c 5-10.doc

7/25/2019 c 5-10.doc

1/63

P5-1A

SANSOMITE

Journal Entries

Date Account titles and explanations Ref Debit Credit

July

1

3

9

12

17

18

20

21

22

Merchandise invenTory

Accounts payable(To record good purchased on account ro! trun" !anuacturers#$%& destination# ter!s 2'10#n'30

120

201

112)01

*0*120

201120

101

)1)101112

112)01

*0*120

120201101

201120

)1)101

112

112

1*00

2000

1200

1*00

201980

1*00

900

1800

300

1*1)8*

22*0

1*00

2000

1200

30

1)70

2000

1*00

900

1700100

300

1*00

Accounts receivable+ales

(To record goods sold on account To satchel ,orld # ter!s 1'10#n'30-ost o goods sold ()0 . 30 Merchandise invenTory(To record cost o goods sold or )0 suitcases# /30 each

Accounts payable

Merchandise invenTory (1*00 . 2 -ash (1*00 300(To record paid the crediTor less discount

+ales discount (200.1-ash (2000 20 Accounts receivable(To record cash received ro! a'r at discount

Accounts receivable (30.*0 +ales(To record goods sold on account To the going concern# ter!s1'10#n'30-ost o goods sold (30.30

Merchandise invenTory(To record cost o goods sold or 30 suitcases# /30 eachassu!ed

Merchandise invenTory (1700100 Accounts payable -ash(To record good purchased on account ro! holiday!anuacturers# $%& shipping point# ter!s 1'10#n'30

Accounts payable (10.30 Merchandise invenTory(To record goods returned To ing!an !anuacturers

+ales discount (1*00.1

-ash (1*001* Accounts receivable(To record cash received ro! A'4 at discount

7/25/2019 c 5-10.doc

2/63

30

31

)01

*0*120

201101

)12112

120*0*

13*0

1)00

200

120

22*0

13*0

1)00

200

120

Accounts receivable ()*.*0 +ales(To record goods sold on account To ly 5by 5 night ter!s1'10#n'30-ost o goods sold ()*.30 Merchandise invenTory

(To record cost o goods sold or )* suitcases# /30 eachAccounts payable (1700300 -ash(To record paid the crediTor ,ithout discount

+ales returns and allo,ance Accounts receivable(To record return o goodsMerchandise invenTory

cost o goods sold(To record cost o goods returned

P5-2A

(a)%la distributing co!pany

Journal entries


April 2

)

*

6

11

13

1)

16

Merchandise invenToryAccounts payable

(To record good purchased on account# ter!s 1'10#n'30

201120

112)01

*0*120

6))101

201120

201120101

)1)

101112

120101

101

300

**00

)100

2)0

*00

6)00

**

*))*

3800

*00

300

**00

)100

2)0

*00

6)6336

**00

3800


(To record goods sold on account# ter!s 1'10#n'30-ost o goods sold Merchandise invenTory(To record cost o goods sold or )0 suitcases# /30 each

$reightout -ash(To record paid or $reightout

Accounts payableMerchandise invenTory

(To record cash received ro! A'4 at discount

Accounts payable (6900*00 Merchandise nvenTory (6)00.1 -ash (6)006)(To record paid the crediTor less discount

+ales iscount (**00.1-ash (**00** Accounts receivable(To record cash received ro! A'4 at discount

Merchandise invenTory -ash(To record good purchased or cash

7/25/2019 c 5-10.doc

3/63

18

20

23

26

27

29

30

120

120201

120

101

101)01

*0*120

120101

201

120101

)12101

112)01

*0*120

)*00

100

6)00

*120

2300

)*00

60

3700

2800

*00

)*00

100

6)00

*120

2300

90))10

60

3700

2800

-ashMerchandise invenTory

(To record cash received or goods returned

Merchandise invenTory Accounts payable(To record good purchased on account ter!s 2'10# n'30

-ost o goods sold -ash(To record paid or $reight 5in

-ash+ales

(To record goods sold or cash-ost o goods sold Merchandise invenTory(To record cost o goods sold

Merchandise invenTory -ash(To record good purchased or cash

Accounts payable Merchandise nvenTory ()*00.2 -ash ()*0090(To record paid the crediTor less discount

+ales returns and allo,ance -ash(To record paid -ash cusTo!ers less scrap value


(To record goods sold on account# ter!s n'30-ost o goods sold

Merchandise invenTory(To record cost o goods sold

(b)

%A$ +T4&:T;< -%M=A;>(

7/25/2019 c 5-10.doc

4/63

Accounts receivable ;o?112

MerchndiseinvenTory ;o?120

Date Explanation Ref Debit Credit Balance

April 2

## )## 6## 11## 1)## 16## 18## 20## 23## 26## 27## 30

J1

J1J1J1J1J1J1J1J1J1J1J1

6900

3800

)*00100

2300

)100*006)

*00

*120

902800

6900

2800230022366036**361003610136*01673167226))26

Accounts payable ;o?201Date Explanation Ref Debit Credit Balance

April 2## 6## 11## 18## 27

J1J1J1

*006)00

)*00

6900

)*00

69006)000)*000

M# %A$ -apital ;o?301


April 1 &alance 9000 9000

+ales ;o?)01


April )## 23## 30

J1J1J1

**006)003700

**00119001*600

+ales returns and allo,ance ;o?)12


April29 J1 60 60

+ales discount ;o?)1)

Date Explanation Ref Debit Credit BalanceApril13 J1 ** **

-ost o goods sold ;o?*0*


April )## 23## 30

J1J1J1

)100*1202800

)100922012020


April )## 13## 30

J1J1J1

**00

3700**00

**0003700

7/25/2019 c 5-10.doc

5/63

$reightout ;o?6))


April 3 J1 2)0 2)0

(c) %la istributing -o!panynco!e state!ent (partial

$or the !onth ended April 30# 2008

+ales 4evenue? +ales

ess ? +ales returns and allo,ance ess ? +ales discount ;et +ales

ess ? -ost o goods soldGross profit

Aount Aount

/1*600

(60

(**

/1*)8*(12020

/3)6*

P5-!A

(a)

MA;@ @=A4TM@;T +T%4@;-%M@ +TAT@M@;T (Multi 5+tep

$or year ended ece!ber 31#2008

Particulars Aount Aount Aount

+ales revenues? +ales

ess? sales return and allo,ance

ess? cost o goods soldGross Profit

ess ?operatin" expanse# +elling epanse ?

epB @panse 5eCuip!ent +ales salaries epanse +ales co!!issions epanses nsurance epanse (7200.60 :tilities epanse(12000.60

Total selling epanse Adinistrati$e expanse#

B epB @pansebuilding insurance epanses(7200.)0 oice salaries property ta epanses :tilities epanses (12000.)0 Total selling epanse

Total operating epanse %ncoe fro operationsAdd#ot&er re$enues and "ains #

nterest revenue

'ess#ot&er re$enues and losses# nterest epanses

et incoe

13300760001)*00)3207200

6280000(8000

620000()12700

11*320

*)880

207300

(170200

10)002880

32000)800)800

37100

)000

)1100

(11000

3)100

7/25/2019 c 5-10.doc

6/63

MA;@ @=A4TM@;T +T%4@

%,ners eCuity state!ent$or year ended ece!ber 31#2008

Particulars Aount Aount

& B!aine Bcapital #Danuary

Add ?net inco!e

ess ? & B!aine #dra,ing& B!aine Bcapital #ece!ber

176600

30100206700(28000

178700

MA;@ @=A4TM@;T +T%4@

&alance sheetece!ber 31#2008

Assets and liabilities Aount Aount

AssetsCurrent assets#

-ashAccounts receivable=repaid insuranceMerchandise nvenTory

Total current assets'on" ter assets #

&uilding 90000ess ?accu!ulated depB &uilding (*2*00@Cuip!ent 110000ess ?accu!ulated dep @Cuip!ent

