CHAPTER 7
Accounting Information Systems
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
1. Explain the basic concepts of
an accounting information
system.
1, 2, 3, 4
1, 2, 3
1
2. Describe the nature and
5, 6, 9, 11,
4, 5
2
1, 2, 3, 4, 5,
3. Record transactions in special
7, 8, 10, 11,
6, 7, 8, 9, 10
3
1, 3, 6, 7, 8,
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Journalize transactions in cash receipts journal;
post to control account and subsidiary ledger.
Simple
30–40
2A
Journalize transactions in cash payments journal;
post to control account and subsidiary ledgers.
Simple
30–40
5A
Journalize in sales and cash receipts journals; post;
prepare a trial balance; prove control to subsidiary;
prepare adjusting entries; prepare an adjusted
trial balance.
Moderate
60–70
WEYGANDT ACCOUNTING PRINCIPLES 12E
CHAPTER 7
ACCOUNTING INFORMATION SYSTEMS
Number
LO
BT
Difficulty
Time (min.)
BE1
1
C
Simple
1–2
BE2
1
C
Simple
2–4
BE3
1
C
Simple
2–3
BE4
2
C
Simple
6–8
BE5
2
C
Simple
2–3
BE6
3
C
Simple
2–4
BE7
3
C
Simple
2–4
BE8
3
C
Simple
2–4
BE9
3
C
Simple
3–5
BE10
3
C
Simple
3–5
DI1
1
C
Simple
3–5
DI2
2
AP
Simple
6–8
DI3
3
K
Simple
2–4
EX1
2, 3
AP
Simple
6–8
EX2
2
C
Simple
6–8
EX3
2, 3
AP
Simple
10–12
EX4
2
AP
Simple
6–8
EX5
2
AP
Simple
6–8
EX6
3
AP
Simple
6–8
EX7
3
AP
Simple
8–10
EX8
3
C
Simple
EX9
3
AP
Simple
8–10
EX10
3
C
Simple
6–8
EX11
2, 3
C
6–8
EX12
2, 3
AP
Simple
8–10
EX13
AP
Simple
6–8
EX14
3
AP
8–10
ACCOUNTING INFORMATION SYSTEMS (Continued)
Number
LO
BT
Difficulty
Time (min.)
P1A
2, 3
AP
Simple
30–40
P2A
2, 3
AP
Simple
30–40
P3A
2, 3
AP
Moderate
40–50
P4A
2, 3
AP
Moderate
50–60
P5A
2, 3
AP
60–70
P6A
2, 3
AP
60–70
AP
Moderate
80–90
Simple
10–15
2, 3
Moderate
15–20
Simple
10–15
Simple
10–15
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End–of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
1. Explain the basic concepts
of an accounting information
system.
Q7-1
Q7-2
Q7-3
Q7-4
BE7-1
BE7-2
BE7-3
DI7-1
E7–11
P7–5A
3. Record transactions in special
journals.
DI7-3
Q7-7
Q7-8
Q7–10
Q7–12
Q7–13
BE7-6
BE7-7
BE7-8
BE7-9
BE7-10
E7-1
E7-3
E7-6
E7-7
E7-9
P7–5A
P7–6A
Q7–11
Broadening Your Perspective
Real-World Focus
Comprehensive
Problem
(Mini Practice Set)
Decision Making
Across the
Organization
ANSWERS TO QUESTIONS
1. (a) An accounting information system collects and processes transaction data and communicates
2. There are three principles for developing an accounting information system:
Cost effectiveness. The system must be cost-effective; that is, the benefits obtained from the
information must outweigh the cost of providing it.
5. The advantages of using subsidiary ledgers are that they:
• Show in a single account transactions affecting a single customer or single creditor, thus
providing up-to-date information on specific account balances.
• Free the general ledger of excessive details relating to accounts receivable and accounts
Questions Chapter 7 (Continued)
7. Sales journal. Records entries for all sales of merchandise on account.
Cash receipts journal. Records entries for all cash received by the business.
Purchases journal. Records entries for all purchases of merchandise on account.
Cash payments journal. Records entries for all cash paid.
Some advantages of each journal are given below:
• Sales journal. (1) Since the sales journal employs only one line to record a Sales
transaction, its use reduces recording time; (2) the column totals are only posted to the
8. The entry for the sales return should be recorded in the general journal. Since Kensington
Company has a single-column sales journal, only credit sales can be recorded there. A purchase
10. The purpose of special journals is to facilitate the recording process of the business entity. Therefore,
the columns included in any special journal should correspond to the unique needs of the
11. (a) No, the customers’ ledger will not agree with the Accounts Receivable control account. The
Questions Chapter 7 (Continued)
13. (a) General journal. (d) Sales journal.
15. Typically included would be credit purchases of equipment, office supplies, and store supplies.
16. One such example is a purchase return. Here the Accounts Payable control and subsidiary account
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 7-1
BRIEF EXERCISE 7-2
BRIEF EXERCISE 7-3
BRIEF EXERCISE 7-4
Accounts Receivable Subsidiary Ledger
General Ledger
Austin Co.
