Chapter 7

Accounting Information Systems

PROBLEMS: SET B
Journalize transactions in
cash receipts journal; post to
control account and
subsidiary ledger.

(LO 2, 3), AP

P7-1B Belt Companys chart of accounts includes the following selected accounts.
101 Cash
401 Sales Revenue
112 Accounts Receivable
414 Sales Discounts
120 Inventory
505 Cost of Goods Sold
301 Owners Capital
On June 1, the accounts receivable ledger of Belt Company showed the following balances:
Suppan & Son $3,000, Guthrie Co. $2,800, Quentin Bros. $2,400, and Hinshaw Co. $2,000.
The June transactions involving the receipt of cash were as follows.
June 1
3
6
7
9
11
15
20

(a) Balancing totals $40,850

(c) Accounts Receivable $0

Journalize transactions in
cash payments journal; post
to the general and subsidiary
ledgers.

(LO 2, 3), AP

Instructions
(a) Journalize the transactions above in a six-column cash receipts journal with columns for Cash Dr., Sales Discounts Dr., Accounts Receivable Cr., Sales Revenue Cr.,
Other Accounts Cr., and Cost of Goods Sold Dr./Inventory Cr. Foot and cross-foot the
journal.
(b) Insert the beginning balances in the Accounts Receivable control and subsidiary
accounts, and post the June transactions to these accounts.
(c) Prove the agreement of the control account and subsidiary account balances.
P7-2B Schellhammer Companys chart of accounts includes the following selected accounts.
101 Cash
120 Inventory
130 Prepaid Insurance

25
30

(c) Accounts Payable $1,300

P-22

157 Equipment
201 Accounts Payable
306 Owners Drawings

On November 1, the accounts payable ledger of Schellhammer Company showed the following balances: S. Gentry $4,000, D. Montero $2,100, R. Trumbo $800, and W. Olivo
$1,800. The November transactions involving the payment of cash were as follows.
Nov. 1
3
5
11
15
16
19

(a) Balancing totals $14,250

The owner, Jim Belt, invested additional cash in the business $15,000.
Received check in full from Hinshaw Co. less 2% cash discount.
Received check in full from Guthrie Co. less 2% cash discount.
Made cash sales of merchandise totaling $8,700. The cost of the merchandise
sold was $5,000.
Received check in full from Suppan & Son less 2% cash discount.
Received cash refund from a supplier for damaged merchandise $450.
Made cash sales of merchandise totaling $6,500. The cost of the merchandise
sold was $4,000.
Received check in full from Quentin Bros. $2,400.

Purchased merchandise, check no. 11, $950.

Purchased store equipment, check no. 12, $1,400.
Paid W. Olivo balance due of $1,800, less 1% discount, check no. 13, $1,782.
Purchased merchandise, check no. 14, $1,700.
Paid R. Trumbo balance due of $800, less 3% discount, check no. 15, $776.
M. Richey, the owner, withdrew $400 cash for own use, check no. 16.
Paid D. Montero in full for invoice no. 1245, $2,100 less 2% discount, check
no. 17, $2,058.
Paid premium due on one-year insurance policy, check no. 18, $2,400.
Paid S. Gentry in full for invoice no. 832, $2,700, check no. 19.

Instructions
(a) Journalize the transactions above in a four-column cash payments journal with columns for Other Accounts Dr., Accounts Payable Dr., Inventory Cr., and Cash Cr. Foot
and cross-foot the journal.
(b) Insert the beginning balances in the Accounts Payable control and subsidiary accounts,
and post the November transactions to these accounts.
(c) Prove the agreement of the control account and the subsidiary account balances.