()2900()2900Total longter! assets

otal assets'iabilities

Current'iabilitiesAccounts payablenterest payable:tilities epanse payableMortgage payable (current portion=roperty ta payable+ales co!!ission payable

Total current liabilities'on" ter liabilities?Mortgage payable (80000200000

Total longter! liabilities

Total liabilities *+ners e,uit # E Bord capital #ece!ber 31

otal liabilities and o+ners e,uit

23800*03002)007*000

1*1*00

20)600

137*00

67100

793008000100020000)800)300

3*6100

117)00

6000060000

177)00

178700

3*6100

(b)MA;@ @=A4TM@;T +T%4@

AdDusting Dournal entries

o Date Accounts titles and explanations Ref Debit Credit

7/25/2019 c 5-10.doc

7/63

1

2

3

)

*

6

ec31

## 31

## 31

## 31

## 31

## 31

epreciation epanse building (*2*00)21000Accu!ulated epreciation building(To adDust epreciation epanse on building

10)00

13300

7200

8000

)800

)300

10)00

13300

7200

8000

)800

)300

epreciation epanse eCuip!ent ()290029600 Accu!ulated epreciation eCuip!ent(To adDust epreciation epanse on eCuip!ent

nsurance epanse =repaid nsurance(To adDust nsurance epanse during the year

nterest epanse nterest payable(To adDust nterest epanse during the year

=roperty ta epanse =roperty ta payable(To adDust =roperty ta epanse during the year

+ales co!!ission epanse +ales co!!ission payable

(To adDust +ales co!!ission epanse

(c)

MA;@ @=A4TM@;T +T%4@-losing Dournal entries


1

2

3

)

ec 31

## 31

## 31

## 31

+alesnterest revenue

nco!e su!!ary(To close revenue accounts

62800)000

601900

30100

28000

632000

)12700

10)001330072001100032000)800760001)*00800012000

30100

28000

nco!e su!!ary -ost o goods sold

epreciation epanse 5 building epreciation epanse eCuip!ent

nsurance epanse nterest epanse %ice supplies epanse =roperty ta epanse +ales salaries epanse +ales co!!ission epanse +ales returns and epanse :tilities epanse(To close epanse accounts

nco!e su!!ary(632000601900

& B!aine capital(To close net inco!e To capital

& B!aine capital & B!aine dra,ing(To close dra,ings account To capital

P5-.A

(a)EA$;@4+ T@;;+ +E%=

7/25/2019 c 5-10.doc

8/63

Journal entries


April )

6

8

10

11

13

1)

1*

17

18

20

21

Merchandise nvenToryAccounts payable

(To record goods purchased on account ro! Day !ac

co!pany #ter!s 2'10#n'30

120201

120101

112)01

*0*120

201

120

120101

201120101

120201

101120

120101

112)01

101112

201120101

8)0

)0

11*0

790

)0

)20

800

900

*0

30

810

*00

900

8)0

)0

11*0

790

)0

)20

1678)

900

*0

30

810

*00

27873

Merchandise nvenTory-ash

(To record goods sold on account #ter!s 1'10#n'30


(To record goods sold on account #ter!s n'30-ost o goods sold

Merchandise nvenTory(To record cost o goods sold

Accounts payable

Merchandise nvenTory(To record goods returned To Day !ac co

Merchandise nvenTory-ash

(To record goods purchased or cash

Accounts payable (8)0)0 Merchandise nvenTory (800.2 -ash(80016(To record paid the crediTor less discount

Merchandise nvenToryAccounts payable

(To record goods purchased on account ro! serenassports,ear ter!s 2'10#n'30

-ashMerchandise nvenTory

(To record goods returned To supplier and received cash

Merchandise nvenTory -ash(To record paid cash or goods reightin


(To record goods sold on account ter!s n'30

-ashAccounts receivable

(To record cash received ro! !e!bers ro! on account

Accounts payableMerchandise nvenTory(900.3-ash (90027

(To record paid crediTor To the less discount

7/25/2019 c 5-10.doc

9/63

27

29

)12112

101112

30

660

30

660

+ales returns and allo,anceAccounts receivable

(To record granted sales returns and allo,ance

-ash Accounts receivable

To record -ash received ro! !e!bers on account

(b)

EA$;@4+ T@;;+ +E%=(

7/25/2019 c 5-10.doc

10/63

## 21 900 900

EA$;@4 -apital ;o?301


April 1 &alance )200 )200

+ales ;o?)01


April 8## 18

J1J1

11*0810

11*01960

+ales returns and allo,ance ;o?)12


April27 J1 30 30

-ost o goods sold ;o?*0*


April 8## 18

J1J1

790*30

7901320

(c) EA$;@4+ T@;;+ +E%=Tril balance

April 30#2008

Account no Account Ref Debit Credit

101

112120201301)01)12*0*

-ash

Accounts receivableMerchandise nvenToryAccounts payableJ EA$;@4+ capital+ales

+ales returns and allo,ance-ost o goods sold

/1*63

7702)77

301320

/0)2001960

Totals 6160 6160

P5-5A

ear @nded ece!ber 31# 2008

4evenues ro! sales?+alesess? +ales returns and allo,ances

7#18#000(8#000

7/25/2019 c 5-10.doc

11/63

;et sales-ost o

7/25/2019 c 5-10.doc

12/63

8

10

11

13

1)

1*

17

18

20

21

27

30

900

)0

300

700

600

*0

30

1#000

*00

600

30

*00

900

)0

300

21679

600

*0

30

1#000

*00

12*88

30

*00

Accounts 4eceivable +ales(To record goods sold on account# ter!s n'30

Accounts =ayable =urchase 4eturns and Allo,ances

(To record purchase returns and allo,ances=urchases -ash(To record goods purchased or cash

Accounts =ayable =urchase iscounts -ash(To record cash pay!ent ,ith discount

=urchases Accounts =ayable(To record goods purchased on account# ter!s 2'10#

n'60-ash =urchase 4eturns and Allo,ances(To record purchase returns and allo,ances

$reightin -ash(To record reightin epense

Accounts 4eceivable +ales(To record goods sold on account# ter!s n'30

-ash

Accounts 4eceivable(To record cash received ro! debTor

Accounts =ayable =urchase iscounts -ash(To record cash pay!ent To crediTors ,ith discount

+ales 4eturns and Allo,ances Accounts 4eceivable(To record sales returns and allo,ances

-ash Accounts 4eceivable

(To record cash received ro! debTors

(b)

Iillage Tennis +hopT Accounts

-ash

7/25/2019 c 5-10.doc

13/63

&eginning balance b'd 2#*00April 1* *0April 20 *00April 30 *00

3#**0

April 7 60April 11 300April 13 686April 17 30April 21 *88@nding balance c'd 1#886

3#**0

Accounts 4eceivable

April 8 900April 18 1#000

1#900

April 20 *00April 27 30April 30 *00@nding balance c'd 870 1#900

Merchandise nvenTory

&eginning balance b'd 1#700

1#700

@nding balance c'd 1#700

1#700

Angie ilbert# -apital

&eginning balance c'd )#200 )#200

@nding balance b'd )#200 )#200

Accounts =ayable

April 10 )0April 13 700April 21 600

1#3)0

April ) 7)0April 1) 600

1#3)0

+ales

@nding balance c'd 1#900

3#**0

April 8 900April 18 1#000 3#**0

+ales 4eturns and Allo,ances

April 27 30 30

@nding balance c'd 30 30

=urchases

April ) 7)0April 11 300April 1) 600

1#6)0

@nding balance c'd 1#6)0

1#6)0

=urchases 4eturns and Allo,ances

7/25/2019 c 5-10.doc

14/63

@nding balance c'd 90

90

April 10 )0April 1* *0 90

=urchases iscounts


26

April 13 1)

April 21 12 26

$reightin

April 6 60April 17 30

90


90

(c)

Iillage Tennis +hopTrial &alanceApril 30# 2008

Account itles Ref Debit Credit

-ashAccounts 4eceivableMerchandise nvenToryAccounts =ayableAngie ilbert# -apital+ales+ales 4eturns and Allo,ances=urchases=urchases 4eturns and Allo,ances=urchase iscounts$reightin

