan 1 /20000 /20000
%ice supplies ;o? 12*
Date Explanation Ref Debit Credit Balance
2008Jan 1## 17## 28
/1000 )00 200
/1000 1)00 1600
=repaid insurance ;o? 130Date Explanation Ref Debit Credit Balance
2008Jan 1 /2000 /2000
@Cuip!ent ;o? 1*7
Date Explanation Ref Debit Credit Balance
2008Jan 1 /6)*0 /6)*0
Accu!ulated deprecation ;o? 1*8
Date Explanation Ref Debit Credit Balance
2008
Jan 1 /1*00 /1*00
;otes payable ;o? 200
Date Explanation Ref Debit Credit Balance
2008Jan21 /1*000 /1*000
Accounts payable ;o? 201
Date Explanation Ref Debit Credit Balance
2008Jan 1## 18## 21
## 31## 31
/2001*000
)8700
/3*000
*2600
/3*000 3)800 19800
72)00 23700
B =ac"ard capital ;o? 301
Date Explanation Ref Debit Credit Balance
2008Jan 1 /78700 /78700
B =ac"ard dra,ing ;o? 306
Date Explanation Ref Debit Credit Balance
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2008Jan 1* /800 /800
+ales ;o? )01
Date Explanation Ref Debit Credit Balance
2008
Jan31## 31 /21800**920 /21800 77720
+ales returns and allo,ance ;o? )16
Date Explanation Ref Debit Credit Balance
2008Jan 9 /300 /300
=urchase ;o? 601
Date Explanation Ref Debit Credit Balance
2008Jan31 /*2600 /*2600
=urchase return and allo,ance ;o? 616Date Explanation Ref Debit Credit Balance
2008Jan18 /200 /200
$reight in ;o? 621
Date Explanation Ref Debit Credit Balance
2008Jan 8 /180 /180
+ales salaries
Date Explanation Ref Debit Credit Balance
2008
Jan31 /)300 /)300
%ice salaries
Date Explanation Ref Debit Credit Balance
2008Jan31 /3600 /3600
4ent
Date Explanation Ref Debit Credit Balance
2008Jan12 /1000 /1000
Accounts receivable subsidiary ledger4B raves
Date Explanation Ref Debit Credit Balance
2008Jan 1## 11## 22
/1*00 1900 800
/1*003)00)200
&B Eachins"i
Date Explanation Ref Debit Credit Balance
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2008Jan 1## 7## 2*
/7*00
3*00/2000
/7*00**009000
+B ngles
Date Explanation Ref Debit Credit Balance2008Jan 1## 7## 11## 21
/)000
900/)000
900
/)000 0 900 0
&B 4e!y
Date Explanation Ref Debit Credit Balance
2008Jan 3## 13## 22
/3100
3700/3100
/3100 03700
JB $ine
Date Explanation Ref Debit Credit Balance
2008Jan 3## 9## 13## 2*
/1800
6100
/3001*00
/18001*00 06100
Accounts payable subsidiary ledger
+B os"o
Date Explanation Ref Debit Credit Balance
2008Jan 1## 9## 16## 18## 23
/9000
20013700
/9000
13900
/9000 01390013700 0
4B Mi"ush
Date Explanation Ref Debit Credit Balance
2008Jan 1## 21 /1*000
/1*000 /1*000 0
B Moreno
Date Explanation Ref Debit Credit Balance
2008 JanB 1## 9## 16## 23## 27
/11000
1*000
/11000
1*000
12*00
/11000 01*000 012*00
+B >ost
Date Explanation Ref Debit Credit Balance
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2008 Jan *## 16## 27
/30001*002800
/30001*007300
B u
Date Explanation Ref Debit Credit Balance2008Jan *## 27
/2700 1200
/2700 3900
(c)=A-A4 -%M=A;>
or"sheet$or the !onth ended January 31# 2008
Accounts
titles
9nad3usted trial
balance
Ad3ustent Ad3usted trial
balance
%ncoe
stateent
Balance s&eet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
-ashAccB 4eeceB;otes receiBMerchandise%ice suppB=repaidinsurB@Cuip!entAccu B depriB;otespayableAccountspayBB =ac"ardcapB=ac"ard
dra,B+ales+ales 4'A=urchase=urchase4'A$right in+ales salaries%ice salaB4entTotals
%iB +upB @
nsurance eBepB @Bnterest eBnterest pyB-ost goodsTotals
)1990230003900020000160020006)*0
800
300*2600
180)30036001000
1*001*0002370078700
77720
200
90020012*30
*000
62**
*000900200
12*
30
62**
)199023000390001*00070018006)*0
800
300*2600
180)30036001000
90020012*30
*000
19697*
162*1*0002370078700
77720
200
30
19697*
300*2600
180)30036001000
90020012*30
*000
6823*
77720
200
77920
