Concept explainers
INSTRUCTIONS
- 1. Open the general ledger accounts and accounts receivable ledger accounts indicated below.
- 2.
Post the entries from the general journal in Problem 7.2B to the appropriate accounts in the general ledger and in the accounts receivable ledger. - 3. Prepare a schedule of accounts receivable. Compare the balance of the Accounts Receivable control account with the total of the schedule.
GENERAL LEDGER ACCOUNTS
ACCOUNTS RECEIVABLE LEDGER ACCOUNTS
Analyze: Damaged or defective goods decreased sales by what dollar amount? By what percentage?
Problem 7.2B
Appliances for Less began operations November 1, 2019. The firm sells its merchandise for cash and on open account. Sales are subject to a 6 percent sales tax. During November, Appliances for Less engaged in the following transactions:
INSTRUCTIONS
Record the transactions in a general journal. Use 1 as the journal page number.
Analyze: What is the total amount due from Bob Huffington for the November 29 sale?
1 and 2
Prepare the general ledger for Company AL.
Explanation of Solution
General ledger: General ledger is a record of all accounts of assets, liabilities, and stockholders’ equity, necessary to prepare financial statements. In the ledger all the entries are recorded in the account order, for which the transactions actually take place.
Post the journal entries in the General Ledger:
GENERAL LEDGER | ||||||
ACCOUNT: Cash | Account No.: 101 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
November 15 | J2 | $ 10,653.00 | $ 10,653.00 | |||
November 18 | J2 | $ 320.00 | $ 10,973.00 | |||
November 20 | J3 | $ 773.80 | $ 11,746.80 | |||
November 28 | J3 | $ 434.60 | $ 12,181.40 | |||
November 30 | J3 | $ 10,971.00 | $ 23,152.40 | |||
ACCOUNT: Accounts receivable | Account No.: 111 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
November 1 | J1 | $ 583.00 | $ 583.00 | |||
November 2 | J1 | $ 874.50 | $ 1,457.50 | |||
November 7 | J2 | $ 434.60 | $ 1,892.10 | |||
November 12 | J2 | $ 100.70 | $ 1,791.40 | |||
November 16 | J2 | $ 583.00 | $ 2,374.40 | |||
November 17 | J2 | $ 1,457.50 | $ 3,831.90 | |||
November 18 | J2 | $ 320.00 | $ 3,511.90 | |||
November 20 | J3 | $ 773.80 | $ 2,738.10 | |||
November 24 | J3 | $ 127.20 | $ 2,610.90 | |||
November 28 | J3 | $ 434.60 | $ 2,176.30 | |||
November 29 | J3 | $ 715.50 | $ 2,891.80 |
Table (1)
GENERAL LEDGER | ||||||
ACCOUNT: Sales Tax Payable | Account No.: 221 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
November 1 | J1 | $ 33.00 | $ 33.00 | |||
November 2 | J1 | $ 49.50 | $ 82.50 | |||
November 7 | J2 | $ 24.60 | $ 107.10 | |||
November 12 | J2 | $ 5.70 | $ 101.40 | |||
November 15 | J2 | $ 603.00 | $ 704.40 | |||
November 16 | J2 | $ 33.00 | $ 737.40 | |||
November 17 | J2 | $ 82.50 | $ 819.90 | |||
November 24 | J3 | $ 7.20 | $ 812.70 | |||
November 29 | J3 | $ 40.50 | $ 853.20 | |||
November 30 | J3 | $ 621.00 | $ 1,474.20 | |||
ACCOUNT: Sales | Account No.: 401 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
November 1 | J1 | $ 550.00 | $ 550.00 | |||
November 2 | J1 | $ 825.00 | $ 1,375.00 | |||
November 7 | J2 | $ 410.00 | $ 1,785.00 | |||
November 15 | J2 | $ 10,020.00 | $ 11,805.00 | |||
November 16 | J2 | $ 550.00 | $ 12,355.00 | |||
November 17 | J2 | $ 1,375.00 | $ 13,730.00 | |||
November 29 | J3 | $ 675.00 | $ 14,405.00 | |||
November 30 | J3 | $ 10,350.00 | $ 24,755.00 | |||
ACCOUNT: Sales Returns and Allowances | Account No.: 421 | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance | |
Debit | Credit | |||||
2019 | ||||||
November 12 | J2 | $ 95.00 | $ 95.00 | |||
November 24 | J3 | $ 120.00 | $ 215.00 |
Table (2)
Reference Notes:
Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Debit: A debit is an accounting term that refers to the left side of an account. The term debit is be denoted by (Dr). The recording amount on the left side of the account is known as debiting.
