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PC Depot is a new retail store selling computers and calculators that was opened in September by Barbara Thompson, who hired an accountant named Chris Jarrard to set up the bookkeeping system. Jarrard recorded the store's initial transactions in a sample journal and Thompson recorded the store's September transactions to be reviewed later, including cash and credit sales, purchases, expenses, and the purchase of new signage using both cash and credit. The document provides the list of transactions and questions to analyze the events, journalize the entries, and post them to ledger accounts.

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Sowmya Vijaykumar Sirsali
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44 views

Case - 1 Unit

PC Depot is a new retail store selling computers and calculators that was opened in September by Barbara Thompson, who hired an accountant named Chris Jarrard to set up the bookkeeping system. Jarrard recorded the store's initial transactions in a sample journal and Thompson recorded the store's September transactions to be reviewed later, including cash and credit sales, purchases, expenses, and the purchase of new signage using both cash and credit. The document provides the list of transactions and questions to analyze the events, journalize the entries, and post them to ledger accounts.

Uploaded by

Sowmya Vijaykumar Sirsali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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FUNDAMENTALS OF FINANCIAL ACCOUNTING

CASE 1

PC Depot

PC Depot was a retail store for personal computers and hand-held calculators, selling
several national brands in each product line. The store was opened in early September by
Barbara Thompson, a young woman previously employed in direct computer sales for a
national firm specializing in business computers.

Thompson knew the importance of adequate records. One of her first decisions,
therefore, was to hire Chris Jarrard, a local accountant, to set up her bookkeeping system.

Jarrard wrote up the store's pre opening financial transactions in journal form to serve
as an example (Exhibit 1). Thompson agreed to write up the remainder of the store's
September financial transactions for Jarrard's later review. At the end of September,
Thompson had the following items to record:

Entry Amount
Account
Number (cr)
9 Cash sales for September  $38,000
10 Credit sales for September 14,850
11 Cash received from credit customers  3,614
12 Bills paid to merchandise suppliers 96,195
13 New merchandise received on credit from supplier 49,940
14 Ms. Thompson ascertained the cost of merchandise sold was 38,140
15 Wages paid to assistant 688
16 Wages earned but unpaid at the end of September 440
17 Rent paid for October  1,485
18 Insurance bill paid for one year (September 1-August 31)  2,310
19 Bills received, but unpaid, from electric company  226
Purchased sign, paying $660 cash and agreeing to pay the $1,100
20 1,760
balance by December 31

EXHIBIT - 1 General Journal


Entry Amount
Account
Number Dr Cr
Cash 1,65,000  
1 Bank Loan Payable (15%)   1,00,000
Proprietor’s Capital   65,000
Rent Expenses (September) 1,485  
2
Cash   1,485
Merchandise Inventory 1,37,500  
3
Accounts Payable   1,37,500
Furniture and Fixtures (10 year life) 15,500  
4
Cash   15,500
Advertising Expense 1,320  
5
Cash   1,320
Wages Expenses 935  
6
Cash   935
Office Supplies Expense 1,100  
7
Cash   1,100
Utilities Expenses 275  
8
Cash   275
.

QUESTIONS:

1) Explain the events that probably gave rise to journal entries 1 to 8 through exhibit – 1.
2) Analyze the facts listed as 9 through 20. Resolving them into their debit and credit
elements. Prepare journal entries and post to the ledger accounts. (Do not prepare
closing entries)
3) Analyse the entries passed in the above case of the transactions of the month
September.

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