Question

CP7-1 (Perpetual Method) Jeter Co. uses a perpetual inventory system and both an accounts receivable
and an accounts payable subsidiary ledger. Balances related to both the general ledger and the
subsidiary ledgers for Jeter are indicated in the working papers presented below. Also following are a
series of transactions for Jeter Co. for the month of January. Credit sales terms are 2/10, n/30. The cost
of all merchandise sold was 60% of the sales price.
GENERAL LEDGER
Account January 1
Number Account Title Opening Balance
101 Cash $35,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Inventory 18,000
126 Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation—Equip. 1,500
201 Accounts Payable 35,000
301 Owner’s Capital 78,700

Schedule of Accounts Receivable Schedule of Accounts Payable
(from accounts receivable subsidiary ledger) (from accounts payable subsidiary ledger)
January 1    January 1
Opening Balance Opening Balance

Customer    R. Beltre $1,500    Creditor S. Meek $ 9,000
   B. Santos 7,500 R. Moses 15,000
   S. Mahay 4,000    D. Saito 11,000

Jan. 3 Sell merchandise on account to B. Corpas $3,600, invoice no. 510, and to J. Revere $1,800,
invoice no. 511.
5 Purchase merchandise from S. Gamel $5,000 and D. Posey $2,200, terms n/30.
7 Receive checks from S. Mahay $4,000 and B. Santos $2,000 after discount period has lapsed.
8 Pay freight on merchandise purchased $235.
9 Send checks to S. Meek for $9,000 less 2% cash discount, and to D. Saito for $11,000 less
1% cash discount.
9 Issue credit of $300 to J. Revere for merchandise returned.
10 Daily cash sales from January 1 to January 10 total $15,500. Make one journal entry for these sales.
11 Sell merchandise on account to R. Beltre $1,600, invoice no. 512, and to S. Mahay $900,
invoice no. 513.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Corpas and J. Revere less cash discounts.
15 Withdraw $800 cash by M. Jeter for personal use.
15 Post all entries to the subsidiary ledgers.
16 Purchase merchandise from D. Saito $15,000, terms 1/10, n/30; S. Meek $14,200, terms
2/10, n/30; and S. Gamel $1,500, terms n/30.
17 Pay $400 cash for offi ce supplies.
18 Return $200 of merchandise to S. Meek and receive credit.
20 Daily cash sales from January 11 to January 20 total $20,100. Make one journal entry for
these sales.
21 Issue $15,000 note, maturing in 90 days, to R. Moses in payment of balance due.
21 Receive payment in full from S. Mahay less cash discount.
22 Sell merchandise on account to B. Corpas $2,700, invoice no. 514, and to R. Beltre $2,300,
invoice no. 515.
22 Post all entries to the subsidiary ledgers.
23 Send checks to D. Saito and S. Meek for full payment less cash discounts.
25 Sell merchandise on account to B. Santos $3,500, invoice no. 516, and to J. Revere $6,100,
invoice no. 517.
27 Purchase merchandise from D. Saito $14,500, terms 1/10, n/30; D. Posey $3,200, terms
n/30; and S. Gamel $5,400, terms n/30.
27 Post all entries to the subsidiary ledgers.
28 Pay $200 cash for offi ce supplies.
31 Daily cash sales from January 21 to January 31 total $21,300. Make one journal entry for
these sales.
31 Pay sales salaries $4,300 and offi ce salaries $3,800.
Instructions

Prepare a multiple-step income statement and an owner’s equity statement for January and a
classifi ed balance sheet at the end of January.
(e) Prepare and post adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the
control accounts in the general ledger.

Answer 1