1#886870

1#700

301#6)0

90

0)#2001#900

9026

6#216 6#216(d)

Iillage Tennis +hopnco!e +tate!ent

$or the Month @nded April 30# 2008

4evenue ro! sales? +ales ess? +ales 4eturns and Allo,ances ;et sales-ost o goods sold? &eginning Merchandise nvenTory =urchase

ess? =urchase iscounts =urchases 4eturns and Allo,ances

;et =urchase Add? $reightin

-ost o goods purchased-ost o goods available or sale

@nding Merchandise nvenTory-ost o

7/25/2019 c 5-10.doc

15/63

Gross Profit **2

P5-A

(a)

Terry Manning $ashion -entreor" +heet

$or the >ear @nded ;ove!ber 30# 2008

Account itlesrial Balance Ad3ustents Ad3usted rial Balance %ncoe 4tateent Balance 4&eet

Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr

-ash 28#700 28#700 28#700

Accounts 4eceivable 30#700 30#700 30#700

MerchandisenvenTory

))#700 () 300 ))#)00 ))#)00

+Tore +upplies 6B200 (1 3#700 2#*00 2#*00

+Tore @Cuip!ent 8*#000 8*#000 8*#000

Accu!ulated epB +Tore @Cuip!ent

22#000 (2 9#000 31#000 31#000

elivery @Cuip!ent )8#000 )8#000 )8#000

Accu!ulated epB elivery @Cuip!ent

6#000 (2 *#000 11#000 11#000

;otes =ayable *1#000 *1#000 *1#000

Accounts =ayable )8#*00 )8#*00 )8#*00B =oorten# -apital 1#10#000 1#10#000 1#10#000

B =oorten# ra,ing 12#000 12#000 12#000

+ales 7#**#200 7#**#200 7#**#200

+ales 4eturns andAllo,ances

8#800 8#800 8#800

-ost o ear @nded ;ove!ber 30# 20084ales Re$enues#

+ales ess? +ales 4eturns and Allo,ances

et sales

'ess# Cost of Goods 4old#

7#**#2008#800

7#)6#)00

)#97#700

7/25/2019 c 5-10.doc

16/63

-ost o goods soldGross profit

'ess# *peratin" Expenses

4ellin" Expenses# +alaries @pense (1#)0#000.70 :tilities @pense (1)#000.80

4ent @pense (2)#000.80 Advertising @pense elivery @pense epB @pense 5 +Tore @Cuip!ent epB @pense 5 elivery@Cuip!ent

otal sellin" expensesAdinistrati$e Expenses#

+alaries @pense (1#)0#000.30:tilities @pense (1)#000.20

4ent @pense (2)#000.20 4epair @pense

+upplies @penseotal adinistrati$e expenses

otal operatin" expenses

%ncoe fro operations

'ess# *t&er Expenses#

nterest epenseset loss

98#00011#200

19#2002)#)0016#7009#000*#000

1#83#*00

6*#)00

2#)8#700

2#)8#900

)2#0002#800

12#100)#8003#700

200

)#080

)#280

Terry Manning $ashion -entre%,nerKs @Cuity +tate!ent

$or the >ear @nded ;ove!ber 30# 2008

evin =oorten# -apital# ece!ber 1# 2007

ess? ;et oss

ess? evin =oorten# ra,ingevin =oorten# -apital# ;ove!ber 30# 2008

1#10#000

)#2801#0*#720

12#000

93#720

Terry Manning $ashion -entre&alance +heet

;ove!ber 30#2008

Assets

Current Assets#

-ashAccounts 4eceivableMerchandise nvenTory

+Tore +upplies Total -urrent Assets'on"-ter Assets#

+Tore @Cuip!entess? Accu!ulated epB +Tore @Cuip!ent

elivery @Cuip!entess? Accu!ulated epB elivery @Cuip!ent

8*#00031#000

28#70030#700))#)00

2#*00 1#06#300

*)#000

)8#00011#000

7/25/2019 c 5-10.doc

17/63

Total ongter! AssetsTotal Assets

'iabilities

Current 'iabilities#

;otes =ayableAccounts =ayable

nterest payable Total -urrent iabilities'on"-ter 'iabilities#

Mortgage =ayableTotal ongter! iabilities

Total iabilities*+ners E,uit#

evin =oorten# -apital# ;ove!ber 30# 2008Total %,nerKs @CuityTotal iabilities and %,nerKs @Cuity

37#000 91#000

21#000

)8#*00)#080

1#97#300

73#*80

30#00030#000

93#720

1#03#*80

93#720

1#97#300

(c)

Terry Manning $ashion -entreAdDusting Journal

Date Account itles and Explanations Ref Debit Credit

2008;ov? 30

(1

(2

(3

()

+Tore +upplies @pense +Tore +upplies(To record sTore supplies epense

3#700

9#000*#000

)#080

300

3#700

9#000*#000

)#080

300

epreciation @pense 5 +Tore @Cuip!entepreciation @pense 5 elivery @Cuip!ent Accu!ulated epB 5 +Tore @Cuip!ent Accu!ulated epB 5 elivery @Cuip!ent(To record depreciation epense

nterest @pense nterest =ayable(To record accrued interest

-ost o

7/25/2019 c 5-10.doc

18/63

(2

(3

()

7#*8#)80

)#280

12#000

8#800)#97#7001#)0#000

1)#000)#080

2)#)0016#7009#000*#000

12#1002#700

2)#000

)#280

12#000

nco!e +u!!ary +ales 4eturns and Allo,ances -ost o goods sold +alaries @pense

:tilities @pensenterest epense

Advertising @pense elivery @pense epB @pense 5 +Tore @Cuip!ent epB @pense 5 elivery @Cuip!ent 4epair @pense +upplies @pense 4ent @pense(To close epenses

evin =oorten# -apital nco!e +u!!ary(To transer net loss To the capital

evin =oorten# -apital evin =oorten# ra,ing

(To transer dra,ing To the capital(e)

Terry Manning $ashion -entre=ost 5closing Trial &alance

;ove!ber 30# 2008

Account itles Ref Debit Credit

-ashAccounts 4eceivableMerchandise nvenTory+Tore +upplies+Tore @Cuip!entAccu!ulated epB +Tore @Cuip!entelivery @Cuip!ent

Accu!ulated epB elivery @Cuip!ent;otes =ayableAccounts =ayablenterest =ayableevin =oorten# -apital# ;ove!ber 30# 2008

28#70030#700))#)00

2#*008*#000

)8#00031#000

11#000*1#000)8#*00

)#08093#720

2#39#300 2#39#300

P5-1B

4or$ino Boo6 7are&ouse

GEERA' 8*9RA' 81

Date Accounts ittles And Explanation Ref Debit Credit

2::o$-1

o$-!

;erc&andise %n$enor

Accounts Paable

(o record purc&ase of Boo6s on Account)

12:

2:1

112

.:1

5:5

12:

7/25/2019 c 5-10.doc

19/63

o$-/

o$-=

o$-15

o$-10

o$-2:

o$-2.

o$-2/

o$-2

o$-!:

(o record cost of ;erc&andise sold)

2:1

12:

2:1

1:112:

1:1

112

112

.:1

5:5

12:

12:

2:1

1:1

.1.

2:1

1:1

12:

112.:1

5:5

12:

.12

112

12:

5:5

7/25/2019 c 5-10.doc

20/63

2::

o$-1

o$-2

o$-5

o$-=

o$-1:

o$-11

o$-15

o$-10

o$-1=

o$-2.

o$-25

o$-20

o$-2=

o$-!1

;erc&andise %n$enor

Accounts Paable

(o record purc&ase on Account)

12:

2:1

112

.:1

5:5

12:

2:1

12:

1:1

.1.

