Concept explainers
1.
Prepare single column revenue journal and cash receipt journal, and post the accounts in the accounts payable subsidiary ledger.
1.
Explanation of Solution
General Ledger: General ledger refers to the ledger that records all the transactions of the business related to the company’s assets, liabilities, owners’ equities, revenues, and expenses. Each subsidiary ledger is represented in the general ledger by summarizing the account.
Accounts payable control account and subsidiary ledger: Accounts payable account and subsidiary ledger is the ledger which is used to post the creditors transaction in one particular ledger account. It helps the business to locate the error in the creditor ledger balance. After all transactions of creditor accounts are posted, the balances in the accounts payable subsidiary ledger should be totaled, and compare with the balance in the general ledger of accounts payable. If both the balance does not agree, the error has been located and corrected.
Purchase journal: Purchase journal refers to the journal that is used to record all purchases on account. In the purchase journal, all purchase transactions are recorded only when the business purchased the goods on account. For example, the business purchased cleaning supplies on account.
Cash payments journal: Cash payments journal refers to the journal that is used to record all transaction which involves the cash payments. For example, the business paid cash to employees (salary paid to employees).
Purchase journal
Purchase journal of Company WTE in the month of October 2016 is as follows:
Figure (1)
Cash payment journal
Cash payment journal of Company WTE in the month of October 2016 is as follows:
Cash payment journal
Date | Check No. | Account debited | Post Ref. | Other accounts Dr. | Accounts payable Dr. | Cash Dr. | |
Oct. | 16 | 1 | Rent expense | 71 | 7,000 | 7,000 | |
18 | 2 | Field supplies | 14 | 4,570 | 4,570 | ||
Office supplies | 15 | 650 | 650 | ||||
24 | PS Incorporation | ✓ | 32,600 | 32,600 | |||
26 | MS Company | ✓ | 9,780 | 9,780 | |||
28 | Land | 240,000 | 240,000 | ||||
30 | A Office supply Company | ✓ | 1,320 | 1,320 | |||
31 | Salary expense | 61 | 32,000 | 32,000 | |||
31 | 284,220 | 43,700 | 327,920 | ||||
✓ | (21) | (11) |
Table (1)
Accounts payable subsidiary ledger
Name: A Office supply Company | ||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) |
Balance ($) | |
Oct. | 20 | P1 | 1,320 | 1,320 | ||
28 | P1 | 3,670 | 4,990 | |||
30 | CP1 | 1,320 | 3,670 |
Table (2)
Name: MS Company | ||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) |
Balance ($) | |
Oct. | 17 | P1 | 9,780 | 9,780 | ||
26 | CP1 | 9,780 | - | |||
30 | P1 | 12,450 | 12,450 |
Table (3)
Name: PS Incorporation | ||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) |
Balance ($) | |
Oct. | 16 | P1 | 32,600 | 32,600 | ||
24 | CP1 | 32,600 | - | |||
30 | P1 | 30,800 | 30,800 |
Table (4)
2. and 3.
2. and 3.
Explanation of Solution
Prepare the general ledger for given accounts as follows:
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 31 | CP1 | 327,920 | 327,920 |
Table (5)
Account: Field supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 18 | CP1 | 4,570 | 4,570 | |||
31 | P1 | 47,530 | 52,100 |
Table (6)
Account: Office supplies Account no. 15 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 18 | CP1 | 650 | 650 | |||
31 | P1 | 4,990 | 5,460 |
Table (7)
Account: Prepaid rent Account no. 16 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 31 | J1 | 15,000 | 15,000 |
Table (8)
Account: Field equipment Account no. 17 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 16 | P1 | 32,600 | 32,600 | |||
31 | J1 | 15,000 | 17,600 |
Table (9)
Account: Office equipment Account no. 18 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
31 | P1 | 5,500 | 5,500 |
Table (10)
Account: Land Account no. 19 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 23 | CP1 | 240,000 | 240,000 |
Table (11)
Account: Accounts payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 31 | P1 | 90,620 | 90,620 | |||
31 | CP1 | 43,700 | 46,920 |
Table (12)
Account: Salary expense Account no. 61 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 31 | CP1 | 32,000 | 32,000 |
Table (13)
Account: Rent expense Account no. 71 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
Oct. | 16 | CP1 | 7,000 | 7,000 |
Table (14)
Journal Page 01 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
Oct. | 31 | Prepaid rent | 16 | 15,000 | |
Field equipment | 17 | 15,000 | |||
(To record leasing of field equipment) |
Table (15)
4.
