COMPREHENSIVE PROBLEM 2: ACCOUNTING CYCLE WITH SUBSIDIARY
LEDGERS, PART 1
During the second half of December 20-1, TJ’s Specialty Shop
engaged in the following transactions:
Dec. 16 Received payment from Lucy Greene on account, $1,960.
16 Sold merchandise on account to
Kim Fields, $160, plus sales tax of $8. Sale No. 640.
17 Returned merchandise to Evans
Essentials for credit, $150.
18 Issued Check No. 813 to Evans
Essentials in payment of December 1 balance of $1,250, less the credit received
on December 17.
19 Sold merchandise on account to
Lucy Greene, $620, plus tax of $31. Sale No. 641.
22 Received payment from John
Dempsey on account, $1,560.
23 Issued Check No. 814 for the
purchase of supplies, $120. (Debit Supplies)
24 Purchased merchandise on account
from West Wholesalers, $1,200. Invoice No. 465, dated December 24, terms n/30.
26 Purchased merchandise on account
from Nathen Co., $800. Invoice No. 817, dated December 26, terms 2/10, n/30.
27 Issued Check No. 815 in payment of
utilities expense for the month of December, $630.
27 Sold merchandise on account to
John Dempsey, $2,020, plus tax of $101. Sale No. 642.
29 Received payment from Martha
Boyle on account, $2,473.
29 Issued Check No. 816 in payment
of wages (Wages Expense) for the two-week period ending December 28, $1,100.
30 Issued Check No. 817 to Meyers
Trophy Shop for a cash purchase of merchandise, $200.
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As of December 16, TJ’s account balances were as follows:
Account
Account No. Debit
Credit
Cash 101
$
9,705
Accounts Receivable 122
10,256
Merchandise Inventory 131
21,800
Supplies 141
1,035
Prepaid Insurance 145
1,380
Land 161 8,700
Building 171
52,000
Accum. Depr.––Building 171.1
$
9,200
Store Equipment 181
28,750
Accum. Depr.––Store Equipment 181.1 9,300
Accounts Payable 202
3,600
Wages Payable 219
Sales Tax Payable 231
1,378
Mortgage Payable
251 12,525
Tom Jones, Capital 311
90,000
Tom Jones, Drawing 312
8,500
Income Summary 313
Sales 401
124,900
Sales Returns and Allowances 401.1 $
1,430
Purchases 501
64,400
Purchases Returns and Allowances 501.1 $
460
Purchases Discounts 501.2 698
Freight-In 502
175
Wages Expense 511
26,100
Advertising Expense 512
4,700
Supplies Expense
524
Telephone Expense 525 2,180
Utilities Expense 533 6,900
Insurance Expense 535
Depr. Expense—Building 540
Depr. Expense––Store Equipment 541
Miscellaneous Expense 549
2,700
Interest Expense 551
1,350
$252,061 $252,061
TJ’s also had the following subsidiary ledger balances as of
December 16:
Accounts Receivable Ledger
Customer Balance
Martha Boyle
12 Jude Lane
Hartford, CT 06117
$3,796
Anne Clark
52 Juniper Road
Hartford, CT 06118 2,100
John Dempsey
700 Hobbes Dr.
Avon, CT 06108 1,560
Kim Fields
5200 Hamilton Ave.
Hartford, CT 06117 ––
Lucy Greene
236 Bally Lane
Simsbury, CT 06123 2,800
Accounts Payable Ledger
Vendor
Balance
Evans Essentials
34 Harry Ave.
East Hartford, CT
05234 $3,600
Nathen Co.
1009 Drake Rd.
Farmington, CT 06082 ––
Owen Enterprises
43 Lucky Lane
Bristol, CT 06007
––
West Wholesalers
888 Anders Street
Newington, CT 06789 ––
At the end of the year, the following adjustments (a)–(g)
need to be made:
(a, b) Merchandise inventory as of December 31, $19,700
(c) Unused supplies on hand, $525.
(d) Unexpired
insurance on December 31, $1,000
(e) Depreciation expense on the building for the year, $800.
(f) Depreciation expense on the store equipment for the
year, $450.
(g) Wages earned but not paid as of December 31, $330.
REQUIRED—GENERAL JOURNAL
For those not using working papers:
1.
If you are not using the working papers, open a
general ledger, an accounts receivable ledger, and an accounts payable ledger
as of December 16. Enter the December 16 balance of each of the accounts, with
a check mark in the Posting Reference column.
For working paper users and nonusers:
2.
Enter transactions for the second half of
December in the general journal. Post immediately to the accounts receivable
and accounts payable ledgers.
3.
Post from the journal to the general ledger
REQUIRED—SPECIAL JOURNALS
For those not using working
papers:
1.
If you are not using the working papers:
a. Open a general ledger, an accounts
receivable ledger, and an accounts payable ledger as of December 16. Enter the
following December 16 balances in the general ledger accounts and place a check
mark in the Posting Reference column.
Cash $
11,500
Accounts Receivable 7,823
Accounts Payable 6,850
Sales Tax Payable 933
Sales 116,000
Purchases 60,500
Purchases Discounts 575
b. Enter the December 16 balances in the
rest of the general ledger accounts, as indicated in the trial balance, and
place a check mark in the Posting Reference column.
c. Enter the December 16 balances in the
accounts receivable and accounts payable ledgers, as indicated in the
subsidiary ledger account listings, and place a check mark in the Posting
Reference column.
d. Insert Dec. 1–15, Cumulative Amount, and
the following amounts in the special journal columns.
Sales Journal: Accounts Receivable Dr.,
4,263; Sales Cr., 4,060; Sales Tax Payable Cr., 203.
Cash Receipts Journal: Accounts Receivable
Cr., 1,830; Sales Cr., 4,840; Sales Tax Pay. Cr., 242; Cash Dr., 6,912.
Purchases Journal: Purchases Dr./Accts.
Pay. Cr., 3,900.
Cash Payments Journal: General Dr., 1,680;
Accounts Payable Dr., 7,150; Purchases Discounts Cr., 123; Cash Cr., 8,707.
For working paper users and nonusers:
2.
Enter transactions for the second half of
December in the proper journals. If you are using the working papers, the
cumulative amount of entries in the special journals for December 1–15 has been
entered in these journals for you. Post immediately to the accounts receivable
and accounts pay
3.
Post from the journals to the general ledger.
Post the journals in the following order: general, sales, purchases, cash
receipts, and cash payments.