Credit: A credit is an accounting term that refers to the right side of an account. The term credit is denoted as (Cr). The recording amount on the right side of the account is known as crediting.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all the increase in the assets, the expenses and the dividends, all the decrease in liabilities, revenues and the stockholders’ equities.
- Credit, all the increase in the liabilities, the revenues, and the stockholders’ equities, and all decreases in the assets, and the expenses.
Pass the journal entries for the given transactions:
General Journal | Page - 1 | |||
Date | Description | Post Ref | Debit | Credit |
2019 | ||||
November 1 | Accounts receivable (2) | 111 | $ 583 | |
Sales | 401 | $ 550 | ||
Sales Tax Payable (1) | 221 | $ 33 | ||
(To record the sale on account to AC; Sales slip 101) | ||||
November 2 | Accounts receivable (4) | 111 | $ 874.50 | |
Sales | 401 | $ 825.00 | ||
Sales Tax Payable (3) | 221 | $ 49.50 | ||
(To record the sale on account to JP; Sales slip 102) |
Table (3)
General Journal | Page - 2 | |||
Date | Description | Post Ref | Debit | Credit |
2019 | ||||
November 7 | Accounts receivable (6) | 111 | $ 434.60 | |
Sales | 401 | $ 410.00 | ||
Sales Tax Payable (5) | 221 | $ 24.60 | ||
(To record the sale on account to BH; Sales slip 103) | ||||
November 12 | Sales Returns and Allowances | 421 | $ 95.00 | |
Sales Tax Payable (7) | 221 | $ 5.70 | ||
Accounts receivable (8) | 111 | $ 100.70 | ||
(To record the sales returns from JP for the sales made on November 2 using sales slip 102, the credit memorandum is 101) | ||||
November 15 | Cash (10) | 101 | $ 10,653 | |
Sales | 401 | $ 10,050 | ||
Sales Tax Payable (9) | 221 | $ 603 | ||
(To record the cash sales) | ||||
November 16 | Accounts receivable (12) | 111 | $ 583 | |
Sales | 401 | $ 550 | ||
Sales Tax Payable (11) | 221 | $ 33 | ||
(To record the sale on account to GS; Sales slip 104) | ||||
November 17 | Accounts receivable (14) | 111 | $ 1,457.50 | |
Sales | 401 | $ 1,375.00 | ||
Sales Tax Payable (13) | 221 | $ 82.50 | ||
(To record the sale on account to DN; Sales slip 105) | ||||
November 18 | Cash | 101 | $ 320 | |
Accounts receivable | 111 | $ 320 | ||
(To record the receipt of partial payment from AC) |
Table (4)
General Journal | Page - 3 | |||
Date | Description | Post Ref | Debit | Credit |
2019 | ||||
November 20 | Cash (15) | 101 | $ 773.80 | |
Accounts receivable | 111 | $ 773.80 | ||
(To record the receipt of payment from JP) | ||||
November 24 | Sales Returns and Allowances | 421 | $ 120.00 | |
Sales Tax Payable (16) | 221 | $ 7.20 | ||
Accounts receivable (17) | 111 | $ 127.20 | ||
(To record the sales returns from DN for the sales made on November 17 using sales slip 105, the credit memorandum is 102) | ||||
November 28 | Cash | 101 | $ 434.60 | |
Accounts receivable | 111 | $ 434.60 | ||
(To record the receipt of payment from BH) | ||||
November 29 | Accounts receivable (19) | 111 | $ 715.50 | |
Sales | 401 | $ 675.00 | ||
Sales Tax Payable (18) | 221 | $ 40.50 | ||
(To record the sale on account to BH; Sales slip 103) | ||||
November 30 | Cash (21) | 101 | $ 10,971 | |
Sales | 401 | $ 10,350 | ||
Sales Tax Payable (20) | 221 | $ 621 | ||
(To record the cash sales) |
Table (5)
Working Notes (1):
Calculate the value of Sales Tax Payable on November 1.
