APPENDIX I
SUBSIDIARY LEDGERS AND SPECIAL JOURNALS
SUMMARY OF QUESTIONS BY OBJECTIVES AND BLOOM’S TAXONOMY
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True-False Statements
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13.
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3
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Multiple Choice Questions
21.
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39.
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48.
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22.
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49.
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23.
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50.
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Exercises
66.
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69.
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72.
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67.
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70.
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71.
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Completion Statements
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81.
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83.
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82.
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84.
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Matching: 85, Short Answer: 86
Test Bank for Financial Accounting, Ninth Edition
I – 2
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
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Learning Objective 1
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7.
TF
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79.
C
2.
TF
5.
TF
8.
TF
23.
MC
66.
Ex
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TF
6.
TF
21.
MC
24.
MC
67.
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Learning Objective 2
9.
TF
14.
TF
29.
MC
34.
MC
39.
MC
69.
Ex
80.
C
10.
TF
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TF
30.
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70.
Ex
81.
C
11.
TF
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71.
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TF
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72.
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TF
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68.
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Learning Objective 3
16.
TF
44.
MC
50.
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56.
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62.
MC
76.
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TF
45.
MC
51.
MC
57.
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63.
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77.
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TF
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MC
52.
MC
58.
MC
64.
MC
78.
Ex
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TF
47.
MC
53.
MC
59.
MC
65.
MC
82.
C
20.
TF
48.
MC
54.
MC
60.
MC
74.
Ex
83.
C
43.
MC
49.
MC
55.
MC
61.
MC
75.
Ex
84.
C
Note: TF = True-False C = Completion
MC = Multiple Choice Ex = Exercise
Matching: 85, Short Answer: 86
CHAPTER LEARNING OBJECTIVES
1. Describe the nature and purpose of a subsidiary ledger. A subsidiary ledger is a group of
accounts with a common characteristic. It facilitates the recording process by freeing the
general ledger from details of individual balances.
2. Explain how companies use special journals in journalizing. A special journal is used to
group similar types of transactions. In a special journal, only one line is used to record a
complete transaction.
3. Indicate how companies post a multi-column journal. In posting a columnar journal:
(a) all column totals except for the Other Accounts column are posted once at the end of
the month to the account title specified in the column heading.
(b) the total of the Other Accounts column is not posted. Instead, the individual amounts
comprising the total are posted separately to the general ledger accounts specified in
the Accounts column.
(c) the individual amounts in a column posted in total to a control account are posted daily
to the subsidiary ledger accounts specified in the Accounts column.
Subsidiary Ledgers and Special Journals
I – 3
TRUE-FALSE STATEMENTS
1. A subsidiary ledger is a group of control accounts which provides information to the
managers for controlling the operation of the company.
2. An accounts receivable subsidiary ledger has all the detailed information about the cash
sales to individual customers.
3. The accounts payable subsidiary ledger provides detailed information about amounts
owed to creditors.
4. The total of the individual account balances in the accounts receivable subsidiary ledger
should agree with the total of the individual account balances in the accounts payable
subsidiary ledger.
5. Control accounts are always located in the general ledger.
6. A control account and subsidiary ledger can be established for inventory.
7. A subsidiary ledger provides up-to-date information on specific account balances.
8. An advantage of using a subsidiary ledger is that one employee must post to both the
subsidiary ledger and the general ledger.
9. Special journals are used to record unique transactions which do not occur very often.
10. A cash receipts journal can be used to record all transactions involving cash coming into
the business, regardless of the source.
Test Bank for Financial Accounting, Ninth Edition
I – 4
11. The cash payments journal only has one column because all entries recorded in this
journal require a credit to the Cash account.
12. A cash payments journal should not be used to record transactions which require payment
by check.
13. If a transaction cannot be recorded in a special journal, it indicates that the company
should adopt an electronic accounting system.
14. A debit column for Sales Returns and Allowances may be found in the cash receipts
journal.
15. A single-column purchases journal is used to record purchases of merchandise on
account.
16. Using special journals can save time in posting because column totals are often posted
rather than individual entries.
17. The reference column in a sales journal is used to indicate the general ledger account
number when the entry is posted.
18. Postings are generally made more frequently to the general ledger control accounts than
to the individual accounts in the subsidiary ledgers.
19. The amounts appearing in the Inventory column of the cash payments journal are posted
individually to the accounts in the accounts payable subsidiary ledger.
20. Transaction amounts recorded in the general journal are never posted to accounts in the
subsidiary ledger.
Subsidiary Ledgers and Special Journals
I – 5
Answers to True-False Statements
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MULTIPLE CHOICE QUESTIONS
21. The balance of a control account in the general ledger
a. must always be zero.
b. must equal the amount of total assets.
c. is always greater than the composite balance of individual accounts in a related
subsidiary ledger.
d. must equal the composite balance of individual accounts in a related subsidiary
ledger.
22. A subsidiary ledger is
a. used in place of the general ledger if the general ledger is destroyed or stolen.
b. a group of accounts used by branches and subsidiaries of a corporate business.
c. a group of accounts with a common characteristic that provides detailed information
about a control account in the general ledger.
d. used to post excess transactions if a general ledger account becomes full during an
accounting period.
23. A subsidiary ledger frees the general ledger from details of
a. individual balances.
b. external transactions.
c. internal transactions.
d. the control account.
24. A company would not likely use subsidiary ledgers for
a. inventory.
b. retained earnings.
c. equipment.
d. accounts receivable.
Test Bank for Financial Accounting, Ninth Edition
I – 6
25. Postings are made daily to subsidiary ledgers so that
a. employees are kept busy.
b. debits equal credits.
c. individual account information is kept current.
d. the control account will balance to the subsidiary ledger.
26. A sales journal is used to record
a. only cash sales of merchandise.
b. sales of all assets on credit and for cash.
c. only credit sales of merchandise.
d. credit sales of merchandise, sales returns and allowances, and sales discounts.
27. If a transaction cannot be recorded in a special journal
a. the company must refuse to enter into the transaction.
b. it is recorded in the general journal.
c. it is recorded directly in the accounts in the general ledger.
d. it is recorded as an adjustment on the worksheet.
28. The one characteristic that all entries recorded in a cash receipts journal have in common
is
a. a credit to the Cash account.
b. that they all represent collections from customers.
c. that they originate from the sales of merchandise.
d. a debit to the Cash account.
29. A single-column purchases journal indicates that
a. only purchases of merchandise on account can be recorded.
b. all purchases of merchandise can be recorded.
c. all acquisitions on account can be recorded.
d. another column must be added so that debits and credits can be recorded.
30. The one characteristic that all entries recorded in a multiple-column purchases journal
have in common is a
a. credit to the Cash account.
b. debit to the Cash account.
c. debit to the Accounts Payable account.
d. credit to the Accounts Payable account.
Subsidiary Ledgers and Special Journals
I – 7
31. A company which uses special journals should record a transaction involving the
purchase of merchandise for cash in a
a. single-column purchases journal.
b. multiple-column purchases journal.
c. cash payments journal.
d. general journal.
32. If merchandise from a cash sale is returned by a customer for a refund, the sales return is
recorded in the
a. general journal.
b. cash receipts journal.
c. cash payments journal.
d. sales journal.
33. Which of the following is not a special journal?
a. Sales journal
b. Purchases journal
c. General journal
d. Cash receipts journal
34. Correcting entries are journalized in
a. a special journal.
b. the general journal.
c. the general ledger.
d. a correcting journal.
35. Adjusting entries are recorded
a. only on the work sheet.
b. only in the general ledger.
c. in the general journal.
d. in the special journals.
36. If a transaction cannot be recorded in a special journal, it is
a. not recorded.
b. a correcting entry.
c. recorded in the general journal.
d. an error.
Test Bank for Financial Accounting, Ninth Edition
I – 8
37. A company uses a sales journal, cash receipts journal, purchases journal, cash payments
journal, and a general journal. A cash sales return would be recorded in the
a. sales journal.
b. cash receipts journal.
c. cash payments journal.
d. general journal.
38. The entries in a sales journal will show
a. all sales of merchandise.
b. the cash sales of the company.
c. the credit sales of merchandise.
d. all sales of the company.
39. Entries in a sales journal
a. are made from sales invoices.
b. will indicate the invoice number in the reference column of the sales journal.
c. will occupy two lines of the sales journal.
d. indicate either a cash debit or accounts receivable debit.
40. Journalizing in a sales journal will not
a. require a debit to Accounts Receivable.
b. show a sales invoice number.
c. affect the reference column of the journal.
d. include a credit to the Sales Revenue account.
41. If a company purchases merchandise for cash, the transaction should be recorded in the
a. purchases journal.
b. general journal.
c. cash payments journal.
d. sales journal.
42. Cash from sales of merchandise will be recorded in the
a. purchases journal.
b. sales journal.
c. cash receipts journal.
d. general journal.
Subsidiary Ledgers and Special Journals
I – 9
43. Debit postings to the individual accounts in an accounts receivable subsidiary ledger
generally come from the
a. sales journal.
b. cash receipts journal.
c. purchases journal.
d. cash payments journal.
44. Entries in a sales journal are
a. posted only to accounts in an accounts receivable subsidiary ledger.
b. posted only to accounts in the general ledger.
c. posted to accounts in an accounts receivable subsidiary ledger and to accounts in the
general ledger.
d. never posted.
45. Which one of the following columns in a cash receipts journal is not posted in total to an
account in the general ledger?
a. Cash column
b. Sales Discounts column
c. Accounts Receivable column
d. Other Accounts column
46. The use of special journals to record transactions
a. eliminates the need for a general ledger.
b. can save time in the posting process.
c. eliminates the need for a general journal.
d. should only be used if the volume of transactions is small.
47. Posting a sales journal to the accounts in the general ledger requires a
a. debit to Cash and a credit to Sales Revenue.
b. debit to Sales Revenue and a credit to Inventory.
c. debit to Accounts Receivable and a credit to Inventory.
d. debit to Accounts Receivable and a credit to Sales Revenue.
48. The entries recorded in the Other Accounts column of a cash payments journal
a. are posted to the accounts payable subsidiary ledger daily.
b. are posted individually to accounts in the general ledger.
c. are not posted individually but are posted as a column total to the general ledger.
d. do not require posting.
Test Bank for Financial Accounting, Ninth Edition
I – 10
49. Proving the equality of the totals in the columns of multiple-column special journals is
called
a. posting to the subsidiary.
b. debiting and crediting.
c. footing and crossfooting.
d. updating the master file.
50. If a company records merchandise it returns to suppliers in the general journal, then
a. a posting must be made only to the accounts payable control account.
b. a posting must be made only to the accounts payable subsidiary ledger account.
c. a dual posting must be made.
d. there will be a debit to Inventory.
51. Gable’s Wholesale uses a sales journal. An entry in this journal represents a
a. debit to Cash; credit to Sales Revenue.
b. debit to Accounts Receivable; credit to Sales Revenue.
c. debit to Sales Discounts; credit to Cash.
d. debit to Accounts Payable; credit to Sales Returns and Allowances.
52. Which accounts in the general ledger are affected when the monthly posting is made from
the sales journal?
a. Accounts Receivable; accounts receivable subsidiary accounts
b. Accounts receivable subsidiary accounts; Sales Revenue
c. Accounts Receivable; Sales Revenue
d. Accounts Receivable; Inventory
53. Which of the following is not a true statement about the daily posting of the sales journal?
a. There is a debit posting to accounts in the accounts receivable subsidiary ledger.
b. There is no credit posting.
c. The reference column in the sales journal is checked when the posting is complete for
each entry in the journal.
d. The invoice number supporting the sales transaction is posted to the reference column
in the subsidiary ledger.
54. Evidence that the monthly posting of the sales journal total has been accomplished is
indicated by
a. a signature of the accountant doing the posting.
b. a date under the double-line total.
c. the general ledger account numbers under the double-lined total.
d. inspecting the postings in the accounts payable subsidiary ledger.
Subsidiary Ledgers and Special Journals
I – 11
55. Which of the following economic events would not be recorded in the cash receipts
journal?
a. Cash sales of merchandise
b. Collections of accounts receivable
c. Cash from sale of land
d. Cash purchases of merchandise
56. The “Other Accounts” column in a cash receipts journal is also referred to as the
a. miscellaneous column.
b. excess column.
c. sundry accounts column.
d. compound-entry column.
57. The process of totaling the columns of a journal is termed
a. ruling.
b. columnizing.
c. sizing.
d. footing.
58. An (x) below the “Other Accounts” column in a cash receipts journal indicates the
a. total has been posted to the general ledger.
b. total is not posted to the general ledger.
c. column has been footed.
d. column has been cross-footed.
59. Cross-footing a cash receipts journal means
a. the equality of debits and credits in the journal has been proved.
b. each line of the journal has a horizontal total.
c. the columns of the journal have been cross-referenced.
d. all necessary postings have been completed.
60. Which of the following would not be an appropriate heading for a column in the cash
receipts journal?
a. Cash
b. Accounts Payable
c. Sales Discounts
d. Sales Revenue
Test Bank for Financial Accounting, Ninth Edition
I – 12
61. Proving the postings of a single-column purchases journal would involve comparing the
a. general ledger posting to Accounts Payable to the debit postings of the accounts
receivable subsidiary ledger.
b. general ledger debit posting to Accounts Payable to the general ledger credit posting
to Inventory.
c. general ledger credit posting to Accounts Payable to the general ledger debit posting
to Inventory.
d. debit postings to the accounts receivable subsidiary ledger to the credit postings to the
accounts payable subsidiary ledger.
62. If a company uses a multiple-column purchases journal, which of the following possible
headings for debit columns of the journal would not be appropriate?
a. Accounts Payable
b. Inventory
c. Supplies
d. Other Accounts
63. Entries in the cash payments journal are made from
a. sales invoices.
b. purchase invoices.
c. prenumbered checks.
d. canceled checks.
64. The reference column of a multiple-column cash payments journal after posting
a. will only contain check marks.
b. will be blank.
c. will only contain account numbers.
d. may contain either account numbers or check marks.
65. The reference column of the accounts in the accounts payable subsidiary ledger after
posting may show
a. only P references.
b. CP, P, or G references.
c. G, P, or S references.
d. only CP references.
Subsidiary Ledgers and Special Journals
I – 13
Answers to Multiple Choice Questions
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EXERCISES
Ex. 66
After Artie Company had completed all posting for the month of December, the sum of the
balances in the following accounts payable subsidiary ledger did not agree with the balance of the
control account in the general ledger.
Name Aston’s
Address 286 Buck Avenue
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 2 P25 2,400 2,400
Name Carson Company
Address 818 Western Avenue
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 1 Balance 7,600
10 CP23 7,600 —
20 P32 3,300 3,300
29 J15 300 3,600
Name Diana Fenn Company
Address 90210 Baker Boulevard
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 1 Balance 9,900
18 CP28 9,900 —
29 P34 12,600 2,700
Test Bank for Financial Accounting, Ninth Edition
I – 14
Ex. 66 (cont.)
Name Maria Lopez
Address 2720 Sommers Avenue
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 8 P27 6,000 6,000
27 P33 8,000 14,000
Name Oster Supplies
Address 1560 Puckett Street
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 1 Balance 8,200
7 P26 5,600 13,800
12 J11 420 12,380
20 CP29 8,000 20,380
The balance in the Accounts Payable control account of $37,380 has been verified as correct.
Also assume that the journals references in the Post Ref. columns of the accounts payable
subsidiary ledger have been verified as correct.
Instructions
Determine the errors in the preceding accounts payable subsidiary accounts and prepare a
corrected schedule of accounts payable.
Subsidiary Ledgers and Special Journals
I – 15
Solution 66 (cont.)
Ex. 67
On December 1, the accounts receivable control account balance in the general ledger of Mitus
Company was $9,000. The accounts receivable subsidiary ledger contained the following detailed
customer balances: Acme $1,500, Baker $2,100, Fare $2,600, and Grote $2,800. The following
information is available from the company’s special journals for the month of December:
Cash Receipts Journal: Cash received from Fare $1,900, from Acme $1,600, from Santos
$1,700, and from Baker $1,800.
Sales Journal: Sales to Santos $2,300, to Fare $1,700, to Acme $2,300, and to Grote $2,400.
Additionally, Fare returned defective merchandise for credit for $900. Acme returned defective
merchandise for $600 which he had purchased for cash.
Instructions
(a) Using T-accounts for Accounts Receivable Control and the detail customer accounts, post
the activity for the month of December.
(b) Reconcile the accounts receivable control account with the subsidiary ledger by preparing a
detail list of customer balances at December 31.
Test Bank for Financial Accounting, Ninth Edition
I – 16
Solution 67 (cont.)
Ex. 68
Gates Company maintains four special journals and a general journal to record its transactions.
Using the code below, indicate in the space provided the appropriate journal for recording the
transactions listed.
Code Journals
S Sales journal
CR Cash receipts journal
CP Cash payments journal
P Single-column purchases journal
G General journal
____ 1. Stockholders invested cash in the business.
____ 2. Purchased store supplies on account.
____ 3. Sold merchandise to customer on account.
____ 4. Purchased a 2-year fire insurance policy for cash.
____ 5. Received a check from a customer as payment on account.
____ 6. Paid for store supplies purchased in transaction 2.
____ 7. Purchased merchandise on account.
____ 8. Issued a credit memorandum to a customer who returned defective merchandise
previously sold on account.
____ 9. Purchased office equipment for cash.
____ 10. Made an adjusting entry for store supplies used during the period.
Subsidiary Ledgers and Special Journals
I – 17
Solution 68 (10 min.)
Ex. 69
Sasser Company uses a sales journal, a cash receipts journal, and a general journal to record
transactions with its customers. Record the following transactions in the appropriate journals. The
cost of all merchandise sold was 70% of the sales price.
July 2 Sold merchandise for $21,000 to B. Stine on account. Credit terms 2/10, n/30. Sales
invoice No. 100.
July 5 Received a check for $800 from R. Hyatt in payment of his account.
July 8 Sold merchandise to F. Wendel for $900 cash.
July 10 Received a check in payment of Sales invoice No. 100 from B. Stine minus the 2%
discount.
July 15 Sold merchandise for $9,000 to J. Nott on account. Credit terms 2/10, n/30. Sales
invoice No. 101.
July 18 Borrowed $25,000 cash from United Bank signing a 6-month, 10% note.
July 20 Sold merchandise for $18,000 to C. Karn on account. Credit terms 2/10, n/30. Sales
invoice No. 102.
July 25 Issued a credit memorandum for $600 to C. Karn as an allowance for damaged
merchandise previously sold on account.
July 31 Received a check from J. Nott for $5,000 as payment on account.
SASSER COMPANY
Sales Journal
S1
——————————————————————————————————————————
Invoice Acct. Rec. Dr. COGS Dr.
Date Account Debited No. Ref. Sales Rev. Cr. Inventory Cr.
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
Test Bank for Financial Accounting, Ninth Edition
I – 18
Ex. 69 (cont.)
SASSER COMPANY
General Journal
G1
——————————————————————————————————————————
Date Explanations Ref. Debit Credit
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
SASSER COMPANY
Cash Receipts Journal
CR1
———————————————————————————————————————————
Sales Accounts Sales Other COGS Dr.
Accounts Cash Discounts Rec. Rev. Accounts Inven. Cr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
Subsidiary Ledgers and Special Journals
I – 19
Solution 69 (cont.)
