Chapter 07 – Accounting Information Systems
Alternate Demonstration Problem
Chapter 7
Bedrock Company completed these transactions during February of the
current year:
Feb 1 Owner, F. Stone invested $100,000 cash in the business.
1 Sent Flint Company check No. 413 for a cash purchase of
inventory $ 75,000.
2 Sold inventory costing $500 on credit to Dale Dent for $800,
Invoice No. 711. (Terms of all credit sales are 2/10, n/60.)
3 Received inventory and an invoice dated January 30, terms
2/10, n/60, from Able Company, $1,750.
4 Sold inventory costing $850 on credit to Gary Glen for $1,250,
Invoice No. 712.
5 Purchased on credit from Best Company inventory, $1,855;
store supplies, $75; and office supplies, $35. Invoice dated
February 4, terms n/10, EOM.
7 Borrowed $5,000 by giving First National Bank a promissory
note payable.
9 Purchased office equipment on credit from More Company,
invoice dated February 6, terms n/10, EOM, $625.
9 Sent Able Company Check No. 414 in payment of its January 30
invoice less the discount.
11 Sold inventory costing $1,000 on credit to Carl Cole for $ 1,650
Invoice No. 713.
12 Received payment from Dale Dent of the February 2 sale less
the discount.
14 Received payment from Gary Glen of the February 4 sale less
the discount.
1
4
14 Received inventory and an invoice dated February 11, terms
2/10, n/60, from Old Company, $1,985.
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Chapter 07 – Accounting Information Systems
Feb. 14 Issued Check No. 415, payable to Payroll, in payment of sales
salaries for the first half of the month, $855. Cashed the check
and paid the employees.
14 Cash sales for the first half of the month, $18,460. Cost of this
merchandise was $ 9,500. (Normally, cash sales are recorded
daily; they are recorded only twice in this problem to reduce
the number of repetitive entries.)
14 Post to the customer and creditor accounts and also post any
amounts that should be posted as individual amounts to the
general ledger accounts. (Normally, such items are posted
daily; but you are asked to post them only twice in this
problem.)
16 Purchased inventory on credit from Best Company, $410; store
supplies, $45; and office supplies, $30. Invoice dated February
12, terms n/10, EOM.
17 Received a credit memorandum from Old Company for
unsatisfactory inventory received on February 14 and returned
for credit, $85.
18 Received a credit memorandum from More Company for office
equipment received on February 9 and returned for credit,
$130.
21 Received payment from Carl Cole for the sale of February 11
less the discount.
21 Issued Check No. 416 to Old Company in payment of its invoice
of February 11 less the return and the discount.
24 Sold inventory costing $475 on credit to Carl Cole for $835,
Invoice No. 714.
26 Sold inventory costing $375 on credit to Gary Glen for $775,
Invoice No. 715.
28 Issued Check No. 417, payable to Payroll, in payment of sales
salaries for the last half of the month, $855. Cashed the check
and paid the employees.
28 Cash sales for the last half of the month, $20,215. Cost of this
merchandise was $ 11,500.
Feb 28 Post to the customer and creditor accounts and post any
7-2
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Chapter 07 – Accounting Information Systems
amounts that should be posted as individual amounts to
general ledger accounts.
28 Foot and crossfoot the journals and make the month-end
postings.
Required:
1. Open the following general ledger accounts: Cash, Accounts
Receivable, Inventory, Store Supplies, Office Supplies, Office
Equipment, Notes Payable, Accounts Payable, F. Stone, Capital,
Sales, Sales Discounts, Cost of Goods Sold, and Sales Salaries
Expense.
2. Open the following accounts receivable ledger accounts: Carl Cole,
Dale Dent, and Gary Glen.
3. Open the following accounts payable ledger accounts: Able
Company, Best Company, More Company, and Old Company.
4. Enter the transactions in a Sales Journal, a Purchases Journal, a
Cash Receipts Journal, a Cash Disbursements Journal, and a General
Journal similar to the ones illustrated in this chapter. Post when
instructed to do so.
5. Prepare a trial balance and prove the subsidiary ledgers by preparing
schedules of accounts receivable and payable.
7-3
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Education.
