Comprehensive Problem, cont.
Requirement 7
QUICK NETWORKING SYSTEMS
Income Statement
For the Month Ended August 31
Sales Revenue
$ 13,296
Less: Sales Returns and Allowances
(550)
Sales Discounts
(56)
Net Sales Revenue
$ 12,690
Cost of Goods Sold
Gross Profit
Net Income
QUICK NETWORKING SYSTEMS
Statement of Retained Earnings
For the Month Ended August 31
Comprehensive Problem, cont.
Requirement 7, cont.
QUICK NETWORKING SYSTEMS
Balance Sheet
August 31
Assets
Current Assets:
Cash
$ 2,193
Accounts Receivable
1,650
Total Current Assets
Plant Assets:
Furniture
Less: Accumulated Depreciation
Total Plant Assets
Total Assets
Liabilities
Current Liabilities:
Accounts Payable
$ 19,020
Salaries Payable
1,030
Total Current Liabilities
$ 20,050
Long-term Liabilities:
Notes Payable
Total Liabilities
$ 51,050
Common Stock
Retained Earnings
Total Liabilities and Stockholders’ Equity
Comprehensive Problem, cont.
Requirement 8
General Journal Page 9
Date
Accounts and Explanation
Post.
Ref.
Debit
Credit
Aug. 31
Sales Revenue
401
13,296
Income Summary
400
13,296
Income Summary
400
10,997
Sales Discounts
402
Sales Returns and Allowances
403
Cost of Goods Sold
501
Rent Expense
513
Depreciation Expense—Furniture
514
Insurance Expense
516
Supplies Expense
519
Income Summary
400
Retained Earnings
305
Retained Earnings
305
Dividends
310
Comprehensive Problem, cont.
Requirement 8, cont.
Cash
No. 101
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
4,490
Aug. 31
CR.11
8,309
12,799
31
CP.5
10,606
2,193
Accounts Receivable
No. 102
Balance
Bal.
22,560
Aug. 31
S.4
12,966
35,526
31
CR.11
7,185
28,341
5
J.9
550
27,791
Merchandise Inventory
No. 105
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
41,800
Aug. 31
P.8
9,730
51,530
19
CP.5
850
52,380
5
J.9
174
52,554
30
CR.11
850
51,704
31
S.4
4,101
47,603
31
CR.11
104
47,499
31
CP.5
47,485
Office Supplies
No. 109
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
1,340
J.9
1,310
990
Comprehensive Problem, cont.
Requirement 8, cont.
Prepaid Insurance
No. 117
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
2,200
Adj.
J.9
550
1,650
Furniture
No. 160
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
510
37,780
Accumulated Depreciation—Furniture
No. 161
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
10,550
Adj.
J.9
230
10,780
Accounts Payable
No. 201
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
12,600
10,420
23,020
4,000
19,020
Salaries Payable
No. 204
Date
Debit
Credit
Balance
Debit
Credit
Bal.
1,250
1,250
Adj.
J.9
1,030
1,030
Comprehensive Problem, cont.
Requirement 8, cont.
Notes Payable, Long-term
No. 220
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
31,000
Common Stock
No. 301
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
25,000
Retained Earnings
No. 305
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
29,260
Clo.
J.9
31,559
Clo.
J.9
500
31,059
Dividends
No. 310
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
0
Aug. 31
CP.5
500
500
Clo.
J.9
500
0
Income Summary
No. 400
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
0
Clo.
J.9
13,296
13,296
Clo.
J.9
10,997
Clo.
J.9
0
Sales Revenue
No. 401
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
0
Aug. 31
12,966
12,966
330
13,296
Clo.
J.9
13,296
0
Comprehensive Problem, cont.
Requirement 8, cont.
Sales Discounts
No. 402
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
0
Aug. 31
CR.11
56
56
Clo.
J.9
56
0
Sales Returns and Allowances
No. 403
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
J.9
550
550
Clo.