Accounts Receivable
Date
Ref.
Debit
Credit
Balance
Date
Ref.
Debit
Credit
Balance
Jan. 7
10,000
10,000
Jan. 31
27,000
27,000
Date
Debit
Credit
Balance
Jan. 15
Date
Debit
Credit
Balance
Jan. 23
BRIEF EXERCISE 7-5
(a) General ledger (c) General ledger
BRIEF EXERCISE 7-6
(a) Cash Receipts Journal (d) Sales Journal
BRIEF EXERCISE 7-7
(a) No (c) Yes
BRIEF EXERCISE 7-8
(a) General Journal (if a one-column Purchases Journal)
BRIEF EXERCISE 7-9
BRIEF EXERCISE 7-10
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 7-1
DO IT! 7-2
Subsidiary balances:
DO IT! 7-3
1. Sold merchandise on account: Sales journal
SOLUTIONS TO EXERCISES
EXERCISE 7-1
(a) $370,400. Beginning balance of $340,000 plus $161,400 debit from sales
EXERCISE 7-2
To: Sara Fogelman, Chief Financial Officer
From: Student
Subject: Jill Longley account
The explanation of the three entries in the subsidiary ledger for the Jill
Longley account is as follows:
Sept. 2 This was a credit sale of merchandise to Longley. The entry
was recorded on page 31 of the Sales Journal.
EXERCISE 7-3
(a) & (b) General Ledger
Accounts Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
Accounts Receivable Subsidiary Ledger
Fowler
Date
Explanation
Ref.
Debit
Credit
Balance
Sogard
Date
Explanation
Ref.
Debit
Credit
Balance
Sept. 1
Balance
4,820
Giambi
Date
Explanation
Ref.
Debit
Credit
Balance
Sept. 1
0
Andino
Date
Explanation
Ref.
Debit
Credit
Balance
EXERCISE 7-3 (Continued)
Hurley
Date
Explanation
Ref.
Debit
Credit
Balance
(c) MONTGOMERY COMPANY
Schedule of Accounts Receivable
As of September 30, 2017
Fowler ……………………………………………………………………………. $2,350
EXERCISE 7-4
(a) $3,500 [$10,000 – ($4,000 + $2,500)].
EXERCISE 7-5
EXERCISE 7-6
(a) & (b)
GOMES COMPANY
Sales Journal S1
Date
Account
Debited
Invoice
No.
Ref.
Accounts Receivable Dr.
Sales Revenue Cr.
Cost of Goods Sold Dr.
Inventory Cr.
2017
GOMES COMPANY
Purchases Journal P1
Date
Account Credited
Terms
Ref.
Inventory Dr.
Accounts Payable Cr.
EXERCISE 7-7
(a) & (b)
R. SANTIAGO CO.
Cash Receipts Journal CR1
Date
Account
Credited
Ref.
Cash
Dr.
Sales
Discounts
Dr.
Accounts
Receivable
Cr.
Sales
Revenue
Cr.
Other
Accounts
Cr.
Cost of Goods Sold
Dr.
Inventory
Cr.
55,300
9,000
40,000
2017
May 1
Owner’s Cap.
40,000
40,000
EXERCISE 7-7 (Continued)
R. SANTIAGO CO.
Cash Payments Journal CP1
Date
Ck.
No.
Account Debited
Ref.
Other
Accounts
Dr.
Accounts
Payable
Dr.
Inventory
Cr.
Cash
Cr.
2017
EXERCISE 7-8
(a) Journal
(b) Columns in the journal
Cash Payments
1.
Cash Payments
Cash (Cr.), Other Accounts (Dr.).
EXERCISE 7-9
(a) Mar. 2 Equipment …………………………………………….. 7,400
Accounts Payable—Bole
(b) To: President Hasselback
From: Chief Accountant
Subject: Posting of Control and Subsidiary Accounts
The posting of these accounts varies with the journals used in recording
the transactions.
EXERCISE 7-10
EXERCISE 7-11
EXERCISE 7-12
(a)
Purchases Journal P1
Date
Account Credited
Ref.
Inventory Dr.
Accounts Payable Cr.
July 3
Marsh Co.
2,400
EXERCISE 7-12 (Continued)
(b)
General Journal
Date
Accounts and Explanations
Ref.
Debit
Credit
July 1
Inventory …………………………………….
120/
400
Accounts Payable—Lange
Equipment ………………………………….
157/
3,900
EXERCISE 7-13
EXERCISE 7-14
SOLUTIONS TO PROBLEMS
PROBLEM 7-1A
(a)
Cash Receipts Journal CR1
Date
Account
Credited
Ref.
Cash
Dr.
Sales
Discounts
Dr.
Accounts
Receivable
Cr.
Sales
Revenue
Cr.
Other
Accounts
Cr.
Cost of Goods Sold
Dr.
Inventory
Cr.
(112)
7,245
Apr. 1
Owner’s
(b) General Ledger
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Accounts Receivable Subsidiary Ledger
Morrow
Date
Explanation
Ref.
Debit
Credit
Balance