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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 $36,000 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 $14,400 (cost is $7,200).

  3 (a) Purchased $1,080 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 $7,200 (cost is $3,600).

  6   Borrowed $72,000 cash from Federal Bank by signing a long-term note payable.

  9   Purchased $18,000 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 $3,600 (cost is $1,800).

  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 $29,000 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, $13,000. Cashed the check and paid the employees.

  15 (b) Cash sales for the first half of the month are $57,600 (cost is $46,080). (Cash sales are recorded daily, but are recorded only twice here to reduce repetitive entries.)

  16   Purchased $1,600 of store supplies on credit from Gabel Company, invoice dated March 16, terms n/10 EOM.

  17   Received a $2,900 credit memorandum from CD Company for the return of unsatisfactory merchandise purchased on March 14.

  19   Received a $540 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 $10,800 (cost is $4,320).

  28   Sold merchandise on credit to Linda Witt, Invoice No. 858, for $4,320 (cost is $1,728).

  31 (a) Issued Check No. 419, payable to Payroll, in payment of sales salaries expense for the last half of the month, $13,000. Cashed the check and paid the employees.

  31 (b) Cash sales for the last half of the month are $63,360 (cost is $38,016).

  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-d. Enter the transactions in a cash disbursements journal.

	CASH DISBURSEMENTS JOURNAL Date Ck.No. Payee Account Debited Cash Cr. Inventory Cr. Other Accounts Dr. Accounts Payable Dr. Mar. 13 416 Van Industries Van Industries $35,280 $720 $36,000 Mar. 15 417 Payroll Sales salaries expense 13,000 13,000 Mar. 23 418 CD Company CD Company 26,100 Mar. 31 419 Payroll Sales salaries expense 13,000 13,000 Mar. 31 Totals $61,280 $720 $26,000 $62,100

Answer 1

Journal entries
		(Amount $)
		Debit	Credit
mar 1st	Inventory a/c Dr	36,000.00
	To Accounts payable a/c		36,000.00
	(Being merchandise purchased from Van Industries, inv dt march 1st, term 2/15, n/30 accounted)
2-Mar	Accounts receivable a/c Dr	14,400.00
	To sales a/c		14,400.00
	(Being merchandise sold to min cho, inv 854 accounted)
2-Mar	Cost of goods sold A/c Dr	7,200.00
	To Inventory a/c		7,200.00
	(Being sale related cost transferred to cogs)
3rd march	office supplies a/c Dr	1,080.00
	To Accounts payable a/c		1,080.00
	(Being office supplies purchased on credit accounted
3rd march	Accounts receivable a/c Dr	7,200.00
	To sales a/c		7,200.00
	(Being merchandise sold to linda watt, inv 855 accounted)
3rd march	Cost of goods sold A/c Dr	3,600.00
	To Inventory a/c		3,600.00
	(Being sale related cost transferred to cogs)
6th marc	Cash A/c Dr	72,000.00
	To notes payable a/c		72,000.00
	(Being cash borrowed towards notes payable)
9th mar	office equipment a/c Dr	18,000.00
	To Accounts payable a/c		18,000.00
	(Being office equipment purchased on credit accounted)
10th mar	Accounts receivable a/c Dr	3,600.00
	To sales a/c		3,600.00
	(Being merchandise sold to jovita, inv 856 accounted)
10th mar	Cost of goods sold A/c Dr	1,800.00
	To Inventory a/c		1,800.00
	(Being sale related cost transferred to cogs)
12th mar	Cash A/c Dr	14,112.00
	Discount given a/c Dr	288.00
	To Accounts receivable a/c		14,400.00
	(Being amount received from Min cho after the discount of 2%)
13th march	Acounts payable a/c Dr	36,000.00
	To Bank a/c		35,280.00
	To discount received a/c		720.00
	(Being amount paid to Van industries vide a check 416 and received the discount of 2%)
13th march	Cash A/c Dr	7,056.00
	Discount given a/c Dr	144.00
	To Accounts receivable a/c		7,200.00
	(Being amount received from Linda witt after the discount of 2%)
14th mar	Inventory a/c Dr	29,000.00
	To Accounts payable a/c		29,000.00
	(Being merchandise purchased from Cd company, inv dt march 13, term 2/10, n/30 accounted)
15th march	Cash A/c Dr	13,000.00
	To bank A/c		13,000.00
	(Being che. 417 encashed and paid to sales salaries)
15th march	Sales salaries a/c Dr	13,000.00
	To cash a/c		13,000.00
	(Being salaries paid through cash)
15th march	Cash A/c Dr	57,600.00
	To sales a/c		57,600.00
	(Being cash sales recorded)
15th march	Cost of goods sold a/c Dr	46,080.00
	To Inventory a/c		46,080.00
	(Being sale related cost transferred to income statement)
16th march	Store supplies a/c Dr	1,600.00
	To Accounts payable a/c		1,600.00
	(Being store supplies purchased on credit accounted)
17th mar	Accounts payable a/c Dr	2,900.00
	To Inventory a/c		2,900.00
	(Being credit note received from the party for the return of goods)
19th mar	Accounts payable a/c Dr	540.00
	To office equipment a/c		540.00
	(Being office equipment returned accounted)
20th mar	Cash A/c Dr	3,528.00
	Discount received a/c Dr	72.00
	To accounts receivable a/c		3,600.00
	(Being payment received for the sale net of discount of 2%)
23rd march	Acccounts payable a/c Dr	26,100.00
	To discount a/c		522.00
	To bank a/c		25,578.00
	(Being Check no 418 issued against payment net of return of 2900 and a discount of 522 on 26,100(29000-2900) accounted)
27th mar	Accounts receivable a/c Dr	10,800.00
	To sales a/c		10,800.00
	(Being merchandise sold to jovita, inv 857 accounted)
27th mar	Cost of goods sold a/c Dr	4,320.00
	To inventorya/c		4,320.00
	(Being sale related cost is transferred to profit and loss account)
28th mar	Accounts receivable a/c Dr	4,320.00
	To sales a/c		4,320.00
	(Being merchandise sold to linda witt, inv 858 accounted)
28th mar	Cost of goods sold a/c Dr	1,728.00
	To inventorya/c		1,728.00
	(Being sale related cost is transferred to profit and loss account)
31st mar	Cash A/c Dr	13,000.00
	To bank A/c		13,000.00
	(Being che. 419 encashed and paid to sales salaries)
31st mar	Sales salaries a/c Dr	13,000.00
	To cash a/c		13,000.00
	(Being salaries paid through cash)
31st mar	Cash A/c Dr	63,360.00
	To sales a/c		63,360.00
	(Being cash sales recorded)
31st mar	Cost of goods sold a/c Dr	38,016.00
	To Inventory a/c		38,016.00
	(Being sale related cost transferred to income statement)

