SOLUTIONS. Learning Goal 24

Transcription

1 S1 Learning Goal 24 Multiple Choice 1. a 2. b 3. d 4. c 5. a 6. d Because all the correct accounts and amounts are entered, the account balances are correct. The entries were simply recorded in a journal that is not supposed to be used for the original entry. This will result in the some entry type being scattered between two journals, but that is all. 7. c 8. d If a transaction involves any payment of cash, the entire transaction is recorded in the cash payments journal. 9. d Because a is a common beginner s mistake, b would not be correct for cash purchases, and c would not be correct for cash sales. 10. c 11. c Recording a sale at the wrong amount will not cause the books to be out of balance in any way, but it will usually be noticed by the customer when the bill is received. 12. b Because the total debit posted to the controlling account will be $450 greater than the total of the accounts in the subsidiary ledger. In this situation, we cannot rely on a customer to notify us when the statement shows an amount that is too low. 13. b In a manual system, transaction data used for journal entries are recorded directly into the special journals. In computerized systems, transaction data are entered into data entry screens instead of special journals. In both systems, special journals are used as transaction type summary reports. 14. d 15. a The only journal that both systems enter data directly into is the general journal. Whenever a general journal is used, knowledge of debits and credits is needed for that journal. Computerized systems use data entry screens (or scanners) for most transactions, and these screens do not require knowledge of debits and credits. 16. b The account is credited for the full amount even though less cash is received. 17. c 18. d However, if (c) is not adequately maintained, losses from theft and fraud could be extremely expensive.

2 S2 Section IV Accounting Systems Learning Goal 24, continued Reinforcement Problems LG Transaction Journal 1. Owner invested $5,000 in her business. CR 2. Sold $1,000 of merchandise on account. S 3. Sold $300 of excess office supplies on account. J 4. Paid $2,000 cash to pay accounts payable. CP 5. Bought $3,000 of merchandise on account. P 6. Made a $500 cash sale of merchandise. CR 7. Customer returned $100 of defective merchandise. J 8. Purchased computer for $4,000; paid $500 cash and signed a note payable for the balance. CP 9. Sold the company van; received $7,000 cash and a $7,000 note receivable for the balance. CR 10. Bought $5,000 of merchandise, terms 2/10, n/30. P 11. Bought $250 of office supplies on account. P 12. Sold $275 of merchandise, terms 2/10, n/30. S 13. Returned the merchandise purchased in transaction #12, above. J 14. Owner withdrew $1,000 from the business. CP 15. Received $650 payment from customer for amount owing from previous month s sale. CR 16. Bought $100 of supplies for cash. CP 17. Made adjusting and closing entries. J

3 S3 Learning Goal 24, continued LG Perpetual inventory system: Customer Account Invoice Number Sales Journal Dr. Receivable Cr. Sales page xxx Dr. Cost of Goods Sold Cr. Merchandise Inventory March 3 Tupelo Partnership 152 2,400 1, Magnolia Enterprises 153 3,800 2, Oxford Company 154 5,500 3,600 11,700 7,900 Cash Receipts Journal page xxx Other Debits Credits Dr. Cost of Account Name Cash Sales Discount Other Receiv. Sales Sales Tax Payable Other Goods Sold Cr. Inventory Mar. 8 J. Madison, Capital 10,000 10, Tupelo Partnership 2, , Magnolia Enterpr. 3, , Unearned Revenue 4,200 4,200 21, ,200 1, ,

4 S4 Section IV Accounting Systems Learning Goal 24, continued LG 24-2, continued Periodic inventory system: Sales Journal page xxx Customer Account Invoice Number Dr. Receivable Cr. Sales March 3 Tupelo Partnership 152 2, Magnolia Enterprises 153 3, Oxford Company 154 5,500 11,700 Cash Receipts Journal Other Debits Credits Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable page xxx Other Mar. 8 J. Madison, Capital 10,000 10, Tupelo Partnership 2, , Magnolia Enterpr. 3, , Unearned Revenue 4,200 4,200 21, ,200 1, ,200

5 S5 Learning Goal 24, continued LG Perpetual inventory system: Account Credited Terms Purchases Journal Credit Payable Inventory Debits Other Name Amount Oct. 4 Rock Springs Corp. 2/10, n/30 3,900 3, Laramie Corp. 1/10, n/30 5,000 5, Riverton Enterprises 2/10, n/30 11,000 11, Torrington Supplies 1/15, n/ Supplies ,800 19, Ck. No. Account Name Cash Payments Journal Other Debits Payable Credits Other Inventory Cash Oct Equipment 10,000 3,000 Notes Payable 7, Rock Springs Corp. 3, , Wages Expense 4,000 4, Laramie Corp. 5, , Inventory ,520 8, ,292

6 S6 Section IV Accounting Systems Learning Goal 24, continued LG 24-3, continued Periodic inventory system: Account Credited Terms Purchases Journal Credit Payable Purchases Debits Other Name Amount Oct. 4 Rock Springs Corp. 2/10, n/30 3,900 3, Laramie Corp. 1/10, n/30 5,000 5, Riverton Enterprises 2/10, n/30 11,000 11, Torrington Supplies 1/15, n/ Supplies ,800 19, Ck. No. Account Name Cash Payments Journal Other Debits Payable Other Credits Purchase Discounts Oct Equipment 10,000 3,000 Notes Payable 7, Rock Springs Corp. 3, , Wages Expense 4,000 4, Laramie Corp. 5, , Freight-in ,520 8, ,292 Cash

7 S7 Learning Goal 24, continued LG Cash Receipts Journal Other Debits Credits Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable Periodic Method: The far right column is omitted because cost of goods sold is not recorded with each sale Other Dr. Cost of Goods Sold Cr. Inventory May R. Donlevy J. Akers Notes Payable ,000 10, C. Tran 1, , Notes Receivable 150 7,500 7,000 Interest Revenue Totals 22, ,700 1, , (102) (415) (125) (410) (210) (X) (520/135)

8 S8 Section IV Accounting Systems Learning Goal 24, continued LG Perpetual method: Cash Payments Journal Debits Credits Ck. No. Account Name Other Payable Other Inventory Cash Oct Office Supplies 120 1,100 1, Rent Expense 615 4,500 4, Hammond Company Notes Payable ,000 10,500 Interest Expense Moreno Wholesale, Inc. 2, , Pine Bluff Supply Company 2,700 2, Inventory Totals 16,850 6, ,882 (X) (210) (145) (101) Periodic method: Cash Payments Journal Debits Credits Ck. No. Account Name Other Payable Other Purchase Discounts Cash Oct Office Supplies 120 1,100 1, Rent Expense 615 4,500 4, Hammond Company Notes Payable ,000 10,500 Interest Expense Moreno Wholesale, Inc. 2, , Pine Bluff Supply Company 2,700 2, Freight-in Totals 16,850 6, ,882 (X) (210) (612) (101)

