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Problem 7-1A Special journals, subsidiary ledgers, trial balance-perpetual LO C3, P1, P2

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Church Company completes these transactions and events during March of the current year (terms for all its credit sales are 2/10, n/30).

Mar.		1				Purchased $39,000 of merchandise from Van Industries, invoice dated March 1, terms 2/15, n/30.
		2				Sold merchandise on credit to Min Cho, Invoice No. 854, for $15,600 (cost is $7,800).
		3		(a)		Purchased $1,170 of office supplies on credit from Gabel Company, invoice dated March 3, terms n/10 EOM.
		3		(b)		Sold merchandise on credit to Linda Witt, Invoice No. 855, for $7,800 (cost is $3,900).
		6				Borrowed $72,000 cash from Federal Bank by signing a long-term note payable.
		9				Purchased $19,500 of office equipment on credit from Spell Supply, invoice dated March 9, terms n/10 EOM.
		10				Sold merchandise on credit to Jovita Albany, Invoice No. 856, for $3,900 (cost is $1,950).
		12				Received payment from Min Cho for the March 2 sale less the discount.
		13		(a)		Sent Van Industries Check No. 416 in payment of the March 1 invoice less the discount.
		13		(b)		Received payment from Linda Witt for the March 3 sale less the discount.
		14				Purchased $35,000 of merchandise from the CD Company, invoice dated March 13, terms 2/10, n/30.
		15		(a)		Issued Check No. 417, payable to Payroll, in payment of sales salaries expense for the first half of the month, $16,200. Cashed the check and paid the employees.
		15		(b)		Cash sales for the first half of the month are $62,400 (cost is $49,920). (Cash sales are recorded daily, but are recorded only twice here to reduce repetitive entries.)
		16				Purchased $1,690 of store supplies on credit from Gabel Company, invoice dated March 16, terms n/10 EOM.
		17				Received a $3,500 credit memorandum from CD Company for the return of unsatisfactory merchandise purchased on March 14.
		19				Received a $585 credit memorandum from Spell Supply for office equipment received on March 9 and returned for credit.
		20				Received payment from Jovita Albany for the sale of March 10 less the discount.
		23				Issued Check No. 418 to CD Company in payment of the invoice of March 13 less the March 17 return and the discount.
		27				Sold merchandise on credit to Jovita Albany, Invoice No. 857, for $11,700 (cost is $4,680).
		28				Sold merchandise on credit to Linda Witt, Invoice No. 858, for $4,680 (cost is $1,872).
		31		(a)		Issued Check No. 419, payable to Payroll, in payment of sales salaries expense for the last half of the month, $16,200. Cashed the check and paid the employees.
		31		(b)		Cash sales for the last half of the month are $68,640 (cost is $41,184).
		31		(c)		Verify that amounts impacting customer and creditor accounts were posted and that any amounts that should have been posted as individual amounts to the general ledger accounts were posted. Foot and crossfoot the journals and make the month-end postings.

Assume the following ledger account amounts Inventory (March 1 beg. bal. is $63,000), Z. Church, Capital (March 1 beg. bal. is $63,000) and Church Company uses the perpetual inventory system.

Problem 7-1A Part 2

Required:

2-a. Enter the transactions in a sales journal.
2-b. Enter the transactions in a purchases journal.
2-c. Enter the transactions in a cash receipts journal.
2-d. Enter the transactions in a cash disbursements journal.
2-e. Enter the transactions in a general journal.

Post information from the journals in Part 2 to the general ledger and the accounts receivable and accounts payable subsidiary ledgers.

Prepare the March 31 trial balance, schedule of accounts receivable and schedule of accounts payable.

Answer 1

2-a. Sales Journals Dr($) Cr($)

(2) Min Cho A/c Dr. to Sales A/c 15,600 15,600 (Sold merchandise on credit to Min Cho, Invoice No. 854)

(3b) Linda Witt A/c Dr. to Sales A/c 7,800 7,800 (Sold merchandise on credit to Linda Witt, Invoice No. 855) (10) Jovita Albany A/c Dr. to Sales A/c 3,900 3,900 (Sold merchandise on credit to Jovita Albany, Invoice No. 856) (15b) Cash A/c Dr. to Sales A/c 62,400   62,400 (Cash sales for the first fortnight being recorded) (27) Jovita Albany A/c Dr. to Sales A/c 11,700 11,700 (Sold merchandise on credit to Jovita Albany, Invoice No. 857) (28) Linda Witt A/c Dr. to Sales A/c 4,680 4,680 (Sold merchandise on credit to Linda Witt, Invoice No. 858)

(31b)Cash A/c Dr. to Sales A/c 68,640   68,640 (Cash sales for the last half of the month being recorded)

2-b. Purchases Journals

(note: only trade related purchases, i.e. purchases of merchandises are to be recorded here)

(1) Purchases A/c Dr. to Van Industries A/c 39,000   39,000 (Purchased merchandise from Van Industries, invoice dated March 1, terms 2/15, n/30) (14) Purchases A/c Dr. to CD Company A/c 35,000   35,000 (Purchased merchandise from the CD Company, invoice dated March 13, terms 2/10, n/30)

2-c. Cash Receipts Journals

(6) Cash A/c Dr. to Borrowing From Federal Bank A/c 72,000   72,000 (Borrowed cash from Federal Bank by signing a long-term note payable)

(12) Cash/Bank A/c Dr. to Min Cho A/c 15,288 15,288 (Received payment from Min Cho for the March 2 sale less the discount)

(13b) Cash/Bank A/c Dr. to Linda Witt A/c 7,644 7,644 (Received payment from Linda Witt for the March 3 sale less the discount)

(15a) Cash A/c Dr. to Bank A/c 16,200 16,200 (Check no. 417 issued and encashed for payment of salaries)

(15b) Cash A/c Dr. to Sales A/c 62,400   62,400 (Cash sales for the first fortnight being recorded)

(20) Cash/Bank A/c Dr. to Jovita Albany A/c 3,822 3,822 (Received payment from Jovita Albany for the sale of March 10 less the discount.)

(31a) Cash A/c Dr. to Bank A/c 16,200 16,200 (Check no. 419 issued and encashed for payment of salaries)

(31b)Cash A/c Dr. to Sales A/c   68,640   68,640 (Cash sales for the last half of the month being recorded)

2-c. Cash Disbursements Journals

(13a) Van Industries A/c Dr. to Bank A/c 38,220 38,220 (Sent Van Industries Check No. 416 in payment of the March 1 invoice less the discount)

(15a) Salaries A/c Dr. to Cash A/c 16,200 16,200 (Salaries paid in cash for first half of the month)

(23)  CD Company A/c Dr. to Bank A/c 30,870 30,870 (Issued Check No. 418 to CD Company in payment of the invoice of March 13 less the March 17 return and the discount) {(35000-3500)*.98}

(31a) Salaries A/c Dr. to Cash A/c 16,200 16,200 (Salaries paid in cash for last half of the month)