1. The individual accounts receivable ledger accounts provide business managers information on the
status of individual customer accounts, which is necessary for managing collections. Managers need
to know which customers owe money, how much they owe, and how long the amount owed has
b
een outstanding.
3. a. 400
b. None
5. a. Sometime following the end of the current month, one of two things may happen: (1) an
overdue notice will be received from Kelly Co., and/or (2) a letter will be received from
Kelley Co., informing the buyer of the overpayment. (It is also possible that the error will be
6. a. Purchases journal d. Cash payments journal
7. An electronic form is a software window that provides the inputs for a particular transaction. For
example, a check form provides the inputs (payee, amount, date) for a cash payment transaction.
8. The use of controlling accounts to verify the accuracy of subsidiary accounts is used in a manual
9. For automated systems that use electronic forms, the special journals are not used to record original
10. E-commerce can be used by a business to conduct transactions directly with customers. Thus, an
order can be received directly from the customer’s Internet input, and cash can be received from the
CHAPTER 5
ACCOUNTING SYSTEMS
DISCUSSION QUESTIONS
CHAPTER 5 Accounting Systems
PE 5–1A
Oct. 4 162 Dawkins Co. 320
PE 5–1B
Apr. 6 78 Lemon Co. 1,240
PE 5–2A
Feb. 22. Collected cash of $120 from Horizon Entertainment Inc. (Invoice No. 422).
27. Provided $170 of services on account to Horizon Entertainment Inc.,
PE 5–2B
Aug. 10. Provided $750 services on account to Moravian Products Inc., itemized
on Invoice No. 119. Amount posted from Page 24 of the revenue journal.
Accounts Rec. Dr.
Fees Earned Cr.
Date
Invoice
No.
Post.
Ref.
Account Debited
PRACTICE EXERCISES
REVENUE JOURNAL
REVENUE JOURNAL
Date
Invoice
No.
Account Debited
Post.
Ref.
Accounts Rec. Dr.
Fees Earned Cr.
CHAPTER 5 Accounting Systems
PE 5–3A
Mar. 11 Party Hearty Supplies Inc. 610 610
PE 5–3B
Nov. 6 Carry Out Supply Inc. 330 330
Amount
Accounts
Payable
Cr.
Party
Supplies
Dr.
Other
Accounts
Dr.
PURCHASES JOURNAL
PURCHASES JOURNAL
Other
Accounts
Dr.
Post.
Ref.
Post.
Ref.
Accounts
Payable
Cr.
Office
Supplies
Dr.
Amount
Post.
Ref.
Post.
Ref.
Date
Account Credited
Account Credited
Date
CHAPTER 5 Accounting Systems
PE 5–4A
Nov. 11. Made purchases of $1,845 on account from Migrant Technology Inc.
(Invoice No. 85). Amount posted from Page 8 of the purchases journal.
PE 5–4B
Jan. 11. Paid $64 to Colonial Inc. on account (Invoice No. 122). Amount posted
from Page 71 of the cash payments journal.
PE 5–5A
Horizontal analysis:
2016 2015 Amount Percent
Retail $126,000 $ 120,000 $ 6,000 5.0%
Wholesale 150,000 164,000 (14,000) –8.5%
Increase/(Decrease)
CHAPTER 5 Accounting Systems
PE 5–5B
Horizontal analysis:
2016 2015 Amount Percent
Camping $280,000 $240,000 $ 40,000 16.7%
Fishing 140,000 160,000 (20,000) –12.5%
Increase/(Decrease)
CHAPTER 5 Accounting Systems
Ex. 5–1
1. General ledger accounts: (e)
Ex. 5–2
a., b., and c.
Mar. 1 Bal. 480
Mar. 31 6,795
d.
Eco-Systems
Hazmat Safety Co.
Masco Co.
Sunrise Enterprises
Total accounts receivable
1,720
$7,275
EXERCISES
March 31, 2016
$1,700
2,875
980
Accounts Receivable
ZETA SERVICES INC.