)199023000390001*00070018006)*0
800
162*1*0002370078700
30
196820 196820
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(d)
=A-A4 -%M=A;>nco!e state!ent
$or the !onth ended January 31# 2008
Particulars Aount Aount
+ales revenues? +ales ess ? sales return and allo,ances
;et sales-ost o goods sold? Merchandise invenTory January 1 =urchase
ess ? purchase return and allo,ance ;et purchase Add ? right in
-ost o goods available saleess ? Merchandise invenTory January 31-ost o goods sold %,nerKs eCuity state!ent
$or the !onth ended January 31# 2008
Particulars Aount
B =ac"ard capital January 1 Add ? ;et inco!e
ess ? B =ac"ard dra,ingB =ac"ard capital January 31
/78700 968*
8838* (800
/87*8*
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=ac"ard -o!pany&alance sheet
January 31# 2008
Particulars Aount Aount
Assets #
-urrent assets? -ashAccounts receivable
;otes receivable Merchandise invenTory
%ice supplies=repaid insurance
Total -urrent assetsong ter! assets? @Cuip!ent
ess ? accu!ulated depreciation
Total assets'iabilities and o+ners e,uit#
Current liabilit#
;otes payable Accounts payable nterest payable
Total -urrent liability*+ners e,uit#
B =ac"ard capital
Total iabilities and o,ners eCuity
/)199023000390001*000 700 1800
/121)90
)82*
6)*0(162*
/1*00023700 30
/12631*
/38730
87*8*
/12631*(e)
=A-A4 -%M=A;>AdDusting entries
Date Accounts titles and explanation Ref Debit Credit
2008Jan 31
## 31
## 31
## 31
%ice supplies epanse %ice supplies(To adDust %ice supplies epanse
/900
200
12*
30
/900
200
12*
30
nsurance epanse =repaid insurance
(To adDust nsurance epanseepreciation epanse Accu!ulated depreciation(To adDust epreciation epanse
nterest epanse nterest payable(To adDust interest epanse
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## 31*000
*000-ost o goods sold Merchandise invenTory(To adDust -ost o goods sold
=A-A4 -%M=A;>
-
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JanB31 /200 /200
epreciation epanse
Date Explanation Ref Debit Credit Balance
2008JanB31 /12* /12*
nterest epanse
Date Explanation Ref Debit Credit Balance
2008JanB31 /30 /30
=A-A4 -%M=A;>-losing Journal
Date Accounts titles and explanation Ref Debit Credit
2008Jan 31
(1
(2
(3
()
(*
+ales
nco!e su!!ary(To close sales revenue
/77720
6823*
200
968*
800
/77720
300*2600180)3003600100090020012*30*000
200
968*
800
nco!e su!!ary +ales return and allo,ance =urchase $reight in +ales salaries %ice salaries 4ent
%ice supplies epanse nsurance epanse epreciation epanse nterest epanse -ost o goods sold(To close epanse account
=urchase return and allo,ance nco!e su!!ary(To close purchase return and allo,ance
nco!e su!!ary B=ac"ard capital
(To close net inco!e
B =ac"ard capital B =ac"ard dra,ing(To close dra,ing
=A-A4 -%M=A;>
-
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nco!e state!ent
Date Explanation Ref Debit Credit Balance
2008Jan31
## 31## 31## 31
/6823*
968*
/77720
200
/77720
9)8* 968* 0
+ales return and allo,ance
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/300/300
/300 0
=urchase
Date Explanation Ref Debit Credit Balance2008Jan31## 31
/*2600/*2600
/*2600 0
$reight in
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/180/180
/180 0
+ales salaries
Date Explanation Ref Debit Credit Balance2008Jan31## 31
/)300/)300
/)300 0
%ice salaries
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/3600/3600
/3600 0
4ent
Date Explanation Ref Debit Credit Balance2008Jan31## 31
/1000/1000
/1000 0
%ice supplies epanse
Date Explanation Ref Debit Credit Balance
2008
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Jan31## 31
/900/900
/900 0
nsurance epanse
Date Explanation Ref Debit Credit Balance
