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SANSOMITE
Date
July
1
3
12
17
18
20
21
22
Journal Entries
Account titles and explanations
Merchandise invenTory
Accounts payable
(To record good purchased on account from trunk manufacturers,
FOB destination, terms 2/10,n/30)
Accounts receivable
Sales
(To record goods sold on account To satchel world , terms 1/10
,n/30)
Cost of goods sold (40 * 30)
Merchandise invenTory
(To record cost of goods sold for 40 suitcases, $30 each)
Accounts payable
Merchandise invenTory (1500 * 2%)
Cash (1500 -300)
(To record paid the crediTor less discount)
Sales discount (200*1%)
Cash (2000 -20)
Accounts receivable
(To record cash received from a/r at discount)
Accounts receivable (30*50)
Sales
(To record goods sold on account To the going concern, terms
1/10,n/30)
Cost of goods sold (30*30)
Merchandise invenTory
(To record cost of goods sold for 30 suitcases, $30 each
assumed)
Merchandise invenTory (1700+100)
Accounts payable
Cash
(To record good purchased on account from holiday
manufacturers, FOB shipping point, terms 1/10,n/30)
Accounts payable (10*30)
Merchandise invenTory
(To record goods returned To Kingman manufacturers)
Sales discount (1500*1%)
Cash (1500-15)
Accounts receivable
(To record cash received from A/R at discount)
2000
505 1200
120
1200
201 1500
120
101
30
1470
414 20
101 1980
112
2000
112 1500
401
1500
505 900
120
900
120 1800
201
101
1700
100
201 300
120
300
414 15
101 1485
112
1500
112
2250
30
31
401
2250
505 1350
120
1350
201 1400
101
1400
412 200
112
200
120 120
505
120
P5-2A
(a)
Olaf distributing company
Journal entries
Date
Account titles and explanations
April 2 Merchandise invenTory
Accounts payable
(To record good purchased on account, terms 1/10,n/30)
4
Accounts receivable
Sales
(To record goods sold on account, terms 1/10,n/30)
Cost of goods sold
Merchandise invenTory
(To record cost of goods sold for 40 suitcases, $30 each)
5
Freight-out
Cash
(To record paid for Freight-out)
6
Accounts payable
Merchandise invenTory
(To record cash received from A/R at discount)
11
Accounts payable (6900-500)
Merchandise InvenTory (6400*1%)
Cash (6400-64)
(To record paid the crediTor less discount)
13
Sales Discount (5500*1%)
Cash (5500-55)
Accounts receivable
(To record cash received from A/R at discount)
14
Merchandise invenTory
Cash
16
(To record good purchased for cash )
5500
505 4100
120
4100
644 240
101
240
201 500
120
500
201 6400
120
101
64
6336
414 55
101 5445
112
5500
120 3800
101
3800
101 500
18
20
23
26
27
29
30
Cash
Merchandise invenTory
(To record cash received for goods returned)
Merchandise invenTory
Accounts payable
(To record good purchased on account terms 2/10, n/30)
Cost of goods sold
Cash
(To record paid for Freight in)
Cash
Sales
(To record goods sold for cash)
Cost of goods sold
Merchandise invenTory
(To record cost of goods sold)
Merchandise invenTory
Cash
(To record good purchased for cash )
Accounts payable
Merchandise InvenTory (4500*2%)
Cash (4500-90)
(To record paid the crediTor less discount)
Sales returns and allowance
Cash
(To record paid Cash cusTomers less scrap value)
Accounts receivable
Sales
(To record goods sold on account, terms n/30)
Cost of goods sold
Merchandise invenTory
(To record cost of goods sold)
120
500
120 4500
201
4500
120 100
101
100
101 6400
401
6400
505 5120
120
5120
120 2300
101
2300
201 4500
120
101
90
4410
412 60
101
60
112 3700
401
3700
505 2800
120
2800
(b)
OLAF DISTRIBUTING COMPANY
(General Ledger)
Cash
No:101
Date
Explanation Ref Debit Credit Balance
April 1 Balance
9000
9000
,,
5
J1
240
8760
,, 11
J1
6336
2424
,, 13
J1
5445
7869
,, 14
J1
3800
4069
,, 16
J1
500
4569
,, 20
J1
100
4469
,, 23
J1
6400
10869
,, 26
J1
2300
8569
,, 27
J1
4410
4159
,, 29
J1
60
4099
invenTory
Accounts receivable
Date
Explanation Ref Debit Credit
April 4
J1
5500
,, 13
J1
5500
Date
Debit
,, 30 Explanation Ref
J1
3700 Credit
April 2
J1
6900
,, 4
J1
4100
,, 6
J1
500
,, 11
J1
64
,, 14
J1
3800
,, 16
J1
500
,, 18
J1
4500
,, 20
J1
100
,, 23
J1
5120
,, 26
J1
2300
,, 27
J1
90
,, 30
J1
2800
No:112
Balance
Merchndise
5500
No:120
0
Balance
3700
6900
2800
2300
2236
6036
5536
10036
10136
5016
7316
7226
4426
Accounts payable
Date
Explanation Ref Debit Credit
April 2
J1
6900
,, 6
J1
500
,, 11
J1
6400
,, 18
4500
,, 27
4500
No:201
Balance
6900
6400
0
4500
0
M, OLAF Capital
Date
Explanation Ref Debit Credit
April 1 Balance
9000
No:301
Balance
9000
Sales
No:401
Date
Explanation Ref Debit Credit Balance
April 4
J1
5500
5500
,, 23
J1
6400
11900
,, 30
J1
3700
15600
Sales returns and allowance
No:412
Date
Explanation Ref Debit Credit Balance
April29
J1
60
60
Sales discount
No:414
Date
Explanation Ref Debit Credit Balance
April13
J1
55
55
Cost of goods sold
No:505
Date
Explanation Ref Debit Credit Balance
April 4
J1
4100
4100
,, 23
J1
5120
9220
,, 30
J1
2800
12020
Freight-out
No:644
Date
Explanation Ref Debit Credit Balance
April 3
J1
240
240
(c)
Amount
$15485
(12020)
$3465
P5-3A
(a)
MAINE DEPARTMENT STORE
INCOME STATEMENT (Multi Step)
For year ended December 31,2008
Particulars
Amount Amount
Sales revenues:
Sales
Less: sales return and allowance
6280000
(8000)
620000
(412700)
207300
Amount
13300
76000
14500
4320
7200
115320
10400
2880
32000
4800
4800
54880
(170200)
37100
4000
41100
(11000)
34100
Amount
Amount
23800
50300
2400
75000
151500
137500
67100
204600
356100
79300
8000
1000
20000
4800
4300
117400
60000
60000
177400
178700
356100
(b)
No
Date
Ref
Debit
Credit
1
2
3
4
5
6
10400
10400
13300
13300
7200
7200
8000
8000
4800
4800
4300
4300
(c)
No
1
3
4
Date
Dec 31
,,
,,
,,
31
31
31
P5-4A
(a)
HAFNERS TENNIS SHOP
Ref
Debit
62800
4000
Credit
632000
601900
412700
10400
13300
7200
11000
32000
4800
76000
14500
8000
12000
30100
30100
28000
28000
Date
April 4
6
8
10
11
13
14
15
17
18
20
21
Journal entries
Account titles and explanations
Merchandise InvenTory
Accounts payable
(To record goods purchased on account from jay mac
company ,terms 2/10,n/30)
Merchandise InvenTory
Cash
(To record goods sold on account ,terms 1/10,n/30)
Accounts receivable
Sales
(To record goods sold on account ,terms n/30)
Cost of goods sold
Merchandise InvenTory
(To record cost of goods sold)
Accounts payable
Merchandise InvenTory
(To record goods returned To jay mac co)
Merchandise InvenTory
Cash
(To record goods purchased for cash )
Accounts payable (840-40)
Merchandise InvenTory (800*2%)
Cash(800-16)
(To record paid the crediTor less discount)
Merchandise InvenTory
Accounts payable
(To record goods purchased on account from serenas
sportswear terms 2/10,n/30)
Cash
Merchandise InvenTory
(To record goods returned To supplier and received cash)
Merchandise InvenTory
Cash
(To record paid cash for goods freight-in)
Accounts receivable
Sales