112

2:1

1:1

12:

12/

1:1

12:

1:1

12:

2:1

12:

1:1

1:1

.:1

5:5

12:

7/25/2019 c 5-10.doc

21/63

Cost of Goods 4old

;erc&andise %n$enor

(o record cost of ;erc&andise sold)

.:1

5:5

12:

7/25/2019 c 5-10.doc

22/63

o$-:5

o$-1:

o$-10

o$-25

o$-20

81

81

81

81

81

April-!1 Balance

7/25/2019 c 5-10.doc

23/63

Cost of Goods 4old

7/25/2019 c 5-10.doc

24/63


AssetsCurrent assets#

-ashAccounts receivable=repaid insurance

Merchandise nvenTory Total current assets'on" ter assets #

elivery @Cuip!ent *7000ess ?accu!ulated depB elivery euipB(19680+Tore @Cuip!ent 2*000ess ?accu!ulated dep +Tore @Cuip!ent ()18000()18000

otal assets

'iabilities

Current'iabilitiesAccounts payable=roperty ta payable+ales co!!ission payable

Total current liabilities'on" ter liabilities?;otes payable Total longter! liabilities Total liabilities *+ners e,uit #Eu!ancapital # ;ove!ber 30# 2008

otal liabilities and o+ners e,uit

800011770)*00

36200 60)70

37320

83200

)73103*006000

120*20

*6810

)6000

)6000

102810

78180

180990

(b)

(c)

Eu!an epart!ent +Tore-losing Dournal entries


>uffan Departent 4ore

AD894ED 8*9RA' ER 81Date Accounts ittles And Explanation Ref Debit Credit

2::

o$-!: (1)

(2)

(!)

(.)

(5)

%nsurance Expense

Prepaid %nsurance

(o record prepaid insurance)

Dep Expense of Deli$er E,uipent

Accuulated Dep - Deli$er E,uipent

(o record depreciation expense)

Dep Expense of 4ore E,uipent

Accuulated Dep 4ore E,uipent

(o record depreciation expense)

Propert ax expense Propert ax Paable

(o record accrued Propert ax expense)

4ales Coission expense

4ales Coission Paable

(o record accrued 4ales Coission expense)

7/25/2019 c 5-10.doc

25/63

1

2

3

)

;ov 30

## 30

## 30

## 30

+alesnterest revenue

nco!e su!!ary(To close revenue accounts

8*0000*000

8)9020

*980

12000

8**000

633220

8200)0009*00900080003*0019000

1200001)0001000010600

*980

12000

nco!e su!!ary -ost o goods sold

elivery @penseepreciation epanse 5elivery

euip

epreciation epanse +Tore eCuipnsurance epanse

nterest epanse =roperty ta epanse 4ent epense +alaries epanse +ales co!!ission epanse +ales returns and epanse :tilities epanse

(To close epanse accounts nco!e su!!ary(632000601900 Eu!an# capital(To close net inco!e To capital

Eu!an# capital Eu!an# dra,ing(To close dra,ings account To capital

P5-.b#

(a)

Mi"eKs =ro +hopJournal @ntries

Date Account itles Explanation Ref Debit Credit2008

AprB*

7

9

10

12

Merchandise nvenTory Accounts =ayable(To record purchase on account# ter! 2'10# n'60

120201

120101

201120

112

)01

*0*120

120201

/1*00

80

100

1100

810

860

/1*00

80

100

1100

810

860

Merchandise nvenTory -ash(To record paid or reight in

Accounts =ayable Merchandise nvenTory(To record goods returned

Account receivable +ales(To record sell on account-ost o goods sold Merchandise nvenTory(To record cost o goods sold

Merchandise nvenTory Accounts =ayable(To record purchase on account# ter!s 1'10# n'30

7/25/2019 c 5-10.doc

26/63

1)

17

20

21

27

30

201120101

201120

112)01

*0*120

201120101

)12

112

101112

1)00

60

700

)90

800

)0

1000

281372

60

700

)90

8792

)0

1000

Accounts =ayable Merchandise nvenTory -ash(To record paid crediTors less discount

Accounts =ayable Merchandise nvenTory

(To record goods returnedAccount receivable +ales(To record sell on account-ost o goods sold Merchandise nvenTory(To record cost o goods sold

Accounts =ayable Merchandise nvenTory -ash(To record paid crediTors at discount

+ales returns L allo,ance Account receivable(To record granted sales returns

-ashAccount receivable

(To record cash received on account

(b)

Mi"eKs =ro +hop(

7/25/2019 c 5-10.doc

27/63

;erc&andise %n$enor o12:


AprB1 *

7 9

10121)172021

&alanceJ1J1J1

J1

3*001*0080

860

100

810

2860)908

3*00*000*080)980

)170*030*002)9)2))*2))))

Accounts paable o2:1


AprB* 9 12 1) 17

21

J1J1J1J1J1J1

100

1)0060800

1*00

860

1*001)002260860800

0

;Palar? Capital o !:1


AprB1 &alance 6000 6000

4ales o .:1


AprB10 20

J1J1

1100700

11001800

4ales returns allo+ance o.12


AprB27 J1 )0 )0

Cost of "oods sold o 5:5


AprB10 20

J1J1

810)90

8101300

(c)

Mi"eKs =ro +hopTrial &alanceApril 30# 2008

Account o Account Ref Debit Credit

7/25/2019 c 5-10.doc

28/63

101112120201301)01

)12*0*

-ashAccounts receivableMerchandise nvenToryAccounts payableMB=al!ar# -apital+ales

+ales returns L allo,ance-ost o goods sold

/12*6760

))))

)01300

/060001800

Totals /7800 /7800

P5-5B#

uc"all epart!ent +Torenco!e +tate!ent

$or the year ended ;ove!ber 30# 2008

Accounts Aount Aount Aount

4evenue ro! sales +ales ess?+ales returns L allo,ance

;et sales -ost o goodssold?&eginningMerchandise nvenTory=urchaseess? =urchase discount =urchase returnsL allo,ance ;et =urchaseAdd? $reightin-ost o goods =urchased-ost o goods available or sale@nding Merchandise nvenTory -ost o goods sold

Gross profit

/6*000070003000

/90000020000

/880000

6*3220

))360

6)*060

6)0000*060

689)2036200

226780

P5-/B#

(a)

2::5 2::/ 2::0 2::

%ncoe 4tateent Data

+ales-ost o goods sold?

7/25/2019 c 5-10.doc

29/63

(b) According To the given data# the proitability declined as per the sales declineB The grossproit rates or 2006 To 2008 are 696)0'968*0F 71B91 # 61*)0'86680F 70B997 and*6230'82230F 68B39 indicate that the proitability declined over the 3year iscal periodB

P5-0b#

(a)

$our %a"s =ro shopJournal entries

Date Account itles Explanations Ref Debit Credit

Apr*

7

9

10

12

1)

17

20

21

27

30

=urchases Accounts payable(To record goods purchased on account

/2200

80

200

9*0

)60

2000

60

1000

)00

7*

1100

/2200

80

200

9*0

)60

)01960

60

1000

)396

7*

1100

$reightin -ash(To record paid or reight in

Accounts payable =urchase returnL allo,ance(To record =urchase return

Account receivable +ales(To record goods sold on account

=urchases Accounts payable(To record goods purchased on account

Accounts payable =urchase discount -ash(To record paid the crediTors# less discount

Accounts payable =urchase return L allo,ance

(To record =urchase returnAccount receivable +ales(To record goods sold on account

Accounts payable =urchase discount -ash(To record paid the crediTors# less discount

+ales return L allo,anceAccount receivable(To record granted +ales return L allo,ance

-ash Accountreceivable(To record cash received on account

(b)

$our %a"s =ro shop

7/25/2019 c 5-10.doc

30/63

AprB1 30

&alance /2*001100

AprB7 1) 21

@nding balancec'd

/801960396116)

