Question

Nicole’s Getaway Spa (NGS) continues to grow and develop. Nicole is now evaluating a computerized accounting system and needs your help in understanding how source documents inform accounting processes. She also needs some help reconciling NGS’s bank account.

Required:
1. For each source information shown below, prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Purchase order dated October 13 for massage chairs costing $805 and oil supplies costing $280
2. Remittance advice from customer for $109, received October 17
3. Receiving report indicating October 22 receipt of October 13 order. Also received supplier invoice totalling $1,085
4. NGS cheque for payment in full of October 13 order

Answer 1

S. No.	Transaction/event	Date	General Journal	Debit	Credit
1	PO dated October 13	No journal entry required
2	Remittance dated October 17	Oct. 17	Cash	109
			Accounts receivable		109
3	Receiving report	Oct. 22	Massage chairs	805
			Oil Supplies	280
			GRIR account		1,085
4	Received supplier invoice	Oct. 22	GRIR account	1,085
			Accounts payable		1,085
5	Cheque payment	(Not given in question)	Accounts payable	1,085
			Bank		1,085

Note: Students can also pass a single entry for receiving report and supplier invoice which would be as follows:

Date	General Journal	Debit	Credit
Oct. 22	Massage chairs	805
	Oil supplies	280
	Accounts payable		1,085