2008
Jan31## 31
/200/200
/200 0
epreciation epanse
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/12*/12*
/12* 0
nterest epanse
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/30/30
/30 0
=urchase return and allo,ance
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/200/200
/200 0
-ost o goods sold
Date Explanation Ref Debit Credit Balance
2008Jan31## 31
/*000/*000
/*000 0
B =ac"ard capital
Date Explanation Ref Debit Credit Balance
2008JanB 1## 31## 31 /800
/78700 968*
/78700 8838*87*8*
B =ac"ard dra,ing
Date Explanation Ref Debit Credit Balance
2008JanB 1## 31
/800/800
/800 0
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(f)=A-A4 -%M=A;>
=ost closing balance$or the !onth ended January 31# 2008
4l o Accounts titles Ref Debit Credit
1 2 3 ) * 6 7 8 9 10 11
12
-ashAccounts receivable;otes receivableMerchandise invenTory%ice supplies=repaid insurance@Cuip!entAccu!ulated deprecation;otes payableAccounts payablenterest payable
B =ac"ard capital
/)1990 23000 39000 1*000 700 1800 6)*0
/162*1*00023700 30
87*8*/1279)0 /1279)0
P-.A
(a)
&ac"haus -o!pany&an" 4econciliation +tate!ent
ece!ber 31# 2008
-ash balance per ban"Add? eposit in transit
ess? %utstanding chec"s? ;oB 3)70
;oB 3)7) ;oB 3)78 ;oB 3)81 ;oB 3)8) ;oB 3)86
AdDusted cash balance per ban"
-ash balance per boo"sAdd? -ollection o note receivable
ess? ;+$ chec"
@rror in recording @rror in recording
AdDusted cash balance per boo"s
720B10
1#0*0B00621B30807B)0798B00
1#889B*0
20#1*)B301#690B)0
21#8))B70
(*#886B30
*72B80
90B009B00
1*#9*8B)0
12#)8*B20)#1)*B00
16#630B20
(671B80
1*#9*8B)0
(b)
&ac"haus -o!panyAdDusting Journal
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Date Account itles and Explanations Ref Debit Credit
2008ec? 31
1B
2B
3B
)B
-ashMiscellaneous @pense ;otes 4eceivable
nterest 4evenue(To record collection o note
)#1)*1*
*72B80
90
9
)#000
160
*72B80
90
9
Accounts 4eceivable -ash(To record ;+$ chec"Accounts =ayable -ash(To record increase o cash paid To accounts payable
Accounts 4eceivable -ash(To record cash received or accounts receivable
P-5A
(a)
Eaver!an -o!pany&an" 4econciliation +tate!ent
July 31# 2008
-ash balance per ban"Add? eposit in transit
ess? %utstanding chec"s @rror in recording
AdDusted cash balance per ban"
-ash balance per boo"sAdd? -ollection o note receivable @rror in recording
ess? &an" service chargeAdDusted cash balance per boo"s
8#)60100
2)#*1)9#)00
33#91)
(8#*60
3#)7090
2*#3*)
21#8*0
3#*60
2*#)10(*6
2*#3*)
(b)
Eaver!an -o!panyAdDusting Journal
Date Account itles and Explanations Ref Debit Credit2008
July? 311B -ash
;otes 4eceivable nterest 4evenue(To record collection o note ,ith interest revenue
3#)703#)00
70
-
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2B
3B
90
*6
90
*6
-ash Accounts =ayable(To record rectiied overpaid To accounts payable
Miscellaneous @pense -ash(To record !iscellaneous epense
P-/A
The ollo,ing internal control ,ea"nesses are identiied in this scenario(1 ac" o establish!ent o responsibility(2 ac" o segregation o duties(3 ac" o docu!entation procedures() ac" o physical# !echanical and electronic controls(* ac" o independent internal veriication(6 ac" o other controls
e !ay suggest that the above indicated lac" o internal control principlesshould be ta"en To the account by the school authorityB
P-1B
:&> %$$-@ +:==> -%M=A;>
o Principle Application o Anita t&eater
1 @stablish!entresponsibility
%nly the treasure and assistant treasure are authoriNed Tosign chec"sB
2 +egregation oduties
nvoices !ust be approved by both the purchasing agent andthe receiving depart!ent supervisorB =ay!ent can only be!ade by the treasure or assistant treasure# and the chec"signers do not record the cash disburse!ent transactionsB