J.9
550
0
Cost of Goods Sold
No. 501
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
0
Aug. 31
S.4
4,101
4,101
31
CR.11
104
4,205
5
J.9
174
4,031
Clo.
J.9
4,031
0
Salaries Expense
No. 510
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
0
1,240
1,240
J.9
2,270
0
Rent Expense
No. 513
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
0
Aug. 1
2,000
2,000
J.9
2,000
0
Comprehensive Problem, cont.
Requirement 8, cont.
Depreciation Expense—Furniture
No. 514
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
Bal.
0
Adj.
J.9
230
230
Clo.
J.9
230
0
Insurance Expense
No. 516
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
J.9
550
550
J.9
550
0
Supplies Expense
No. 519
Date
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
0
J.9
1,310
1,310
J.9
1,310
0
Requirement 9
QUICK NETWORKING SYSTEMS
Post-Closing Trial Balance
August 31
Account Name
Debit
Credit
Cash
2,193
Accounts Receivable
27,791
Merchandise Inventory
47,485
Office Supplies
Prepaid Insurance
1,650
Furniture
37,780
Accumulated Depreciation—Furniture
Accounts Payable
Salaries Payable
Note Payable—long-term
Common Stock
Retained Earnings
Critical Thinking
Decision Case C–1
A fire destroyed certain accounting records of Green Books. The controller, Marilyn Green, asks your
help in reconstructing the records. All of the sales are on account, with credit terms of 2/10, n/30. All
cash receipts on account reached the store within the 10-day discount period, except as noted. The only
accounting record preserved from the fire is the accounts receivable subsidiary ledger, which follows.
Requirements
1. Determine the beginning and ending balances of Accounts Receivable.
2. Determine the sales on account in the month of April.
3. Determine total cash receipts on account from customers during April.
SOLUTION
Requirement 1
Accounts Receivable Subsidiary Ledger
April 1
Customer
Balance
Garcia Sales
$ 450
Leewright, Inc.
Sally Jones
Jacques LeHavre
Total
$ 4,350
Accounts Receivable Subsidiary Ledger
April 30
Customer
Balance
Garcia Sales
$ 4,700
Leewright, Inc.
Sally Jones
Jacques LeHavre
Total
$ 10,600
Requirement 2
Sales on Account
Date
Customer
Amount
Apr. 8
Jacques LeHavre
$ 2,400
11
Sally Jones
400
15
Leewright, Inc.
16
Jacques LeHavre
900
24
Sally Jones
25
Garcia Sales
29
Garcia Sales
Total
Decision Case C–1, cont.
Requirement 3
Cash Receipts from Customers
Invoice
Sales
Cash
Date
Customer
Amount
Discount
Receipts
Apr. 3
Garcia Sales
$ 450
$ 9
$ 441
5
Sally Jones
1,100
22
1,078
Jacques LeHavre
2,400
48
2,352
Sally Jones
400
392
Jacques LeHavre
700
14
686
Leewright, Inc.
1,500
1,500
Total
$ 6,550
$ 101
$ 6,449
Fraud Case C–1
Didrikson Rubin, the auditor of Red Barn Farm Equipment, was verifying cash payments to vendors for
the past several months. She noticed that several checks had been paid to a specific vendor, but she
couldn’t find a record of the transactions in the computerized system. Didrikson suspects that an
employee is issuing checks to a fictitious “vendor” and then deleting the transactions from the
computerized system. How might Didrikson investigate the suspected fraud?
SOLUTION
Team Project C–1
Ace Moving is considering investing in an entry-level computerized accounting information system.
Ace needs a system that can record customer invoices and cash receipts. In addition, it would like to
track all of its bills and cash payments. As a team, investigate the two common entry-level accounting
software products: QuickBooks and Sage 50 Accounting. Prepare a PowerPoint presentation that
summarizes the similarities and differences between the two software systems.
SOLUTION
Communication Activity C–1
In 150 words or fewer, explain what an accounting information system is and describe an effective
system.
SOLUTION
An accounting information system (AIS) collects, records, stores, and processes accounting data to