Chapter 07 – Accounting Information Systems
Solution: Alternate Demonstration Problem
Chapter 7
SALES JOURNAL
Date Account Debited
Invoice Number
PR
Accts Rec Dr
Sales Cr
Cost of Goods Sold Debit
Inventory Credit
Feb. 2 Dale Dent 711 800.00 500.00
4 Gary Glen 712 1,250.00 850.00
11 Carl Cole 713 1,650.00 1,000.00
24 Carl Cole 714 835.00 475.00
26 Gary Glen 715 775.00 375.00
28 Totals . . . . 5,310.00 3,200.00
(112/411) (511/113)
PURCHASES JOURNAL
Date Amount Credited
Date of
Invoice Terms
P
R
Accounts
Payable
Credit
Inventory
Debit
Store
Supplies
Debit
Office
Supplies
Debit
Feb. 3 Able Company 1/30 2/10, n/60 1,750.00 1,750.00 . . . . . . . . . .
5 Best Company 2/4 n/10, EOM 1,965.00 1,855.00 75.00 35.00
14 Old Company 2/11 2/10, n/60 1,985.00 1,985.00 . . . . . . . . . .
16 Best Company 2/12 n/10, EOM 485.00 410.00 45.00 30.00
28 Totals . . . . . . . . . . . . . 6,185.00 6,000.00 120.00 65.00
(212) (113) (115) (116)
7-4
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Chapter 07 – Accounting Information Systems
CASH RECEIPTS JOURNAL
Date
Account
Credited Explanation PR
Cash
Debit
Sales
Disc.
Debit
Accts.
Rec.
Credit
Sales
Credit
Other
Accts.
Credit
Cost of
Goods Sold
Debit
Inventory
Credit
Feb.
1
F.Stone,
Capital
Investment 311 100,000.0
0
…………… …………… …………… 100,000.0
0
……………
7 Notes
Payable
Note to bank 211 5,000.00 …………… …………… …………… 5,000.00 ……………
12 Dale Dent Sale of 2/2 784.00 16.00 800.00 …………… …………… ……………
14 Gary Glen Sale of 2/4 1,225.00 25.00 1,250.00 …………… …………… ……………
14 Sales Cash sales 18,460.00 …………… …………… 18,460.00 …………… 9,500.00
21 Carl Cole Sale of 2/11 1,617.00 33.00 1,650.00 …………… …………… ……………
28 Sales Cash sales 20,215.00 …………... …………... 20,215.00 …………... 11,500.00
28 Totals…………
…………………… 147,301.0
0
74.00 3,700.00 38,675.00 105,000.0
0
21,000.00
(111) (413) (112) (411) () (511/113)
CASH DISBURSEMENTS JOURNAL
Date
Ch.
No. Payee Account Debited PR
Cash
Credit
Inventory
Credit
Accts.
Pay
Debit
Other
Accts.
Debit
Feb.
1
41
3
Flint Company Inventory 113 75,000.0
0
…………… …………… 75,000.00
9 41
4
Able Company Invoice of 1/30 1,715.00 35.00 1,750.00 ……………
14 41
5
Payroll Sales Salaries Exp. 61
2
855.00 …………… …………… 855.00
21 41
6
Old Company Invoice of 2/11 1,862.00 38.00 1,900.00 ……………
7-12
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Chapter 07 – Accounting Information Systems
28 41
7
Payroll Sales Salaries Exp. 61
2
855.00 …………... …………... 855.00
28 Totals………… ……………………………… 80,287.0
0
73.00 3,650.00 76,710.00
(111) (113) (212) ()
7-13
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Chapter 07 – Accounting Information Systems
GENERAL JOURNAL
Feb 9 Office Equipment 133 625.00
Accounts Payable/ More Company 212/625.00
17 Accounts Payable/ Old Company 212/85.00
Inventory 113 85.00
18 Accounts Payable/ More Company 212/130.00
Office Equipment 133 130.00
GENERAL LEDGER
Cash Acct. No. 111
Date Explanation PR Debit Credit Balance
Feb. 28
28
R2
D2
147,301
80,287
147,301
67,014
Accounts Receivable Acct. No. 112
Date Explanation PR Debit Credit Balance
Feb. 28
28
S2
R2
5,310
3,700
5,310
1,610
Inventory Acct. No. 113
Date Explanation PR Debit Credit Balance
Feb. 2
17
28
28
28
28
D2
G2
P2
S2
R2
D2
75,000
6,000
85
3,200
21,000
73
75,000
74,915
80,915
77,715
56,715
56,642
Store Supplies Acct. No. 115
Date Explanation PR Debit Credit Balance
Feb. 28 P2 120 120
Office Supplies Acct. No. 116
Date Explanation PR Debit Credit Balance
Feb. 28 P2 65 65
Office Equipment Acct. No. 133
7-14
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Education.
Chapter 07 – Accounting Information Systems
Date Explanation PR Debit Credit Balance
Feb. 9
18
G2
G2
625
130
625
495
Notes Payable Acct. No. 211
Date Explanation PR Debit Credit Balance
Feb. 7 R2 5,000 5,000
Accounts Payable Acct. No. 212
Date Explanation PR Debit Credit Balance
Feb. 9
17
18
28
28
G2
G2
G2
P2
D2
85
130
3,650
625
6,185
625
540
410
6,595
2,945
F. Stone, Capital Acct. No. 311
Date Explanation PR Debit Credit Balance
Feb. 1 R2 100,000 100,000
Sales Acct. No. 411
Date Explanation PR Debit Credit Balance
Feb. 28
28
S2
R2
5,310
38,675
5,310
43,985
Sales Discounts Acct. No. 413
Date Explanation PR Debit Credit Balance
Feb. 28 R2 74 74
Cost of Goods Sold Acct. No. 511
Date Explanation PR Debit Credit Balance
Feb. 28
28
R2
SJ
21,000
3,200
21,000
24,200
Sales Salaries Expense Acct. No. 612
Date Explanation PR Debit Credit Balance
Feb. 14
28
D2
D2
855
855
855
1,710
7-15
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Chapter 07 – Accounting Information Systems
ACCOUNTS RECEIVABLE LEDGER
Carl Cole
Date Explanation PR Debit Credit Balance
Feb. 11
21
24
S2
R2
S2
1,650
835
1,650
1,650
-0-
835
Dale Dent
Date Explanation PR Debit Credit Balance
Feb. 2
12
S2
R2
800
800
800
-0-
Gary Glen
Date Explanation PR Debit Credit Balance
Feb. 4
14
26
S2
R2
S2
1,250
775
1,250
1,250
-0-
775
ACCOUNTS PAYABLE LEDGER
Able Company
Date Explanation PR Debit Credit Balance
Feb. 3
9
P2
D2 1,750
1,750 1,750
-0-
Best Company
Date Explanation PR Debit Credit Balance
Feb. 5
16
P2
P2
1,965
485
1,965
2,450
More Company
Date Explanation PR Debit Credit Balance
Feb. 9
18
G2
G2 130
625 625
495
Old Company
Date Explanation PR Debit Credit Balance
7-16
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Chapter 07 – Accounting Information Systems
Feb. 14
17
21
P2
G2
D2
85
1,900
1,985 1,985
1,900
-0-
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Chapter 07 – Accounting Information Systems
BEDROCK COMPANY
Trial Balance
February 28, 20XX
Cash ……………………………………………………………… $67,014
Accounts Receivable……………………………………….. 1,610
Inventory………………………………………………………… 56,642
Store supplies…………………………………………………. 120
Office supplies………………………………………………… 65
Office equipment……………………………………………… 495
Notes payable…………………………………………………. $ 5,000
Accounts payable……………………………………………. 2,945
F. Stone, Capital………………………………………………. 100,000
Sales ……………………………………………………………… 43,985
Sales discounts………………………………………………. 74
Cost of Goods Sold…………………………………………. 24,200
Sales salaries expense…………………………………….. 1,710 ______
Totals…………………………………………………….. $151,930 $151,930
BEDROCK COMPANY
Schedule of Accounts Receivable
February 28, 20XX
Carl Cole…………………………………………………………. $ 835
Gary Glen……………………………………………………….. 775
Total………………………………………………………. $1,610
BEDROCK COMPANY
Schedule of Accounts Payable
February 28, 20XX
Best Company…………………………………………………. $2,450
More Company………………………………………………… 495
Total ……………………………………………………… $2,945
7-18
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