3600 3600

Accounts Recei$ableDate Explanations Aount Date Explanations Aount

BAprB10 20

/9*01000

AprB27 30

@nding balancec'd

/7*110077*

19*0 19*0

;erc&andise %n$enorDate Explanations Aount Date Explanations Aount

AprB1

&alance /3*00 @nding balancec'd

/3*00

3*00 3*00

Accounts paable

Date Explanations Aount Date Explanations Aount

AprB9 17 1) 21

20060

2000)00

AprB* 12

@nding balance c'd

2200)60

0

2660 2660

P&il ;ic6el? capitalDate Explanations Aount Date Explanations Aount

AprB31 &alance c'd 6000 AprB1 &alance 6000

6000 6000

4alesDate Explanations Aount Date Explanations Aount

AprB31@nding &alance c'd 19*0

AprB9 20

9*01000

19*0 19*0

4ales Returns allo+ances

Date Explanations Aount Date Explanations AountAprB27 7* AprB27 @nding &alance c'd 7*

7* 7*

Purc&aseDate Explanations Aount Date Explanations Aount

AprB* 20

2200)60

AprB31 @nding &alance c'd 2660

7/25/2019 c 5-10.doc

31/63

2660 2660

Purc&ase Returns allo+ancesDate Explanations Aount Date Explanations Aount

AprB31 @nding &alance c'd 260

AprB9

17

200

60260 260

Purc&ase DiscountDate Explanations Aount Date Explanations Aount

AprB31 @nding &alance c'd ))AprB1) 21

)0)

)) ))

@rei"&t- inDate Explanations Aount Date Explanations Aount

AprB7 80 AprB31 @nding &alance c'd 80

80 80(c)

$our %a"s =ro shopTrial balance

April 31# 2008

Accounts titles ebit -redit

-ashAccounts 4eceivableMerchandise nvenToryAccounts payable=hil Mic"el# capital+ales+ales 4eturns L allo,ances=urchase=urchase 4eturns L allo,ances=urchase iscount$reight in

/116)77*

3*00

7*2660

80

0600019*0

260))

82*) 82*)

(d)

$our %a"s =ro shopnco!e +tate!ent

$or the !onth ended April#30 2008

Accounts A!ount A!ount A!ount

4evenue ro! sales

+ales ess?+ales returns L allo,ance;et sales

-ost o goods sold?&eginningMerchandise nvenTory=urchaseess? =urchase discount

/2660))260

/19*07*/187*

3*00

7/25/2019 c 5-10.doc

32/63

=urchase returnsL allo,ance ;et =urchaseAdd? $reightin-ost o goods =urchased-ost o goods available or sale

@nding Merchandise nvenTory -ost o goods sold?Gross profit

2)36

1)12

23*680

*936)*2)

/)63

C&apter 0

Proble set c

(a)

=A-A4 -%M=A;>+ales Dournal

Date Accounts debited %n$oice no Ref Accounts recei$able dr

4ales cr

2008

Jan 3

## 11

## 22

## 2*

&B 4e!yJB $ine4Braves+B ngels&B 4e!y4B raves&B Eachins"iJB $ine

*10*11*12*13*1)*1**16*17

/310018001900900

3700800

3*006100

/21300

=urchase Dournal

Date Accounts credited %n$oice no Ref Purc&ase dr

Accounts paable cr2008Jan *

## 16

## 27

+B >ostB uB Moneno+B os"o+B >ostB MonenoB u+B >ost

/30002700

1*000139001*00

12*0012002*00

/*2600

-ash receipt DournalDate Accounts credited Ref Cas& dr Accounts recei$able dr 4ales cr

2008Jan 7

## 10## 13

+B ngels&B Eachins"i+ales&B 4e!yJB $ine( 1800300

/)00020001**0031001*00

/)0002000

31001*00

/1**00

7/25/2019 c 5-10.doc

33/63

## 20## 21## 31

+ales+B ngels+ales

17900900

22920900

17900

22920

67)20 11*00 **920

-ash pay!ent Dournal

Date Accounts debited Ref *t&er accounts dr Accounts paable dr Purc&ase Cas& cr

2008Jan 8## 9

## 12## 1*## 17## 23

## 28## 31

$reight in+B os"oB Moneno4entithdra,al%ice suppliesB Moneno+B os"o%ice supplies+ales salaries%ice salaries

/180

1000800)00

200)3003600

/900011000

1*00013700

/1809000110001000800)00

1*00013700200)3003600

10)80 )8700 0 *91180

7/25/2019 c 5-10.doc

34/63

## 31 11*00 23000

;otes receivable ;o? 11*


2008Jan 1 /39000 /39000

Merchandise invenTory ;o? 120


2008Jan 1 /20000 /20000

%ice supplies ;o? 12*


2008Jan 1## 17## 28

/1000 )00 200

/1000 1)00 1600

=repaid insurance ;o? 130Date Explanation Ref Debit Credit Balance

2008Jan 1 /2000 /2000

@Cuip!ent ;o? 1*7


2008Jan 1 /6)*0 /6)*0

Accu!ulated deprecation ;o? 1*8


2008

Jan 1 /1*00 /1*00

;otes payable ;o? 200


2008Jan21 /1*000 /1*000

Accounts payable ;o? 201


2008Jan 1## 18## 21

## 31## 31

/2001*000

)8700

/3*000

*2600

/3*000 3)800 19800

72)00 23700

B =ac"ard capital ;o? 301


2008Jan 1 /78700 /78700

B =ac"ard dra,ing ;o? 306


7/25/2019 c 5-10.doc

35/63

2008Jan 1* /800 /800

+ales ;o? )01


2008

Jan31## 31 /21800**920 /21800 77720

+ales returns and allo,ance ;o? )16


2008Jan 9 /300 /300

=urchase ;o? 601


2008Jan31 /*2600 /*2600

=urchase return and allo,ance ;o? 616Date Explanation Ref Debit Credit Balance

2008Jan18 /200 /200

$reight in ;o? 621


2008Jan 8 /180 /180

+ales salaries


2008

Jan31 /)300 /)300

%ice salaries


2008Jan31 /3600 /3600

4ent


2008Jan12 /1000 /1000

Accounts receivable subsidiary ledger4B raves


2008Jan 1## 11## 22

/1*00 1900 800

/1*003)00)200

&B Eachins"i


7/25/2019 c 5-10.doc

36/63

2008Jan 1## 7## 2*

/7*00

3*00/2000

/7*00**009000

+B ngles

Date Explanation Ref Debit Credit Balance2008Jan 1## 7## 11## 21

/)000

900/)000

900

/)000 0 900 0

&B 4e!y


2008Jan 3## 13## 22

/3100

3700/3100

/3100 03700

JB $ine


2008Jan 3## 9## 13## 2*

/1800

6100

/3001*00

/18001*00 06100

Accounts payable subsidiary ledger

+B os"o


2008Jan 1## 9## 16## 18## 23

/9000

20013700

/9000

13900

/9000 01390013700 0

4B Mi"ush


2008Jan 1## 21 /1*000

/1*000 /1*000 0

B Moreno


2008 JanB 1## 9## 16## 23## 27

/11000

1*000

/11000

1*000

12*00

/11000 01*000 012*00

+B >ost


7/25/2019 c 5-10.doc

37/63

2008 Jan *## 16## 27

/30001*002800

/30001*007300

B u

Date Explanation Ref Debit Credit Balance2008Jan *## 27

/2700 1200

/2700 3900

(c)=A-A4 -%M=A;>

or"sheet$or the !onth ended January 31# 2008

Accounts

titles

9nad3usted trial

balance

Ad3ustent Ad3usted trial

balance

%ncoe

stateent

Balance s&eet

Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr

-ashAccB 4eeceB;otes receiBMerchandise%ice suppB=repaidinsurB@Cuip!entAccu B depriB;otespayableAccountspayBB =ac"ardcapB=ac"ard

dra,B+ales+ales 4'A=urchase=urchase4'A$right in+ales salaries%ice salaB4entTotals