Problems: Set B
P7-3B The chart of accounts of Henry Company includes the following selected accounts.
112
120
126
157
201

Accounts Receivable
Inventory
Supplies
Equipment
Accounts Payable

401
412
505
610

Sales Revenue
Sales Returns and Allowances
Cost of Goods Sold
Advertising Expense

In May, the following selected transactions were completed. All purchases and sales were
on account except as indicated. The cost of all merchandise sold was 60% of the sales price.
May 2 Purchased merchandise from Berkman Company $5,000.
3 Received freight bill from Fast Freight on Berkman purchase $250.
5 Sales were made to Persinger Company $1,300, Fehr Bros. $2,300, and Mount
Company $1,000.
8 Purchased merchandise from Kayser Company $5,400 and Neufeld Company $3,000.
10 Received credit on merchandise returned to Neufeld Company $350.
15 Purchased supplies from Rabels Supplies $600.
16 Purchased merchandise from Berkman Company $3,100, and Kayser Company $4,200.
17 Returned supplies to Rabels Supplies, receiving credit $70. (Hint: Credit Supplies.)
18 Received freight bills on May 16 purchases from Fast Freight $325.
20 Returned merchandise to Berkman Company receiving credit $200.
23 Made sales to Fehr Bros. $1,600 and to Mount Company $2,500.
25 Received bill for advertising from Mock Advertising $620.
26 Granted allowance to Mount Company for merchandise damaged in shipment $140.
28 Purchased equipment from Rabels Supplies $400.
Instructions
(a) Journalize the transactions above in a purchases journal, a sales journal, and a general
journal. The purchases journal should have the following column headings: Date, Account
Credited (Debited), Ref., Accounts Payable Cr., Inventory Dr., and Other Accounts Dr.
(b) Post to both the general and subsidiary ledger accounts. (Assume that all accounts
have zero beginning balances.)
(c) Prove the agreement of the control and subsidiary accounts.
P7-4B Selected accounts from the chart of accounts of Conley Company are shown below.
101
112
120
126
140
145

Cash
Accounts Receivable
Inventory
Supplies
Land
Building

201
401
414
505
610

Accounts Payable
Sales Revenue
Sales Discounts
Cost of Goods Sold
Advertising Expense

The cost of all merchandise sold was 65% of the sales price. During October, Conley Company
completed the following transactions.
Oct. 2
4
5
7
9
10
12
13
14
16
17
18
21
23
25
25

Purchased merchandise on account from Kent Company $15,000.

Sold merchandise on account to Doumit Co. $5,600. Invoice no. 204, terms 2/10,
n/30.
Purchased supplies for cash $60.
Made cash sales for the week totaling $6,700.
Paid in full the amount owed Kent Company less a 2% discount.
Purchased merchandise on account from Wrigley Corp. $2,600.
Received payment from Doumit Co. for invoice no. 204.
Returned $150 worth of damaged goods purchased on account from Wrigley
Corp. on October 10.
Made cash sales for the week totaling $6,000.
Sold a parcel of land for $20,000 cash, the lands original cost.
Sold merchandise on account to JRs Warehouse $4,900, invoice no. 205, terms
2/10, n/30.
Purchased merchandise for cash $1,600.
Made cash sales for the week totaling $6,000.
Paid in full the amount owed Wrigley Corp. for the goods kept (no discount).
Purchased supplies on account from Francisco Co. $190.
Sold merchandise on account to Fryer Corp. $3,800, invoice no. 206, terms 2/10, n/30.

P-23

Journalize transactions in
multi-column purchases
journal; post to the general
and subsidiary ledgers.

(LO 2, 3), AP

(a) Purchases journal

Accounts Payable, Cr.
$22,895
Sales journalSales
Revenue total $8,700
(c) Accounts Receivable
$8,560
Accounts Payable $22,275
Journalize transactions in
special journals.

(LO 2, 3), AP

P-24

7 Accounting Information Systems

25
26

Received payment from JRs Warehouse for invoice no. 205.

Purchased for cash a small parcel of land and a building on the land to use
as a storage facility. The total cost of $26,000 was allocated $16,000 to the
land and $10,000 to the building.
Purchased merchandise on account from Marte Co. $6,200.
Made cash sales for the week totaling $5,500.
Purchased merchandise on account from Kent Company $10,000.
Paid advertising bill for the month from the Gazette, $290.
Sold merchandise on account to JRs Warehouse $3,400, invoice no. 207, terms 2/10,
n/30.

27
28
30
30
30

Conley Company uses the following journals.

(b) Sales journal $17,700

Purchases journal
$33,800
Cash receipts journal
Cash, Dr. $54,490
Cash payments journal,
Cash, Cr. $45,100
Journalize in purchases and
cash payments journals; post;
prepare a trial balance; prove
control to subsidiary; prepare
adjusting entries; prepare an
adjusted trial balance.

(LO 2, 3), AP

1. Sales journal.
2. Single-column purchases journal.
3. Cash receipts journal with columns for Cash Dr., Sales Discounts Dr., Accounts Receivable
Cr., Sales Revenue Cr., Other Accounts Cr., and Cost of Goods Sold Dr./Inventory Cr.
4. Cash payments journal with columns for Other Accounts Dr., Accounts Payable Dr.,
Inventory Cr., and Cash Cr.
5. General journal.
Instructions
Using the selected accounts provided:
(a) Record the October transactions in the appropriate journals.
(b) Foot and cross-foot all special journals.
(c) Show how postings would be made by placing ledger account numbers and check
marks as needed in the journals. (Actual posting to ledger accounts is not required.)
P7-5B Presented below are the sales and cash receipts journals for Lowery Co. for its first
month of operations.

SALES JOURNAL
Date
Feb. 3
9
12
26

Account Debited

Ref.

S1

Accounts Receivable Dr.

Sales Revenue Cr.

Cost of Goods Sold Dr.

Inventory Cr.

4,000
5,000
6,500
5,500

2,400
3,000
3,900
3,300

21,000

12,600

C. Ogleby
S. Hauke
T. Ghosh
W. Hoy

CASH RECEIPTS JOURNAL

Date
Feb. 1
2
13
18
26

Owners
Account Credited Ref.
Owners Capital
C. Ogleby
Inventory
S. Hauke

Cash
Dr.

CR1

Sales
Accounts
Sales
Other
Discounts Receivable Revenue Accounts Cost of Goods Sold Dr.
Dr.
Cr.
Cr.
Cr.
Inventory Cr.

23,000
4,500
3,960
120
5,000

23,000
40

36,580

40

4,500

2,700

4,000
120
5,000
9,000

4,500

23,120

2,700

In addition, the following transactions have not been journalized for February 2014.
Feb. 2
7
9

Purchased merchandise on account from B. Setterstrom for $5,600, terms 2/10,

n/30.
Purchased merchandise on account from A. Dambro for $23,000, terms 1/10,
n/30.
Paid cash of $980 for purchase of supplies.

Problems: Set B
12
15
16
17
20
21
28

P-25

Paid $5,488 to B. Setterstrom in payment for $5,600 invoice, less 2% discount.

Purchased equipment for $4,500 cash.
Purchased merchandise on account from D. Budke $1,900, terms 2/10, n/30.
Paid $22,770 to A. Dambro in payment of $23,000 invoice, less 1% discount.
S. Lowery withdrew cash of $800 from the business for personal use.
Purchased merchandise on account from Eberle Company for $8,000, terms
1/10, n/30.
Paid $1,900 to D. Budke in payment of $1,900 invoice.

Instructions
(a) Open the following accounts in the general ledger.
101
112
120
126
157
158
201

Cash
Accounts Receivable
Inventory
Supplies
Equipment
Accumulated DepreciationEquipment
Accounts Payable

301
306
401
414
505
631
711

Owners Capital
Owners Drawings
Sales Revenue
Sales Discounts
Cost of Goods Sold
Supplies Expense
Depreciation Expense

(b) Journalize the transactions that have not been journalized in a one-column purchases
journal and the cash payments journal (see Illustration 7-16).
(c) Post to the accounts receivable and accounts payable subsidiary ledgers. Follow the
sequence of transactions as shown in the problem.
(d) Post the individual entries and totals to the general ledger.
(e) Prepare a trial balance at February 28, 2014.
(f) Determine that the subsidiary ledgers agree with the control accounts in the general ledger.
(g) The following adjustments at the end of February are necessary.
(1) A count of supplies indicates that $200 is still on hand.
(2) Depreciation on equipment for February is $150.
Prepare the adjusting entries and then post the adjusting entries to the general ledger.
(h) Prepare an adjusted trial balance at February 28, 2014.

(b) Purchases journal total

$38,500
Cash payments journal
Cash, Cr. $36,438
(e) Totals $56,500
(f) Accounts Receivable
$12,000
Accounts Payable $8,000

(h) Totals $56,650