Prepare accounts payable creditor balances.
4.
Explanation of Solution
Accounts payable creditor balance
Accounts payable creditor balance is as follows:
Company WTE | |
Accounts payable creditor balances | |
October 31, 2016 | |
Amount ($) | |
A Office supply Company | 3,670 |
MS Company | 12,450 |
PS Incorporation | 30,800 |
Total accounts receivable | 46,920 |
Table (16)
Accounts payable controlling account
Ending balance of accounts payable controlling account is as follows:
Company WTE | |
Accounts payable (Controlling account) | |
October 31, 2016 | |
Amount ($) | |
Opening balance | 0 |
Add: | |
Total credits (from purchase journal) | 90,620 |
90,620 | |
Less: | |
Total debits (from cash payment journal) | (43,700) |
Total accounts payable | 46,920 |
Table (17)
In this case, accounts payable subsidiary ledger is used to identify, and locate the error by way of cross-checking the creditor balance and accounts payable controlling account. From the above calculation, we can understand that both balances of accounts payable is agree, hence there is no error in the recording and posing of transactions.
5.
Discuss the reason for using subsidiary ledger for the field equipment.
5.
Explanation of Solution
A subsidiary ledger for the field equipment helps the company to track the cost of each piece of equipment, location, useful life, and other necessary data. This information is used for safeguarding the equipment and determining depreciation of equipment.
Want to see more full solutions like this?
Chapter 5 Solutions
Financial Accounting
- AquaFresh Water Testing Service was established on April 16, 2016. AquaFresh uses field equipment and field supplies (chemicals and other supplies) to analyze water for unsafe contaminants in streams, lakes, and ponds. Transactions related to purchases and cash payments during the remainder of April are as follows: Instructions 1.Journalize the transactions for April. Use a purchases journal and a cash payments journal, similar to those illustrated in this chapter, and a two-column general journal. Use debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the following partial chart of accounts: At the points indicated in the narrative of transactions, post to the following accounts in the accounts payable subsidiary ledger: Best Office Supply Co. Hydro Supply Co. Pure Equipment Co. 2.Post the individual entries (Other Accounts columns of the purchases journal and the cash payments journal and both columns of the general journal) to the appropriate general ledger accounts. 3.Total each of the columns of the purchases journal and the cash payments journal, and post the appropriate totals to the general ledger. (Because the problem does not include transactions related to cash receipts, the cash account in the ledger will have a credit balance.) 4.Prepare a schedule of the accounts payable creditor balances. 5.Why might AquaFresh consider using a subsidiary ledger for the field equipment?arrow_forwardThe transactions completed by Revere Courier Company during December 2016, the first month of the fiscal year, were as follows: Instructions 1. Enter the following account balances in the general ledger as of December 1: 2. Journalize the transactions for December 2016, using the following journals similar to those illustrated in this chapter: cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), single-column revenue journal (p. 35), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made. 3. Post the appropriate individual entries to the general ledger. 4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances. 5. Prepare a trial balance.arrow_forwardTransactions related to purchases and cash payments completed by Wisk Away Cleaning Services Inc. during the month of May 20Y5 are as follows: Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those illustrated in the text. Place a check mark () in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Wisk Away Cleaning Services Inc. uses the following accounts:arrow_forward
- Transactions related to revenue and cash receipts completed by Sycamore Inc. during the month of December 2016 are as follows: Prepare a single-column revenue journal and a cash receipts journal to record these transactions. Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. Place a check mark () in the Post. Ref. column to indicate when the accounts receivable subsidiary ledger should be posted.arrow_forwardTransactions related to revenue and cash receipts completed by Albany Architects Co. during the period November 230, 2016, are as follows: Instructions 1. Insert the following balances in the general ledger as of November 1: 2. Insert the following balances in the accounts receivable subsidiary ledger as of November 1: 3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees. Insert a check mark () in the Post. Ref. column when recording cash fees. 4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for November. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customers account before recording a cash receipt. 5. Total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting. 6. Determine that the sum of the customer balances agrees with the accounts receivable controlling account in the general ledger. 7. Why would an automated system omit postings to a controlling account as performed in step 5 for Accounts Receivable?arrow_forwardThe following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer. If you are using the form-based approach with QuickBooks or general ledger, select Cash Sales as the customer for all cash sales transactions. Required 1. Record the transactions for January using a general journal, page 1. Assume the periodic inventory method is used. If using QuickBooks, record transactions using either the journal entry method or the forms-based approach as directed by your instructor. The chart of accounts is as follows: 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily the general journal entries to the general ledger. Write the owners name in the Capital and Drawing accounts. If using QuickBooks or general ledger, ignore Steps 2, 3, and 4. 5. Prepare a trial balance. 6. Prepare a schedule of accounts receivable (A/R Aging Detail report in QuickBooks) and a schedule of accounts payable (A/P Summary Detail report in QuickBooks). Do the totals equal the balances of the related controlling accounts?arrow_forward