3 ocu!entationprocedures
-hec"s are renu!beredB
) =hysical#!echanical#electronic controls
&lan" chec"s are "ept in a sae in the treasure oiceB %nlythe treasure and assistant treasure have access To the saeB Achec" ,riter is used in ,riting chec"sB
* ndependent internalveriication
The chec" signer co!pares the chec"s ,ill the approvedinvoice prior To issueB &an" and boo" balance are reconciled!onthly by the assistant chie accountB
6 %ver controls $ollo,ing pay!ent# invoices are sta!ped paidB
P-2B
(a)
;;;Journal @ntries
Date Account titles and explanation Ref Debit Credit
Jul 1 =etty cash -ash(To establish petty cash und
200B00200B00
-
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## 1*
## 31
Aug1*
## 16
## 31
9)B00)2B)0)6B6011B201B80
82B10)*B002*B*039B)0
7*B60)3B0033B00
37B00
100B00
1)0B009*B60)7B101B30
196B00
192B00
187B001B60
100B00
18)B00
$reight 5 out=ostage epanse@ntertain!ent epanseMiscellaneous epanse-ash short and over ( short
-ash(To replenish the petty cash und ,ith a cash short
$reight 5 out-haritable contribution epanse=ostage epanseMiscellaneous epanse -ash(To replenish the petty cash und
$reight 5 out@ntertain!ent epanse=ostage epanse
Miscellaneous epanse -ash-ash short and over ( over
(To replenish the petty cash und ,ith a cash over
petty cash(300 200 cash(To increase petty cash und
=ostage epanseTravel epanse$reight 5 out-ash short and over ( short
-ash(To replenish the petty cash und ,ith a cash short
(b)=etty cash
Date Explanation Ref Debit Credit Balance
Jul 1Aug16## 31
cpcp
200100
200300300
(c) The inter control eatures o a petty cash und include the ollo,ing points?B a cusTodian is responsible or the undB
B A petty cash receipt signed by the cusTodian and the individual receiving thepay!ent is reCuired or each pay!ent ro! the undB
B The treasure oice ea!ines all pay!ents and sta!p supporting docu!ents Toindicate they ,ere paid ,hen the und is replenishedB
IB +urprise count can be !ade at any ti!e To deter!ine ,hether the und is intactBP-!b
(a)
-
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$lint Eills
-
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-
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-ash balance per ban"Add? eposit in transit (7700073110)000 @rror o understate (27827*
ess? %utstanding chec"s (73*1018071*003)*00
AdDusted cash balance per ban"
-ash balance per boo"Add? -ollection o notes receivable by ban" (6800130 @rror o understate nterest earned
ess? +aety deposit bo rentAdDusted cash balance per boo"
/78903
/2*932
7893
693018032
3382*6393
/27)32
20330
71)2
)027)72
)0
/27)32
(b)
&au!gardner -o!pany
AdDusting DournalDate Account titles explanations Ref Debit Credit
Aug 31
Aug 31
Aug 31
Aug 31
-ash ;otes receivable nterest revenue(To record collection o note ,ith interest
6930
32
)0
180
6930
32
)0
180
-ash nterest revenue(To record @arned interest revenue
Miscellaneous epense -ash
(To record Miscellaneous epense or cash-ash Accounts payable(To record rectiied overpaid To Accounts payable
P-/B(a)
4ichardson -o!pany&an" 4econciliation +tate!ent
%cTober 31# 2008
Particulars Aount Aount
-ash balance per ban"Add? (3 eposits in transit
ess? (3 %utstanding chec"s?AdDusted cash balance per ban"-ash balance per boo"Add? (* -ollection o notes receivable by ban"
/18180B00379*B*1
2197*B*11112B79
/20862B72
21892B72300B00
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ess? Thet (&alancing igureAdDusted cash balance per boo"
22192B721330B00
/20862B72
(b)The cashier atte!pted To cover the thet o /1330 by ollo,ing three ,ays?
