CHAPTER 5 Accounting Systems
Prob. 5-4B (Continued)
1.
Post.
Item Ref. Debit Credit Balance
Oct. 17 P1 9,780 9,780
26 CP1 9,780 —
30 P1 12,450 12,450
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Name: Petro Services Inc.
Name: Midland Supply Co.
Date
A-One Office Supply Co.
Name:
CHAPTER 5 Accounting Systems
Prob. 5-4B (Continued)
2. and 3.
Account No. 11
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
18 CP1 4,570 4,570
31 P1 47,530 52,100
Account No. 15
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
31 J1 15,000 15,000
Account No. 17
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
31 P1 5,500 5,500
GENERAL LEDGER
Account: Prepaid Rent
Oct.
Account:
Balance
Field Supplies
Account:
Balance
Oct.
Account:
Account: Office Equipment
Balance
Date
Office Supplies
Date
Field Equipment
Account: Cash
Oct.
Date
CHAPTER 5 Accounting Systems
Prob. 5-4B (Concluded)
Account No. 19
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
31 P1 90,620 90,620
31 CP1 43,700 46,920
Account No. 61
Account No. 71
Post.
Item Ref. Debit Credit Debit Credit
16 CP1 7,000 7,000
4.
A-One Office Supply Co. $ 3,670
*The total of the schedule of accounts payable is equal to the balance of the accounts
payable control account.
5. A subsidiary ledger for the field equipment would allow the company to track
each piece of equipment with respect to cost, location, useful life, and other
Account: Land
October 31
Oct.
Balance
Date
Accounts Payable
Accounts Payable Creditor Balances
Account:
West Texas Exploration Co.
Account: Salary Expense
Rent Expense
Account:
Oct.
Balance
Date
CHAPTER 5 Accounting Systems
Prob. 5-5B
1., 3., and 4.
Account No. 11
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 31,950
31 R35 39,540 71,490
31 CR31 38,950 32,540
Account No. 14
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 3,690
31 CP34 600 4,290
31 P37 2,490 6,780
Account No. 16
Maintenance Supplies
GENERAL LEDGER
Balance
Accounts Receivable
Account:
Account: Cash
Account: Office Equipment
Balance
Date
Mar.
Account: Office Supplies
Mar.
Date
Account:
CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
Account No. 17
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 62,400
2 P37 26,900 89,300
16 CP34 28,500 117,800
Account No. 19
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 2,755
31 P37 36,030 38,785
31 CP34 31,225 7,560
Account No. 31
Account No. 32
Post.
Item Ref. Debit Credit Debit Credit
27 CP34 4,000 4,000 Mar.
Account:
Balance
Date
Balance
Date
Mar.
Account: Accumulated Depreciation—Vehicles
Balance
Account: Accumulated Depreciation—Office Equipment
J. Wu, Drawing
Account: Vehicles
Account: J. Wu, Capital
Mar.
Account: Accounts Payable
Date
CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
Account No. 41
Account No. 42
Post.
Item Ref. Debit Credit Debit Credit
18 CR31 900 900
Account No. 51
Account No. 52
Post.
Item Ref. Debit Credit Debit Credit
20 J1 4,400 4,400
Account No. 53
Account No. 61
Post.
Item Ref. Debit Credit Debit Credit
31 CP34 21,200 21,200
Date
Mar.
Account: Fuel Expense
Account: Maintenance Supplies Expense
Balance
Mar.
Balance
Date
Account: Office Salaries Expense
Account: Fees Earned
Account: Driver Salaries Expense
Account: Rent Revenue
Balance
Date
Mar.
CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
Account No. 62
Account No. 63
Post.
Item Ref. Debit Credit Debit Credit
20 CP34 8,590 8,590
Account: Advertising Expense
Date
Mar.
Account: Rent Expense
Balance
CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
2. and 4.
Page 37
Mar. 2 18 26,900
316 1,570
Page 31
Mar. 6 Chavez Co. 7,950
10 Sajeev Co. 10,000
12 Ellis Co. 7,000
16 Fees Earned 41 26,800
Date
Post.
Ref.
Amount
Maintenance
Supplies
Dr.
Office
Supplies
Dr.
PURCHASES JOURNAL
Date
Post.
Ref.
Accounts
Payable
Cr.
26,900
1,570
McIntyre Sales Co.
Post.
Ref.
Other
Accounts
Dr.
Vehicles
Office Equipment
Account Credited
Office Mate Inc.
Cash
Dr.
CASH RECEIPTS JOURNAL
Account Credited
Other
Accounts
Cr.
Accounts
Receivable
Cr.
7,950
10,000
7,000
26,800
CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
2. and 4.
Page 35
5 91 Ellis Co.
7 92 Trent Co.
Page 34
1 205 Rent Expense 62 2,450
9 206 Fuel Expense 53 820
10 207 Office City 450 450
10 208 Bastille Co. 1,890 1,890
11 209 Porter Co. 415 415
13 210 McIntyre Sales Co. 26,900 26,900
16 211 Vehicles 18 28,500
Account Debited
REVENUE JOURNAL
Date
CASH PAYMENTS JOURNAL
Accounts
Payable
Dr.
7,000
Invoice
No.
Account Debited
Cash
Cr.
Other
Accounts
Dr.