9 S9 Learning Goal 24, continued LG Perpetual method: Purchases Journal Credit Payable Debits Other Account Credited Terms Inventory Name Amount Dec. 1 Bizzell Supply Company 1/10, n/30 3,100 3,100 4 Coast Corporation 2/10, n/30 2,650 2, East Asia Imports 3/10, n/30 15,200 Furniture , Weintraub Supply, Inc. 2/10, n/ Gupta Enterprises 3/10, n/30 1,750 1,270 Supplies O Keefe Company 2/10, n/30 2,500 2,500 Totals 26,100 10,420 15,680 (215) (155) (X) Periodic method: Purchases Journal Credit Account Credited Terms Payable Purchases Dec. 1 Bizzell Supply Company 1/10, n/30 3,100 3,100 4 Coast Corporation 2/10, n/30 2,650 2,650 Debits Other Name Amount 12 East Asia Imports 3/10, n/30 15,200 Furniture , Weintraub Supply, Inc. 2/10, n/ Gupta Enterprises 3/10, n/30 1,750 1,270 Supplies O Keefe Company 2/10, n/30 2,500 2,500 Totals 26,100 10,420 15,680 (215) (610) (X)

10 S10 Section IV Accounting Systems Learning Goal 24, continued LG Customer Account Invoice Number Sales Journal Dr. Receivable Cr. Sales Dr. Cost of Goods Sold Cr. Inventory Jan 3 Carson City Company 125 3,500 2, Las Vegas, Inc ,000 15, Ely Company 127 2,800 1, Virginia City Co ,180 20,260 (110/410 ) (505/115) Comments: Cash Receipts Journal Other Debits Credits Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable Other 1. To determine if a discount should apply, be sure to identify the date of the sale to see if the payment is received within the number of days allowed. 2. Also remember to enter the posting references for the other accounts and for subsidiary accounts. Dr. Cost of Goods Sold Cr. Inventory Jan 4 Elko Enterprises 9, , Carson City Co. 3, , Reno Company 4,750 4, Supplies Las Vegas Inc. 19, , , ,750 1, (105) (411) (110) (410) (220) (x) (505/115)

11 S11 Learning Goal 24, continued LG Perpetual method: Account Credited Terms Purchases Journal Credit Payable Inventory Debits Other Name Amount Nov. 3 Baltimore Enterprises 2/10, n/30 2,750 2,750 7 Rockville Co. n/ Supplies Silver Spring, Inc. 2/15, n/30 4,800 4, Largo Company 2/10, n/30 7,500 7, Cumberland Agency n Ad. Expense ,825 15, (205) (110) (x) Comments: Ck. No. Account Name Cash Payments Journal Debits Other Payable Credits Other Inventory Cash Nov Annapolis Company Baltimore Enterprises 2, , Abell Company 2,200 2, Prepaid Insurance 120 2,330 2, Silver Spring, Inc. 4, , Sales Tax Payable 208 1,210 1, Inventory ,040 10, ,134 (X) (205) (110) (103) 1. To determine if a discount should apply, be sure to identify the date of the purchase to see if the payment is made within the number of days allowed. In the case of an eom (end of month) discount, verify that the payment was made within the designated number of days from the end of the month. (In this problem, Annapolis Company allowed a 1% discount for payment made within 5 days from end of the month of sale.) 2. The November 5 credit to Payable is determined by calculating: $495/.99 = $500. Because you know the payment is within the discount period, the $495 paid must be 99% of the total payable. 3. This problem accrues an expense (Nov. 29) as a reminder that a purchases journal can also be used to record accrued expenses (unpaid services). However, many companies prefer to keep all accruals on the general journal, especially if reversing entries procedures are used (see disk). 4. Also remember to enter the posting references for the other accounts and for subsidiary accounts.

12 S12 Section IV Accounting Systems Learning Goal 24, continued LG 24-8, continued Periodic method: Account Credited Terms Purchases Journal Credit Payable Purchases Debits Other Name Amount Nov. 3 Baltimore Enterprises 2/10, n/30 2,750 2,750 7 Rockville Co. n/ Supplies Silver Spring, Inc. 2/15, n/30 4,800 4, Largo Company 2/10, n/30 7,500 7, Cumberland Agency n Ad. Expense ,825 15, (205) (508) (X) Comments: Ck. No. Account Name Cash Payments Journal Debits Other Account Payable Other Account Credits Purchase Discounts Nov Annapolis Company Baltimore Enterprises 2, , Abell Company 2,200 2, Prepaid Insurance 120 2,330 2, Silver Spring, Inc. 4, , Sales Tax Payable 208 1,210 1, Freight-in ,040 10, ,134 (X) (205) (510) (103) 1. To determine if a discount should apply, be sure to identify the date of the purchase to see if the payment is made within the number of days allowed. In the case of an eom (end of month) discount, verify that the payment was made within the designated number of days from the end of the month. (In this problem, Annapolis Company allowed a 1% discount for payment made within 5 days from end of the month of sale.) 2. The November 5 credit to Payable is determined by calculating: $495/.99 = $500. Because you know the payment is within the discount period, the $495 paid must be 99% of the total payable. 3. This problem accrues an expense (Nov. 29) as a reminder that a purchases journal can also be used to record accrued expenses (unpaid services). However, many companies prefer to keep all accruals in the general journal. 4. Also remember to enter the posting references for the other accounts and for subsidiary accounts. Cash

13 S13 Learning Goal 24, continued LG Perpetual method: Account Credited Terms Purchases Journal page 5 Credit Payable Merchandise Inventory Debits Other Name Amount May 2 Enid Wholesale 1/15, n/30 3,200 3,200 3 Stillwater Supply 2/10, n/30 1,700 Supplies 132 1,700 8 Norman Resources 2/10, n/30 5,600 5, OK City Enterprises 2/10, n/30 4,900 4, Enid Wholesale 1/15, n/30 4,700 4, OK City Enterprises 2/10, n/30 5,200 5, Stillwater Supply 2/10, n/30 9,100 Off. Equip , Norman Resources 2/10, n/30 7,200 7, OK City Enterprises 2/10, n/30 1,400 1,400 43,000 32,200 10,800 (210) (145) (X) General Journal Page 3 Account Name and Dr. Cr. May 11 Payable, Norman Resources 210// 250 Merchandise Inventory Returned merchandise 20 Merchandise Inventory Payable, Tulsa Freight Company 210// 400 Received freight bill 29 Payable, Stillwater Supply 210// 1,700 Merchandise Inventory 145 1,700 Returned merchandise