T-accounts:

Inventory a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
	Beginning balance	63,000.00	2-Mar	By Cost of goods sold	7,200.00
mar 1st	To accounts payable a/c	36,000.00	3rd march	By Cost of goods sold	3,600.00
14th mar	To accounts payable a/c	29,000.00	10th mar	By Cost of goods sold	1,800.00
			15th march	By Cost of goods sold	46,080.00
			17th mar	By Accounts payable	2,900.00
			31st mar	By Cost of goods sold	38,016.00
			27th mar	By Cost of goods sold	4,320.00
			28th mar	By Cost of goods sold	1,728.00
				By bal c/d	22,356.00
		128,000.00			128,000.00
Acccounts payable a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
23rd march	To cash a/c	26,100.00	mar 1st	By inventory a/c	36,000.00
17th mar	To Inventory a/c	2,900.00	3rd march	By office supplies a/c	1,080.00
19th mar	To office equipment a/c	540.00	9th mar	By office equipment a/c	18,000.00
13th march	To Cash a/c	36,000.00	14th mar	By inventory a/c	29,000.00
31st march	To Bal c/d	20,140.00	16th march	By store supplies a/c	1,600.00
		85,680.00			85,680.00
Accounts receivable a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
2-Mar	To Sales a/c	14,400.00	12th mar	By cash a/c	14,400.00
3rd march	To sales a/c	7,200.00	13th march	By cash a/c	7,200.00
10th mar	To sales a/c	3,600.00	20th mar	By cash a/c	3,600.00
27th mar	To sales a/c	10,800.00	31st mar	By bal c/d	15,120.00
28th mar	To sales a/c	4,320.00
		40,320.00			40,320.00

Sales A/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
			10th mar	By Accounts receivable a/c	3,600.00
			2-Mar	By Accounts receivable a/c	14,400.00
			3rd march	By Accounts receivable a/c	7,200.00
			15th march	To cash a/c	57,600.00
			27th mar	By Accounts receivable a/c	10,800.00
			28th mar	By Accounts receivable a/c	4,320.00
	To Profit and loss A/c	161,280.00	31st mar	By cash a/c	63,360.00
		161,280.00			161,280.00

Cash A/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
6th marc	To notes payable a/c	72,000.00	31st mar	By sales salaries a/c	13,000.00
12th mar	To accounts receivable a/c	14,112.00	15th march	By sales salaries a/c	13,000.00
13th march	To accounts receivable a/c	7,056.00
15th march	To bank a/c	13,000.00
15th march	To sales a/c	57,600.00
20th mar	To accounts receivable a/c	3,528.00
31st mar	To bank a/c	13,000.00
31st mar	To sales a/c	63,360.00
			31st mar	By bal c/d	217,656.00
		243,656.00			243,656.00

Cost of goods sold a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
2-Mar	To Inventory a/c	7,200.00
3rd march	To Inventory a/c	3,600.00
10th mar	To Inventory a/c	1,800.00
15th march	To Inventory a/c	46,080.00
27th mar	To Inventory a/c	4,320.00
28th mar	To Inventory a/c	1,728.00
31st mar	To Inventory a/c	38,016.00	31st mar	By Profit and loss a/c	102,744.00
		102,744.00			102,744.00

Discount
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
12th mar	To accounts receivable	288.00	23rd march	By Accounts payable a/c	522.00
13th march	To accounts receivable	144.00	13th march	By Accounts payable a/c	720.00
20th mar	To accounts receivable	72.00
31st mar	To Profit and loss a/c	738.00
		1,242.00			1,242.00
office equipment a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
9th mar	To Accounts payable a/c	18,000.00	19th mar	By Accounts payable a/c	540.00
			31st mar	By bal c/d	17,460.00
		18,000.00			18,000.00

notes payable a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
31st mar	To bal c/d	72,000.00	6th marc	By Cash a/c	72,000.00

office supplies a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
3rd march	To Accounts payable a/c	1,080.00	31st mar	By bal c/d	1,080.00
Sales salaries a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
15th march	To Cash a/c	13,000.00
31st mar	To Cash a/c	13,000.00	31st mar	by Profit and loss a/c	26,000.00
		26,000.00			26,000.00
Store supplies a/c Dr
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
16th march	To Accounts payable a/c	1,600.00	31st mar	By bal c/d	1,600.00

Bank a/c
				(Amount in $)
Date	Account	Debit	Date	Account	Credit
			13th march	By accounts payable	35,280.00
			15th march	By cash a/c	13,000.00
			23rd march	By accounts payable	25,578.00
31st mar	To bal c/d	86,858.00	31st mar	By cash a/c	13,000.00
		86,858.00			86,858.00