Finance Appendix G The Numbers Parentheses Under The Bottom

subject Type Homework Help
subject Pages 10
subject Words 145
subject Authors Paul Kimmel; Jerry Weygandt; Donald Kieso

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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 18
Ex. 72 (Cont.)
The balance in the Accounts Payable control account of $41,580 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.
Ex. 73
On October 1, the accounts receivable control account balance in the general ledger of Helms
Company was $9,000. The accounts receivable subsidiary ledger contained the following detailed
customer balances: Able $2,000, Bravo $1,600, Charlie $3,600, and Gamma $1,800. The
following information is available from the company's special journals for the month of October:
Cash Receipts Journal: Cash received from Charlie $1,900, from Able $2,600, from Sigma
$1,700, and from Bravo $1,500.
Sales Journal: Sales to Sigma $2,300, to Charlie $2,700, to Able $2,300, and to Gamma $2,000.
Additionally, Charlie returned defective merchandise for credit for $900. Able returned defective
merchandise for $600 which he had purchased for cash.
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Subsidiary Ledgers and Special Journals
G - 19
Ex. 73 (Cont.)
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 Accounting: Tools for Business Decision Making, Fifth Edition
G - 20
Ex. 74
Sadat 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 $20,000 to B. Rock on account. Credit terms 2/10, n/30. Sales
invoice No. 100.
July 5 Received a check for $800 from R. Budd in payment of his account.
July 8 Sold merchandise to F. Truman for $700 cash.
July 10 Received a check in payment of Sales invoice No. 100 from B. Rock minus the 2%
discount.
July 15 Sold merchandise for $9,000 to J. Weilmann 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 $15,000 to C. Warden on account. Credit terms 2/10, n/30.
Sales invoice No. 102.
July 25 Issued a credit memorandum for $600 to C. Warden as an allowance for damaged
merchandise previously sold on account.
July 31 Received a check from J. Weilmann for $5,000 as payment on account.
SADAT COMPANY
Sales Journal
S1
——————————————————————————————————————————
Invoice Acct. Rec. Dr. C. of G.S. Dr.
Date Account Debited No. Ref. Sales Rev. Cr. Inventory Cr.
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
SADAT COMPANY
General Journal
G1
——————————————————————————————————————————
Date Explanations Ref. Debit Credit
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
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Subsidiary Ledgers and Special Journals
G - 21
Ex. 74 (Cont.)
SADAT COMPANY
Cash Receipts Journal
CR1
———————————————————————————————————————————
Sales Accounts Other C. of G.S. Dr.
Accounts Cash Discounts Rec. Sales Rev. Accounts Inventory Cr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 20, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA
Solution 74 (20 min.)
———————————————————————————————————————————
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 22
Solution 74 (Cont.)
Ex. 75
Lighthouse Ltd. 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 $35,000 from O’Connor Company. Terms:
2/10, n/30; FOB shipping point.
Oct. 6 Paid $7,200 to Freedom Insurance Company for a two-year fire insurance policy.
Oct. 8 Purchased store supplies on account for $700 from Martin Supply Company. Terms:
2/10, n/30.
Oct. 11 Purchased merchandise on account for $14,000 from Darlington LLC. Terms: 2/10,
n/30; FOB shipping point.
Oct. 13 Issued a debit memorandum for $2,000 to Darlington LLC for merchandise
purchased on October 11 and returned because of damage.
Oct. 15 Paid O’Connor Company for merchandise purchased on October 5, less discount.
Oct. 16 Purchased merchandise for $8,000 cash from Kaye Company.
Oct. 21 Paid Darlington LLC for merchandise purchased on October 11, less merchandise
returned on October 13, less discount.
Oct. 25 Purchased merchandise on account for $22,000 from Willard Company. Terms:
2/10, n/30; FOB shipping point.
Oct. 31 Purchased office equipment for $30,000 cash from Wilcoxen Office Supply
Company.
Subsidiary Ledgers and Special Journals
G - 23
Ex. 75 (Cont.)
LIGHTHOUSE LTD.
Purchases Journal
P1
———————————————————————————————————————————
Inventory. Dr.
Date Account Credited Ref. Accounts Payable Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
LIGHTHOUSE LTD.
General Journal
G1
———————————————————————————————————————————
Date Explanation Ref. Debit Credit
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
LIGHTHOUSE LTD.
Cash Payments Journal
CP1
———————————————————————————————————————————
Other Accounts
Accounts Accounts Payable Inventory Cash
Date Debited Ref. Dr. Dr. Cr. Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 20, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 24
Solution 75 (20 min.)
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Subsidiary Ledgers and Special Journals
G - 25