9,840
Accounts Rec. Dr.
Fees Earned Cr.
Post.
Ref.
Date
Mar.
Post.
Ref.
Ck.
No.
820
Mar. 2,450
28,500
CHAPTER 5 Accounting Systems
Prob. 5-5B (Concluded)
3. Page 1
Mar. 20 Maintenance Supplies Expense 52 4,400
Maintenance Supplies 14 4,400
5.
Account Debit Credit
No. Balances Balances
Cash 11 25,885
Accounts Receivable 12 32,540
Maintenance Supplies 14 7,910
Office Supplies 15 6,780
J. Wu, Drawing 32 4,000
Fees Earned 41 95,740
Rent Revenue 42 900
Driver Salaries Expense 51 33,300
Maintenance Supplies Expense 52 4,400
JOURNAL
Date Description
Post.
Ref.
March 31
Debit Credit
AM Express Company
Unadjusted Trial Balance
CHAPTER 5 Accounting Systems
CP 5-1
a. The half-price offer is a normal business practice so long as it is not the result of
price collusion with other competitors or is considered “unfair pricing” according
to federal statutes. Many businesses offer low initial services to entice customers
b. Customer “lock-in” can be unethical if it is the result of fixing prices or acquiring
competitors to achieve monopolistic concentration within an industry. However,
in this case, the customer lock-in is a function and nature of the product. Namely,
the data that are created by the product cannot be easily migrated to another
application. Note that Netbooks is not denying the customer ownership of the data;
rather, Netbooks is making it costly to switch. Such lock-in is not considered an
unethical business practice. Indeed, we see such lock-in characteristics in many
●Sony designs video games so that they only work on its PlayStation®
equipment. Therefore, the games are locked in to the consoles. This allows
Sony and its licensees to limit and control competition for games.
●Many manufacturers control replacement parts for equipment by custom-
designing the parts. Customers then become locked in to the original
manufacturer for replacement parts.
CASES & PROJECTS
CHAPTER 5 Accounting Systems
CP 5-2
Note to Instructors: While the list of functions and services can be quite large, the key
services are identified below. The purpose of these services is fairly advanced for
most students. The activity asks for a listing rather than an explanation because most
students have limited experience by which to provide much explanation. Use this case
to demonstrate the scope and basic nature of these application tools.
Selected JDA Supply Chain Management Solutions
●Demand management
●Factory planning and scheduling
●Merchandise operations
●Supplier relationship management
Selected Salesforce.com Customer Relationship Management Solutions
●Provide the sales force with real-time information about all customer contacts
with the firm to improve the effectiveness of the sales call
●Provide real-time forecast estimation and accumulation tools
●Support promotion plans and integrate the plans with forecasting and
CHAPTER 5 Accounting Systems
CP 5-3
To: Senior Management
From: Student
Re: Cloud-based accounting software
A new approach to automating our accounting requirements is now available. It is
called cloud-based accounting using a cloud computing provider. Rather than
purchasing our accounting software and loading it on our own computers, cloud-
based accounting software is rented and resides on the provider’s computers. Our
data, along with the accounting software, stay with the provider. There are several
advantages to this approach.
1. We don’t need to administer the application or data on our own computers.
This becomes the job of the service provider, thus saving us computer system
personnel costs. All we need is a desktop computer and a browser to use the
software.
3. We don’t need to purchase and load software upgrades. All upgrades are
provided on the provider’s server when they are available. Thus, we are always
using the latest version.
are passed between us and our customers and suppliers.
We also need to consider a number of disadvantages.
1. The cost of the software is recurring. Thus, we are trading the recurring costs of
maintaining our system infrastructure for the recurring cost of the service. A
financial analysis should be conducted to determine whether the service is cost-
effective.
2. The Internet can be slow. During busy times, we may experience slow response
times.
MEMORANDUM
CHAPTER 5 Accounting Systems
CP 5-4
Kyle is missing some of the principal benefits of the computerized system. A
computerized system has three primary advantages. First, the computerized system is
more efficient and accurate at transaction processing. In the computerized system,
once the transaction data have been input, the information is simultaneously recorded
in the electronic journal (file) and posted to the ledger accounts. This saves a significant
amount of time in recording and posting transactions. Second, the computerized
environment is less prone to mathematical, posting, and recording errors. The computer
CP 5-5
a. The accounts receivable and accounts payable accounts consist of transactions
with individual customers and creditors (suppliers). In both cases, the subsidiary
ledger tracks what is collectible from customers or owed to suppliers. Thus, the
subsidiary ledger is required for tracking the collection and payment process to
CHAPTER 5 Accounting Systems
CP 5-6
1. Special journals are used to reduce the processing time and expense to record
transactions. A special journal is usually created when a specific type of
transaction occurs frequently enough so that the use of the traditional two-
column journal becomes cumbersome. The frequency of transactions for Omni
Care would probably justify the following special journals:
Purchases journal
Cash payments journal
CHAPTER 5 Accounting Systems
2.
Page 1
Page 1
Other
Accounts
Dr.
Accounts
Payable
Cr.
Post.
Ref.
Amount
Medical
Supplies
Dr.
Office
Supplies
Dr.
PURCHASES JOURNAL
Date
Post.
Ref.
REVENUE JOURNAL
Account Credited