Accounts Receivable Customer Balances
CHAPTER 5 Accounting Systems
Ex. 5–3
a. General journal f. Cash receipts journal
b. Cash receipts journal g. Revenue journal
Ex. 5–4
a. Cash payments journal f. General journal
b. Cash payments journal g. Purchases journal
Ex. 5–5
Apr. 3. Provided service on account; posted from revenue journal Page 44.
6. Granted an invoice adjustment or corrected an error related to sale of
CHAPTER 5 Accounting Systems
Ex. 5–6
a.
2 Morgan Corp. 425
3 Mid States Inc. 260
321
322
REVENUE JOURNAL
Account Debited
Invoice
No.
Accounts Rec. Dr.
Fees Earned Cr.
Date
Post.
Ref.
Aug.
CHAPTER 5 Accounting Systems
Ex. 5–7
a. and b.
July 1 Bal. 625 July 4 1,890
18 950 22 3,660
c.
July 1 Bal. 625 July 31 9,910
d.
Aladdin Co.
Clearmark Co.
e. A computerized system would likely use an electronic form specially designed
for recording sales transactions, such as an electronic invoice form. The
Accounts Receivable Customer Balances
Accounts Receivable Fees Earned
Aladdin Co. Clearmark Co.
SAPLING CONSULTING INC.
July 31, 2016
$ 1,575
5,550
CHAPTER 5 Accounting Systems
Ex. 5–8
Amber Communications Inc. $4,070
Celestial Studios Inc. 1,650
Balance, August 1, 2016 $ 4,230
Ex. 5–9
Page
8
Invoice Post.
No. Ref. Fees Earned Cr.
2016
Dec. 2 512 Cadence Co.
Page
12
2016
Dec. 4 CMI Inc.
19 Ells Inc.
Date
775
MIRAGE PRODUCTIONS INC.
Accounts Receivable Customer Balances
August 31, 2016
Accounts Receivable
(Controlling)
REVENUE JOURNAL
Accounts Rec. Dr.
Account Debited
Cash
Dr.
Post.
Ref.
Account Credited
Fees Earned
Cr.
Accts.
Rec. Cr.
CASH RECEIPTS JOURNAL
Date
230
605
230
605
CHAPTER 5 Accounting Systems
Ex. 5–10
a.
Page
19
2016
Oct. 3 622 Palace Corp.
Page
25
2016
Oct. 5 Champion Co. 1,060
12 Wayfarer Co. 1,450
b.
Amex Services Inc. $2,970
The total of the customer accounts on October 31, 2016, $5,810, equals the
balance of the accounts receivable controlling account, shown as follows:
Oct. 1 Bal. Oct. 31
REVENUE JOURNAL
Account Debited
Post.
Ref.
Cash
Dr.
Accts.
Rec.
Cr.
Date
2,890
Accounts Rec. Dr.
Fees Earned Cr.
Invoice
No.
CASH RECEIPTS JOURNAL
Date
Accounts Receivable
LASTING SUMMER INC.
Accounts Receivable Customer Balances
October 31, 2016
Fees
Earned
Cr.
Account
Credited
2,510
Post.
Ref.
1,060
1,450
5,400
CHAPTER 5 Accounting Systems
Ex. 5–10 (Concluded)
c. The accounts receivable subsidiary ledger is needed to track customer services
Ex. 5–11
1. General ledger account: (g), (h), (i), (j), (k), (l)
Ex. 5–12
2. Subsidiary ledger account: (a), (d), (g)
Ex. 5–13
May 6. Purchased services, supplies, equipment, or other commodities on
account; posted from purchases journal Page 44.
14. Received an invoice adjustment or corrected an error related to
CHAPTER 5 Accounting Systems
Ex. 5–14
a.
June 4 490 490
92,790 Office Equipment 2,790
Account Credited
Office Universe Inc.
Accounts
Payable
Cr.
Office
Supplies
Dr.
Other
Accounts
Dr.
Post.
