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PB–31, cont.
Requirements 1 and 2, cont.
Cash Payments Journal Page 1
Other
Accounts
Merchandise
PB–31, cont.
Requirements 1 and 2, cont.
General Journal Page 1
Date Accounts and Explanation
Post.
Debit Credit
Comprehensive Problem for Appendix B
Completing the Accounting Cycle for a Merchandising Entity—Using Special Journals
Amherst Networking Systems adjusts and closes its books and then prepares financial statements
monthly. Amherst uses the perpetual inventory system and all sales on credit have terms of n/30.
The company completed the following transactions during August:
Aug. 1 Issued check no. 682 for August office rent of $1,300.
2 Issued check no. 683 to pay the salaries payable of $1,300 from July 31.
2 Issued invoice no. 503 for sale on account to R. T. Loeb, $700. Amherst’s cost of this
merchandise inventory was $210.
3 Purchased merchandise inventory on credit terms of 1/15, n/60 from Goldner, Inc., $1,400.
4 Received cash on account from Friend Company, $2,400.
4 Sold merchandise inventory for cash, $370 (cost, $111).
5 Issued check no. 684 to purchase office supplies for cash, $730.
7 Issued invoice no. 504 for sale on account to K. D. Sanders, $2,100 (cost, $630).
8 Issued check no. 685 to pay Filter Company $2,500 of the amount owed at July 31. This
payment occurred after the end of the discount period.
11 Issued check no. 686 to pay Goldner, Inc. the net amount owed from August 3.
12 Received cash from R. T. Loeb in full settlement of her account receivable from August 2.
16 Issued check no. 687 to pay salaries expense of $1,290.
19 Purchased merchandise inventory for cash, $850, issuing check no. 688.
22 Purchased furniture on credit terms of 3/15, n/60 from Bradford Corporation, $510.
23 Sold merchandise inventory on account to Friend Company, issuing invoice no. 505 for
$9,000 (cost, $2,700).
24 Received half the July 31 amount receivable from K. D. Sanders.
26 Purchased office supplies on credit terms of 2/10, n/30 from Filter Company, $240.
30 Returned damaged merchandise inventory to the company from whom Amherst made the
cash purchase on August 19, receiving cash of $850.
31 Purchased merchandise inventory on credit terms of 1/10, n/30 from Seacrest Supply,
$8,000.
31 Issued check no. 689 to stockholders, for dividends, $600.
Requirements
1. Open these four-column accounts with their account numbers and July 31 balances in the
various ledgers.
General Ledger
Nbr. Account Name Debit Credit
101 Cash $ 5,020
102 Accounts Receivable 22,490
105 Merchandise Inventory 41,300
109 Office Supplies 1,680
117 Prepaid Insurance 2,600
160 Furniture 37,000
161 Accumulated Depreciation—Furniture $ 10,000
201 Accounts Payable 12,700
204 Salaries Payable 1,300
220 Note Payable, Long-term 25,000
301 Common Stock 20,000
305 Retained Earnings 41,090
310 Dividends
400 Income Summary
401 Sales Revenue
501 Cost of Goods Sold
510 Salaries Expense
513 Rent Expense
514 Depreciation Expense—Furniture
516 Insurance Expense
519 Supplies Expense
Accounts Receivable Subsidiary Ledger: Friend Company $2,400; R. T. Loeb, $0; Parker, Inc.,
$11,300; and K. D. Sanders, $8,790.
Accounts Payable Subsidiary Ledger: Bradford Corporation, $0; Filter Company, $12,700;
Goldner, Inc., $0; and Seacrest Supply, $0.
2. Journalize the August transactions using a sales journal (page 4), a cash receipts journal (page
11, omit Sales Discounts Forfeited column), a purchases journal (page 8), a cash payments
journal (page 5), and a general journal (page 9).
3. Post daily to the accounts receivable subsidiary ledger and the accounts payable subsidiary
ledger. On August 31, post to the general ledger.
4. Prepare an unadjusted trial balance for the month ended August 31.
5. Journalize and post the following adjusting entries:
a. Office supplies on hand, $1,000.
b. Prepaid insurance expired, $350.
c. Depreciation expense on furniture, $250.
d. Accrued salaries expense, $1,060.
6. Prepare an adjusted trial balance.
7. Prepare a multistep income statement, statement of retained earnings, and classified balance sheet.
8. Journalize closing entries and post.
9. Prepare a post-closing trial balance.
SOLUTION
Requirements 1, 3, 5, and 8
Furniture No. 160
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 37,000
Aug. 22 P.8 510 37,510
Accumulated Depreciation—Furniture No. 161
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 10,000
Adj. J.9 250 10,250
Retained Earnings No. 305
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 41,090
Clo. J.9 2,619 43,709
Clo. J.9 600 43,109
Dividends No. 310
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 0
Aug. 31 CP.5 600 600
Clo. J.9 600 0
Comprehensive Problem, cont.
Requirements 1, 3, 5, and 8, cont.
Cost of Goods Sold No. 501
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 0
Aug. 31 S.4 3,540 3,540
31 CR.11 111 3,651
Clo. J.9 3,651 0
Comprehensive Problem, cont.
Requirements 1, 3, 5, and 8, cont.
Insurance Expense No. 516
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 0
Adj. J.9 350 350
Clo. J.9 350 0
Accounts Receivable—K.D. Sanders
Date
Post.
Ref. Debit Credit
Balance
Debit Credit
Bal. 8,790
Aug. 7 S.4 2,100 10,890
24 CR.11 4,395 6,495
