Question

Purchases and Cash Payments Journals; Accounts Payable Subsidiary and General Ledgers

AquaFresh Water Testing Service was established on April 16. AquaFresh uses field equipment and field supplies (chemicals and other supplies) to analyze water for unsafe contaminants in streams, lakes, and ponds. Transactions related to purchases and cash payments during the remainder of April are as follows:

April 16.		Issued Check No. 1 in payment of rent for the remainder of April, $3,500.
April 16.		Purchased field supplies on account from Hydro Supply Co., $5,340.
April 16.		Purchased field equipment on account from Pure Equipment Co., $21,450.
April 17.		Purchased office supplies on account from Best Office Supply Co., $510.
April 19.		Issued Check No. 2 in payment of field supplies, $3,340, and office supplies, $400.
		Post the journals to the accounts payable subsidiary ledger.
April 23.		Purchased office supplies on account from Best Office Supply Co., $660.
April 23.		Issued Check No. 3 to purchase land, $140,000.
April 24.		Issued Check No. 4 to Hydro Supply Co. in payment of April 16 invoice, $5,340.
April 26.		Issued Check No. 5 to Pure Equipment Co. in payment of April 16 invoice, $21,450.
		Post the journals to the accounts payable subsidiary ledger.
April 30.		Acquired land in exchange for field equipment having a cost of $12,000.
April 30.		Purchased field supplies on account from Hydro Supply Co., $7,650.
April 30.		Issued Check No. 6 to Best Office Supply Co. in payment of April 17 invoice, $510.
April 30.		Purchased the following from Pure Equipment Co. on account: field supplies, $1,340, and field equipment, $4,700.
April 30.		Issued Check No. 7 in payment of salaries, $29,400.
		Post the journals to the accounts payable subsidiary ledger.

Required:

1. Journalize the transactions (in chronological order as presented in the data) for April. Use a purchases journal and a cash payments journal, and a two-column general journal. Use debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the following partial chart of accounts:

11	Cash	19	Land
14	Field Supplies	21	Accounts Payable
15	Office Supplies	61	Salary Expense
17	Field Equipment	71	Rent Expense

At the points indicated in the narrative of transactions, post to the following accounts in chronological order in the accounts payable subsidiary ledger:

Best Office Supply Co.

Hydro Supply Co.

Pure Equipment Co.

For those boxes in which no entry is required, leave the box blank. If no other account is needed in the "Other Accounts Dr." column select "No Entry Required".

PURCHASES JOURNAL								PAGE 1
Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Field Supplies Dr.	Office Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount
April 16	Hydro Supply Co.	?				No Entry Required
April 16	Pure Equipment Co.	?				Field Equipment
April 17	Best Office Supply Co.	?				No Entry Required
April 23	Best Office Supply Co.	?				No Entry Required
April 30	Hydro Supply Co.	?				No Entry Required
April 30	Pure Equipment Co.	?				Field Equipment
April 30

CASH PAYMENTS JOURNAL						PAGE 1
Date	Ck. No.	Account Debited	Post. Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.
April 16		Rent Expense
April 19		Field Supplies
		Office Supplies
April 23		Land
April 24		Hydro Supply Co.	?
April 26		Pure Equipment Co.	?
April 30		Best Office Supply Co.	?
April 30		Salary Expense
April 30		Total

JOURNAL				PAGE 1
Date	Description	Post. Ref.	Debit	Credit
April 30	Land
	Field Equipment

2. Post the individual entries in chronological order (Other Accounts columns of the purchases journal and the cash payments journal and both columns of the general journal) to the appropriate general ledger accounts. Post to the subsidiary ledger in chronological order. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, post transactions from the purchases journal first, then the cash payments journal before posting from the general journal.

3. Total each of the columns of the purchases journal and the cash payments journal, and post the appropriate totals to the general ledger.

For those boxes in which no entry is required, leave the box blank.

ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Date	Item	Post. Ref.	Debit	Credit	Balance
Account: Best Office Supply Co.
April 17
April 23
April 30
Account: Hydro Supply Co.
April 16
April 24
April 30
Account: Pure Equipment Co.
April 16
April 26
April 30

Post transactions in chronological order. However, if there is more that one transaction on the same date, post from the purchases journal first, then from the cash payments journal before posting from the general journal. (Because the problem does not include transactions related to cash receipts, the cash account in the ledger will have a credit balance.)

GENERAL LEDGER
					Balance
Date	Item	Post. Ref.	Debit	Credit	Dr.	Cr.
Account: Cash #11
April 30
Account: Field Supplies #14
April 19
April 30
Account: Office Supplies #15
April 19
April 30
Account: Field Equipment #17
April 16
April 30
April 30
Account: Land #19
April 23
April 30
Account: Accounts Payable #21
April 30
April 30
Account: Salary Expense #61
April 30
Account: Rent Expense #71
April 16

4. Prepare a schedule of the accounts payable creditor balances.

AQUAFRESH WATER TESTING SERVICE Accounts Payable Creditor Balances April 30
Best Office Supply Co.	$
Hydro Supply Co.
Pure Equipment Co.
Total accounts payable	$

5. All are reasons why AquaFresh might consider using a subsidiary ledger for the field equipment EXCEPT:

To secure lower pricing on equipment purchases

Answer 1

General Journal
Date	Ref.	Details		Debit	Credit
16-Apr-08	4-004	Rent Expense		3,500.00
	1-001		Cash		3500.00
	1-010	Field Supplies		5,340.00
	2-001		Accounts Payable		5340.00
	1-501	Equipment		21,450.00
	2-001		Accounts Payable		21450.00
17-Apr-08	1-005	Office Supplies		510.00
	2-001		Accounts Payable		510.00
19-Apr-08	2-001	Accounts Payable		3,340.00
	1-001		Cash		3340.00
19-Apr-08	2-001	Accounts Payable		400.00
	1-001		Cash		400.00
23-Apr-08	1-005	Office Supplies		660.00
	2-001		Accounts Payable		660.00
23-Apr-08	1-505	Land		140,000.00
	1-001		Cash		140000.00
24-Apr-08	2-001	Accounts Payable		5,340.00
	1-001		Cash		5340.00
26-Apr-08	2-001	Accounts Payable		21,450.00
	1-001		Cash		21450.00
30-Apr-08	1-505	Land		12,000.00
	1-501		Equipment		12,000.00
30-Apr-08	1-010	Field Supplies		7,650.00
	2-001		Accounts Payable		7650.00
30-Apr-08	2-001	Accounts Payable		510.00
	1-001		Cash		510.00
30-Apr-08	1-010	Field Supplies		1,340.00
	2-001		Accounts Payable		1340.00
30-Apr-08	1-501	Equipment		4,700.00
	2-001		Accounts Payable		4700.00
30-Apr-08	4-007	Salaries Expense		29,400.00
	2-001		Accounts Payable		29400.00

PURCHASES JOURNAL								PAGE 1
Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Field Supplies Dr.	Office Supplies Dr.	Other Accounts	Post.	Amount
						Dr.	Ref.
Apr-16	Hydro Supply Co.	?	5340	5340		No Entry Required
Apr-16	Pure Equipment Co.	?	21450			Field Equipment		21450
Apr-17	Best Office Supply Co.	?	510		510	No Entry Required
Apr-23	Best Office Supply Co.	?	660		660	No Entry Required
Apr-30	Hydro Supply Co.	?	7650	7650		No Entry Required
Apr-30	Pure Equipment Co.	?	6040	1340		Field Equipment		4700
Apr-30
CASH PAYMENTS JOURNAL						PAGE 1
Date	Ck. No.	Account Debited	Post. Ref.	Other Accounts	Accounts	Cash Cr.
				Dr.	Payable Dr.
Apr-16	1	Rent Expense		3500		3500
Apr-19	2	Field Supplies			3340	3340
	2	Office Supplies			400	400
Apr-23	3	Land		140000		140000
Apr-24	4	Hydro Supply Co.	?		5340	5340
Apr-26	5	Pure Equipment Co.	?		21450	21450
Apr-30	6	Best Office Supply Co.	?		510	510
Apr-30		Salary Expense		29400		29400
Apr-30		Total		172900	31040	203940
JOURNAL				PAGE 1
Date	Description	Post. Ref.	Debit	Credit
Apr-30	Land		12000
	Field Equipment			12000
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Date	Item	Post. Ref.	Debit	Credit	Balance
Account: Best Office Supply Co.
Apr-17	Office Supplies		510		510
Apr-23	Office Supplies		660		1170
Apr-30	Cash			510	660
Account: Hydro Supply Co.
Apr-16	Field Supplies		5340		5340
Apr-24	Field Supplies		7650		12990
Apr-30	Cash			5340	7650
Account: Pure Equipment Co.
Apr-16	Field Equipment		21450		21450
Apr-26	Field Equipment		4700		26150
Apr-30	Cash			21450	4700
AQUAFRESH WATER TESTING SERVICE
Accounts Payable Creditor Balances
Apr-30
Best Office Supply Co.		660
Hydro Supply Co.		7650
Pure Equipment Co.		4700
Total accounts payable

Posting Acct	1-001	Cash
Date	Acct	Description	Debit	Credit	Net
16-Apr-08	4-004	Rent Expense	-	3,500.00	(3,500.00)
19-Apr-08	2-001	Accounts Payable	-	3,740.00	(3,740.00)
23-Apr-08	1-505	Land	-	140,000.00	(140,000.00)
24-Apr-08	2-001	Accounts Payable	-	5,340.00	(5,340.00)
26-Apr-08	2-001	Accounts Payable	-	21,450.00	(21,450.00)
30-Apr-08	2-001	Accounts Payable	-	510.00	(510.00)
Total			-	174,540.00	(174,540.00)
Posting Acct	2-001	Accounts Payable
Date	Acct	Description	Debit	Credit	Net
16-Apr-08	1-501	Equipment	-	21,450.00	(21,450.00)
	1-010	Field Supplies	-	5,340.00	(5,340.00)
17-Apr-08	1-005	Office Supplies	-	510.00	(510.00)
19-Apr-08	1-001	Cash	3,740.00	-	3,740.00
23-Apr-08	1-005	Office Supplies	-	660.00	(660.00)
24-Apr-08	1-001	Cash	5,340.00	-	5,340.00
26-Apr-08	1-001	Cash	21,450.00	-	21,450.00
30-Apr-08	1-001	Cash	510.00	-	510.00
	1-501	Equipment	-	4,700.00	(4,700.00)
	4-007	Salaries Expense	-	29,400.00	(29,400.00)
	1-010	Field Supplies	-	8,990.00	(8,990.00)
Total			31,040.00	71,050.00	(40,010.00)
Posting Acct	4-004	Rent Expense
Date	Acct	Description	Debit	Credit	Net
16-Apr-08	1-001	Cash	3,500.00	-	3,500.00
Total			3,500.00	-	3,500.00
Posting Acct	1-501	Equipment
Date	Acct	Description	Debit	Credit	Net
16-Apr-08	2-001	Accounts Payable	21,450.00	-	21,450.00
30-Apr-08	2-001	Accounts Payable	4,700.00	-	4,700.00
	1-505	Land	-	12,000.00	(12,000.00)
Total			26,150.00	12,000.00	14,150.00
Posting Acct	1-005	Office Supplies
Date	Acct	Description	Debit	Credit	Net
17-Apr-08	2-001	Accounts Payable	510.00	-	510.00
23-Apr-08	2-001	Accounts Payable	660.00	-	660.00
Total			1,170.00	-	1,170.00
Posting Acct	4-007	Salaries Expense
Date	Acct	Description	Debit	Credit	Net
30-Apr-08	2-001	Accounts Payable	29,400.00	-	29,400.00
Total			29,400.00	-	29,400.00
Posting Acct	1-010	Field Supplies
Date	Acct	Description	Debit	Credit	Net
16-Apr-08	2-001	Accounts Payable	5,340.00	-	5,340.00
30-Apr-08	2-001	Accounts Payable	8,990.00	-	8,990.00
Total			14,330.00	-	14,330.00
Posting Acct	1-505	Land
Date	Acct	Description	Debit	Credit	Net
23-Apr-08	1-001	Cash	140,000.00	-	140,000.00
30-Apr-08	1-501	Equipment	12,000.00	-	12,000.00
Total			152,000.00	-	152,000.00