Ref.
Amount
Tek Village, Inc.
PURCHASES JOURNAL
Post.
Ref.
Date
CHAPTER 5 Accounting Systems
Ex. 5–15
a. and b.
Mar. 4 690 Mar. 1 Bal. 580
26 385 15 325
c.
Mar. 1 Bal. 580 Mar. 31 1,400
d.
Enviro-Wash Supplies Inc.
Nicely Co.
e. A computerized system would likely use an electronic form specially designed
for recording purchase transactions. The transaction details would be input
March 31, 2016
$1,075
905
Accounts Payable Creditor Balances
Enviro-Wash Supplies Inc. Nicely Co.
NEWMARK EXTERIOR CLEANERS INC.
Accounts Payable Cleaning Supplies
CHAPTER 5 Accounting Systems
Ex. 5–16
Augusta Sod Co. $ 6,450
Concrete Equipment Co. 6,700
Note: The account balances are determined by subtracting the debits from the credits
for each account.
Balance, June 1, 2016 $ 2,230
Accounts Payable
(Controlling)
OUTDOOR ARTISAN LANDSCAPING
Accounts Payable Creditor Balances
June 30, 2016
CHAPTER 5 Accounting Systems
Ex. 5–17
Page
36
2016
May 3
12
Page
41
2016
May 1 57 Liquid Klean Supplies Inc. 395
395
Other
Accounts
Dr.
Accounts
Payable
Dr.
Cash
Cr.
CASH PAYMENTS JOURNAL
Ck.
No.
Account Debited
PURCHASES JOURNAL
Date
Post.
Ref.
Accounts
Payable
Cr.
220
400
Date
Account Credited
Sani-Fresh Products Inc.
Porter Products Inc.
Post.
Ref.
Post.
Ref.
Amount
Cleaning
Supplies
Dr.
Other
Accounts
Dr.
220
400
CHAPTER 5 Accounting Systems
Ex. 5–18
a.
Page
16
2016
June 4
Page
22
2016
June 6 345 Labradore Inc. 360
Post.
Ref.
Amount
Pet
Supplies
Dr.
Other
Accounts
Dr.
Post.
Ref.
Date
Account Credited
Best Friend Supplies Inc.
Ck.
No.
Account Debited
PURCHASES JOURNAL
Date
Post.
Ref.
Accounts
Payable
Cr.
255
255
Other
Accounts
Dr.
Accounts
Payable
Dr.
Cash
Cr.
CASH PAYMENTS JOURNAL
360
CHAPTER 5 Accounting Systems
Ex. 5–18 (Concluded)
b.
Meow Mart Inc. $ 400
balance of the accounts payable controlling account, shown as follows:
June 30 855 June 1 Bal.
Ex. 5–19
a. Two errors were made in balancing the accounts in the subsidiary ledger:
(1) The Carbon Supplies Inc. transaction of March 9 should have
(2) The Hudson Bay Minerals Co. transaction of March 25 should have resulted
Accounts Payable
HAPPY TAILS INC.
Accounts Payable Creditor Balances
June 30, 2016
600
CHAPTER 5 Accounting Systems
Ex. 5–19 (Concluded)
b.
C. D. Greer and Son $15,750
Carbon Supplies Inc. 9,200
Ex. 5–20
Revenue journal: (c)
Ex. 5–21
2. The Other Accounts column is for credits (not debits).
3. A better order of columns would be to place the Other Accounts Cr. column
A recommended and corrected cash receipts journal is as follows:
Page
12
BUNKER HILL ASSAY SERVICES INC.
Accounts Payable Creditor Balances
March 31, 2016
Accts.
Other
Fees
CASH RECEIPTS JOURNAL
CHAPTER 5 Accounting Systems
Ex. 5–22
a. In the electronic invoice form from QuickBooks
®
shown above, typical
fields for data input can be identified as follows:
2. Date and invoice number
4. Amount of revenue
b. The customer Accounts Receivable is debited, and Fees Earned is credited.