(To record goods sold on account terms n/30)
Cash
Accounts receivable
(To record cash received from members from on account)
Accounts payable
Merchandise InvenTory(900*3%)
Cash (900-27
(To record paid crediTor To the less discount)
40
112
401
1150
505
120
790
201
120
40
120
101
420
201
120
101
800
120
201
900
101
120
50
120
101
30
112
401
810
101
112
500
201
120
101
900
40
1150
790
40
420
16
784
900
50
30
810
500
27
873
27
29
412
112
30
101
112
660
30
660
(b)
InvenTory
No:101
Balance
2500
2460
2160
1572
1622
1592
2092
1413
1563
Accounts receivable
Date Explanation Ref Debit Credit
April 8
J1
1150
,, 18
J1
810
Ref Debit 500
Credit
,,Date
20 Explanation J1
1700
,,April271 Balance
J1
30
840
,, 304
J1
660
,,
6
J1
40
,,
8
J1
790
,, 10
J1
40
,, 11
J1
420
,, 13
J1
16
,, 14
J1
900
,, 15
J1
50
,, 17
J1
30
,, 18
J1
530
,, 21
J1
27
No:112
Balance
Merchndise
1150
No:120
1960
Balance
1460
1700
1430
2540
770
2580
1790
1750
2170
2154
3054
3054
3034
2504
2477
Accounts payable
No:201
Date Explanation Ref Debit Credit Balance
April 4
J1
840
840
,, 10
J1
40
800
,, 13
J1
800
0
,, 14
900
900
,,
21
900
900
HAFNER Capital
No:301
Date Explanation Ref Debit Credit Balance
April 1 Balance
4200
4200
Sales
No:401
Date Explanation Ref Debit Credit Balance
April 8
J1
1150
1150
,, 18
J1
810
1960
Sales returns and allowance
No:412
Date Explanation Ref Debit Credit Balance
April27
J1
30
30
Cost of goods sold
No:505
Date Explanation Ref Debit Credit Balance
April 8
J1
790
790
,, 18
J1
530
1320
(c)
6160
P5-5A
Gordman Department STore
Income Statement
For the Year Ended December 31, 2008
Revenues from sales:
Sales
7,18,000
Less: Sales returns and allowances
(8,000)
Credit
$0
4200
1960
6160
Net sales
7,10,000
Cost of Goods Sold:
Beginning merchandise invenTory
40,500
Purchase
4,47,000
Less: Purchase discount
(12,000)
Purchase returns and allowances
(6,400)
Net purchase
4,28,600
Add: Freight-in
5,600
Cost of goods purchased
4,34,200
Cost of goods available for sale
4,74,700
Ending merchandise invenTory
(75,000)
Cost of goods sold
(3,99,700)
Gross profit
3,10,300
P5-6A
(a) Cost of goods sold (2006) = 13,000 + 1,46,000 - 11,300 = 1,47,700
Cost of goods sold (2007) = 11,300 + 1,45,000 - 14,700 = 1,41,600
Cost of goods sold (2008) = 14,700 + 1,29,000 - 12,200 = 1,31,500
(b) Gross Profit (2006) = 2,25,700 - 1,47,700 = 78,000
Gross Profit (2007) = 2,27,600 - 1,41,600 = 86,000
Gross Profit (2008) = 2,19,500 - 1,31,500 = 88,000
(c) Accounts Payable (Ending) [2006] = 20,000 + 1,46,000 -1,35,000 = 31,000
Accounts Payable (Ending) [2007] = 31,000 + 1,45,000 -1,61,000 = 15,000
Accounts Payable (Ending) [2008] = 15,000 + 1,29,000 -1,27,000 = 17,000
(d) According To the given data, the profitability is not declined as per the sales declined
in 2006. The gross profit rates for 2004 To 2006 are 78,000/2, 25,700 = 34.56%,
86,000/2,27600 = 37.79% and 88,000/2,19,5600 40.09% indicate the profitability
fluctuated over the 3-year fiscal period.
P5-7A
(a)
Date
2008
Apr:
4
60
60
8
10
11
13
14
15
17
18
20
21
27
30
Accounts Receivable
Sales
(To record goods sold on account, terms n/30)
Accounts Payable
Purchase Returns and Allowances
(To record purchase returns and allowances)
Purchases
Cash
(To record goods purchased for cash)
Accounts Payable
Purchase Discounts
Cash
(To record cash payment with discount)
Purchases
Accounts Payable
(To record goods purchased on account, terms 2/10,
n/60)
Cash
Purchase Returns and Allowances
(To record purchase returns and allowances)
Freight-in
Cash
(To record freight-in expense)
Accounts Receivable
Sales
(To record goods sold on account, terms n/30)
Cash
Accounts Receivable
(To record cash received from debTor)
Accounts Payable
Purchase Discounts
Cash
(To record cash payment To crediTors with discount)
Sales Returns and Allowances
Accounts Receivable
(To record sales returns and allowances)
Cash
Accounts Receivable
(To record cash received from debTors)
(b)
Village Tennis Shop
T Accounts
Cash
900
900
40
40
300
300
700
21
679
600
600
50
50
30
30
1,000
1,000
500
500
600
12
588
30
30
500
500
2,500
50
500
500
April 7
April 11
April 13
April 17
April 21
Ending balance c/d
3,550
60
300
686
30
588
1,886
3,550
Accounts Receivable
900
April 20
1,000
April 27
April 30
Ending balance c/d
1,900
500
30
500
870
1,900
Merchandise InvenTory
1,700
Ending balance c/d
1,700
1,700
1,700
4,200
4,200
April 8
April 18
April 10
April 13
April 21
Accounts Payable
40
April 4
700
April 14
600
1,340
740
600
1,340
Sales
Ending balance c/d
1,900
April 8
April 18
3,550
April 27
April 4
April 11
April 14
Purchases
740
Ending balance c/d
300
600
1,640
Purchases Returns and Allowances
900
1,000
3,550
30
30
1,640
1,640
90
April 10
April 15
40
50
90
Ending balance c/d
April 6
April 17
90
Purchases Discounts
26
April 13
April 21
26
14
12
26
Freight-in
60
Ending balance c/d
30
90
90
90
(c)
Village Tennis Shop
Trial Balance
April 30, 2008
Account Titles
Ref. Debit
Cash
1,886
Accounts Receivable
870
Merchandise InvenTory
1,700
Accounts Payable
Angie Wilbert, Capital
Sales
Sales Returns and Allowances
30
Purchases
1,640
Purchases Returns and Allowances
Purchase Discounts
Freight-in
90
6,216
Credit
0
4,200
1,900
90
26
6,216
(d)
Village Tennis Shop
Income Statement
For the Month Ended April 30, 2008
Revenue from sales:
Sales
Less: Sales Returns and Allowances
Net sales
Cost of goods sold:
Beginning Merchandise InvenTory
Purchase
1,640
Less: Purchase Discounts
26
Purchases Returns and Allowances
90
Net Purchase 1,524
Add: Freight-in
90
Cost of goods purchased
Cost of goods available for sale
Ending Merchandise InvenTory
Cost of Goods Sold
1,900
30
1,870
1,700
1,614
3,314
2,296
1,018
Gross Profit
552
P5-8A
(a)
Terry Manning Fashion Centre
Work Sheet
For the Year Ended November 30, 2008
Account Titles
Trial Balance
Dr.
Cr.
Cash
Accounts Receivable
Merchandise
InvenTory
STore Supplies
STore Equipment
Accumulated Dep.
- STore Equipment
Delivery Equipment
Accumulated Dep.
- Delivery Equipment
Notes Payable
Accounts Payable
K. Poorten, Capital
K. Poorten, Drawing
Sales
28,700
30,700
44,700
8,800
Adjustments
Dr.
Cr.
(4) 300
6.200
85,000
(1) 3,700
22,000
(2) 9,000
6,000
(2) 5,000
48,000
28,700
30,700
44,400
2,500
85,000
2,500
85,000
31,000
31,000
48,000
12,000
48,000
11,000
11,000
51,000
48,500
1,10,000
51,000
48,500
1,10,000
12,000
7,55,200
4,97,400
1,40,000
24,400
14,000
12,100
16,700
24,000
7,55,200
8,800
8,800
(1) 3,700
(2) 9,000
4,97,700
1,40,000
24,400
14,000
12,100
16,700
24,000
3,700
9,000
4,97,700
1,40,000
24,400
14,000
12,100
16,700
24,000
3,700
9,000
(2) 5,000
5,000
5,000
(3) 4,080
9,92,700
12,000
7,55,200
(4) 300
22,080
4,080
(3) 4,080
22,080
Balance Sheet
Dr.
Cr.
28,700
30,700
44,400
51,000
48,500
1,10,000
9,92,700
Income Statement
Dr.
Cr.
10,10,780
4,080
4,080
10,10,780
4,080
7,61,480
7,59,480
7,55,200
4,280
7,59,480
(b)
Terry Manning Fashion Centre
Multiple-step Income Statement
For the Year Ended November 30, 2008
Sales Revenues:
Sales
7,55,200
Less: Sales Returns and Allowances
8,800
Net sales
Less: Cost of Goods Sold:
7,46,400
4,97,700
4,280
2,55,580
2,55,580
2,48,700
98,000
11,200
19,200
24,400
16,700
9,000
5,000
1,83,500
42,000
2,800
12,100
4,800
3,700
65,400
2,48,900
200
4,080
4,280
28,700
30,700
44,400
2,500
1,06,300
85,000
31,000
54,000
48,000
11,000
37,000
91,000
1,97,300
21,000
48,500
4,080
73,580
30,000
30,000
1,03,580
93,720
93,720
1,97,300
(c)
Date
2008
Nov: 30
(1)
(2)
(3)
(4)
Ref.
Debit
Credit
3,700
3,700
9,000
5,000
9,000
5,000
4,080
4,080
300
300
(d)
Date
2008
Nov: 30
(1)
Debit
Credit
7,55,200
7,55,200
(2)
(3)
(4)
Income Summary
Sales Returns and Allowances
Cost of goods sold
Salaries Expense
Utilities Expense
Interest expense
Advertising Expense
Delivery Expense
Dep. Expense STore Equipment
Dep. Expense Delivery Equipment
Repair Expense
Supplies Expense
Rent Expense
(To close expenses)
Kevin Poorten, Capital
Income Summary
(To transfer net loss To the capital)
Kevin Poorten, Capital
Kevin Poorten, Drawing
(To transfer drawing To the capital)
7,58,480
8,800
4,97,700
1,40,000
14,000
4,080
24,400
16,700
9,000
5,000
12,100
2,700
24,000
4,280
4,280
12,000
12,000
(e)
Terry Manning Fashion Centre
Post closing Trial Balance
November 30, 2008
Account Titles
Ref.
Cash
Accounts Receivable
Merchandise InvenTory
STore Supplies
STore Equipment
Accumulated Dep.- STore Equipment
Delivery Equipment
Accumulated Dep.- Delivery Equipment
Notes Payable
Accounts Payable
Interest Payable
Kevin Poorten, Capital, November 30, 2008
Debit
28,700
30,700
44,400
2,500
85,000
Credit
31,000
48,000
11,000
51,000
48,500
4,080
93,720
2,39,300
2,39,300
P5-1B
Date
2008
Nov-1
Nov-3
Ref.
Debit
120
201
$900
112
401
$1200
505
120
$600
J1
Credit
$900
$1200
$600
Nov-6
Nov-9
Nov-15
Nov-17
Nov-20
Nov-24
Nov-26
Nov-28
Nov-30
201
120
$50
201
101
120
$850
$17
101
112
$1200
112
401
$1500
505
120
$750
120
201
$600
101
414
$1470
$30
$50
$833
$1200
$1500
$750
$600
$1500
201
101
120
$600
$588
$12
$1100
112
401
$1100
$550
505
120
$550
412
112
$150
120
505
$75
$150
$75
P5-2B:
(a.)
Date
Ref.
Debit
J1
Credit
2008
Nov-1
Nov-2
Nov-5
Nov-9
Nov-10
Nov-11
Nov-15
Nov-17
Nov-19
Nov-24
Nov-25
Nov-27
Nov-29
Nov-31
Merchandise InvenTory
Accounts Payable
(To record purchase on Account)
Account Receivable
Sales
(To record credit sale)
Cost of Goods Sold
Merchandise InvenTory
(To record cost of Merchandise sold)
Account Payable
Merchandise InvenTory
(Received credit for purchase return)
Cash
Sales Discount
Account Receivable
(To record collection within discount period)
Account Payable
Cash
Merchandise InvenTory
(To record payment within discount period)
Supplies
Cash
(To record purchase of supplies for cash)
Merchandise InvenTory
Cash
(To record purchase of invenTory for cash)
Merchandise InvenTory
Account Payable
(To record purchase on Account)
Merchandise InvenTory
Cash
(To record freight cost)
Cash
Sales
(To record cash sale)
Cost of Goods Sold
Merchandise InvenTory
(To record cost of Merchandise sold)
Merchandise InvenTory
Account Payable
(To record purchase on Account)
Account Payable
Cash
Merchandise InvenTory
(To record payment in discount period)
Sales Return and Allowances
Cash
(To record refund for return)
Account Receivable
Sales
(To record credit sale)
120
201
$8000
112
401
$4000
505
120
$3100
201
120
$600
101
414
112
$3960
$40
201
101
120
$7400
126
101
$900
120
101
$230
120
201
$2500
120
101
$250
101
401
$6200
505
120
$4600
$120
$201
$1000
401
101
120
$2500
412
101
$80
112
$1600
$8000
$4000
$3100
$600
$4000
$7326
$74
$900
$230
$2500
$250
$6200
$4600
$1000
$2450
$50
$80
401
505
120
$1600
$1120
$1120
(b.)
Date
2008
April-30
Nov-09
Nov-10
Nov-11
Nov-12
Nov-19
Nov-24
Nov-27
Nov-29
Date
2008
Nov-01
Nov-09
Nov-31
Date
2008
Nov-01
Nov-05
Nov-10
Nov-17
Nov-19
Nov-25
Nov-31
Date
2008
Nov-11
Date
2008
Nov-01
Explanation
Cash
Ref
Debit
Balance
J1
J1
J1
J1
J1
J1
J1
J1
Explanation
Credit
$10000
$3960
$7326
$900
$230
$250
$6200
$2450
$80
Accounts Receivable
Ref
Debit
Credit
J1
J1
J1
$4000
$4000
$1600
Merchandise InvenTory
Explanation
Ref
Debit
Credit
J1
J1
J1
J1
J1
J1
J1
Explanation
Explanation
$8000
J1
$900
Account Payable
Ref
Debit
J1
No. 112
Balance
$4000
$00
$1600
No. 120
Balance
$1120
Credit
No. 126
Balance
$2500
$250
$1000
Debit
$10000
$13960
$6634
$5734
$5504
$5254
$11454
$9004
$8924
$8000
$7400
$7326
$9826
$10076
$11076
$9956
$600
$74
Supplies
Ref
No. 101
Balance
$900
Credit
No. 201
Balance
$8000
$8000
Nov-05
Nov-10
Nov-17
Nov-25
Nov-27
Date
2008
April-31
Date
2008
Nov-02
Nov-24
Nov-31
Date
2008
Nov-29
Date
2008
Nov-09
Date
2008
Nov-02
Nov-24
Nov-31
J1
J1
J1
J1
J1
Explanation
$600
$7400
$2500
$1000
$2500
Balance
Explanation
Credit
No. 310
Balance
$10000
$10000
Sales
Ref
Debit
Credit
No. 401
Balance
J1
J1
J1
$4000
$6200
$1600
$4000
$10200
$11800
Explanation
(c)
Sales Revenue:
Sales
Less: Sales Return
Sales Discount
Net Sales
$80
Sales Discount
Ref
Debit
J1
Explanation
$7400
$00
$2500
$3500
$1000
$80
Credit
$40
$3100
$4600
$1120
No. 412
Balance
No. 414
Balance
$40
No. 505
Balance
$3100
$7700
$8820
$11800
$80
$140
$220
$11680
$8820
$2860
P5-3B
(a.)
Huffman Department STore
Income Statement
For the month of November, 2008
Sales Revenue:
Sales
Less: Sales Return
Net Sales
Less: Cost of Goods Sold
Gross Profit
Operating Expenses:
Selling Expenses:
Salaries Expense
$90000
Insurance Expense
$4500
Sales Commision Expense
$1400
Depreciation of Delivery Equipment
$4000
Depreciation of STore Equipment
$9500
Total Selling Expenses
$12200
Advertising Expenses:
Salaries Expense
$30000
Insurance Expense
$4500
Rent Expense
$19000
Utilities Expense
$10600
Property Tax Expense
$3500
Delivery Expense
$8200
Total Advertising Expenses
$75800
Total Operating Expenses
Income from operations
Other Revenues and Gains:
Interest Revenues
$5000
Other Expenses and Losses:
Interest Expense
$8000
Net Income
$850000
$10000
$840000
$633220
$206780
$197800
$8980
-$3000
$5980
$84200
$5980
$90180
$12000
$78180
Amount
Amount
8000
11770
4500
36200
60470
57000
37320
25000
(418000)
83200
120520
Total assets
Liabilities
Current Liabilities
Accounts payable
Property tax payable
Sales commission payable
Total current liabilities
Long term liabilities :
Notes payable
Total long-term liabilities
Total liabilities
Owners equity :
Huffman capital , November 30, 2008
Total liabilities and owners equity
47310
3500
6000
56810
46000
46000
102810
78180
180990
(b)
Date
2008
Nov-30 (1)
(2)
(3)
(4)
(5)
Ref.
Insurance Expense
Prepaid Insurance
(To record prepaid insurance)
Dep. Expense of Delivery Equipment
Accumulated Dep. - Delivery Equipment
(To record depreciation expense)
Dep. Expense of STore Equipment
Accumulated Dep. STore Equipment
(To record depreciation expense)
Property Tax expense
Property Tax Payable
(To record accrued Property Tax expense)
Sales Commission expense
Sales Commission Payable
(To record accrued Sales Commission expense)
Debit
J1
Credit
$9000
$9000
$4000
$4000
$9500
$9500
$3500
$3500
$6000
$6000
Date
Ref
Debit
Credit
(c)
Nov 30
,,
30
Sales
Interest revenue
Income summary
(To close revenue accounts)
Income summary
Cost of goods sold
Delivery Expense
Depreciation expanse Delivery
850000
5000
855000
849020
633220
8200
4000
9500
9000
8000
3500
19000
120000
14000
10000
10600
euip
,,
,,
5980
5980
12000
12000
P5-4b:
(a)
Date
2008
Apr.5
7
9
10
12
Ref.
Debit
120
201
$1500
120
101
80
201
120
100
112
401
1100
505
120
810
120
201
860
Credit
$1500
80
100
1100
810
860
14 Accounts Payable
Merchandise InvenTory
Cash
(To record paid crediTors less discount)
17 Accounts Payable
Merchandise InvenTory
(To record goods returned)
20 Account receivable
Sales
(To record sell on account)
Cost of goods sold
Merchandise InvenTory
(To record cost of goods sold)
21 Accounts Payable
Merchandise InvenTory
Cash
(To record paid crediTors at discount)
27 Sales returns & allowance
Account receivable
(To record granted sales returns)
30 Cash
Account receivable
(To record cash received on account)
201
120
101
1400
201
120
60
112
401
700
505
120
490
201
120
101
800
412
112
40
101
112
1000
28
1372
60
700
490
8
792
40
(b)
Date
Apr.1
7
14
21
30
Accounts receivable
Date
Explanation Ref. Debit Credit
Apr.10
J1
1100
20
J1
700
27
J1
40
30
J1
1000
No. 112
Balance
1100
1800
1760
760
1000
Merchandise InvenTory
Date Explanation Ref. Debit Credit
Apr.1
Balance
3500
5
J1
1500
7
J1
80
9
J1
100
10
J1
810
12
860
14
28
17
60
20
490
21
8
No.120
Balance
3500
5000
5080
4980
4170
5030
5002
4942
4452
4444
Accounts payable
Date Explanation Ref. Debit Credit
Apr.5
J1
1500
9
J1
100
12
J1
860
14
J1
1400
17
J1
60
21
J1
800
No.201
Balance
1500
1400
2260
860
800
0
M.Palmar, Capital
Explanation Ref. Debit Credit
Balance
6000
No. 301
Balance
6000
Date
Apr.1
Sales
Date
Explanation Ref. Debit Credit
Apr.10
J1
1100
20
J1
700
Date
Apr.27
No. 401
Balance
1100
1800
No.412
Balance
40
Account No.
Ref.
Debit
Credit
101
112
120
201
301
401
412
505
Cash
Accounts receivable
Merchandise InvenTory
Accounts payable
M.Palmar, Capital
Sales
Sales returns & allowance
Cost of goods sold
Totals
$1256
760
4444
$0
6000
1800
40
1300
$7800
$7800
P5-5B:
DuckWall Department STore
Income Statement
For the year ended November 30, 2008
Accounts
Amount
Revenue from sales
Sales
Less: Sales returns & allowance
Net sales
Cost of goods
sold:
Beginning Merchandise InvenTory
Purchase
Less: Purchase discount
Purchase returns& allowance
Net Purchase
Add: Freight-in
Cost of goods Purchased
Cost of goods available for sale
Ending Merchandise InvenTory
Cost of goods sold
Gross profit
Amount
Amount
$900000
20000
$880000
$650000
7000
3000
640000
5060
44360
645060
689420
36200
653220
226780
P5-6B:
(a)
2005
Income Statement Data
Sales
Cost of goods sold:
Gross profit
Operating expenses
Net income
Balance sheet data
Merchandise InvenTory
Accounts payable
Additional information
Purchases of Merchandise
InvenTory on account
Cash payment To suppliers
$13000
5800
2006
2007
2008
$96850
(a) 27210
(e)$86680
25140
$82220
25990
69640
63500
61540
(f)56970
(i)56230
52060
(b)$6140
$4570
(j)$4170
(c)$11680
6500
$14700
4600
(k)$12200
(l)4000
$25890
(d)25190
(g)$28160
(h)30060
$24050
24650
(b) According To the given data, the profitability declined as per the sales decline. The gross
profit rates for 2006 To 2008 are 69640/96850= 71.91% , 61540/86680= 70.997% and
56230/82230= 68.39% indicate that the profitability declined over the 3-year fiscal period.
P5-7b:
(a)
Four Oaks Pro shop
Journal entries
Account Titles & Explanations
Date
Apr-5 Purchases
Accounts payable
(To record goods purchased on account)
7 Freight-in
Cash
(To record paid for freight in)
9 Accounts payable
Purchase return& allowance
(To record Purchase return)
10 Account receivable
Sales
(To record goods sold on account)
12 Purchases
Accounts payable
(To record goods purchased on account)
14 Accounts payable
Purchase discount
Cash
(To record paid the crediTors, less discount)
17 Accounts payable
Purchase return & allowance
(To record Purchase return)
20 Account receivable
Sales
(To record goods sold on account)
21 Accounts payable
Purchase discount
Cash
(To record paid the crediTors, less discount)
27 Sales return & allowance
Account receivable
(To record granted Sales return & allowance)
30
Cash
receivable
(To record cash received on account)
Ref.
Debit
$2200
$2200
80
80
200
200
950
950
460
460
2000
40
1960
60
60
1000
1000
400
4
396
75
75
1100
1100
Account
(b)
Date
Credit
Amount
Apr.1
30
Balance
$2500
1100
Apr.7
14
21
$80
1960
396
1164
3600
Ending balance
c/d
3600
Accounts Receivable
Date
.Apr.10
20
Explanations Amount
$950
1000
Date
Apr.27
30
Explanations
Amount
$75
1100
775
1950
Ending balance
c/d
1950
Merchandise InvenTory
Date
Apr.1
Date
Apr.9
17
14
21
Explanations
Ending balance
c/d
Amount
$3500
3500
Accounts payable
Explanations Amount Date
Explanations
200
Apr.5
60
12
2000
Ending balance c/d
400
2660
Amount
2200
460
0
2660
Explanations
Balance
Amount
6000
6000
Sales
Date
Apr.31
Explanations
Amount
1950
1950
Date Explanations
Apr.9
20
Amount
950
1000
1950
Explanations Amount
75
75
Date
Apr.27
Explanations
Ending Balance c/d
Amount
75
75
Explanations
Ending Balance c/d
Amount
2660
Purchase
Date
Apr.5
20
Explanations Amount
2200
460
Date
Apr.31
2660
2660
Explanations
Amount
Apr.31
260
260
Date Explanations
Apr.9
17
Amount
200
60
260
Purchase Discount
Date
Explanations
Amount
Apr.31
44
44
Date Explanations
Apr.14
21
Amount
40
4
44
Freight- in
Date
Apr.7
Explanations Amount
80
80
Date
Apr.31
Explanations
Ending Balance c/d
Amount
80
80
(c)
Four Oaks Pro shop
Trial balance
April 31, 2008
Accounts titles
Debit
Cash
$1164
Accounts Receivable
775
Merchandise InvenTory
3500
Accounts payable
Phil Mickel, capital
Sales
Sales Returns & allowances
75
Purchase
2660
Purchase Returns & allowances
Purchase Discount
Freight- in
80
8254
Credit
0
6000
1950
260
44
8254
(d)
Four Oaks Pro shop
Income Statement
For the month ended April,30 2008
Accounts
Amount Amount Amount
Revenue from sales
Sales
$1950
Less: Sales returns & allowance
75
Net sales
$1875
Cost of goods sold:
Beginning Merchandise InvenTory
3500
Purchase
$2660
Less: Purchase discount
44
260
2356
80
2436
5936
4524
1412
$463
Chapter 7
Problem set c
(a)
Date
PACKARD COMPANY
Sales journal
Accounts debited Invoice no. Ref
Accounts receivable dr.
Sales
cr.
2008
Jan 3
B. Remy
J. Fine
,, 11 R.Draves
S. Ingels
,, 22 B. Remy
R. Draves
,, 25 B. Hachinski
J. Fine
Date
510
511
512
513
514
515
516
517
Accounts credited
Purchase journal
Invoice no. Ref
$3100
1800
1900
900
3700
800
3500
6100
$21300
Purchase
dr.
Accounts payable cr.
2008
Jan 5
S. Yost
D. Lux
,, 16 D. Moneno
S. Kosko
S. Yost
,, 27 D. Moneno
D. Lux
S. Yost
Date
2008
Jan 7
Accounts credited
S. Ingels
B. Hachinski
,, 10 Sales
,, 13 B. Remy
J. Fine( 1800-300)
$3000
2700
15000
13900
1500
12500
1200
2500
$52600
Cash receipt journal
Ref Cash dr. Accounts receivable dr.
$4000
2000
15500
3100
1500
Sales cr.
$4000
2000
$15500
3100
1500
,, 20
,, 21
,, 31
Date
2008
Jan 8
,, 9
,,
,,
,,
,,
12
15
17
23
,, 28
,, 31
Sales
S. Ingels
Sales
Accounts debited
17900
900
22920
67420
Ref
Freight in
S. Kosko
D. Moneno
Rent
Withdrawal
Office supplies
D. Moneno
S. Kosko
Office supplies
Sales salaries
Office salaries
Date
2008
Jan 9
,, 18
,, 21
17900
900
22920
55920
11500
Purchase
Cash cr
$180
9000
11000
1000
800
400
15000
13700
200
4300
3600
591180
$180
$9000
11000
1000
800
400
15000
13700
200
4300
3600
10480
48700
General journal
Accounts titles and explanation
Ref
Debit
Current liability
$300
Sales returns and allowance
Accounts receivable
(To record sales returns of goods from J. Fine)
Accounts payable
Purchase return and allowance
(To record returns of goods purchase from S. Kosko)
Accounts payable
Notes payable
(Note payable issue To supplies)
$300
200
200
15000
15000
(b)
Date
2008
Jan 1
,, 31
,, 31
Date
2008
Jan 1
,, 9
,, 31
PACKARD COMPANY
General ledger
Cash
Explanation Ref Debit
Credit
$33750
67420
Accounts receivable
Explanation Ref Debit
$59180
$33750
101170
41990
Credit
No: 112
Balance
$13000
$300
21800
No: 101
Balance
$13000
12700
34500
,, 31
Date
2008
Jan 1
Date
2008
Jan 1
Date
2008
Jan 1
,, 17
,, 28
Date
2008
Jan 1
Date
2008
Jan 1
Date
2008
Jan 1
Notes receivable
Explanation Ref Debit
11500
23000
Credit
No: 115
Balance
$39000
$39000
Merchandise invenTory
Explanation Ref Debit Credit
Explanation
$20000
$20000
Office supplies
Ref Debit Credit
No: 125
Balance
$1000
400
200
Prepaid insurance
Explanation Ref Debit
$1000
1400
1600
No: 130
Credit Balance
$2000
Equipment
Ref Debit
Explanation
$2000
Credit
$6450
$1500
Notes payable
Ref Debit Credit
Explanation
Date
2008
Jan 1
,, 18
,, 21
,, 31
,, 31
Explanation
Date
2008
Jan 1
Explanation
Date
Explanation
No: 157
Balance
$6450
Accumulated deprecation
Explanation Ref Debit Credit
Date
2008
Jan21
No: 120
Balance
$15000
Accounts payable
Ref Debit Credit
$35000
No: 158
Balance
$1500
No: 200
Balance
$15000
No: 201
Balance
48700
$35000
34800
19800
72400
23700
I. Packard capital
Ref Debit Credit
No: 301
Balance
$200
15000
52600
$78700
I. Packard drawing
Ref Debit Credit
$78700
No: 306
Balance
2008
Jan 15
Date
2008
Jan31
,, 31
Date
2008
Jan 9
Date
2008
Jan31
Date
2008
Jan18
$800
Explanation
Ref
No: 401
Balance
$21800
55920
$21800
77720
$300
Purchase
Ref Debit
Explanation
No: 416
Balance
$300
Credit
$52600
No: 601
Balance
$52600
Explanation
Date
2008
Jan31
Explanation
Date
2008
Jan31
Explanation
Date
2008
Jan12
Explanation
Date
Credit
Date
2008
Jan 8
Date
2008
Jan 1
,, 11
,, 22
Sales
Debit
$800
Freight in
Ref Debit
$200
$200
Credit
No: 621
Balance
$180
Sales salaries
Ref Debit
$180
Credit
$4300
Office salaries
Ref Debit
$4300
Credit
$3600
Rent
Ref Debit
Balance
Balance
$3600
Credit
$1000
Balance
$1000
B. Hachinski
Ref Debit
$1500
3400
4200
Credit
Balance
2008
Jan 1
,, 7
,, 25
$7500
$7500
5500
9000
Credit
Balance
3500
Date
2008
Jan 1
,, 7
,, 11
,, 21
Explanation
Date
2008
Jan 3
,, 13
,, 22
Explanation
Date
2008
Jan 3
,, 9
,, 13
,, 25
Explanation
S. Ingles
Ref Debit
$4000
$4000
900
900
B. Remy
Ref Debit
Balance
$3100
$3100
0
3700
Credit
Balance
$300
1500
$1800
1500
0
6100
3700
J. Fine
Ref Debit
$1800
6100
Accounts payable subsidiary ledger
S. Kosko
Explanation Ref Debit Credit
$9000
$9000
13900
200
13700
Explanation
Date
2008 Jan. 1
,, 9
,, 16
,, 23
,, 27
$4000
0
900
0
Credit
$3100
Date
2008
Jan 1
,, 9
,, 16
,, 18
,, 23
Date
2008
Jan 1
,, 21
$2000
R. Mikush
Ref Debit
Balance
$9000
0
13900
13700
0
Credit
Balance
$15000
$15000
0
$15000
D. Moreno
Explanation Ref Debit
Credit
Balance
$11000
$11000
0
15000
0
12500
$11000
15000
15000
12500
Date
Explanation
S. Yost
Ref Debit
Credit
Balance
2008 Jan 5
,, 16
,, 27
Date
2008
Jan 5
,, 27
$3000
1500
2800
Explanation
D. Lux
Ref Debit
$3000
1500
7300
Credit
Balance
$2700
1200
$2700
3900
(c)
PACKARD COMPANY
Worksheet
For the month ended January 31, 2008
Accounts
titles
Cash
Acc. Reece.
Notes recei.
Merchandise
Office supp.
Prepaid
insur.
Equipment
Accu . depri.
Notes
payable
Accounts
pay.
I. Packard
cap.
Packard
draw.
Sales
Sales R/A
Purchase
Purchase
R/A
Fright in
Sales salaries
Office sala.
Rent
Totals
Offi. Sup. Ex
Insurance ex.
Dep. Ex.
Interest ex.
Interest py.
Cost goods
Totals
Unadjusted trial
balance
Dr.
Cr.
Adjustment
Dr.
41990
23000
39000
20000
1600
2000
6450
Cr.
5000
900
200
1500
15000
23700
78700
Adjusted trial
balance
Dr.
Cr.
41990
23000
39000
15000
700
1800
6450
125
800
800
300
52600
200
77720
300
52600
200
5000
200
180
4300
3600
1000
180
4300
3600
1000
900
200
125
30
900
200
125
30
30
30
30
5000
5000
68235
196820
196820
6255
6255
Cr.
1625
15000
23700
78700
77720
900
200
125
30
Dr.
41990
23000
39000
15000
700
1800
6450
800
300
52600
Balance sheet
1625
15000
23700
78700
77720
180
4300
3600
1000
Income
statement
Dr.
Cr.
196975
196975
77920
(d)
PACKARD COMPANY
Income statement
For the month ended January 31, 2008
Particulars
Amount
Sales revenues:
Sales
$77720
Less : sales return and allowances
300
Net sales
Cost of goods sold:
Merchandise invenTory January 1
20000
Purchase
52600
72600
Less : purchase return and allowance
200
Net purchase 72400
Add : fright in
180
Cost of goods available sale
72580
Less : Merchandise invenTory January 31 15000
Cost of goods sold
Gross profit
Operating expanse:
Sales salaries
Administrative expanse:
Office salaries
Rent
Office supplies expanse
Insurance expanse
Depreciation expanse
Amount
$77420
(57580)
19840
4300
3600
1000
900
200
125
(10135)
9715
(30)
$9685
Packard Company
Balance sheet
January 31, 2008
Particulars
Assets :
Current assets:
Cash
Accounts receivable
Notes receivable
Merchandise invenTory
Office supplies
Prepaid insurance
Total Current assets
Long term assets:
Equipment
Less : accumulated depreciation
Total assets
Liabilities and owners equity:
Current liability:
Notes payable
Accounts payable
Interest payable
Total Current liability
Owners equity:
I. Packard capital
Amount Amount
$41990
23000
39000
15000
700
1800
$121490
6450
(1625)
4825
$126315
$15000
23700
30
$38730
87585
$126315
PACKARD COMPANY
Adjusting entries
Accounts titles and explanation Ref Debit Credit
Date
2008
Jan 31 Office supplies expanse
Office supplies
(To adjust Office supplies expanse)
,, 31 Insurance expanse
Prepaid insurance
(To adjust Insurance expanse)
,, 31 Depreciation expanse
Accumulated depreciation
(To adjust Depreciation expanse)
,, 31 Interest expanse
Interest payable
(To adjust interest expanse)
$900
$900
200
200
125
125
30
30
,, 31
Date
2008
Jan. 1
,, 31
5000
5000
PACKARD COMPANY
General ledger
Merchandise invenTory
Explanation Ref Debit Credit Balance
Date
2008
Jan. 1
,, 31
$20000
$5000
Office supplies
Explanation Ref Debit
$2000
15000
Credit Balance
$1600
$900
$1600
700
Prepaid insurance
Date Explanation Ref Debit Credit Balance
2008
Jan. 1
$2000
$2000
,, 31
$200
1800
Accumulated depreciation
Date Explanation Ref Debit Credit Balance
2008
Jan. 1
$1500 $1500
,, 31
125
1625
Interest payable
Date Explanation Ref Debit Credit Balance
2008
Jan.31
$30
$30
Cost of goods sold
Date Explanation Ref Debit Credit Balance
2008
Jan.31
$5000
$5000
Date
2008
Jan.31
Date
2008
Balance
$900
Balance
Jan.31
$200
$200
Depreciation expanse
Date Explanation Ref Debit Credit Balance
2008
Jan.31
$125
$125
Interest expanse
Date Explanation Ref Debit Credit Balance
2008
Jan.31
$30
$30
PACKARD COMPANY
Closing Journal
Accounts titles and explanation
Ref
Date
2008
Jan 31 Sales
(1)
Income summary
(To close sales revenue)
(2)
Income summary
Sales return and allowance
Purchase
Freight in
Sales salaries
Office salaries
Rent
Office supplies expanse
Insurance expanse
Depreciation expanse
Interest expanse
Cost of goods sold
(To close expanse account)
(3)
Purchase return and allowance
Income summary
(To close purchase return and allowance)
(4)
Income summary
I .Packard capital
(To close net income)
(5)
I. Packard capital
I. Packard drawing
(To close drawing)
Date
2008
Jan31
,, 31
PACKARD COMPANY
General ledger
Sales
Explanation Ref Debit Credit
$77720
Debit
Credit
$77720
$77720
68235
300
52600
180
4300
3600
1000
900
200
125
30
5000
200
200
9685
9685
800
800
Balance
$77720 $77720
0
Income statement
Date Explanation Ref Debit Credit Balance
2008
Jan31
$77720 $77720
,, 31
$68235
9485
,, 31
200
9685
,, 31
9685
0
Sales return and allowance
Date Explanation Ref Debit Credit Balance
2008
Jan31
$300
$300
,, 31
$300
0
Purchase
Date Explanation Ref Debit Credit Balance
2008
Jan31
$52600
$52600
,, 31
$52600
0
Freight in
Date Explanation Ref Debit Credit Balance
2008
Jan31
$180
$180
,, 31
$180
0
Date
2008
Jan31
,, 31
Sales salaries
Explanation Ref Debit
Credit
Balance
$4300
$4300
0
$4300
Office salaries
Date Explanation Ref Debit Credit Balance
2008
Jan31
$3600
$3600
,, 31
$3600
0
Rent
Date Explanation Ref Debit Credit Balance
2008
Jan31
$1000
$1000
,, 31
$1000
0
Date
2008
Balance
Jan31
,, 31
$900
$900
$900
0
Insurance expanse
Date Explanation Ref Debit Credit Balance
2008
Jan31
$200
$200
,, 31
$200
0
Depreciation expanse
Date Explanation Ref Debit Credit Balance
2008
Jan31
$125
$125
,, 31
$125
0
Interest expanse
Date Explanation Ref Debit Credit Balance
2008
Jan31
$30
$30
,, 31
$30
0
Date
2008
Jan31
,, 31
Date
2008
Jan31
,, 31
$200
0
$5000
0
I. Packard capital
Date Explanation Ref Debit Credit Balance
2008
Jan. 1
$78700 $78700
,, 31
9685 88385
,, 31
$800
87585
Date
2008
Jan. 1
,, 31
I. Packard drawing
Explanation Ref Debit Credit Balance
$800
$800
$800
0
(f)
PACKARD COMPANY
Post closing balance
For the month ended January 31, 2008
Sl. No.
Accounts titles
Ref Debit
1
Cash
$41990
2
Accounts receivable
23000
3
Notes receivable
39000
4
Merchandise invenTory
15000
5
Office supplies
700
6
Prepaid insurance
1800
7
Equipment
6450
8
Accumulated deprecation
9
Notes payable
10
Accounts payable
11
Interest payable
12
I. Packard capital
$127940
Credit
$1625
15000
23700
30
87585
$127940
P8-4A
(a)
Backhaus Company
Bank Reconciliation Statement
December 31, 2008
Cash balance per bank
Add: Deposit in transit
Less: Outstanding checks:
No. 3470
No. 3474
No. 3478
No. 3481
No. 3484
No. 3486
720.10
1,050.00
621.30
807.40
798.00
1,889.50
(5,886.30)
15,958.40
20,154.30
1,690.40
21,844.70
572.80
90.00
9.00
12,485.20
4,145.00
16,630.20
(671.80)
15,958.40
Date
2008
Dec: 31
1.
2.
3.
4.
Ref.
Cash
Miscellaneous Expense
Notes Receivable
Interest Revenue
(To record collection of note)
Accounts Receivable
Cash
(To record NSF check)
Accounts Payable
Cash
(To record increase of cash paid To accounts payable)
Accounts Receivable
Cash
(To record cash received for accounts receivable)
Debit
Credit
4,145
15
4,000
160
572.80
572.80
90
90
9
9
P8-5A
(a)
Haverman Company
Bank Reconciliation Statement
July 31, 2008
Cash balance per bank
Add: Deposit in transit
Less: Outstanding checks
Error in recording
8,460
100
(8,560)
25,354
24,514
9,400
33,914
3,470
90
21,850
3,560
25,410
(56)
25,354
(b)
Date
2008
July: 31
1.
Haverman Company
Adjusting Journal
Account Titles and Explanations
Cash
Notes Receivable
Interest Revenue
(To record collection of note with interest revenue)
Ref.
Debit
Credit
3,470
3,400
70
2.
Cash
Accounts Payable
(To record rectified overpaid To accounts payable)
Miscellaneous Expense
Cash
(To record miscellaneous expense)
3.
90
90
56
56
P8-6A
The following internal control weaknesses are identified in this scenario
Lack of establishment of responsibility
Lack of segregation of duties
Lack of documentation procedures
Lack of physical, mechanical and electronic controls
Lack of independent internal verification
Lack of other controls
We may suggest that the above indicated lack of internal control principles
should be taken To the account by the school authority.
(1)
(2)
(3)
(4)
(5)
(6)
P8-1B
No
Principle
1
Establishment
responsibility
2
Segregation of
duties
3
4
5
6
Documentation
procedures
Physical,
mechanical,
electronic controls
Independent internal
verification
Over controls
P8-2B
(a)
Date
Jul 1
WINNINGHAMSOSA COMPANY
Journal Entries
Account titles and explanation
Ref Debit Credit
Petty cash
200.00
Cash
200.00
(To establish petty cash fund)
,, 15
Freight out
Postage expanse
Entertainment expanse
Miscellaneous expanse
Cash short and over ( short)
Cash
(To replenish the petty cash fund with a cash short)
,, 31
Freight out
Charitable contribution expanse
Postage expanse
Miscellaneous expanse
Cash
(To replenish the petty cash fund)
Aug15 Freight out
Entertainment expanse
Postage expanse
Miscellaneous expanse
Cash
Cash short and over ( over)
(To replenish the petty cash fund with a cash over)
,, 16
petty cash(300- 200)
cash
(To increase petty cash fund)
,, 31 Postage expanse
Travel expanse
Freight out
Cash short and over ( short)
Cash
(To replenish the petty cash fund with a cash short)
(b)
Petty cash
Date Explanation Ref Debit Credit
Jul 1
cp 200
Aug16
cp 100
,, 31
(c)
94.00
42.40
46.60
11.20
1.80
196.00
82.10
45.00
25.50
39.40
192.00
75.60
43.00
33.00
37.00
187.00
1.60
100.00
100.00
140.00
95.60
47.10
1.30
184.00
Balance
200
300
300
The inter control features of a petty cash fund include the following points:
I. a cusTodian is responsible for the fund.
II. A petty cash receipt signed by the cusTodian and the individual receiving the
payment is required for each payment from the fund.
III. The treasure office examines all payments and stamp supporting documents To
indicate they were paid when the fund is replenished.
IV. Surprise count can be made at any time To determine whether the fund is intact.
P8-3b
(a.)
Amount
$936.15
600.00
Amount
$6804.60
1536.15
8340.75
515.25
$7825.50
6781.50
2055.00
8836.50
40.00
10.00
27.00
934.00
1011.00
$7825.50
(b)
Date
May 31
May31
May 31
May 31
May 31
Ref.
Debit
2055
25
2000
80
40
40
10
10
27
27
934
934
P8-4B
(a)
Conlin Company
Bank Reconciliation Statement
November 30, 2008
Particulars
Amount
Credit
Amount
$17069.40
2338.00
19407.40
$1260.40
503.60
538.20
612.00
829.50
974.80
398.00
1200.00
72.00
180.00
9.00
6316.50
$13090.90
10846.90
2505.00
13351.90
261.00
$13090.90
(b)
Date
Nov 30
Nov 30
Nov 30
Nov 30
Conlin Company
Adjusting journal
Account titles & explanations
Cash
Miscellaneous expense
Notes receivable
Interest revenue
(To record collection of note with interest)
Miscellaneous expense
Cash
(To record Miscellaneous expense for cash)
Accounts payable
Cash
(To record increase of cash paid To accounts payable)
Accounts receivable
Cash
(To record decrease of cash received from accounts
receivable)
P8-5B
(a.)
Baumgardner Company
Bank Reconciliation Statement
August 31, 2008
Particulars
Amount Amount
$25932
$7890
3
6930
180
32
40
7893
33825
6393
$27432
20330
7142
27472
40
$27432
(b)
Baumgardner Company
Adjusting journal
Account titles & explanations
Date
Aug 31 Cash
Notes receivable
Interest revenue
(To record collection of note with interest)
Aug 31 Cash
Interest revenue
(To record Earned interest revenue)
Aug 31 Miscellaneous expense
Cash
(To record Miscellaneous expense for cash)
Aug 31 Cash
Accounts payable
(To record rectified overpaid To Accounts payable)
P8-6B
(a)
Richardson Company
Bank Reconciliation Statement
OcTober 31, 2008
Particulars
Amount Amount
Cash balance per bank
$18180.00
Add: (3) Deposits in transit
3795.51
21975.51
Less: (3) Outstanding checks:
1112.79
Adjusted cash balance per bank
$20862.72
Cash balance per book
21892.72
Add: (5) Collection of notes receivable by bank
300.00
180
22192.72
1330.00
$20862.72
(b) The cashier attempted To cover the theft of $1330 by following three ways:
(1) Not listing as outstanding three checks Totaling 530.00
i. (No.62, $126.75; No.183, 150.00; No.284, 253.25)
(2) Under footing the outstanding checks listed by100.00
i. (No.862, $190.71; No. 863, 226.80; No. 864, 165.28= 582.79482.79)
(3) Subtracting the $200 credit from the bank balance instead of adding To the
book balance, thereby concealing $700 of the theft.
(c.) The following principles of internal control were violated in this case:
(1) Independent internal verification
(2) Segregation of duties.
P9-1A
(a)
LEIS CO.
Journal Entries
Date
Account title and explanation
Ref Debit
Credit
1
Accounts receivable
3200000
Sales
3200000
( To record goods on Accounts)
2
50000
Sales return and allowance
50000
Accounts receivable
(To record sales return)
3
2810000
Cash
2810000
Accounts receivable
(To record received cash from accounts receivable )
4
5
(b)
LEIS CO.
Ledger
Accounts receivable
90000
90000
24000
24000
24000
24000
Beginning balance
(1)
(5)
960000
3200000
24000
(2)
(3)
(4)
(5)
Ending balance C/D
4184000
Allowance and doubtful Accounts
90000 Beginning balance B/D
(5)
Ending balance C/D
1 4000
104000
(4)
50000
2810000
90000
24000
1210000
4184000
80000
24000
104000
(c)
LEIS CO
Journal entry
No Date
Account title and explanation
1.
Bad debt expanse (115000-90000)
Allowance and doubtful Accounts
(To record Bad debt expanse)
Ref Debit
25000
Debit
25000
(d) We know,
A /R turnover ratio=Net credit sales/ Average receivable
= (3200000-50000)/ (960000+1210000)/2
=3150000/1085000
=2.9 times
P9-2A:
(a) Bad debt expanse =$33000
(b) Bad debt expanse=$2200000*2%=$44000
(c) Bad debt expanse=$825000*6%-3000=$46500
(d) Bad debt expanse=$825000*6%+3000=$52500
(e) There are two major weaknesses with the direct write off method.
1) It does not match expanse with revenues.
2) The Accounts receivable are not stated at cash realized value at the
balance sheet date.
P9-3A:
(a) + (b)
Zillmann Company
Journal entries
No Date
Account title and explanation
Ref Debit Credit
1. 2008 Bad debt expanse(42610-12000)
30610
dec31
Allowance and doubtful Accounts
3061
(To record Bad debt expanse)
Date
2005
dec31 Adjusting
30610
30610
Balance
12000
42610
41610
42610
(c)
Zillmann Company
Journal entries
No Date
Account title and explanation
1. 2006 Bad debt expanse
dec31
Allowance and doubtful Accounts
(To record Bad debt expanse)
P9-4A
(a)
CusTomer
Total
(e)
Applying 3% of Total accounts receivable would change the amount of
Total bad debt expanse. The advantage of aging account receivable over percentage To
Total account receivable is the more accuracy of bad debt expanse.
P9-5A
(b)
VORCESTER COMPANY
Journal entry
No Date
Account title and explanation
1. dec31 Bad debt expanse(11750-2000)
Allowance and doubtful Accounts
(To record Bad debt expanse)
2
Dec31 Bad debt expanse (950000*1%)
Allowance and doubtful Accounts
(To record Bad debt expanse)
Ref Debit
9750
Credit
9750
9500
9500
(c)
VORCESTER COMPANY
Journal entry
No Date
Account title and explanation
1. dec31 Bad debt expanse(11750+2000)
Allowance and doubtful Accounts
(To record Bad debt expanse)
2
Dec31 Bad debt expanse (950000*1%)
Allowance and doubtful Accounts
(To record Bad debt expanse)
Ref
Debit
13750
Credit
13750
9500
9500
(d)
VORCESTER COMPANY
Journal entry
No Date
Account title and explanation
1. 2006 Allowance and doubtful Accounts
jan31
Accounts receivable
(To record written off A/R for uncollectible )
Ref Debit
2000
VORCESTER COMPANY
Journal entry
No Date
Account title and explanation
1. 2009 Bad debt expanse
jan31
Accounts receivable
(To record written off A/R for uncollectible )
Ref Debit
3000
Credit
2000
(e)
Credit
3000
P9-6A
(a)
MENDOSA COMPANY
Journal entries
No Date
Account title and explanation
1
Oct 7 Accounts receivable
Sales
( To record goods on Accounts)
2
3
4
,, 12 Cash(900-27)
Service charge expanse (900*3%)
Sales
,, 15 Accounts receivable
Interest revenue
(To record received cash for Sales on VISA card)
,, 15 Cash
Note receivable
Interest revenue (8000*8%*60/360)
(To record received cash from N/P with interest)
,, 24 Accounts receivable
Note receivable
Interest revenue(9000*10%*60/360)
(To record Hughey note is dishonest)
,, 31 Interest receivable
Interest revenue(16000*9%*30/360)
(To record interest earned on N/R)
(b)
MENDOSA COMPANY
Ledger Account
Note receivable
Date explanation Ref Debit Credit
Oct31 Balance
,, 15
8000
,, 25
9000
Balance
33000
25000
16000
Accounts receivable
Date explanation Ref Debit Credit
Oct 7
6900
,, 15
460
,, 25
9150
Balance
6900
7360
16510
Interest receivable
Date explanation Ref Debit Credit
Oct 1 Balance
,, 15
120
,, 24
90
,, 31
90
Balance
170
90
0
90
(c)
MENDOSA COMPANY
Balance sheet
December 31, 2008
Assets and liabilities Amount Amount
Assets
Current Assets:
Note receivable
16000
873
27
900
460
460
8107
8000
107
9150
9000
150
120
120
32600
P9-7A
No Date
1
2008
Jan 5
2
3
4
6
7
,, 20
Feb18
apr.20
,, 30
May25
Aug15
,, 25
Sep 1
KLOPPENBERG COMPANY
Journal entries
Account title and explanation
Ref
Accounts receivable
Sales
(sold merchandise on account, terms n/15)
Note receivable
Accounts receivable
(received a $16000, 90 day, 9% note from a cusTomer)
Note receivable
Sales
(received a $8000, 180 day, 9% note Sales on account)
Cash
Note receivable
Interest revenue
(received cash from billing company note at maturity)
Cash
Note receivable
Interest revenue
(received cash from sara rogers company note at maturity)
Note receivable
Accounts receivable- jenks inc.
(received a $ 4000, 90day,7% note from a cusTomer)
Cash
Note receivable
Interest revenue
(received cash from ludwing company note at maturity)
Accounts receivable - jenks inc.
Note receivable
Interest revenue
(Fionas note was dishonored and account is debited with
interest)
Note receivable
Sales
(received a $12000, 180 day, 10% note for Sales on
account )
Debit
Credit
20000
20000
2000
2000
8000
8000
20450
20000
450
26000
25000
1000
4000
4000
8360
8000
360
4070
4000
70
12000
12000
P9-1B
(a)
PICKERIL IMPORTS
Journal Entries
Date
Account title and explanation
1
Accounts receivable
Sales
Ref
Debit
2570000
Credit
2570000
40000
40000
2300000
2300000
65000
65000
25000
25000
25000
25000
(b)
Beginning balance
(6)
(6)
PICKERIL IMPORTS
Ledger
Accounts receivable
1000000
(7)
2570000
(8)
25000
(9)
(10)
Ending balance C/D
3590000
40000
2300000
65000
25000
1205000
3590000
60000
25000
85000
(c)
PICKERIL IMPORTS
Journal entry
No Date
Account title and explanation
1.
Bad debt expanse (90000-20000)
Allowance and doubtful Accounts
(To record Bad debt expanse)
Ref Debit
70000
(d) We know,
A /R turnover ratio=Net credit sales/ Average receivable
= (2570000-40000)/ (100000+1205000)/2
=2530000/1102500
Debit
70000
=2.29 times
P9-2b:
(b)
(c)
(d)
(e)
(f)
P9-3b:
(a) + (b)
LAWREN COMPANY
Journal entries
No Date
Account title and explanation
1. 2008 Bad debt expanse(35790-10000)
dec31
Allowance and doubtful Accounts
(To record Bad debt expanse)
Date
2005
dec31 Adjusting
25790
25790
Balance
10000
35790
34690
35790
(c)
LAWREN COMPANY
Journal entries
No Date
Account title and explanation
1. 2006 Bad debt expanse(28300+1200)
dec31
Allowance and doubtful Accounts
(To record Bad debt expanse)
P9-4b
(a)
CusTomer
Total
1000
3000
3750
Journal entry
No Date
Account title and explanation
1. dec31 Bad debt expanse(13750-10000)
Allowance and doubtful Accounts
(To record Bad debt expanse)
3000
3000
(c)
Journal entry
No Date
Account title and explanation
1. dec31 Allowance and doubtful Accounts
Accounts receivable
(To record written off A/R for uncollectible )
(d)
Journal entry
No Date
Account title and explanation
1. dec31 Accounts receivable
Allowance and doubtful Accounts
(To record of A/R for recovery)
cash
Accounts receivable
(To record received cash from A/R )
(e) Applying 3% of Total accounts receivable would change the amount of Total bad debt
expanse. The advantage of aging account receivable over percentage To Total account
receivable is the more accuracy of bad debt expanse.
P9-5b
(a)
SCHNAKENBERG COMPANY
Journal entry
No Date
Account title and explanation
Ref Debit Credit
1. dec31 Bad debt expanse(17750-1500)
16050
Allowance and doubtful Accounts
16050
(To record Bad debt expanse)
2
Dec31 Bad debt expanse (850000*2%)
1700
1700
Allowance and doubtful Accounts
(To record Bad debt expanse)
(b)
No Date
1. dec31
SCHNAKENBERG COMPANY
Journal entry
Account title and explanation
Ref Debit Credit
Bad debt expanse(17750+1500)
19050
Allowance and doubtful Accounts
19050
(To record Bad debt expanse)
Dec31
1700
1700
(c)
SCHNAKENBERG COMPANY
Journal entry
Account title and explanation
No Date
1. 2006
jan31 Allowance and doubtful Accounts
Accounts receivable
(To record written off A/R for uncollectible )
(d)
SCHNAKENBERG COMPANY
Journal entry
Account title and explanation
No Date
1. 2009
jan31 Bad debt expanse
Accounts receivable
(To record written off A/R for uncollectible )
(e) The advantages of allowance method over direct write off is the future hope of
collection of accounts receivable, and the respective loss is the adjusted with allowance
for doubtful accounts fund.
P9-6b
(a)
SCHOTTENHEIMER COMPANY
Journal entries
No Date
Account title and explanation
1
Jul 5 Accounts receivable
Sales
(To record goods on Accounts)
2
,, 14 Cash(700-21)
Service charge expanse (700*3%)
Sales
3
,, 14 Accounts receivable
Interest revenue
(To record received cash for Sales on VISA card)
4
,, 15 Cash
Note receivable
Interest revenue (6000*10%*45/360)
(To record received cash from N/P with interest)
5
,, 25 Accounts receivable
Note receivable
Interest revenue(9000*10%*60/360)
(To record Hughey note is dishonest)
Ref Debit
6200
Credit
6200
681
21
700
440
440
6100
6000
100
25375
25000
375
,, 31
Interest receivable
Interest revenue(15000*8%*30/360)
(To record interest earned on N/R)
100
100
(b)
SCHOTTENHEIMER COMPANY
Ledger Account
Note receivable
Date explanation Ref Debit Credit
Jul 1 Balance
,, 15
6000
,, 25
25000
Balance
46000
40000
15000
Accounts receivable
Date explanation Ref Debit Credit
Jul 5
6200
,, 15
440
,,25
25375
Balance
6200
6640
32015
Interest receivable
Date explanation Ref Debit Credit
Jul 1 Balance
,, 15
75
,, 25
165
,, 31
100
Balance
240
165
0
100
(c)
SCHOTTENHEIMER COMPANY
Balance sheet
December 31, 2008
Assets and liabilities Amount Amount
Assets
Current Assets:
Note receivable
9000
Accounts receivable 32015
Interest receivable
100
Total receivable
41115
P9-7b
No Date
1
2008
Jan.5
FRYBENDAL COMPANY
Journal entries
Account title and explanation
Accounts receivable
Sales
(Sold merchandise on account, terms n/30)
2
3
4
5
10
Feb.2
Note receivable
Sales
(Received a $6300, 120 day, 10%note)
,, 12 Note receivable
Sales
(Received a $7800, 60 day, 10%note for sales on
account)
,, 26 Accounts receivable- Louk co.
Sales
(Sold merchandise on account, terms n/10)
Apr.5 Note receivable
Accounts receivable- Louk co.
(Received a $4000, 90 day, 8%note from
a customer)
,, 12 Cash
Note receivable
Interest revenue
(Received cash from Gage company note at
maturity)
Jun. 2 Cash
Note receivable
Interest revenue
(Received cash from Garth Broke company note at
maturity)
Jul.5 Accounts receivable
Note receivable
Interest revenue
(Mathiass note was dishonored, and his account is
debited with interest)
,, 15 Note receivable- Louk co.
Sales
(Received a $7000, 90 day, 12%note for sales on
account )
Oct15 Bad debt expanse
Note receivable
Interest revenue
(Pecks note was dishonored, and directly written off
this account)
6300
6300
7800
7800
4000
4000
7930
7930
7930
7800
130
6510
6300
210
4080
4000
80
7000
7000
7210
7000
210
Accounts receivable