———————————————————————————————————————————
Ex. 70
Ward Company uses a single-column purchases journal, a cash payments journal, and a general
journal to record transactions with its suppliers and others. Record the following transactions in
the appropriate journals.
Transactions
Oct. 5 Purchased merchandise on account for $10,000 from Groton Company. Terms:
2/10, n/30; FOB shipping point.
Oct. 6 Paid $7,200 to Federated Insurance Company for a two-year fire insurance policy.
Oct. 8 Purchased store supplies on account for $700 from Flynn Supply Company. Terms:
2/10, n/30.
Oct. 11 Purchased merchandise on account for $14,000 from Buehler Corporation. Terms:
2/10, n/30; FOB shipping point.
Oct. 13 Issued a debit memorandum for $5,000 to Buehler Corporation for merchandise
purchased on October 11 and returned because of damage.
Oct. 15 Paid Groton Company for merchandise purchased on October 5, less discount.
Oct. 16 Purchased merchandise for $8,000 cash from Clifford Company.
Test Bank for Financial Accounting, Ninth Edition
I – 20
Ex. 70 (cont.)
Oct. 21 Paid Buehler Corporation for merchandise purchased on October 11, less
merchandise returned on October 13, less discount.
Oct. 25 Purchased merchandise on account for $22,000 from Dooley Company. Terms:
2/10, n/30; FOB shipping point.
Oct. 31 Purchased office equipment for $30,000 cash from Paten Office Supply Company.
WARD COMPANY
Purchases Journal
P1
———————————————————————————————————————————
Inventory. Dr.
Date Account Credited Ref. Accounts Payable Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
WARD COMPANY
General Journal
G1
———————————————————————————————————————————
Date Explanation Ref. Debit Credit
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
Subsidiary Ledgers and Special Journals
I – 21
Ex. 70 (cont.)
WARD COMPANY
Cash Payments Journal
CP1
———————————————————————————————————————————
Other Accounts
Account Accounts Payable Inventory Cash
Date Debited Ref. Dr. Dr. Cr. Cr.
———————————————————————————————————————————
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Test Bank for Financial Accounting, Ninth Edition
I – 22
Solution 70 (cont.)
Ex. 71
Sandy Company uses both special journals and a general journal. The company accountant
made the following errors during July.
1. Incorrectly added the credit entries in a customer’s account in the accounts receivable
subsidiary ledger. The total was listed as $2,690; it should have been $2,790.
2. A remittance of $400 from Tom Short was correctly recorded in the cash receipts journal,
but the amount was posted incorrectly to the account of customer Will Short in the
subsidiary ledger.
3. A purchase of merchandise on account from Easton Company for $1,000 was incorrectly
entered in the purchases journal at $10,000.
4. In the sales journal, the entries were incorrectly added for the month. The monthly total
was listed as $24,620; it should have been $24,260.
Instructions
Indicate how each of the above errors might be discovered.
Subsidiary Ledgers and Special Journals
I – 23
Solution 71 (cont.)
Ex. 72
Below are some typical transactions incurred by Harley Company.
____ 1. Purchase of merchandise on account.
____ 2. Collection on account from customers.
____ 3. Payment of employee‘s wages.
____ 4. Sales of merchandise for cash.
____ 5. Close Income Summary to Retained Earnings.
____ 6. Adjusting entry for depreciation on machinery.
____ 7. Payment of creditors on account.
____ 8. Purchase of office equipment on credit.
____ 9. Sales discount taken on goods sold on credit.
____ 10. Sales of merchandise on account.
____ 11. Purchase of a delivery truck for cash.
____ 12. Return of merchandise purchased on credit.
____ 13. Payment of rent in advance.
____ 14. Adjusting entry for accrued interest expense.
____ 15. Purchase of office supplies for cash.
For each transaction, indicate by the code letter the appropriate journal where the transaction
would be journalized.
CR — Cash Receipts Journal
CP — Cash Payments Journal
S — Sales Journal
P — Single-Column Purchases Journal
G — General Journal
Test Bank for Financial Accounting, Ninth Edition
I – 24
Ex. 73
Circle the correct answer to each situation.
(a) A sales journal will be used for:
Credit Sales Cash Sales Sales Discounts
Yes No Yes No Yes No
(b) A single-column purchases journal will be used for:
Purchase Returns
Cash Purchases Purchases on Account and Allowances
Yes No Yes No Yes No
(c) A multiple-column purchases journal will be used for:
Supplies Purchased Equipment Purchases
Cash Purchases on Account on Account
Yes No Yes No Yes No
(d) A cash payments journal will be used for:
Payments to Purchases Payment of
Creditors Discounts Dividends
Yes No Yes No Yes No
(e) A cash receipts journal will be used for:
Sale of Stock Purchases Discounts Cash Sales
Yes No Yes No Yes No
Subsidiary Ledgers and Special Journals
I – 25
Ex. 74
Listed below are various column headings that may appear in special journals. Using the
following code letters, identify for each column heading (1) the special journal where the column
heading would appear, and (2) whether the amounts entered under the column heading would be
posted in total, individually, or both in total and individually. (Note: column headings may appear
in more than one special journal)
Code: Special Journals Code: Posting
S = Sales journal I = Individual posting
P = Single-column purchases journal T = Total posting
CR = Cash receipts journal B = Both individual and total posting
CP = Cash payments journal
Heading Special Journal Posting
1. Accounts Payable—Cr. ___________ ___
2. Sales—Cr. ___________ ___
3. Sales Discounts—Dr. ___________ ___
4. Merchandise Inventory—Dr. ___________ ___
5. Cash—Cr. ___________ ___
6. Accounts Receivable—Dr. ___________ ___
7. Other Accounts—Cr. ___________ ___
8. Merchandise Inventory—Cr. ___________ ___
9. Accounts Receivable—Cr. ___________ ___
10. Accounts Payable—Dr. ___________ ___
Test Bank for Financial Accounting, Ninth Edition
I – 26
Ex. 75
Horton Company uses four special journals, (cash receipts, cash payments, sales, and purchases
journal) in addition to a general journal. On November 1, 2015, the control accounts in the
general ledger had the following balances: Cash $12,000, Accounts Receivable $200,000 and
Accounts Payable $42,000. Selected information on the final line of the special journals for the
month of November is presented below:
Cash Receipts Journal:
Sales Accounts Sales Other Accounts
Cash Discounts Receivable Rev. Cr. C. of G. S. Dr.
Dr. Dr. Cr. Cr. Acct. Ref. Amount Inven. Cr.
? $600 $3,400 $29,000 (X) $1,000 $17,400
Cash Payments Journal:
Other Accounts Accounts
Dr. Payable Supplies Inventory Cash
Acct. Ref. Amount Dr. Dr. Cr. Cr.
(X) $1,600 ? $2,400 $700 $14,600
Purchases Journal:
Accounts Other Accounts
Payable Inventory Supplies Dr.
Cr. Dr. Dr. Acct. Ref. Amount
? $37,000 $1,450 (X) $3,300
Additional Data:
The Sales Journal total was $41,000. A customer returned merchandise for credit for $360 and
Norton Company returned store supplies to a supplier for credit for $400.
Instructions
(a) Determine the missing amounts in the special journals.
(b) Determine the balances in the general ledger accounts (Cash, Accounts Receivable, and
Accounts Payable) at the end of November.
Subsidiary Ledgers and Special Journals
I – 27
Solution 75 (20 min.)
Ex. 76
Easton Company began business on October 1. The sales journal, as it appeared at the end of
the month, follows:
SALES JOURNAL Page 1
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Invoice Post.