%iB +upB @

nsurance eBepB @Bnterest eBnterest pyB-ost goodsTotals

)1990230003900020000160020006)*0

800

300*2600

180)30036001000

1*001*0002370078700

77720

200

90020012*30

*000

62**

*000900200

12*

30

62**

)199023000390001*00070018006)*0

800

300*2600

180)30036001000

90020012*30

*000

19697*

162*1*0002370078700

77720

200

30

19697*

300*2600

180)30036001000

90020012*30

*000

6823*

77720

200

77920

)199023000390001*00070018006)*0

800

162*1*0002370078700

30

196820 196820

7/25/2019 c 5-10.doc

38/63

(d)

=A-A4 -%M=A;>nco!e state!ent

$or the !onth ended January 31# 2008


+ales revenues? +ales ess ? sales return and allo,ances

;et sales-ost o goods sold? Merchandise invenTory January 1 =urchase

ess ? purchase return and allo,ance ;et purchase Add ? right in

-ost o goods available saleess ? Merchandise invenTory January 31-ost o goods sold %,nerKs eCuity state!ent

$or the !onth ended January 31# 2008

Particulars Aount

B =ac"ard capital January 1 Add ? ;et inco!e

ess ? B =ac"ard dra,ingB =ac"ard capital January 31

/78700 968*

8838* (800

/87*8*

7/25/2019 c 5-10.doc

39/63

=ac"ard -o!pany&alance sheet

January 31# 2008


Assets #

-urrent assets? -ashAccounts receivable

;otes receivable Merchandise invenTory

%ice supplies=repaid insurance

Total -urrent assetsong ter! assets? @Cuip!ent

ess ? accu!ulated depreciation

Total assets'iabilities and o+ners e,uit#

Current liabilit#

;otes payable Accounts payable nterest payable

Total -urrent liability*+ners e,uit#

B =ac"ard capital

Total iabilities and o,ners eCuity

/)199023000390001*000 700 1800

/121)90

)82*

6)*0(162*

/1*00023700 30

/12631*

/38730

87*8*

/12631*(e)

=A-A4 -%M=A;>AdDusting entries

Date Accounts titles and explanation Ref Debit Credit

2008Jan 31

## 31

## 31

## 31

%ice supplies epanse %ice supplies(To adDust %ice supplies epanse

/900

200

12*

30

/900

200

12*

30

nsurance epanse =repaid insurance

(To adDust nsurance epanseepreciation epanse Accu!ulated depreciation(To adDust epreciation epanse

nterest epanse nterest payable(To adDust interest epanse

7/25/2019 c 5-10.doc

40/63

## 31*000

*000-ost o goods sold Merchandise invenTory(To adDust -ost o goods sold

=A-A4 -%M=A;>

7/25/2019 c 5-10.doc

41/63

JanB31 /200 /200

epreciation epanse


2008JanB31 /12* /12*

nterest epanse


2008JanB31 /30 /30

=A-A4 -%M=A;>-losing Journal

Date Accounts titles and explanation Ref Debit Credit

2008Jan 31

(1

(2

(3

()

(*

+ales

nco!e su!!ary(To close sales revenue

/77720

6823*

200

968*

800

/77720

300*2600180)3003600100090020012*30*000

200

968*

800

nco!e su!!ary +ales return and allo,ance =urchase $reight in +ales salaries %ice salaries 4ent

%ice supplies epanse nsurance epanse epreciation epanse nterest epanse -ost o goods sold(To close epanse account

=urchase return and allo,ance nco!e su!!ary(To close purchase return and allo,ance

nco!e su!!ary B=ac"ard capital

(To close net inco!e

B =ac"ard capital B =ac"ard dra,ing(To close dra,ing

=A-A4 -%M=A;>

7/25/2019 c 5-10.doc

42/63

nco!e state!ent


2008Jan31

## 31## 31## 31

/6823*

968*

/77720

200

/77720

9)8* 968* 0

+ales return and allo,ance


2008Jan31## 31

/300/300

/300 0

=urchase

Date Explanation Ref Debit Credit Balance2008Jan31## 31

/*2600/*2600

/*2600 0

$reight in


2008Jan31## 31

/180/180

/180 0

+ales salaries


/)300/)300

/)300 0

%ice salaries


2008Jan31## 31

/3600/3600

/3600 0

4ent


/1000/1000

/1000 0

%ice supplies epanse


2008

7/25/2019 c 5-10.doc

43/63

Jan31## 31

/900/900

/900 0

nsurance epanse


2008

Jan31## 31

/200/200

/200 0

epreciation epanse


2008Jan31## 31

/12*/12*

/12* 0

nterest epanse


2008Jan31## 31

/30/30

/30 0

=urchase return and allo,ance


2008Jan31## 31

/200/200

/200 0

-ost o goods sold


2008Jan31## 31

/*000/*000

/*000 0

B =ac"ard capital


2008JanB 1## 31## 31 /800

/78700 968*

/78700 8838*87*8*

B =ac"ard dra,ing


2008JanB 1## 31

/800/800

/800 0

7/25/2019 c 5-10.doc

44/63

(f)=A-A4 -%M=A;>

=ost closing balance$or the !onth ended January 31# 2008

4l o Accounts titles Ref Debit Credit

1 2 3 ) * 6 7 8 9 10 11

12

-ashAccounts receivable;otes receivableMerchandise invenTory%ice supplies=repaid insurance@Cuip!entAccu!ulated deprecation;otes payableAccounts payablenterest payable

B =ac"ard capital

/)1990 23000 39000 1*000 700 1800 6)*0

/162*1*00023700 30

87*8*/1279)0 /1279)0

P-.A

(a)

&ac"haus -o!pany&an" 4econciliation +tate!ent

ece!ber 31# 2008

-ash balance per ban"Add? eposit in transit

ess? %utstanding chec"s? ;oB 3)70

;oB 3)7) ;oB 3)78 ;oB 3)81 ;oB 3)8) ;oB 3)86

AdDusted cash balance per ban"

-ash balance per boo"sAdd? -ollection o note receivable

ess? ;+$ chec"

@rror in recording @rror in recording

AdDusted cash balance per boo"s

720B10

1#0*0B00621B30807B)0798B00

1#889B*0

20#1*)B301#690B)0

21#8))B70

(*#886B30

*72B80

90B009B00

1*#9*8B)0

12#)8*B20)#1)*B00

16#630B20

(671B80

1*#9*8B)0

(b)

&ac"haus -o!panyAdDusting Journal

7/25/2019 c 5-10.doc

45/63

Date Account itles and Explanations Ref Debit Credit

2008ec? 31

1B

2B

3B

)B

-ashMiscellaneous @pense ;otes 4eceivable

nterest 4evenue(To record collection o note

)#1)*1*

*72B80

90

9

)#000

160

*72B80

90

9

Accounts 4eceivable -ash(To record ;+$ chec"Accounts =ayable -ash(To record increase o cash paid To accounts payable

Accounts 4eceivable -ash(To record cash received or accounts receivable

P-5A

(a)

Eaver!an -o!pany&an" 4econciliation +tate!ent

July 31# 2008

-ash balance per ban"Add? eposit in transit

ess? %utstanding chec"s @rror in recording


-ash balance per boo"sAdd? -ollection o note receivable @rror in recording

ess? &an" service chargeAdDusted cash balance per boo"s

8#)60100

2)#*1)9#)00

33#91)

(8#*60

3#)7090

2*#3*)

21#8*0

3#*60

2*#)10(*6

2*#3*)

(b)

Eaver!an -o!panyAdDusting Journal

Date Account itles and Explanations Ref Debit Credit2008

July? 311B -ash

;otes 4eceivable nterest 4evenue(To record collection o note ,ith interest revenue

3#)703#)00

70

7/25/2019 c 5-10.doc

46/63

2B

3B

90

*6

90

*6

-ash Accounts =ayable(To record rectiied overpaid To accounts payable

Miscellaneous @pense -ash(To record !iscellaneous epense

P-/A

The ollo,ing internal control ,ea"nesses are identiied in this scenario(1 ac" o establish!ent o responsibility(2 ac" o segregation o duties(3 ac" o docu!entation procedures() ac" o physical# !echanical and electronic controls(* ac" o independent internal veriication(6 ac" o other controls

e !ay suggest that the above indicated lac" o internal control principlesshould be ta"en To the account by the school authorityB