Ex. 76
Below are some typical transactions incurred by Kuo 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
Ans: N/A, LO: 2, Bloom: AN, Difficulty: Medium, Min: 12, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA
Solution 76 (12 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 26
Ex. 77
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 PayableCr. ___________ ___
2. Sales RevenueCr. ___________ ___
3. Sales DiscountsDr. ___________ ___
4. InventoryDr. ___________ ___
5. CashCr. ___________ ___
6. Accounts ReceivableDr. ___________ ___
7. Other AccountsCr. ___________ ___
8. InventoryCr. ___________ ___
9. Accounts ReceivableCr. ___________ ___
10. Accounts PayableDr. ___________ ___
Ans: N/A, LO: 3, Bloom: AN, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA
Solution 77 (15 min.)
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Subsidiary Ledgers and Special Journals
G - 27
Ex. 78
Sirius LLC uses four special journals, (cash receipts, cash payments, sales, and purchases
journal) in addition to a general journal. On November 1, 2013, 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 Inventory Cr.
? $600 $6,400 $31,000 (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 $19,600
Purchases Journal:
Accounts Other Accounts
Payable Inventory Supplies Dr.
Cr. Dr. Dr. Acct. Ref. Amount
? $36,000 $1,450 (X) $3,300
Additional Data:
The Sales Journal total was $45,000. A customer returned merchandise for credit for $360 and
Leo 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.
Ans: N/A, LO: 3, Bloom: AN, Difficulty: Medium, Min: 20, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA
Solution 78 (20 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 28
Solution 78 (Cont.)
Ex. 79
Wood Furnishings Inc. began business on April 1. The sales journal, as it appeared at the end of
the month, follows:
SALES JOURNAL Page 1
———————————————————————————————————————————
Invoice Post.
Date Account Debited Number Ref. Amount
———————————————————————————————————————————
Apr. 5 Jack Sago 10001 475
11 Leo Lauer 10002 535
16 Jack Sago 10003 818
19 Christy Sage 10004 447
26 Irene Walz 10005 1,884
4,159
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.
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Subsidiary Ledgers and Special Journals
G - 29
Solution 79 (20 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 30
Ex. 80
CASH PAYMENTS JOURNAL Page 45
———————————————————————————————————————————
Other Accounts
Ck. Account Post. Accounts Payable Inventory Cash
Date No. Debited Ref. Dr. Dr. Cr. Cr.
———————————————————————————————————————————
2013
Jan. 4 659 N & R Inc, (a) 4,000 40 3,960
11 660 Prepaid Rent (b) 2,000 2,000
13 661 Inventory. (c) 565 565
14 662 Dividends (d) 1,000 1,000
18 663 Keene (e) 2,300 2,300
20 664 Inventory. (f) 450 450
29 665 Equipment (g) 2,400 2,400
6,415 6,300 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.
Ans: N/A, LO: 3, Bloom: AN, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC:
Problem Solving, IMA: FSA
Solution 80 (10 min.)
Ex. 81
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 Post. Ref. column.
(c) the numbers 113 and 416 in the Post. Ref. column.
(d) the (x) below the Other Accounts column.
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Subsidiary Ledgers and Special Journals
G - 31
———————————————————————————————————————————
Sales Accounts Sales Other C.of G.S. Dr.
Accounts Post Cash Discounts Receivable Rev. Accounts Inventory Cr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr.
———————————————————————————————————————————
May 27 Jim Cale 980 20 1,000
Ex. 81 (Cont.)
28 Notes Receivable 113 3,000
Interest Revenue 416 3,360 360
29 370 370 260
31 Jim McHugh 400 400
5,110 20 1,400 370 3,360 260
(111) (412) (114) (411) (x) (505)(120)
Ans: N/A, LO: 3, Bloom: AN, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Research, AICPA PC:
Problem Solving, IMA: Business Applications
Solution 81 (10 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
G - 32
COMPLETION STATEMENTS
82. The accounts receivable _____________ provides detailed information about customer
accounts which is summarized in one ______________ account in the general ledger.
83. If a certain type of transaction occurs with great frequency, it is more efficient to create a
______________ to record that type of transaction.
84. 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 _______________.
85. The use of special journals often saves time in the _______________ process.
86. 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.
87. 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
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Subsidiary Ledgers and Special Journals
G - 33
MATCHING
88. 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.
Answers to Matching
SHORT-ANSWER ESSAY
S-A E 89
At the end of the month, the accountant for Golden 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.

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