14 S14 Section IV Accounting Systems Learning Goal 24, continued LG 24-9, continued Periodic method: Account Credited Terms Purchases Journal Page 5 Credit Payable Purchases Debits Other Name Amount May 2 Enid Wholesale 1/15, n/30 3,200 3,200 3 Stillwater Supply 2/10, n/30 1,700 Supplies 132 1,700 8 Norman Resources 2/10, n/30 5,600 5, OK City Enterprises 2/10, n/30 4,900 4, Enid Wholesale 1/15, n/30 4,700 4, OK City Enterprises 2/10, n/30 5,200 5, Stillwater Supply 2/10, n/30 9,100 Off. Equip , Norman Resources 2/10, n/30 7,200 7, OK City Enterprises 2/10, n/30 1,400 1,400 43,000 32,200 10,800 (210) (500) (X) General Journal Page 3 Account Name and Dr. Cr. May 11 Payable, Norman Resources 210// 250 Purchase Returns and Allowances Returned merchandise 20 Freight-in Payable, Tulsa Freight Company 210// 400 Received freight bill 29 Payable, Stillwater Supply 210// 1,700 Purchase Returns and Allowances 510 1,700 Returned merchandise

15 S15 Learning Goal 24, continued LG a. Total sales: $27,650 credit sales + $2,480 cash sales = $30,130. The three biggest customers this month: Scott Company, $7,000 at 23.2% of total sales; Nguyen Company, $5,500 at 18.3% of total sales; Anwen Enterprises, $5,250 at 17.4% of total sales. b. Sale Type Total Sales Cost of Goods Sold Gross Profit Gross Profit Percentage Credit sales $27,650 $11,240 $16, % Cash sales 2,480 1,275 1, % There is clearly a difference between the gross profit percent of cash and credit sales. This should be investigated to determine if there is a business reason, and the effect on total sales. c. Compare the November sales dates on the sales journal to the cash receipt dates on the cash receipts journal. By doing this, we see a sale made to Cabot Company on November 12. We received payment from Cabot Company on November 30, net of an $86 dollar discount. Payment was received 8 days after the discount payment date. d. To determine the unpaid November purchases, we compare the purchases journal and Payable payments made on the cash payments journal. The remaining unpaid November purchases are Office Suppliers for $5,500; Computer Supply Company for $9,750; Greenspan Company for $4,360; and Canyon Wholesale for $1,500. No discount is offered by Office Suppliers. For a discount, Computer Supply Company is due on December 3. Greenspan Company is due on December 2. Canyon Wholesale is due on December 7. Note: If we had a subsidiary ledger, it would be much easier to simply review each accounts payable subsidiary account to determine the balance due, the credit terms, and the payment due dates for each outstanding payable. e. Total November inventory purchases are $19,410 + $1,340 = $20,750. The three biggest inventory suppliers are Greenspan Company at $8,010 (38.6%), Ontario Enterprises at $5,100 (24.6%), and Bernanke Company at $4,800 (23.1%). f. The top three sources of cash receipts for November were collections from accounts receivable of $18,523, a loan of $15,000, and an owner investment of $12,000. The loan and investment are not likely to recur in December. g. Discounts do appear to be important to our customers. Of the five different cash receipts from credit customers in November, four of them took discounts (although Cabot Company paid after the discount period). The actual effective discount percentage taken was $327/$18,850 = 1.74% (see cash receipts journal). h. Total discounts taken on November purchases can be calculated by looking at the cash payments journal and calculating discounts taken as a percentage of the accounts payable that are paid. Creditor Paid $ Amount of Payable Discount taken % Discount taken Roosevelt Corporation $1, Ontario Enterprises 5,100 0 Greenspan Company 3, Bernanke Company 4, Washington Company Total $15,550 $159 1% The overall discount percentage is $159/$15,550 = 1%. Clearly, something is wrong because we can see on the purchases journal that most terms are 2%. To investigate this further, we should compare each purchase and each payment over a period of time.

16 S16 Section IV Accounting Systems Learning Goal 24, continued LG 24-10, continued i. Total November cash receipts are $52,627. The cash receipts that are probably non-recurring are the loan of $15,000, the owner s investment of $12,000, and the sale of equipment that provided $4,500 cash. We can make a rough estimate of the recurring cash receipts as $52,627 ($15,000 + $12,000 + $4,500) = $21,127. Total November cash payments are $30,481. The cash payment that is probably non-recurring is the purchase of land that required a cash payment of $7,000. We can make a rough estimate of the recurring cash payments as $30,481 $7,000 = $23,481. It appears that November total recurring cash receipts of $21,127 are less than total recurring cash payments of $23,481. This means that we should be very cautious about the December cash inflows and outflows. LG Perpetual system: General Journal Page 5 Account Name and Dr. Cr. Jan. 14 Sales Returns and Allowances 412 1,000 Receivable, Elizabeth, Inc. 115/ 1,000 Merchandise Inventory Cost of Goods Sold Inventory returned from Elizabeth, Inc. 22 Payable, Plainfield Supply Co. 215/ 650 Merchandise Inventory Inventory returned to Plainfield Supply Co. 28 Casualty Loss 650 1,500 Merchandise Inventory 126 1,500 Merchandise Inventory Payable, Superior Freight Company 215/ 700

17 S17 Learning Goal 24, continued LG 24-11, continued Perpetual system solution, continued Customer Account Invoice Number Sales Journal page 11 Dr. Receivable Cr. Sales Dr. Cost of Goods Sold Cr. Merchandise Inventory Jan. 4 Trenton Co Elizabeth, Inc ,750 1, New Brunswick, Inc ,900 2, Camden Co ,250 1, Trenton Co ,180 2,870 Totals 19,880 7,950 (115/410) (512/126) Account Credited Terms Purchases Journal page 14 Credit Payable Merchandise Inventory Debits Other Name Amount Jan. 2 Plainfield Supply Co. 2/10, n/30 3,500 3,500 6 Diamond Resources 1/10, n/15 8,000 8, Orange Office Supply 1,620 Supplies 122 1, Plainfield Supply Co. 2/10, n/30 2,800 2, Patterson Equipment 5,000 Equipment 140 5,000 Totals 20,920 14,300 6,620 (215) (126) (X)