(1 ;ot listing as outstanding three chec"s Totaling *30B00iB (;oB62# /126B7*O ;oB183# 1*0B00O ;oB28)# 2*3B2*
(2 :nder ooting the outstanding chec"s listed by100B00iB (;oB862# /190B71O ;oB 863# 226B80O ;oB 86)# 16*B28F *82B79
)82B79(3 +ubtracting the /200 credit ro! the ban" balance instead o adding To the
boo" balance# thereby concealing /700 o the thetB
(c)The ollo,ing principles o internal control ,ere violated in this case?(1 ndependent internal veriication(2 +egregation o dutiesB
P=-1A
(a)
@+ -%BJournal @ntries
Date Account title and explanation Ref Debit Credit
1
2
3
)
*
Accounts receivable+ales
( To record goods on Accounts
3200000
*0000
2810000
90000
2)000
2)000
3200000
*0000
2810000
90000
2)000
2)000
+ales return and allo,anceAccounts receivable
(To record sales return-ash
Accounts receivable(To record received cash ro! accounts receivable
Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o o A'4 or uncollectible
Accounts receivable Allo,ance and doubtul Accounts (To record reinstalled o A '4 or recovery
-ash Accounts receivable(To record received cash ro! A '4
(b)
@+ -%Bedger
Accounts receivable
-
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-
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dec31 AdDusting 30610 30610
Allo,ance and doubtul Accounts
Date explanation Ref Debit Credit Balance
200*
dec31dec312006!ar1!ar1
&alanceAdDusting
1000
30610
1000
12000
)2610
)1610)2610
(c)
Pill!ann -o!panyJournal entries
o Date Account title and explanation Ref Debit Credit
1B 2006dec31
&ad debt epanse Allo,ance and doubtul Accounts
(To record &ad debt epanse
29)0029)00
P=-.A
(a)
Cusoer otal uber of Das outstandin"
1-!: !1-/: /1-=: =1-=: *$er 12:
Accounts receivable /37*000 /220000 /900000 /)0000 /10000 /1*000
0 uncollectible 1 ) * 8 10
@sti!ated &ad debts 10100 2200 3600 2000 800 1*00
(b)Journal entry
o Date Account title and explanation Ref Debit Credit1B dec31 &ad debt epanse(1010010000
Allo,ance and doubtul Accounts(To record &ad debt epanse
2010020100
(c)Journal entry
o Date Account title and explanation Ref Debit Credit
1B dec31 Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible
*00*00
(d)
Journal entryo Date Account title and explanation Ref Debit Credit
1B dec31 Accounts receivable Allo,ance and doubtul Accounts(To record o A'4 or recoverycash
Accounts receivable(To record received cash ro! A'4
*000
*000
*000
*000
-
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(e) Applying 3 o Total accounts receivable ,ould change the a!ount oTotal bad debt epanseB The advantage o aging account receivable over percentage ToTotal account receivable is the !ore accuracy o bad debt epanseB
P=-5A(b)I%4-@+T@4 -%M=A;>
Journal entry
o Date Account title and explanation Ref Debit Credit
1B
2
dec31
ec31
&ad debt epanse(117*02000 Allo,ance and doubtul Accounts(To record &ad debt epanse
97*0
9*00
97*0
9*00&ad debt epanse (9*0000.1 Allo,ance and doubtul Accounts(To record &ad debt epanse
(c)
I%4-@+T@4 -%M=A;>Journal entry
o Date Account title and explanation Ref Debit Credit
1B
2
dec31
ec31
&ad debt epanse(117*02000 Allo,ance and doubtul Accounts(To record &ad debt epanse
137*0
9*00
137*0