P-1B

:&> %$$-@ +:==> -%M=A;>

o Principle Application o Anita t&eater

1 @stablish!entresponsibility

%nly the treasure and assistant treasure are authoriNed Tosign chec"sB

2 +egregation oduties

nvoices !ust be approved by both the purchasing agent andthe receiving depart!ent supervisorB =ay!ent can only be!ade by the treasure or assistant treasure# and the chec"signers do not record the cash disburse!ent transactionsB

3 ocu!entationprocedures

-hec"s are renu!beredB

) =hysical#!echanical#electronic controls

&lan" chec"s are "ept in a sae in the treasure oiceB %nlythe treasure and assistant treasure have access To the saeB Achec" ,riter is used in ,riting chec"sB

* ndependent internalveriication

The chec" signer co!pares the chec"s ,ill the approvedinvoice prior To issueB &an" and boo" balance are reconciled!onthly by the assistant chie accountB

6 %ver controls $ollo,ing pay!ent# invoices are sta!ped paidB

P-2B

(a)

;;;Journal @ntries

Date Account titles and explanation Ref Debit Credit

Jul 1 =etty cash -ash(To establish petty cash und

200B00200B00

7/25/2019 c 5-10.doc

47/63

## 1*

## 31

Aug1*

## 16

## 31

9)B00)2B)0)6B6011B201B80

82B10)*B002*B*039B)0

7*B60)3B0033B00

37B00

100B00

1)0B009*B60)7B101B30

196B00

192B00

187B001B60

100B00

18)B00

$reight 5 out=ostage epanse@ntertain!ent epanseMiscellaneous epanse-ash short and over ( short

-ash(To replenish the petty cash und ,ith a cash short

$reight 5 out-haritable contribution epanse=ostage epanseMiscellaneous epanse -ash(To replenish the petty cash und

$reight 5 out@ntertain!ent epanse=ostage epanse

Miscellaneous epanse -ash-ash short and over ( over

(To replenish the petty cash und ,ith a cash over

petty cash(300 200 cash(To increase petty cash und

=ostage epanseTravel epanse$reight 5 out-ash short and over ( short

-ash(To replenish the petty cash und ,ith a cash short

(b)=etty cash


Jul 1Aug16## 31

cpcp

200100

200300300

(c) The inter control eatures o a petty cash und include the ollo,ing points?B a cusTodian is responsible or the undB

B A petty cash receipt signed by the cusTodian and the individual receiving thepay!ent is reCuired or each pay!ent ro! the undB

B The treasure oice ea!ines all pay!ents and sta!p supporting docu!ents Toindicate they ,ere paid ,hen the und is replenishedB

IB +urprise count can be !ade at any ti!e To deter!ine ,hether the und is intactBP-!b

(a)

7/25/2019 c 5-10.doc

48/63

$lint Eills

7/25/2019 c 5-10.doc

49/63

7/25/2019 c 5-10.doc

50/63

-ash balance per ban"Add? eposit in transit (7700073110)000 @rror o understate (27827*

ess? %utstanding chec"s (73*1018071*003)*00


-ash balance per boo"Add? -ollection o notes receivable by ban" (6800130 @rror o understate nterest earned

ess? +aety deposit bo rentAdDusted cash balance per boo"

/78903

/2*932

7893

693018032

3382*6393

/27)32

20330

71)2

)027)72

)0

/27)32

(b)

&au!gardner -o!pany

AdDusting DournalDate Account titles explanations Ref Debit Credit

Aug 31

Aug 31

Aug 31

Aug 31

-ash ;otes receivable nterest revenue(To record collection o note ,ith interest

6930

32

)0

180

6930

32

)0

180

-ash nterest revenue(To record @arned interest revenue

Miscellaneous epense -ash

(To record Miscellaneous epense or cash-ash Accounts payable(To record rectiied overpaid To Accounts payable

P-/B(a)

4ichardson -o!pany&an" 4econciliation +tate!ent

%cTober 31# 2008


-ash balance per ban"Add? (3 eposits in transit

ess? (3 %utstanding chec"s?AdDusted cash balance per ban"-ash balance per boo"Add? (* -ollection o notes receivable by ban"

/18180B00379*B*1

2197*B*11112B79

/20862B72

21892B72300B00

7/25/2019 c 5-10.doc

51/63

ess? Thet (&alancing igureAdDusted cash balance per boo"

22192B721330B00

/20862B72

(b)The cashier atte!pted To cover the thet o /1330 by ollo,ing three ,ays?

(1 ;ot listing as outstanding three chec"s Totaling *30B00iB (;oB62# /126B7*O ;oB183# 1*0B00O ;oB28)# 2*3B2*

(2 :nder ooting the outstanding chec"s listed by100B00iB (;oB862# /190B71O ;oB 863# 226B80O ;oB 86)# 16*B28F *82B79

)82B79(3 +ubtracting the /200 credit ro! the ban" balance instead o adding To the

boo" balance# thereby concealing /700 o the thetB

(c)The ollo,ing principles o internal control ,ere violated in this case?(1 ndependent internal veriication(2 +egregation o dutiesB

P=-1A

(a)

@+ -%BJournal @ntries

Date Account title and explanation Ref Debit Credit

1

2

3

)

*


( To record goods on Accounts

3200000

*0000

2810000

90000

2)000

2)000

3200000

*0000

2810000

90000

2)000

2)000

+ales return and allo,anceAccounts receivable

(To record sales return-ash

Accounts receivable(To record received cash ro! accounts receivable

Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o o A'4 or uncollectible

Accounts receivable Allo,ance and doubtul Accounts (To record reinstalled o A '4 or recovery

-ash Accounts receivable(To record received cash ro! A '4

(b)

@+ -%Bedger

Accounts receivable

7/25/2019 c 5-10.doc

52/63

7/25/2019 c 5-10.doc

53/63

dec31 AdDusting 30610 30610

Allo,ance and doubtul Accounts

Date explanation Ref Debit Credit Balance

200*

dec31dec312006!ar1!ar1

&alanceAdDusting

1000

30610

1000

12000

)2610

)1610)2610

(c)

Pill!ann -o!panyJournal entries

o Date Account title and explanation Ref Debit Credit

1B 2006dec31

&ad debt epanse Allo,ance and doubtul Accounts

(To record &ad debt epanse

29)0029)00

P=-.A

(a)

Cusoer otal uber of Das outstandin"

1-!: !1-/: /1-=: =1-=: *$er 12:

Accounts receivable /37*000 /220000 /900000 /)0000 /10000 /1*000

0 uncollectible 1 ) * 8 10

@sti!ated &ad debts 10100 2200 3600 2000 800 1*00

(b)Journal entry

o Date Account title and explanation Ref Debit Credit1B dec31 &ad debt epanse(1010010000

Allo,ance and doubtul Accounts(To record &ad debt epanse

2010020100

(c)Journal entry


1B dec31 Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible

*00*00

(d)

Journal entryo Date Account title and explanation Ref Debit Credit

1B dec31 Accounts receivable Allo,ance and doubtul Accounts(To record o A'4 or recoverycash

Accounts receivable(To record received cash ro! A'4

*000

*000

*000

*000

7/25/2019 c 5-10.doc

54/63

(e) Applying 3 o Total accounts receivable ,ould change the a!ount oTotal bad debt epanseB The advantage o aging account receivable over percentage ToTotal account receivable is the !ore accuracy o bad debt epanseB

P=-5A(b)I%4-@+T@4 -%M=A;>

Journal entry


1B

2

dec31

ec31

&ad debt epanse(117*02000 Allo,ance and doubtul Accounts(To record &ad debt epanse

97*0

9*00

97*0

9*00&ad debt epanse (9*0000.1 Allo,ance and doubtul Accounts(To record &ad debt epanse

(c)

I%4-@+T@4 -%M=A;>Journal entry


1B

2

dec31

ec31

&ad debt epanse(117*02000 Allo,ance and doubtul Accounts(To record &ad debt epanse