18 S18 Section IV Accounting Systems Learning Goal 24, continued LG 24-11, continued Perpetual system solution, continued Cash Receipts Journal page 18 Other Debits Credits Dr. Cost of Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable Other Goods Sold Cr. Inventory Jan New Brunswick 1, , Trenton Co Supplies 122 1,500 1,170 Gain on Sale Elizabeth, Inc. 1, , New Brunswick 2, , Camden Co. 3,250 3, ,802 1, Totals 13, ,800 2, , (103) (415) (115) (410) (220) (X) (512/126) Ck. No. Account Name Cash Payments Journal page 20 Other Debits Payable Other Credits Merchandise Inventory Jan Rent Expense 550 4,800 4, Orange Office Supply 5,000 5, Equipment ,000 2,400 Notes Payable 280 9, Plainfield Supply Co. 3, , Diamond Resources 8, , Wages Expense ,500 10, Internet Expenses A. Torelli, Drawing 302 1,000 1,000 Totals 29,130 16,500 9, ,880 (X) (215) (X) (126) (103) Cash

19 S19 Learning Goal 24, continued LG 24-11, continued Perpetual system solution, continued General Ledger Cash 103 Jan. 1 Bal. CR18 13,395 36,200 49,595 CP20 35,880 13,715 Receivable 115 Jan Bal. GJ5 S11 CR18 19,880 1,000 9,800 1, ,380 10,580 Supplies 122 Jan Bal. P14 1, , CR18 1, Sales Tax Payable 220 Jan. 1 Bal. CR Notes Payable 280 Jan. 12 CP20 9,600 9,600 A. Torelli, Capital 301 Jan. 1 Bal. 56,755 A. Torelli, Drawing 302 Jan. CP20 1,000 1,000 Merchandise Inventory 126 Jan Bal. GJ5 GJ5 GJ5 S11 P14 CR18 CP20 GJ , ,500 7, ,650 16,050 15,400 13,900 5,950 20,250 19,355 19,205 19,905 Equipment 140 Jan Bal. CP20 P14 12,000 5,000 8,600 20,600 25,600 Payable 215 Jan Bal. GJ5 P14 CP20 GJ ,500 20, ,000 4,350 25,270 8,770 9,470 Sales Revenue 410 Jan. S11 CR18 19,880 2,100 19,880 21,980 Sales Returns & Allow. 412 Jan. 14 GJ5 1,000 1,000 Sales Discounts 415 Jan. CR Cost of Goods Sold 512 Jan. 14 GJ5 S11 CR18 7, (400) 7,550 8,445 Wages Expense 525 Jan. CP20 10,500 10,500

20 S20 Section IV Accounting Systems Learning Goal 24, continued LG 24-11, continued Perpetual system solution, continued General Ledger, continued Rent Expense 550 Jan. 8 CP20 4,800 4,800 Casualty Loss 650 Jan. 28 GJ5 1,500 1,500 Internet Expenses 570 Jan. CP Gain on Sale 710 Jan. 19 CR A/R Subsidiary Ledger Elizabeth, Inc. Jan. 10 S11 2,750 2, GJ5 CR18 1,000 1,750 1,750 0 Camden Co. Jan. 14 S11 3,250 3, CR18 3,250 0 A/P Subsidiary Ledger Diamond Resources Jan P14 CP20 8,000 8,000 8,000 0 Orange Office Supply Jan Bal. CP20 5,000 5, P14 1,620 1,620 New Brunswick, Inc. Jan Bal. CR18 S11 CR18 5,900 1,500 2,500 1, ,900 3,400 Trenton Co. Jan S11 CR18 S , ,180 Patterson Equipment Jan. 30 P14 5,000 5,000 Plainfield Supply Co. Jan P14 CP20 P14 GJ5 3, ,500 2,800 3, ,800 2,150 Superior Freight Company Jan. GJ

21 S21 Learning Goal 24, continued LG 24-11, continued Comments: 1. The total of final balances in Receivable subsidiary accounts should equal the controlling account balance: $10, The total of final balances in Payable subsidiary accounts should equal the controlling account balance: $9, The January 9 for the balance due payment from New Brunswick Company is within the discount period. The balance due is $1,500; however, this is reduced by a 2% discount. This applies to all other customers paying within the discount period. 4. Even though New Brunswick Company made only a partial (short) payment on January 21 of the balance due, the payment was made within the discount period. Therefore, the payment is considered to be net of the 2% discount. So the amount of the Receivable to credit is $2,450/.98 = $2, All checks are written in sequence, so the check number for the January 12 payment is # In the ledger accounts, individual items are posted daily and are recorded in the ledger as of the date of the transaction. Journal column totals are posted at the end of the month (January ), so there is no particular order in which they are recorded into a ledger account. (They all have the same date: January.) 7. There is a double posting reference in the general journal for accounts receivable and accounts payable. (Posting to both controlling and subsidiary accounts.) Periodic system solution: General Journal Page 5 Account Name and Dr. Cr. Jan. 14 Sales Returns and Allowances 412 1,000 Receivable, Elizabeth, Inc. 115/ 1, Payable, Plainfield Supply Co. 215/ 650 Purchase Returns and Allowances Inventory returned to Plainfield Supply Co. 28 Casualty Loss 650 1,500 Merchandise Inventory 126 1,500 Freight-in Payable, Superior Freight Company 215/ 700

22 S22 Section IV Accounting Systems Learning Goal 24, continued LG 24-11, continued Periodic system solution, continued Customer Account Invoice Number Sales Journal page 11 Dr. Receivable Cr. Sales Jan. 4 Trenton Co Elizabeth, Inc , New Brunswick, Inc , Camden Co , Trenton Co ,180 Totals 19,880 (115/410) Account Credited Terms Purchases Journal page 14 Credit Payable Purchases Debits Other Name Amount Jan. 2 Plainfield Supply Co. 2/10, n/30 3,500 3,500 6 Diamond Resources 1/10, n/15 8,000 8, Orange Office Supply 1,620 Supplies 122 1, Plainfield Supply Co. 2/10, n/30 2,800 2, Patterson Equipment 5,000 Equipment 140 5,000 Totals 20,920 14,300 6,620 (215) (508) (X)

23 S23 Learning Goal 24, continued LG 24-11, continued Periodic system solution, continued Cash Receipts Journal page 18 Other Debits Credits Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable Other Jan New Brunswick 1, , Trenton Co Supplies 122 1,500 1,170 Gain on Sale Elizabeth, Inc. 1, , New Brunswick 2, , Camden Co. 3,250 3, ,802 1, Totals 13, ,800 2, ,500 (103) (415) (115) (410) (220) (X) Ck. No. Account Name Cash Payments Journal page 20 Other Debits Payable Other Credits Purchase Discounts Jan Rent Expense 550 4,800 4, Orange Office Supply 5,000 5, Equipment ,000 2,400 Notes Payable 280 9, Plainfield Supply Co. 3, , Diamond Resources 8, , Wages Expense ,500 10, Internet Expenses A. Torelli, Drawing 302 1,000 1,000 Totals 29,130 16,500 9, ,880 (X) (215) (X) (510) (103) Cash

24 S24 Section IV Accounting Systems Learning Goal 24, continued LG 24-11, continued Periodic system solution, continued General Ledger Cash 103 Jan. 1 Bal. CR18 13,395 36,200 49,595 CP20 35,880 13,715 Receivable 115 Jan Bal. GJ5 S11 CR18 19,880 1,000 9,800 1, ,380 10,580 Supplies 122 Jan Bal. P14 1, , CR18 1, Merchandise Inventory 126 Jan Bal. GJ5 1,500 15,650 14,150 Equipment 140 Jan Bal. CP20 P14 12,000 5,000 8,600 20,600 25,600 Payable 215 Jan Bal. GJ5 P14 CP20 GJ ,500 20, ,000 4,350 25,270 8,770 9,470 Sales Tax Payable 220 Jan. 1 Bal. CR Notes Payable 280 Jan. 12 CP20 9,600 9,600 A. Torelli, Capital 301 Jan. 1 Bal. 56,755 A. Torelli, Drawing 302 Jan. CP20 1,000 1,000 Sales Revenue 410 Jan. S11 CR18 19,880 2,100 19,880 21,980 Sales Returns & Allow. 412 Jan. 14 GJ5 1,000 1,000 Sales Discounts 415 Jan. CR Purchases 508 Jan. P14 14,300 14,300 Purchase Discounts 510 Jan. CP Purchase Returns & Allow. 511 Jan. 22 GJ

25 S25 Learning Goal 24, continued LG 24-11, continued Periodic system solution, continued General Ledger, continued Freight-in 512 Jan. GJ Wages Expense 525 Jan. CP20 10,500 10,500 Rent Expense 550 Jan. 8 CP20 4,800 4,800 Internet Expenses 570 Jan. CP Casualty Loss 650 Jan. 28 GJ5 1,500 1,500 Gain on Sale 710 Jan. 19 CR A/R Subsidiary Ledger Elizabeth, Inc. Jan. 10 S11 2,750 2, GJ5 CR18 1,000 1,750 1,750 0 Camden Co. Jan. 14 S11 3,250 3, CR18 3,250 0 A/P Subsidiary Ledger Diamond Resources Jan P14 CP20 8,000 8,000 8,000 0 Orange Office Supply Jan Bal. CP20 5,000 5, P14 1,620 1,620 New Brunswick, Inc. Jan Bal. CR18 S11 CR18 5,900 1,500 2,500 1, ,900 3,400 Trenton Co. Jan S11 CR18 S , ,180 Patterson Equipment Jan. 30 P14 5,000 5,000 Plainfield Supply Co. Jan P14 CP20 P14 GJ5 3, ,500 2,800 3, ,800 2,150 Superior Freight Company Jan. GJ

26 S26 Section IV Accounting Systems Learning Goal 24, continued LG 24-11, continued Comments: 1. The total of final balances in Receivable subsidiary accounts should equal the controlling account balance: $10, The total of final balances in Payable subsidiary accounts should equal the controlling account balance: $9, The January 9 for the balance due payment from New Brunswick Company is within the discount period. The balance due is $1,500; however, this is reduced by a 2% discount. This applies to all other customers paying within the discount period. 4. Even though New Brunswick Company made only a partial (short) payment on January 21 of the balance due, the payment was made within the discount period. Therefore, the payment is considered to be net of the 2% discount. So the amount of the Receivable to credit is $2,450/.98 = $2, All checks are written in sequence, so the check number for the January 12 payment is # In the ledger accounts, individual items are posted daily and are recorded in the ledger as of the date of the transaction. Journal column totals are posted at the end of the month (January ), so there is no particular order in which they are recorded into a ledger account. (They all have the same date: January.) 7. There is a double posting reference in the general journal for accounts receivable and accounts payable. (Posting to both controlling and subsidiary accounts.) 8. Except for the casualty loss, the Merchandise Inventory account has no activity and the Cost of Goods Sold account is not used because with the periodic method, the inventory balance is not updated until the end of the period when the inventory is counted and cost of goods sold for the period is calculated. LG Perpetual system solution: General Journal Page 6 Account Name and Dr. Cr. May 11 Sales Returns and Allowances Receivable/Waterloo Co. 110/ 400 Merchandise Inventory Cost of Goods Sold Inventory returned from Waterloo Co 19 Payable/Bakersfield Co. 210/ 2,000 Merchandise Inventory 125 2,000 Inventory returned to Bakersfield Co.

27 S27 Learning Goal 24, continued LG 24-12, continued Perpetual system solution, continued Customer Account Invoice Number Sales Journal page 9 Dr. Receivable Cr. Sales Dr. Cost of Goods Sold Cr. Merchandise Inventory May 1 Brockport Co. 2 3,900 2,320 2 Brockport Co. 3 3,100 1,900 9 Waterloo Corp. 4 3,950 2, Valdosta Part. 5 8,200 4, Carson City Co. 6 5,900 3, Vanderbilt Co. 7 6,500 3,885 Totals,550 18,700 (110/405) (505/125) Account Credited Terms Purchases Journal page 12 Credit Payable Merchandise Inventory Debits Other Name Amount May 3 Barstow Corp. 1/15, n/30 5,100 5, Bakersfield Co. 1/10, n/30 12,000 12, Redwood City Corp. 2/10, n/30 1,000 Equip , Ventura Co. n/ Supplies Totals 18,925 17,100 1,825 (210) (125) (X)

28 S28 Section IV Accounting Systems Learning Goal 24, continued LG 24-12, continued Perpetual system solution, continued Cash Receipts Journal page 10 Other Debits Credits Dr. Cost of Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable Other Goods Sold Cr. Inventory May 5 Fredonia Co 1, ,400 6 Bank Fees Brockport Co 3, , Bank Fees Interest Earn Bank Fees Brockport Co. 3,100 3,100 Supplies Totals 10, ,400 1, (105) (407) (X) (110) (405) (215) (X) (505/125) Ck. No. Account Name Cash Payments Journal page 14 Other Debits Payable Other Credits Merchandise Inventory May Rent Expense 530 4,500 4, Inventory Equipment ,000 4,000 Notes Payable 280 8, Barstow Co. 5, , Bakersfield Co. 8, , Salaries Expense 520 7,500 7, Redwood City Corp. 1, Equipment Utilities Expense Inventory Totals 25,830 14,100 8,020 1,779 (X) (210) (X) (125) (105) Cash

29 S29 Learning Goal 24, continued LG 24-12, continued Perpetual system solution, continued General Ledger Cash 105 May 1 Bal. CR10 10,109 24,154 34,263 CP14,779 2,484 Receivable 110 May 1 11 Bal. GJ6 S9 CR10, ,400 1,400 1,000 32,550 24,150 Supplies 120 May 1 30 Bal. P CR Merchandise Inventory 125 May Bal. CP14 GJ6 GJ6 S9 P12 CR10 CP14 CP , ,000 18, ,588 22,438 22,648 20,648 1,948 19,048 18,451 19,201 19,070 Equipment 150 May Bal. CP14 P12 12,000 1,000 5,500 17,500 18, CP ,480 Payable 210 May 1 19 Bal. GJ6 P12 CP14 2,000 14,100 18,925 5,000 3,000 21,925 7,825 Sales Tax Payable 215 May 1 Bal. CR Notes Payable 280 May 14 CP14 8,000 8,000 M. Nagano, Capital 300 May 1 Bal. 47,337 Sales Revenue 405 May S9 CR10,550 1,300,550 32,850 Sales Returns & Allow. 406 May 11 GJ Sales Discounts 407 May CR Interest Earned 435 May 17 CR Cost of Goods Sold 505 May 11 GJ6 S9 CR10 18, (210) 18,490 19,087 Salaries Expense 520 May 24 CP14 7,500 7,500

30 S30 Section IV Accounting Systems Learning Goal 24, continued LG 24-12, continued Perpetual system solution, continued General Ledger, continued Rent Expense 530 May 2 CP14 4,500 4,500 Utilities Expense 540 May 28 CP Bank Fees Expense 550 May CR10 CR10 CR A/P Subsidiary Ledger Bakersfield Company May P12 GJ6 CP14 2,000 8,000 12,000 12,000 10,000 2,000 Barstow Corporation May 3 15 P12 CP14 5,100 5,100 5,100 0 A/R Subsidiary Ledger Brockport Company May 1 2 S9 S9 3,900 3,100 3,900 7, CR10 CR10 3,900 3,100 3,100 0 Carson City Company May 19 S9 5,900 5,900 Moorpark Enterprises April 30 Bal. 5,000 Redwood City Corporation May P12 CP14 1,000 1,000 1,000 0 Fredonia Company Apr 29 S8 1,400 1,400 May 5 CR10 1,400 0 Valdosta Partnership May 13 S9 8,200 8,200 Ventura Company May 30 P Vanderbilt Company May 23 S9 6,500 6,500 Waterloo Corporation May 9 S9 3,950 3, GJ ,550

31 S Learning Goal 24, continued LG 24-12, continued Comments: 1. The total of final balances in Receivable subsidiary accounts should equal the controlling account balance: $24, The total of final balances in Payable subsidiary accounts should equal the controlling account balance: $7, Fredonia Company paid within the discount period, so it received a full $1,400 credit against its account receivable balance, even though it only had to pay a lesser amount of $1,372 (a 2% discount). This also applies to any other company paying within a discount period. 4. To calculate the cash received from a taxable sale, multiply the sales tax rate of 8% times the amount of the sale. Then subtract 3% of the sales amount for the bank charges. 5. The May 22 partial (short) payment to Bakersfield Company is within the discount period, so it represents a net amount after applying the 1% discount. The debit to Payable is therefore $7,920/.99 = $8, In the ledger accounts, individual items are posted daily and are recorded in the ledger as of the date of the transaction. Journal column totals are posted at the end of the month (May ), so there is no particular order in which they are recorded into a ledger account. (They all have the same date: May.) 7. There is a double posting reference in the general journal for accounts receivable and accounts payable. (Posting to both controlling and subsidiary accounts.) 8. Did you notice that this company might be having a cash flow problem next month? (Look at the change in the cash balance in the Cash account.) What do you think is causing this? (Look at what is happening in the accounts receivable account.) Periodic system solution: General Journal Page 6 Account Name and Dr. Cr. May 11 Sales Returns and Allowances Receivable/Waterloo Co. 110/ Payable/Bakersfield Co. 210/ 2,000 Purchase Returns & Allowances 507 2,000 Inventory returned to Bakersfield Co.

32 S32 Section IV Accounting Systems Learning Goal 24, continued LG 24-12, continued Periodic system solution, continued Customer Account Sales Journal page 9 Invoice Number Dr. Receivable Cr. Sales May 1 Brockport Co. 2 3,900 2 Brockport Co. 3 3,100 9 Waterloo Corp. 4 3, Valdosta Part. 5 8, Carson City Co. 6 5, Vanderbilt Co. 7 6,500 Totals,550 (110/405) Account Credited Terms Purchases Journal page 12 Credit Payable Purchases Debits Other Name Amount May 3 Barstow Corp. 1/15, n/30 5,100 5, Bakersfield Co. 1/10, n/30 12,000 12, Redwood City Corp. 2/10, n/30 1,000 Equipment 150 1, Ventura Co. n/ Supplies Totals 18,925 17,100 1,825 (210) (505) (X)