Date Account Debited Number Ref. Amount
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Oct. 5 Donna Miner 10001 275
11 Mike Barr 10002 335
16 Donna Miner 10003 818
19 Laura Cher 10004 147
26 Myron Silas 10005 1,184
2,759
1. Open general ledger T-accounts for Accounts Receivable (No. 112) and Sales (No. 401) and
an accounts receivable subsidiary T-account ledger with an account for each customer. Make
the appropriate postings from the sales journal. Fill in the appropriate posting references in
the sales journal above.
2. Prove the accounts receivable subsidiary ledger by preparing a schedule of accounts
receivable.
Test Bank for Financial Accounting, Ninth Edition
I – 28
Solution 76 (20 min.)
Subsidiary Ledgers and Special Journals
I – 29
Ex. 77
CASH PAYMENTS JOURNAL Page 45
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Other Accounts
Ck. Account Accounts Payable Inventory Cash
Date No. Debited Ref. Dr. Dr. Cr. Cr.
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2015
Jan. 4 659 M. Tate (a) 4,000 40 3,960
11 660 Prepaid Rent (b) 1,000 1,000
13 661 Inventory. (c) 565 565
14 662 Dividends (d) 2,000 2,000
18 663 Welch (e) 1,300 1,300
20 664 Inventory. (f) 450 450
29 665 Equipment (g) 3,400 3,400
7,415 5,300 40 12,675
(h) (i) (j) (k)
Using the cash payments journal above, identify each of the posting references indicated by a
letter, as representing:
(1) a posting to a general ledger account.
(2) a posting to a subsidiary ledger account.
(3) that no posting is required.
Test Bank for Financial Accounting, Ninth Edition
I – 30
Ex. 78
Shown below is a page from a special journal.
1. What is the name of this journal?
2. Give an explanation for each of the transactions in this journal.
3. Explain the following:
(a) the numbers under the bottom lines.
(b) the checks entered into the Ref. column.
(c) the numbers 113 and 416 in the Ref. column.
(d) the (x) below the Other Accounts column.
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Sales Accounts Sales Other COGS Dr.
Account Cash Discounts Receivable Rev. Accounts Inventory Cr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr.
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May 27 Ted Roth 980 20 1,000
28 Notes Receivable 113 4,000
Interest Revenue 416 4,480 480
29 370 370 260
31 Don Calb 400 400
6,230 20 1,400 370 4,480 260
(111) (412) (114) (411) (x) (505)(120)
Subsidiary Ledgers and Special Journals
I – 31
COMPLETION STATEMENTS
79. The accounts receivable _____________ provides detailed information about customer
accounts which is summarized in one ______________ account in the general ledger.
80. If a certain type of transaction occurs with great frequency, it is more efficient to create a
______________ to record that type of transaction.
81. If a company maintains special journals, sales of merchandise on credit should be
recorded in a _______________ whereas sales of merchandise for cash should be
recorded in the _______________.
82. The use of special journals often saves time in the _______________ process.
83. The entries in the Accounts Receivable Credit column of the cash receipts journal must be
posted _______________ to the accounts in the accounts receivable subsidiary ledger
and in _______________ to the control account in the general ledger.
84. Transactions that cannot be entered in a special journal are recorded in the
_______________, and if control and subsidiary accounts are involved, there must be a
_______________ posting.
Answers to Completion Statements
Test Bank for Financial Accounting, Ninth Edition
I – 32
MATCHING
85. Match the items below by entering the appropriate code letter in the space provided.
A. Accounts payable ledger D. Subsidiary ledger
B. Columnar journal E. Control account
C. Special journals
____ 1. A general ledger account that summarizes detailed information in a subsidiary ledger.
____ 2. A subsidiary ledger that contains accounts with individual creditors.
____ 3. A special journal with more than one column.
____ 4. Detailed information about a group of accounts with a common characteristic.
____ 5. Used to record high volume, similar type transactions.
SHORT-ANSWER ESSAY
S-A E 86
At the end of the month, the accountant for Slater Company prepared a schedule of accounts
receivable from the accounts receivable subsidiary ledger. Its total did not agree with the balance
in the Accounts Receivable control account in the general ledger. Briefly describe the procedure
that should be followed in reconciling the two balances.