9*00&ad debt epanse (9*0000.1 Allo,ance and doubtul Accounts(To record &ad debt epanse
(d)I%4-@+T@4 -%M=A;>
Journal entry
o Date Account title and explanation Ref Debit Credit1B 2006
Dan31Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible
20002000
(e)I%4-@+T@4 -%M=A;>
Journal entry
o Date Account title and explanation Ref Debit Credit
1B 2009Dan31
&ad debt epanse Accounts receivable(To record ,ritten o A'4 or uncollectible
30003000
P=-/A(a)
M@;%+A -%M=A;>Journal entries
o Date Account title and explanation Ref Debit Credit
1 %ct 7 Accounts receivable +ales( To record goods on Accounts
69006900
-
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2
3
)
*
6
## 12
## 1*
## 1*
## 2)
## 31
87327
)60
8107
91*0
120
900
)60
8000 107
9000 1*0
120
-ash(90027+ervice charge epanse (900.3
+ales
Accounts receivable nterest revenue
(To record received cash or +ales on I+A card-ash
;ote receivable nterest revenue (8000.8.60'360(To record received cash ro! ;'= ,ith interest
Accounts receivable ;ote receivable
nterest revenue(9000.10.60'360(To record Eughey note is dishonest
nterest receivable nterest revenue(16000.9.30'360
(To record interest earned on ;'4(b)
M@;%+A -%M=A;>edger Account;ote receivable
Date explanation Ref Debit Credit Balance
%ct31## 1*## 2*
&alance80009000
330002*00016000
Accounts receivable
Date explanation Ref Debit Credit Balance%ct 7## 1*## 2*
6900)6091*0
6900736016*10
nterest receivable
Date explanation Ref Debit Credit Balance
%ct 1## 1*## 2)## 31
&alance
90
12090
17090090
(c)M@;%+A -%M=A;>
&alance sheetece!ber 31# 2008
Assets and liabilities Aount Aount
Assets-urrent Assets? ;ote receivable 16000
-
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Accounts receivable nterest receivable
Total receivable
16*10 90
32600P=-0A
%==@;&@4< -%M=A;>Journal entries
o Date Account title and explanation Ref Debit Credit
1
2
3
)
*
6
7
8
9
2008Jan *
## 20
$eb18
aprB20
## 30
May2*
Aug1*
## 2*
+ep 1
Accounts receivable +ales(sold !erchandise on account# ter!s n'1*
20000
2000
8000
20)*0
26000
)000
8360
)070
12000
20000
2000
8000
20000)*0
2*0001000
)000
8000360
)00070
12000
;ote receivableAccounts receivable
(received a /16000# 90 day# 9 note ro! a cusTo!er
;ote receivable +ales(received a /8000# 180 day# 9 note +ales on account
-ash;ote receivable nterest revenue(received cash ro! billing co!pany note at !aturity
-ash;ote receivable
nterest revenue(received cash ro! sara rogers co!pany note at !aturity
;ote receivable Accounts receivable Den"s incB(received a / )000# 90day#7 note ro! a cusTo!er
-ash
;ote receivable nterest revenue(received cash ro! lud,ing co!pany note at !aturity
Accounts receivable Den"s incB;ote receivable
nterest revenue($ionaKs note ,as dishonored and account is debited ,ithinterest
;ote receivable +ales(received a /12000# 180 day# 10 note or +ales onaccount
P=-1B
(a)=-@4 M=%4T+
Journal @ntries
Date Account title and explanation Ref Debit Credit
1 Accounts receivable+ales
2*700002*70000
-
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2
3
)
*
( To record goods on Accounts)0000
2300000
6*000
2*000
2*000
)0000
2300000
6*000
2*000
2*000
+ales return and allo,anceAccounts receivable
(To record sales return