33 S33 Learning Goal 24, continued LG 24-12, continued Periodic system solution, continued Cash Receipts Journal page 10 Other Debits Credits Account Name Cash Sales Discount Other Receivable Sales Sales Tax Payable Other May 5 Fredonia Co 1, ,400 6 Bank Fees Brockport Co 3, , Bank Fees Interest Earned Bank Fees Brockport Co. 3,100 3,100 Supplies Totals 10, ,400 1, (105) (407) (X) (110) (405) (215) (X) Ck. No. Account Name Cash Payments Journal page 14 Other Debits Payable Other Credits Purchase Discounts May Rent Expense 530 4,500 4, Purchases Equipment ,000 4,000 Notes Payable 280 8, Barstow Co. 5, , Bakersfield Co. 8, , Salaries Expense 520 7,500 7, Redwood City Corp. 1, Equipment Utilities Expense Freight-in Totals 25,830 14,100 8,020 1,779 (X) (210) (X) (506) (105) Cash

34 S34 Section IV Accounting Systems Learning Goal 24, continued LG 24-12, continued Periodic system solution, continued General Ledger Cash 105 May 1 Bal. CR10 10,109 24,154 34,263 CD14,779 2,484 Receivable 110 May 1 11 Bal. GJ6 S9 CR10, ,400 1,400 1,000 32,550 24,150 Supplies 120 May 1 30 Bal. P CR Merchandise Inventory 125 May 1 Bal. 21,588 Equipment 150 May Bal. CP14 P12 12,000 1,000 5,500 17,500 18, CP ,480 Payable 210 May 1 19 Bal. GJ6 P12 CP14 2,000 14,100 18,925 5,000 3,000 21,925 7,825 Sales Tax Payable 215 May 1 Bal. CR M. Nagano, Capital 300 May 1 Bal. 47,337 Sales Revenue 405 May S9 CR10,550 1,300,550 32,850 Sales Returns & Allow. 406 May 11 GJ Sales Discounts 407 May CR Interest Earned 435 May 17 CR Purchases 505 May 8 CP14 P , ,950 Purchase Discounts 506 May 24 CP Purchase Returns & Allow. 507 May 19 GJ6 2,000 2,000 Freight-in. 510 May CP Notes Payable 280 May 14 CP14 8,000 8,000

35 S35 Learning Goal 24, continued LG 24-12, continued Periodic system solution, continued General Ledger, continued Salaries Expense 520 May 24 CP14 7,500 7,500 Utilities Expense 540 May 28 CP Rent Expense 530 May 2 CP14 4,500 4,500 A/P Subsidiary Ledger Barstow Corporation May 3 15 P12 CP14 5,100 5,100 5,100 0 Bakersfield Company May P12 GJ6 CP14 2,000 8,000 12,000 12,000 10,000 2,000 Bank Fees Expense 550 May CR10 CR10 CR A/R Subsidiary Ledger Brockport Company May 1 2 S9 S9 3,900 3,100 3,900 7, CR10 CR10 3,900 3,100 3,100 0 Carson City Company May 19 S9 5,900 5,900 Moorpark Enterprises April 30 Bal. 5,000 Redwood City Corporation May P12 CP14 1,000 1,000 1,000 0 Fredonia Company Apr 29 S8 1,400 1,400 May 5 CR10 1,400 0 Valdosta Partnership May 13 S9 8,200 8,200 Ventura Company May 30 P Vanderbilt Company May 23 S9 6,500 6,500 Waterloo Corporation May 9 S9 3,950 3, GJ ,550

36 S36 Section IV Accounting Systems Learning Goal 24, continued LG 24-12, continued Comments: 1. The total of final balances in Receivable subsidiary accounts should equal the controlling account balance: $24, The total of final balances in Payable subsidiary accounts should equal the controlling account balance: $7, Fredonia Company paid within the discount period, so it received a full $1,400 credit against its account receivable balance, even though it only had to pay a lesser amount of $1,372 (a 2% discount). This also applies to any other company paying within the discount period. 4. The May 22 partial (short) payment to Bakersfield Company is within the discount period, so it represents a net amount after applying the 1% discount. The debit to Payable is therefore $7,920/.99 = $8, To calculate the cash received from a taxable sale, multiply the sales tax rate of 8% times the amount of the sale. Then subtract 3% of the sales amount for the bank charges. 6. In the ledger accounts, individual items are posted daily and are recorded in the ledger as of the date of the transaction. Journal column totals are posted at the end of the month (May ), so there is no particular order in which they are recorded into a ledger account. (They all have the same date: May.) 7. There is a double posting reference in the general journal for accounts receivable and accounts payable. (Posting to both controlling and subsidiary accounts.) 8. The Merchandise Inventory account has no activity and the Cost of Goods Sold account is not used because with the periodic method, the inventory balance is not updated until the end of the period when the inventory is counted and cost of goods sold for the period is calculated. 9. Did you notice that this company might be having a cash flow problem next month? (Look at the change in the cash balance in the cash account.) What do you think is causing this? (Look at what is happening in the accounts receivable account.)

37 S37 Learning Goal 24, continued LG General Journal page 5 Account Name and Dr. Cr. August 2 Equipment 150 4,500 J. Reed, Capital 303 4, Unearned Revenue 250 1,500 Lessons Revenue 410 1,500 Depreciation Expense 560 3,860 Accumulated Depreciation, Aircraft 141 3,560 Accumulated Depreciation, Equipment Utilities Expense Advertising Expense 550 1,195 Payable, County Utilities Service 210/ 412 Payable, Metro Newspaper 210/ 1,195 Office Supplies Expense 512 1,532 Aircraft Supplies Expense 514 2,788 Office Supplies 120 1,532 Aircraft Supplies 125 2,788 Insurance Expense 510 1,875 Prepaid Insurance 130 1,875 Salaries/Wages Expense 520 2,300 Salaries/Wages Payable 220 2,300 Customer Account Invoice Number Sales Journal page 3 Dr. Accts. Receivable Cr. Rides Revenue Dr. Accts. Receivable Cr. Lessons Revenue Aug. 12 J. Torcedo 210 6, E. Anderson D. Nguyen R. Washington D. Nguyen D. Zoraida E. Anderson J. Torcedo 217 3,700 Totals 1,630 10,200 (110/405) (110/410)

38 S38 Section IV Accounting Systems Learning Goal 24, continued LG 24-13, continued Account Credited Terms Purchases Journal page 4 Credit Payable Aircraft Supplies Debits Other Name Amount Aug. 10 Archer Supplies net Office Supp Sandilov Corp. net 30 4,900 Equipment 150 4, Jimenez Company 2/10, n/ Cadwyn Company 2/15, n/30 1,285 1,285 Totals 7,470 2,185 5,285 (210) (125) (X) Cash Receipts Journal page 7 Other Debits Credits Account Name Cash Customer Discounts Other Receivable Rides Revenue Lessons Revenue Other Aug. 1 J. Reed, Capital ,000 15, ,750 2,750 5 Johnson Aircraft 18, , ,450 7,450 7 John Sears 2, ,000 8 Unearned Revenue 250 1,500 1, D. Zoraida 5,595 5, ,130 2, E. Anderson J. Torcedo 3,000 3, John Sears Totals 60, ,975 4,880 7,450 16,500 (103) (421) (110) (405) (410) (X)

39 S39 Learning Goal 24, continued LG 24-13, continued Ck. No. Account Name Cash Payments Journal page 8 Other Debits Sal./Wages Expense Payable Other Credits Aircraft Supplies August Office Supplies Rent Expense 530 3,000 3, Cadwyn Company 5, , ,100 2, Sandilov Corp. 7,947 7, ,540 2, ,450 2, Notes Payable ,200 Interest Expense 598 4, Aircraft ,000 25,000 Notes Payable , Jimenez Company J. Reed, Withdrawals 304 1,100 1,100 Totals 87,175 7,090 14,747 52, ,935 (X) (520) (210) (X) (125) (103) Cash

40 S40 Section IV Accounting Systems Learning Goal 24, continued LG 24-13, continued General Ledger Cash 103 Aug. 1 Bal. CR7 60,356 93, ,636 CP8 56,935 96,701 Receivable 110 Aug. 1 Bal. S3 S3 1,630 10,200 28,725 30,355 40,555 CR7,975 8,580 Office Supplies 120 Aug Bal. CP8 P ,252 2,127 2,512 GJ5 1, Aircraft Supplies 125 Aug. 1 Bal. P4 2,185 2,100 4,285 CP8 GJ7 77 2,788 4,208 1,420 Prepaid Insurance 130 Aug. 1 Bal. GJ5 1,875 7,500 5,625 Aircraft 140 Aug. 1 Bal. CP8 77, , ,420 Accum. Dep n. Aircraft 141 Aug. 1 Bal. GJ5 3,560 67,900 71,460 Equipment 150 Aug Bal. GJ5 P4 4,500 4,900 36,880 41,380 46,280 Accum. Dep n. Equipment 151 Aug. 1 Bal. GJ ,922 28,222 Payable 210 Aug. 1 Bal. P4 CP8 GJ5 GJ5 14,747 7, ,195 13,847 21,7 6,570 6,982 8,177 Salaries & Wages Payable 220 Aug. GJ5 2,300 2,300 Unearned Revenue 250 Aug CR7 GJ5 1,500 1,500 1,500 0

41 S41 Learning Goal 24, continued LG 24-13, continued General Ledger, continued Notes Payable 280 Aug Bal. CP , ,675 CP8 52, ,675 J. Reed, Capital 303 Aug Bal. CR7 GJ5 15,000 4,500 7, , ,988 J. Reed, Withdrawals 304 Aug. CP8 1,100 1,100 Rides Revenue 405 Aug. S3 CR7 1,630 4,880 1,630 6,510 Lessons Revenue 410 Aug. 21 GJ5 S3 CR7 1,500 10,200 7,450 1,500 11,700 19,150 Customer Discounts 421 Aug. CR Insurance Expense 510 Aug. GJ5 1,875 1,875 Office Supplies Expense 512 Aug. GJ5 1,532 1,532 Aircraft Supplies Expense 514 Aug. GJ5 2,788 2,788 Salaries/Wages Expense 520 Aug. CP8 GJ5 7,090 2,300 7,090 9,390 Rent Expense 530 Aug. 3 CP8 3,000 3,000 Utilities Expense 540 Aug. GJ Advertising Expense 550 Aug. GJ5 1,195 1,195 Depreciation Expense 560 Aug. GJ5 3,860 3,860 Interest Expense 598 Aug. 24 CP8 4,875 4,875

42 S42 Section IV Accounting Systems Learning Goal 24, continued LG 24-13, continued A/R Subsidiary Ledger E. Anderson Aug S3 CR7 S Johnson Aircraft Aug. 1 5 Bal. CR7 19,200 19,200 0 D. Nguyen Aug S3 S J. Sears Aug Bal. CR7 CR7 3, , J. Torcedo Aug S3 CR7 S3 6,500 3,700 3,000 6,500 3,500 7,200 R. Washington Aug. 17 S A/P Subsidiary Ledger Archer Supplies Aug. 10 P Cadwyn Company Aug. 1 6 Bal. CP8 5,900 5, P4 1,285 1,285 County Utilities Service Aug. GJ Jimenez Company Aug. 26 P4 CP Metro Newspaper Aug. GJ5 1,195 1,195 Sandilov Corp. Aug Bal. CP8 7,947 7, P4 4,900 4,900 D. Zoraida Aug Bal. CR7 S ,595 5,

43 S43 Learning Goal 24, continued LG 24-13, continued Comments: Sky Soaring Enterprises Adjusted Trial Balance August, Acct. # Dr. Cr. 103 Cash $96, Receivable 8, Office Supplies Aircraft Supplies 1, Prepaid Insurance 5, Aircraft 834, Accum. Dep n., Aircraft 71, Equipment 46, Accum. Dep n., Equipment 28, Payable 8, Salaries and Wages Payable 2, Notes Payable 551, J. Reed, Capital 336, J. Reed, Withdrawals 1, Rides Revenue 6, Lessons Revenue 19, Customer Discounts Insurance Expense 1, Office Supplies Expense 1, Aircraft Supplies Expense 2, Salaries/Wages Expense 9, Rent Expense 3, Utilities Expense Advertising Expense 1, Depreciation Expense 3, Interest Expense 4,875 Totals 1,024,482 1,024, This problem required some thought about how best to select the column titles in several of the special journals. For the sales journal, there were two types of revenue and no cost of goods sold, so the two right columns could be used for each type of sale on account. For the cash receipts journal, two possible types of revenue credit entries were likely to occur with some frequency the rides and lessons revenue. (Although in August there was only one cash receipt entry for lessons revenue.) For the cash payments journal, the problem instructions indicated that discounts were usually available (credit entries) for early payment for aircraft supplies. For the purchases journal Aircraft Supplies was used as a column heading instead of Office Supplies because of greater possible use (see comment in the August 6 transaction). Note: With differently formatted journals, your column headings could have also been different. 2. The calculation for Sears short payment within the discount period is 2,940/.98 = 3,000 A/R credit. Notice that some customers paid after their discount period had expired and received no discount.