Working Notes (2):
Calculate the value of Accounts receivable on November 1.
Working Notes (3):
Calculate the value of Sales Tax Payable on November 2.
Working Notes (4):
Calculate the value of Accounts receivable on November 4.
Working Notes (5):
Calculate the value of Sales Tax Payable on November 12.
Working Notes (6):
Calculate the value of Accounts receivable on November 12.
Working Notes (7):
Calculate the value of Sales Tax Payable on November 12.
Working Notes (8):
Calculate the value of Accounts receivable on November 12.
Working Notes (9):
Calculate the value of Sales Tax Payable on November 15.
Working Notes (10):
Calculate the value of Cash on November 15.
Working Notes (11):
Calculate the value of Sales Tax Payable on November 16.
Working Notes (12):
Calculate the value of Accounts receivable on November 16.
Working Notes (13):
Calculate the value of Sales Tax Payable on November 17.
Working Notes (14):
Calculate the value of Accounts receivable on November 17.
Working Notes (15):
Calculate the value of Cash on November 20.
Working Notes (16):
Calculate the value of Sales Tax Payable on November 24.
Working Notes (17):
Calculate the value of Accounts receivable on November 24.
Working Notes (18):
Calculate the value of Sales Tax Payable on November 29.
Working Notes (19):
Calculate the value of Accounts receivable on November 29.
Working Notes (20):
Calculate the value of Sales Tax Payable on November 30.
Working Notes (21):
Calculate the value of Cash on November 30.
3
Using the Schedule of Accounts Receivable compare the Accounts receivable balances with the total and identify the amount and percentage of sales decreased due to the defective goods.
Explanation of Solution
Schedule of accounts receivable: This is the schedule which reports all the debtors of a company during the given period and the balances to be recovered from them.
Prepare the Accounts receivable Subsidiary Ledger:
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER | |||||
NAME: AC | |||||
ADDRESS: | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance |
2019 | |||||
November 1 | Sales Slip 101 | J1 | $ 583.00 | $ 583.00 | |
November 18 | J2 | $ 320.00 | $ 263.00 | ||
NAME: BH | |||||
ADDRESS: | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance |
2019 | |||||
November 7 | Sales Slip 103 | J2 | $ 434.60 | $ 434.60 | |
November 28 | J3 | $ 434.60 | $ 0.00 | ||
November 29 | Sales Slip 106 | J3 | $ 715.50 | $ 1,150.10 | |
NAME: DN | |||||
ADDRESS: | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance |
2019 | |||||
November 17 | Sales Slip 105 | J2 | $ 1,457.50 | $ 1,457.50 | |
November 24 | Credit Memorandum 102 | J3 | $ 127.20 | $ 1,330.30 | |
NAME: JP | |||||
ADDRESS: | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance |
2019 | |||||
November 1 | Sales Slip 102 | J1 | $ 874.50 | $ 874.50 | |
November 12 | Credit Memorandum 101 | J2 | $ 100.70 | $ 773.80 | |
November 20 | J3 | $ 773.80 | $ 0.00 |
Table (6)
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER | |||||
NAME: GS | |||||
ADDRESS: | |||||
Date | Description | Post. Ref. | Debit | Credit | Balance |
2019 | |||||
November 16 | Sales Slip 104 | J2 | $ 583.00 | $ 583.00 |
Table (7)
Prepare the Schedule of Accounts Receivable:
Company AL | |
Schedule of Accounts Receivable | |
November 30, 2019 | |
Particulars | Amount ($) |
AC | $ 263.00 |
BH | $ 715.50 |
DN | $ 1,330.30 |
JP | $ 0.00 |
GS | $ 583.00 |
Total accounts receivable | $ 2,891.80 |
Table (8)
The amount of sales decreased due to the defective goods is $215 and the percentage of sales decreased due to the defective goods is 0.9%.
Working notes (22):
Calculate the percentage of sales:
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Chapter 7 Solutions
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