-ashAccounts receivable
(To record received cash ro! accounts receivable
Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o o A'4 or uncollectible
Accounts receivable Allo,ance and doubtul Accounts(To record reinstalled o A '4 or recovery-ash Accounts receivable
(To record received cash ro! A '4(b)
=-@4 M=%4T+edger
Accounts receivable
&eginning balance 1000000(6 2*70000(6 2*000
(7 )0000(8 2300000(9 6*000(10 2*000@nding balance -' 120*000
3*90000 3*90000
Allo,ance and doubtul Accounts
(6 6*000
@nding balance -' 20000 8*000
&eginning balance &' 60000(7 2*000
8*000
(c)
=-@4 M=%4T+Journal entry
o Date Account title and explanation Ref Debit Debit
1B &ad debt epanse (9000020000 Allo,ance and doubtul Accounts(To record &ad debt epanse
7000070000
(d)e "no,# A '4 turnover ratioF;et credit sales' Average receivable
F (2*70000)0000' (100000120*000'2 F2*30000'1102*00
-
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F2B29 ti!esP=-2b#
(b &ad debt epanse F/26000(c &ad debt epanseF/1*)0000.2F/30800GAnsH(d &ad debt epanseF/*20000.*)000F/22000GAnsH
(e &ad debt epanseF/*20000.*2000F/28000GAnsH( There are t,o !aDor ,ea"nesses ,ith the direct ,rite o !ethodB1 t doesnKt !atch epanse ,ith revenuesB2 The Accounts receivable are not stated at cash realiNed value at the
balance sheet dateBP=-!b#
(a) (b)
A4@; -%M=A;>Journal entries
o Date Account title and explanation Ref Debit Credit
1B 2008
dec31
&ad debt epanse(3*79010000
Allo,ance and doubtul Accounts(To record &ad debt epanse
2*790
2*790
&ad debt epanse
Date explanation Ref Debit Credit Balance
200*dec31 AdDusting 2*790 2*790
Allo,ance and doubtul Accounts
Date explanation Ref Debit Credit Balance
200*
dec31dec312006!ar1!ar1
&alanceAdDusting
1100
2*790
1100
10000
3*790
3)6903*790
(c)
A4@; -%M=A;>Journal entries
o Date Account title and explanation Ref Debit Credit
1B 2006dec31
&ad debt epanse(283001200 Allo,ance and doubtul Accounts
(To record &ad debt epanse
29*0029*00
P=-.b(a)
Cusoer otal uber of Das outstandin"
1-!: !1-/: /1-=: =1-=: *$er 12:
Accounts receivable /260000 /100000 /60000 /*0000 /30000 /20000
0 uncollectible 1 * 7B* 10 1*
-
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@sti!ated &ad debts 137*00 1000 3000 37*0 3000 3000
(b)
Journal entry
o Date Account title and explanation Ref Debit Credit
1B dec31 &ad debt epanse(137*010000 Allo,ance and doubtul Accounts(To record &ad debt epanse
37*037*0
(c)
Journal entry
o Date Account title and explanation Ref Debit Credit
1B dec31 Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible
20002000
(d)
Journal entry
o Date Account title and explanation Ref Debit Credit1B dec31 Accounts receivable
Allo,ance and doubtul Accounts(To record o A'4 or recoverycash
Accounts receivable(To record received cash ro! A'4
1000
10001000
1000
(e)Applying 3 o Total accounts receivable ,ould change the a!ount o Total bad debtepanseB The advantage o aging account receivable over percentage To Total accountreceivable is the !ore accuracy o bad debt epanseB
P=-5b
(a)
+-E;A@;&@4< -%M=A;>Journal entry
o Date Account title and explanation Ref Debit Credit
1B
2
dec31
ec31
&ad debt epanse(177*01*00 Allo,ance and doubtul Accounts(To record &ad debt epanse
