•
•
•
•
•
•
•
•
2.
4.
6.
8.
10.
Answers will vary but may include the following.
Groups of accounts.
Notations of the page number of the journal from which a figure comes; number of account to which
the figure was posted; to provide cross-references.
Before entry posted: cross out incorrect item, write correct data above it. After posted: journalize and
post a correcting entry.
To record business transactions in chronological order.
Helps establish audit trail.
Exposing the assets of the business to fraud and theft.
Increasing the risk of producing inaccurate financial statements.
Difficulty in auditing transactions.
Research customer billing. (Customer says no invoice was received.)
Note to instructor: These questions are designed to check students’ understanding of new terms, concepts,
and procedures presented in the chapter.
Discussion Questions
Managerial Implications: Thinking Critically
Willamette Valley Vineyards produces some 100,000 cases of wine annually that is distributed
throughout the United States, Canada, and the Pacific Rim.
CHAPTER 4
THE GENERAL JOURNAL AND THE GENERAL LEDGER
Willamette Valley Vineyards is set to become the first winery in the world to use cork stoppers
harvested from responsibly managed forestlands certified by the Rainforest Alliance to Forest
Stewardship Council (FSC) standards.
The vineyard uses biofuel in company tractors and delivery vehicles and has a biofuel policy which
offers up to 50 gallons of biofuel a month, at no cost, to each employee.
Willamette Valley (NASDAQ: WVVI) produced revenues of $16,563,712 in 2009 versus
$16,048,238 in the prior year, an increase of 3.2%.
Fast Facts
The resolution of the dispute with regards to the taxes paid by the vineyard depended upon the vineyard’s
recordkeeping and accounting practices. The Alcohol and Tobacco Tax Trade Board uncovered some
reporting errors which resulted in the vineyard having to revise statements and pay fines.
Chapter Opener: Thinking Critically
EXERCISE 4.1
Debit Debit Credit Debit Credit
1. 401 5. 202 101 8. 101 301
14 14
15 20 Supplies 121 4 2 0 00 15
16 Cash 101 4 2 0 00 16
17 Purchased supplies, Check 1002 17
18 18
19 23 Cash 101 1 2 0 00 19
20 Supplies 121 1 2 0 00 20
21 Returned damaged supplies and 21
22 received cash refund 22
23 23
24 30 Accounts Payable 202 320000 24
25 Cash 101 320000 25
26 Paid Zen, Inc., on account for 26
27 Invoice 9823, Check 1003 27
Credit
101
EXERCISE 4.2 (continued)
PAGE 2
POST.
REF.
1 2013 1
2 Sept. 30 Mary Vinzant, Drawing 302 200000 2
3 Cash 101 200000 3
4 Owner withdrew cash for personal use 4
5 5
CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
EXERCISE 4.3
ACCOUNT Cash ACCOUNT NO. 101
2013
Sept. 1 J1 5000000 5000000
ACCOUNT Accounts Receivable ACCOUNT NO. 111
ACCOUNT Supplies ACCOUNT NO. 121
2013
E
2013
Sept. 4 J1 550000 550000
DATE
BALANC
E
DEBIT CREDIT
DEBIT CREDITDESCRIPTION
POST
REF. DEBIT
POST
REF.
CREDIT
BALANC
E
DEBIT CREDIT
DATE DESCRIPTION
GENERAL LEDGER
DATE DESCRIPTION
POST
REF. DEBIT CREDIT
BALANCE
DEBIT CREDIT
EXERCISE 4.3 (continued)
ACCOUNT Automobile ACCOUNT NO. 141
ACCOUNT Accounts Payable ACCOUNT NO. 202
ACCOUNT Mary Vinzant, Capital ACCOUNT NO. 301
ACCOUNT Mary Vinzant, Drawing ACCOUNT NO. 302
ACCOUNT Fees Income ACCOUNT NO. 401
DEBIT CREDIT
CREDIT
BALANC
E
DEBIT
CREDIT CREDIT
DEBIT
BALANC
E
DEBIT
POST
REF.
DATE DESCRIPTION
POST
REF.
DATE DESCRIPTION
CREDIT
DEBIT CREDIT
BALANC
E
DEBIT
DATE DESCRIPTION
POST
REF.
DATE
DESCRIPTION
DESCRIPTION
DATE
CREDIT
BALANC
E
DEBIT CREDIT
DEBIT
POST
REF.
CREDIT
POST
REF. DEBIT CREDIT
BALANC
E
DEBIT
EXERCISE 4.3 (continued)
ACCOUNT Rent Expense ACCOUNT NO. 511
ACCOUNT Salaries Expense ACCOUNT NO. 514
ACCOUNT Telephone Expense ACCOUNT NO. 517
CREDIT
DEBIT
POST
REF.
BALANC
E
DEBIT
DATE
POST
REF.
CREDITDESCRIPTION
BALANC
E
DESCRIPTION DEBIT CREDIT
BALANC
E
DEBIT
POST
REF. DEBIT CREDIT CREDIT
DEBIT CREDIT
DATE
DATE
DESCRIPTION
EXERCISE 4.4
PAGE
POST.
REF.
1 2013 1
2 Nov. 5 Cash 1400000 2
3 Accounts Receivable 1600000 3
4 Fees Income 3000000 4
EXERCISE 4.5
PAGE
POST.
REF.
1 2013 1
2 July 30 Telephone Expense 9 5 0 00 2
CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
CREDIT
EXERCISE 4.6
PAGE
POST.
REF.
1 2013 1
PROBLEM 4.1A
PAGE 1
POST.
REF.
1 2013 1
2 Sept. 1 Rent Expense 140000 2
3 Cash 140000 3
4 Paid September rent, Check 1169 4
5 5
6 5 Cash 250000 6
7 Fees Income 250000 7
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
DATE DESCRIPTION DEBIT
GENERAL JOURNAL
CREDIT
PROBLEM 4.1A (continued)
PAGE 2
POST.
REF.
1 2013 1
2 Sept. 15 Salaries Expense 420000 2
3 Cash 420000 3
4 Paid semimonthly salaries, Checks 1172-1177 4
5 5
14 14
15 20 Equipment 276000 15
16 Cash 276000 16
17 Purchased nets, Check 1179 17
18 18
19 21 Cash 9 5 0 00 19
20 Accounts Receivable 9 5 0 00 20
21 Received cash on account 21
22 22
CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
PROBLEM 4.1A (continued)
PAGE 3
POST.
REF.
1 2013 1
2 Sept. 28 Utilities Expense 225000 2
3 Cash 225000 3
4 Paid monthly electric bill, Check 1181 4
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 4.2A (continued)
PAGE 2
POST.
REF.
1 2013 6 Art Equipment 151 270000 1
2 Oct. Cash 101 270000 2
3 Purchased art equipment, Check 1002 3
4 4
16 Performed services for cash and on credit 16
17 17
18 15 Cash 101 3 0 0 00 18
19 Supplies 121 3 0 0 00 19
20 20
Returned damaged supplies for cash refund
CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
PROBLEM 4.2A (continued)
PAGE 3
POST.
REF.
1 2013 26 Accounts Receivable 111 390000 1
2 Oct. Fees Income 401 390000 2
3 Performed services on credit 3
4 4
5 27 Telephone Expense 520 2 7 5 00 5
6 Cash 101 2 7 5 00 6
CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
PROBLEM 4.2A (continued)
ACCOUNT Cash ACCOUNT NO. 101
2013
Oct. 1 J1 5000000 5000000
2 J1 250000 4750000
6 J1 270000 4480000
7 J1 105000 4375000
ACCOUNT Accounts Receivable ACCOUNT NO. 111
2013
E
2013
Oct. 7 J1 105000 105000
15 J1 3 0 0 00 7 5 0 00
CREDIT
CREDIT
BALANC
E
POST
REF. DEBIT DEBIT
DATE DESCRIPTION
GENERAL LEDGER
BALANC
E
DEBIT CREDIT
DATE CREDITDEBIT
POST
REF.DESCRIPTION
PROBLEM 4.2A (continued)
ACCOUNT Office Equipment ACCOUNT NO. 141
E
E
ACCOUNT Wilson Adams, Capital ACCOUNT NO. 301
GENERAL LEDGER
BALANC
E
POST
BALANC
E
POST
PROBLEM 4.2A (continued)
ACCOUNT Wilson Adams, Drawing ACCOUNT NO. 302
ACCOUNT Fees Income ACCOUNT NO. 401
ACCOUNT Office Cleaning Expense ACCOUNT NO. 511
ACCOUNT Rent Expense ACCOUNT NO. 514
CREDIT
BALANC
E
DEBIT
CREDITDEBITDATE DESCRIPTION
POST
REF.
POST
REF.DATE
BALANC
E
DEBIT CREDIT
DEBIT CREDITDESCRIPTION
DATE DESCRIPTION
GENERAL LEDGER
DATE DESCRIPTION
POST
REF. DEBIT DEBIT
CREDIT
BALANC
E
CREDIT
CREDIT
POST
REF.
BALANC
E
DEBIT CREDIT
DEBIT
PROBLEM 4.2A (continued)
ACCOUNT Salaries Expense ACCOUNT NO. 517
ACCOUNT Telephone Expense ACCOUNT NO. 520
ACCOUNT Utilities Expense ACCOUNT NO. 523
PROBLEM 4.3A
April 1: The debit should be to Accounts Receivable, not Accounts Payable.
BALANC
E
DEBIT CREDIT
DESCRIPTION
POST
REF. CREDIT
DEBIT CREDIT
GENERAL LEDGER
DATE DESCRIPTION
POST
REF.
DATE DESCRIPTION
DATE
DEBIT CREDIT
BALANC
E
DEBIT
DEBIT CREDIT DEBIT
BALANC
E
CREDIT
POST
REF.
PROBLEM 4.4A
PAGE 1
POST.
REF.
1 2013 1
2 Nov. 1 Cash 101 45 0 0 0 00 2
3 Tools 131 100000 3
4 Erwin Tobias, Capital 301 46 0 0 0 00 4
5 Beginning investment of owner 5
14 14
15 10 Cash 101 5 0 0 00 15
16 Accounts Receivable 111 140000 16
17 Fees Income 401 190000 17
18 Services for cash and credit 18
CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT
PROBLEM 4.4A (continued)
ACCOUNT Cash ACCOUNT NO. 101
2013
ACCOUNT Accounts Receivable ACCOUNT NO. 111
ACCOUNT Office Supplies ACCOUNT NO. 121
ACCOUNT Tools ACCOUNT NO. 131
2013
DATE DESCRIPTION CREDITDEBIT
DATE
BALANC
E
DEBIT CREDIT
POST
REF.
DESCRIPTION
POST
REF.
DESCRIPTION
POST
REF.
CREDIT
CREDIT
GENERAL LEDGER
DATE DESCRIPTION CREDIT
DATE DEBIT
DEBIT
DEBIT
BALANC
E
DEBIT
BALANC
E
POST
REF.
BALANC
E
CREDIT
DEBIT CREDIT
CREDIT DEBIT
PROBLEM 4.4A (continued)
ACCOUNT Machinery ACCOUNT NO. 141
ACCOUNT Equipment ACCOUNT NO. 151
ACCOUNT Accounts Payable ACCOUNT NO. 202
2013
ACCOUNT Erwin Tobias, Capital ACCOUNT NO. 301
2013
DATE DESCRIPTION
BALANC
E
DEBIT CREDIT
DEBIT CREDIT
POST
REF.
CREDIT
CREDIT
DATE DESCRIPTION
POST
REF. DEBIT CREDIT
BALANC
E
DEBIT
POST
REF.
BALANC
E
DEBIT CREDIT
DEBIT
GENERAL LEDGER
CREDIT
POST
REF. DEBIT CREDIT
BALANC
E
DEBIT
DATE DESCRIPTION
DATE DESCRIPTION
PROBLEM 4.4A (continued)
ACCOUNT Fees Income ACCOUNT NO. 401
PROBLEM 4.1B
PAGE 1
1 2013 1
2 Sept. 1 Cash 2500000 2
3 Cathy Cox 2500000 3
4 Beginning investment of owner 4
GENERAL JOURNAL
DESCRIPTIONDATE
POST
REF. DEBIT CREDIT
GENERAL LEDGER
BALANC
E
DEBIT CREDIT
DATE DESCRIPTION
POST
REF. DEBIT CREDIT