Question

Comprehensive Accounting Cycle Review

ACR7.1  (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 below 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 Number	Account Title	January 1 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 (from accounts receivable subsidiary ledger)		Schedule of Accounts Payable (from accounts payable subsidiary ledger)
Customer	January 1 Opening Balance	Creditor	January 1 Opening Balance
R. Beltre	$1,500	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 office 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 office 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 office salaries $3,800.

Instructions

(a)  

Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal as shown in Illustration 7.9, a cash payments journal as shown in Illustration 7.16, and a two-column general journal.

(b)  

Post the journals to the general ledger.

(c)  Prepare a trial balance at January 31, 2020, in the trial balance columns of the worksheet. Complete the worksheet using the following additional information.

• 1.Office supplies at January 31 total $900.
• 2.Insurance coverage expires on October 31, 2020.
• 3.Annual depreciation on the equipment is $1,500.
• 4.Interest of $50 has accrued on the note payable.

(d)  

Prepare a multiple-step income statement and an owner's equity statement for January and a classified 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.

ACR7.2  (Periodic Inventory) McBride Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit balances.

GENERAL LEDGER
Account Number	Account Title	January 1 Opening Balance
101	Cash	$33,750
112	Accounts Receivable	13,000
115	Notes Receivable	39,000
120	Inventory	20,000
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 (from accounts receivable subsidiary ledger)		Schedule of Accounts Payable (from accounts payable subsidiary ledger)
Customer	January 1 Opening Balance	Creditor	January 1 Opening Balance
R. Kotsay	$1,500	S. Otero	$  9,000
B. Boxberger	7,500	R. Rasmus	15,000
S. Andrus	4,000	D. Baroni	11,000

In addition, the following transactions have not been journalized for January 2020.

Jan.  3	Sell merchandise on account to B. Berg $3,600, invoice no. 510, and J. Lutz $1,800, invoice no. 511.
5	Purchase merchandise on account from S. Colt $5,000 and D. Kahn $2,700.
7	Receive checks for $4,000 from S. Andrus and $2,000 from B. Boxberger.
8	Pay freight on merchandise purchased $180.
9	Send checks to S. Otero for $9,000 and D. Baroni for $11,000.
9	Issue credit of $300 to J. Lutz for merchandise returned.
10	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. Kotsay for $2,900, invoice no. 512, and to S. Andrus $900, invoice no. 513. Post all entries to the subsidiary ledgers.
12	Pay rent of $1,000 for January.
13	Receive payment in full from B. Berg and J. Lutz.
15	Withdraw $800 cash by I. McBride for personal use.
16	Purchase merchandise on account from D. Baroni for $12,000, from S. Otero for $13,900, and from S. Colt for $1,500.
17	Pay $400 cash for supplies.
18	Return $200 of merchandise to S. Otero and receive credit.
20	Cash sales from January 11 to January 20 total $17,500. Make one journal entry for these sales.
21	Issue $15,000 note to R. Rasmus in payment of balance due.
21	Receive payment in full from S. Andrus. Post all entries to the subsidiary ledgers.
22	Sell merchandise on account to B. Berg for $3,700, invoice no. 514, and to R. Kotsay for $800, invoice no. 515.
23	Send checks to D. Baroni and S. Otero in full payment.
25	Sell merchandise on account to B. Boxberger for $3,500, invoice no. 516, and to J. Lutz for $6,100, invoice no. 517.
27	Purchase merchandise on account from D. Baroni for $12,500, from D. Kahn for $1,200, and from S. Colt for $2,800.
28	Pay $200 cash for office supplies.
31	Cash sales from January 21 to January 31 total $22,920. Make one journal entry for these sales.
31	Pay sales salaries of $4,300 and office salaries of $3,600.

Instructions

(a)  

Record the January transactions in the appropriate journal—sales, purchases, cash receipts, cash payments, and general.

(b)  

Post the journals to the general and subsidiary ledgers. Add and number new accounts in an orderly fashion as needed.

(c)  Prepare a trial balance at January 31, 2020, using a worksheet. Complete the worksheet using the following additional information.

• 1.Supplies at January 31 total $700.
• 2.Insurance coverage expires on October 31, 2020.
• 3.Annual depreciation on the equipment is $1,500.
• 4.Interest of $30 has accrued on the note payable.
• 5.Inventory at January 31 is $15,000.

(d)  

Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.

(e)  

Prepare and post the 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

In the books of Jeter Co.