160*0
1700
160*0
1700&ad debt epanse (8*0000.2 Allo,ance and doubtul Accounts
(To record &ad debt epanse(b)
+-E;A@;&@4< -%M=A;>Journal entry
o Date Account title and explanation Ref Debit Credit
1B dec31 &ad debt epanse(177*01*00Allo,ance and doubtul Accounts
(To record &ad debt epanse
190*0190*0
-
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2 ec31 17001700
&ad debt epanse (8*0000.2 Allo,ance and doubtul Accounts(To record &ad debt epanse
(c)
+-E;A@;&@4< -%M=A;>
Journal entryo Date Account title and explanation Ref Debit Credit
1B 2006Dan31
Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible
)*00)*00
(d)+-E;A@;&@4< -%M=A;>
Journal entry
o Date Account title and explanation Ref Debit Credit
1B 2009
Dan31 &ad debt epanse Accounts receivable(To record ,ritten o A'4 or uncollectible
)*00)*00
(e)The advantages o allo,ance !ethod over direct ,rite o is the uture hope ocollection o accounts receivable# and the respective loss is the adDusted ,ith allo,anceor doubtul accounts undB
P=-/b
(a)+-E%TT@;E@M@4 -%M=A;>
Journal entrieso Date Account title and explanation Ref Debit Credit
1
2
3
)
*
Jul *
## 1)
## 1)
## 1*
## 2*
Accounts receivable +ales(To record goods on Accounts
6200
68121
))0
6100
2*37*
6200
700
))0
6000 100
2*000 37*
-ash(70021+ervice charge epanse (700.3 +ales
Accounts receivable nterest revenue(To record received cash or +ales on I+A card
-ash;ote receivable
nterest revenue (6000.10.)*'360(To record received cash ro! ;'= ,ith interest
Accounts receivable ;ote receivable
nterest revenue(9000.10.60'360(To record Eughey note is dishonest
-
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6 ## 31 100100
nterest receivable nterest revenue(1*000.8.30'360(To record interest earned on ;'4
(b)+-E%TT@;E@M@4 -%M=A;>
edger Account;ote receivable
Date explanation Ref Debit Credit Balance
Jul 1## 1*## 2*
&alance60002*000
)6000)00001*000
Accounts receivable
Date explanation Ref Debit Credit Balance
Jul *## 1*
##2*
6200))0
2*37*
620066)0
3201*
nterest receivable
Date explanation Ref Debit Credit Balance
Jul 1## 1*## 2*## 31
&alance
100
7*16*
2)016*0100
(c)+-E%TT@;E@M@4 -%M=A;>
&alance sheet
ece!ber 31# 2008Assets and liabilities Aount Aount
Assets-urrent Assets? ;ote receivable
Accounts receivable nterest receivable
Total receivable
90003201* 100
)111*
P=-0b$4>&@;A -%M=A;>
Journal entrieso Date Account title and explanation Ref Debit Credit
1 2008JanB* Accounts receivable
+ales(+old !erchandise on account# ter!s n'30
63006300
-
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2
3
)
*
6
7
8
9
10
$ebB2
## 12
## 26
AprB*
## 12
JunB 2
JulB*
## 1*
%ct1*
6300
7800
)000
7930
7930
6*10
)080
7000
7210
6300
7800
)000
7930
7800
130
6300210
)000 80
7000
7000210
;ote receivable+ales
(4eceived a /6300# 120 day# 10note
;ote receivable+ales
(4eceived a /7800# 60 day# 10note or sales onaccount
Accounts receivable ou" coB +ales(+old !erchandise on account# ter!s n'10
;ote receivableAccounts receivable ou" coB
(4eceived a /)000# 90 day# 8note ro!a custo!er
-ash;ote receivable
nterest revenue(4eceived cash ro!
-
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Accounts receivable