- The following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer. If you are using the form-based approach with QuickBooks or general ledger, select Cash Sales as the customer for all cash sales transactions. Required 1. Record the transactions for January using a sales journal, page 73; a purchases journal, page 56; a cash receipts journal, page 38; a cash payments journal, page 45; and a general journal, page 100. Assume the periodic inventory method is used. 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Add the columns of the special journals and prove the equality of the debit and credit totals on scratch paper. 6. Post the appropriate totals of the special journals to the general ledger. 7. Prepare a trial balance. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?arrow_forwardThe transactions completed by AM Express Company during March 2016, the first month of the fiscal year, were as follows: Instructions 1. Enter the following account balances in the general ledger as of March 1: 2. Journalize the transactions for March 2016, using the following journals similar to those illustrated in this chapter: single-column revenue journal (p. 35), cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made. 3. Post the appropriate individual entries to the general ledger. 4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances. 5. Prepare a trial balance.arrow_forwardTransactions related to revenue and cash receipts completed by Sterling Engineering Services during the period June 230, 2016, are as follows: Instructions 1. Insert the following balances in the general ledger as of June 1: 2. Insert the following balances in the accounts receivable subsidiary ledger as of June 1: 3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees. Insert a check mark () in the Post. Ref. column when recording cash fees. 4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for June. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customers account before recording a cash receipt. 5. Total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting. 6. Determine that the sum of the customer accounts agrees with the accounts receivable controlling account in the general ledger. 7. Why would an automated system omit postings to a control account as performed in step 5 for Accounts Receivable?arrow_forward
- Kelley Company has completed the following October sales and purchases journals: a. Total and post the journals to T accounts for the general ledger and the accounts receivable and accounts payable ledgers. b. Complete a schedule of accounts receivable for October 31, 20--. c. Complete a schedule of accounts payable for October 31, 20--. d. Compare the balances of the schedules with their respective general ledger accounts. If they are not the same, find and correct the error(s).arrow_forwardThe following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer. If you are using the form-based approach with QuickBooks or general ledger, select Cash Sales as the customer for all cash sales transactions. Required 1. Record the transactions for January using a general journal, page 1. Assume the periodic inventory method is used. If using QuickBooks, record transactions using either the journal entry method or the forms-based approach, as directed by your instructor. The chart of accounts is as follows: 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily the general journal entries to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Prepare a trial balance. 6. Prepare a schedule of accounts receivable (A/R Aging Detail report in QuickBooks) and a schedule of accounts payable (A/P Aging Detail report in QuickBooks). Do the totals equal the balances of the related controlling accounts? If using QuickBooks or general ledger, ignore Steps 2, 3, and 4.arrow_forwardThe following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer. If you are using the form-based approach with QuickBooks or general ledger, select Cash Sales as the customer for all cash sales transactions. Required 1. Record the transactions for January using a sales journal, page 91; a purchases journal, page 74; a cash receipts journal, page 56; a cash payments journal, page 63; and a general journal, page 119. Assume the periodic inventory method is used. 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Add the columns of the special journals and prove the equality of the debit and credit totals on scratch paper. 6. Post the appropriate totals of the special journals to the general ledger. 7. Prepare a trial balance. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?arrow_forward
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781305084087Author:Cathy J. ScottPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengagePrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub