CP 7-2 COMPREHENSIVE PROBLEM: CHAPTERS 3 TO 7
Note: If the working papers that accompany this text are not used in
solving this problem, account numbers may differ from those presented in
this solution.
(a)
Sales Journal S1
Date
Account Debited
Invoice No.
Ref.
Accounts Receivable Dr.
Sales Revenue Cr.
Jan. 3
3
11
B. Berg
J. Lutz
R. Kotsay
510
511
512
3,600
1,800
2,900
Purchases Journal P1
Date
Account Credited
Terms
Ref.
Purchases Dr.
Accounts Payable Cr.
Jan. 5
5
16
S. Colt
D. Kahn
D. Baroni
5,000
2,700
12,000
CP 7-2 (Continued)
Cash Receipts Journal CR1
Date
Account
Credited
Ref.
Cash
Dr.
Accounts
Receivable
Cr.
Sales
Revenue
Cr.
Other
Accounts
Cr.
Jan. 7
7
S. Andrus
B. Boxberger
4,000
2,000
4,000
2,000
Cash Payments Journal CP1
Date
Account Debited
Ref.
Other
Accounts
Dr.
Accounts
Payable
Dr.
Supplies
Dr.
Cash
Cr.
9,880
(X)
Jan. 8
9
Freight In
S. Otero
516
180
9,000
180
9,000
CP 7-2 (Continued)
(a) & (e)
General Journal G1
Date
Account Titles and Explanations
Ref.
Debit
Credit
Jan. 9
Sales Returns and
Allowances ……………………………..
Accounts Receivable—
412
300
18
Accounts Payable—S. Otero ………..
Purchase Returns and
201/
200
21
Accounts Payable—
R. Rasmus ………………………………
201/
15,000
Adjusting Entries
31
Supplies Expense ……………………….
Supplies …………………………..…
728
126
900
900
31
Insurance Expense
(1/10 X 2,000) …………………………..
Prepaid Insurance ……………….
722/
130/
200
200
Accumulated Depreciation—
Equipment ………………………
158
125
31
Interest Expense …………………………
Interest Payable ………………….
718
230
30
30
CP 7-2 (Continued)
General Journal G1
Date
Account Titles and Explanations
Ref.
Debit
Credit
Jan. 31
Inventory (Jan. 31) ………………………
120
15,000
31
Income Summary ………………………..
Inventory (Jan. 1) ………………..
Sales Returns and
Allowances ……………………..
Purchases …………………………..
350
120
412
510
82,235
20,000
300
51,600
31
Income Summary ………………………..
Owner’s Capital …………………..
350
301
12,185
12,185
31
Owner’s Drawings ……………….
301
306
(b) & (e) General Ledger
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
33,750
CP 7-2 (Continued)
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
31
Balance
S1
23,300
13,000
36,300
Notes Receivable No. 115
Date
Explanation
Ref.
Debit
Credit
Balance
Inventory No. 120
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
20,000
Supplies No. 126
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
1,000
Prepaid Insurance No. 130
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
2,000
Equipment No. 157
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
6,450
CP 7-2 (Continued)
Accumulated Depreciation—Equipment No. 158
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
1,500
Notes Payable No. 200
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 21
G1
15,000
15,000
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
31
Balance
P1
51,600
35,000
86,600
Interest Payable No. 230
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 31
Adj. entry
G1
30
30
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
78,700
Owner’s Drawings No. 306
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 15
CP1
800
800
CP 7-2 (Continued)
Income Summary No. 350
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 31
G1
94,420
94,420
Sales Revenue No. 401
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 31
S1
23,300
23,300
Sales Returns and Allowances No. 412
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 9
G1
300
300
Purchases No. 510
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 31
31
Clos. entry
P1
G1
51,600
51,600
51,600
0
Purchase Returns and Allowances No. 512
Date
Explanation
Ref.
Debit
Credit
Balance
31
Clos. entry
G1
0
Jan. 18
G1
200
200
Freight-In No. 516
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 8
CP1
180
180
CP 7-2 (Continued)
Salaries and Wages Expense No. 627
Date
Explanation
Ref.
Debit
Credit
Balance
Depreciation Expense No. 711
Date
Explanation
Ref.
Debit
Credit
Balance
31
G1
125
0
Jan. 31
Adj. entry
G1
125
125
Interest Expense No. 718
Date
Explanation
Ref.
Debit
Credit
Balance
Insurance Expense No. 722
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 31
31
Adj. entry
Clos. entry
G1
G1
200
200
200
0
Supplies Expense No. 728
Date
Explanation
Ref.
Debit
Credit
Balance
Rent Expense No. 729
Date
Explanation
Ref.
Debit
Credit
Balance
CP 7-2 (Continued)
Accounts Receivable Subsidiary Ledger
R. Kotsay
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
11
Balance
S1
2,900
1,500
4,400
J. Lutz
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 3
S1
1,800
1,800
B. Boxberger
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
7,500
S. Andrus
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
4,000
B. Berg
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 3
13
S1
CR1
3,600
3,600
3,600
0
CP 7-2 (Continued)
Accounts Payable Subsidiary Ledger
D. Kahn
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 5
P1
2,700
2,700
S. Otero
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
9
16
Balance
CP1
P1
9,000
13,900
9,000
0
13,900
R. Rasmus
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
21
Balance
G1
15,000
15,000
0
D. Baroni
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
9
Balance
CP1
11,000
11,000
0
S. Colt
Date
Explanation
Ref.
Debit
Credit
Balance
Accounts Receivable
Notes Receivable
Inventory
Supplies
Supplies Expense
Insurance Expense
Depreciation Expense
Interest Expense
24,000
39,000
20,000
1,600
(1) 900
(2) 200
(3) 125
(4) 30
(1) 900
24,000
39,000
20,000
700
900
200
125
30
20,000
900
200
125
30
15,000
24,000
39,000
15,000
700
CP 7-2 (Continued)
(d) MCBRIDE CO.
Income Statement
For the Month Ended January 31, 2017
Sales
Sales revenue …………………………... $79,220
Less: Sales returns and
Net purchases ………………………….. 51,400
Freight–in …………………………………. 180 51,580
Operating expenses
Salaries and wages
expense …………………………... 7,900
Rent expense ……………………… 1,000
CP 7-2 (Continued)
MCBRIDE CO.
Owner’s Equity Statement
For the Month Ended January 31, 2017
Owner’s Capital, January 1, 2017 ………………… $78,700
Add: Net income ………………………………………. 12,185
MCBRIDE CO.
Balance Sheet
January 31, 2017
Assets
Current assets
Cash …………………………………………………… $45,490
Notes receivable ………………………………….. 39,000
Property and equipment
Equipment ………………………………………….. 6,450
Liabilities and Owner’s Equity
Current liabilities
Notes payable ……………………………………… $15,000
Accounts payable ……………………………….. 25,700
CP 7-2 (Continued)
(f) MCBRIDE CO.
Post-Closing Trial Balance
January 31, 2017
Debit
Credit
Cash ………………………………………………………..
Accounts Receivable ………………………………..
Equipment ……………………………………………….
Accumulated Depreciation—Equipment …….
Notes Payable ………………………………………….
Accounts Payable …………………………………….
$ 45,490
24,000
6,450
$ 1,625
15,000
25,700
Accounts Receivable balance ………………………… $24,000
Subsidiary account balances
R. Kotsay……………………………………………….. $ 5,200
J. Lutz ……………………………………………………. 6,100
Subsidiary account balances
D. Kahn …………………………………………………. $ 3,900
BYP 7-1 REAL-WORLD FOCUS
Answers will vary.
BYP 7-2 DECISION MAKING ACROSS THE ORGANIZATION
(a) The special journals for Ermler & Trump should be: (1) sales journal,
(2) purchases journal, (3) cash receipts journal, and (4) cash payments
journal.
(1) Sales Journal columns:
Date.
(2) Purchases Journal columns:
Date.
Account Credited.
Terms.
(3) Cash Receipts Journal columns:
Date.
Account Credited.
Reference.
Cash, Dr.
Accounts Receivable, Cr.
BYP 7-2 (Continued)
(4) Cash Payments Journal columns:
Date.
Check Number.
Account Debited.
Reference.
(b) Ermler & Trump should have:
(1) An accounts receivable control account with individual customers’
accounts in a customers’ subsidiary ledger.
BYP 7-3 COMMUNICATION ACTIVITY
Mr. Ben Newell
2 Main Street
Central City, Michigan 48172
Dear Mr. Newell:
Thank you for hiring two additional bookkeepers a month ago to help me with
the accounting. Unfortunately, the inefficiencies in recording transactions
have continued at an even higher rate. The reason is that there are often
times when more than one person needs to use the journal. In addition, the
daily posting of transactions continues to be very time consuming.
I would like to suggest some changes in the accounting system. Because of
the increased volume of business, I believe it is time for us to use special
journals for journalizing transactions. Special journals would be in addition to
the journal that we are using now. There would be four special journals:
BYP 7-4 ETHICS CASE
(a) The stakeholders in this case are:
• Indy Grover, manager of Wiemers’s centralized computer account–
ing operation.
• The employees of Wiemers’s three divisions at Freeport, Rockport,
and Bayport.
(b) Indy’s instructions to assign the Bayport code to all uncoded and
incorrectly coded sales documents overstates the sales of Bayport
and understates the sales of Freeport and Rockport, thereby affecting
BYP 7-5 ALL ABOUT YOU
The process begins when journal entries are recorded for transactions in a
journal. Once entries are made in the journal, they are posted to the ledger
by using the Post function. After entries have been posted, you can click