137*0

9*00

137*0

9*00&ad debt epanse (9*0000.1 Allo,ance and doubtul Accounts(To record &ad debt epanse

(d)I%4-@+T@4 -%M=A;>

Journal entry

o Date Account title and explanation Ref Debit Credit1B 2006

Dan31Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible

20002000

(e)I%4-@+T@4 -%M=A;>

Journal entry


1B 2009Dan31

&ad debt epanse Accounts receivable(To record ,ritten o A'4 or uncollectible

30003000

P=-/A(a)

M@;%+A -%M=A;>Journal entries


1 %ct 7 Accounts receivable +ales( To record goods on Accounts

69006900

7/25/2019 c 5-10.doc

55/63

2

3

)

*

6

## 12

## 1*

## 1*

## 2)

## 31

87327

)60

8107

91*0

120

900

)60

8000 107

9000 1*0

120

-ash(90027+ervice charge epanse (900.3

+ales

Accounts receivable nterest revenue

(To record received cash or +ales on I+A card-ash

;ote receivable nterest revenue (8000.8.60'360(To record received cash ro! ;'= ,ith interest

Accounts receivable ;ote receivable

nterest revenue(9000.10.60'360(To record Eughey note is dishonest

nterest receivable nterest revenue(16000.9.30'360

(To record interest earned on ;'4(b)

M@;%+A -%M=A;>edger Account;ote receivable


%ct31## 1*## 2*

&alance80009000

330002*00016000

Accounts receivable

Date explanation Ref Debit Credit Balance%ct 7## 1*## 2*

6900)6091*0

6900736016*10

nterest receivable


%ct 1## 1*## 2)## 31

&alance

90

12090

17090090

(c)M@;%+A -%M=A;>

&alance sheetece!ber 31# 2008


Assets-urrent Assets? ;ote receivable 16000

7/25/2019 c 5-10.doc

56/63

Accounts receivable nterest receivable

Total receivable

16*10 90

32600P=-0A

%==@;&@4< -%M=A;>Journal entries


1

2

3

)

*

6

7

8

9

2008Jan *

## 20

$eb18

aprB20

## 30

May2*

Aug1*

## 2*

+ep 1

Accounts receivable +ales(sold !erchandise on account# ter!s n'1*

20000

2000

8000

20)*0

26000

)000

8360

)070

12000

20000

2000

8000

20000)*0

2*0001000

)000

8000360

)00070

12000

;ote receivableAccounts receivable

(received a /16000# 90 day# 9 note ro! a cusTo!er

;ote receivable +ales(received a /8000# 180 day# 9 note +ales on account

-ash;ote receivable nterest revenue(received cash ro! billing co!pany note at !aturity

-ash;ote receivable

nterest revenue(received cash ro! sara rogers co!pany note at !aturity

;ote receivable Accounts receivable Den"s incB(received a / )000# 90day#7 note ro! a cusTo!er

-ash

;ote receivable nterest revenue(received cash ro! lud,ing co!pany note at !aturity

Accounts receivable Den"s incB;ote receivable

nterest revenue($ionaKs note ,as dishonored and account is debited ,ithinterest

;ote receivable +ales(received a /12000# 180 day# 10 note or +ales onaccount

P=-1B

(a)=-@4 M=%4T+

Journal @ntries

Date Account title and explanation Ref Debit Credit

1 Accounts receivable+ales

2*700002*70000

7/25/2019 c 5-10.doc

57/63

2

3

)

*

( To record goods on Accounts)0000

2300000

6*000

2*000

2*000

)0000

2300000

6*000

2*000

2*000

+ales return and allo,anceAccounts receivable

(To record sales return

-ashAccounts receivable

(To record received cash ro! accounts receivable

Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o o A'4 or uncollectible

Accounts receivable Allo,ance and doubtul Accounts(To record reinstalled o A '4 or recovery-ash Accounts receivable

(To record received cash ro! A '4(b)

=-@4 M=%4T+edger

Accounts receivable

&eginning balance 1000000(6 2*70000(6 2*000

(7 )0000(8 2300000(9 6*000(10 2*000@nding balance -' 120*000

3*90000 3*90000


(6 6*000

@nding balance -' 20000 8*000

&eginning balance &' 60000(7 2*000

8*000

(c)

=-@4 M=%4T+Journal entry

o Date Account title and explanation Ref Debit Debit

1B &ad debt epanse (9000020000 Allo,ance and doubtul Accounts(To record &ad debt epanse

7000070000

(d)e "no,# A '4 turnover ratioF;et credit sales' Average receivable

F (2*70000)0000' (100000120*000'2 F2*30000'1102*00

7/25/2019 c 5-10.doc

58/63

F2B29 ti!esP=-2b#

(b &ad debt epanse F/26000(c &ad debt epanseF/1*)0000.2F/30800GAnsH(d &ad debt epanseF/*20000.*)000F/22000GAnsH

(e &ad debt epanseF/*20000.*2000F/28000GAnsH( There are t,o !aDor ,ea"nesses ,ith the direct ,rite o !ethodB1 t doesnKt !atch epanse ,ith revenuesB2 The Accounts receivable are not stated at cash realiNed value at the

balance sheet dateBP=-!b#

(a) (b)

A4@; -%M=A;>Journal entries


1B 2008

dec31

&ad debt epanse(3*79010000

Allo,ance and doubtul Accounts(To record &ad debt epanse

2*790

2*790

&ad debt epanse


200*dec31 AdDusting 2*790 2*790



200*

dec31dec312006!ar1!ar1

&alanceAdDusting

1100

2*790

1100

10000

3*790

3)6903*790

(c)

A4@; -%M=A;>Journal entries


1B 2006dec31

&ad debt epanse(283001200 Allo,ance and doubtul Accounts


29*0029*00

P=-.b(a)

Cusoer otal uber of Das outstandin"

1-!: !1-/: /1-=: =1-=: *$er 12:

Accounts receivable /260000 /100000 /60000 /*0000 /30000 /20000

0 uncollectible 1 * 7B* 10 1*

7/25/2019 c 5-10.doc

59/63

@sti!ated &ad debts 137*00 1000 3000 37*0 3000 3000

(b)

Journal entry


1B dec31 &ad debt epanse(137*010000 Allo,ance and doubtul Accounts(To record &ad debt epanse

37*037*0

(c)

Journal entry


1B dec31 Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible

20002000

(d)

Journal entry

o Date Account title and explanation Ref Debit Credit1B dec31 Accounts receivable

Allo,ance and doubtul Accounts(To record o A'4 or recoverycash

Accounts receivable(To record received cash ro! A'4

1000

10001000

1000

(e)Applying 3 o Total accounts receivable ,ould change the a!ount o Total bad debtepanseB The advantage o aging account receivable over percentage To Total accountreceivable is the !ore accuracy o bad debt epanseB

P=-5b

(a)

+-E;A@;&@4< -%M=A;>Journal entry


1B

2

dec31

ec31

&ad debt epanse(177*01*00 Allo,ance and doubtul Accounts(To record &ad debt epanse

160*0

1700

160*0

1700&ad debt epanse (8*0000.2 Allo,ance and doubtul Accounts

(To record &ad debt epanse(b)

+-E;A@;&@4< -%M=A;>Journal entry


1B dec31 &ad debt epanse(177*01*00Allo,ance and doubtul Accounts


190*0190*0

7/25/2019 c 5-10.doc

60/63

2 ec31 17001700

&ad debt epanse (8*0000.2 Allo,ance and doubtul Accounts(To record &ad debt epanse

(c)

+-E;A@;&@4< -%M=A;>

Journal entryo Date Account title and explanation Ref Debit Credit

1B 2006Dan31

Allo,ance and doubtul Accounts Accounts receivable(To record ,ritten o A'4 or uncollectible

)*00)*00

(d)+-E;A@;&@4< -%M=A;>

Journal entry


1B 2009

Dan31 &ad debt epanse Accounts receivable(To record ,ritten o A'4 or uncollectible

)*00)*00

(e)The advantages o allo,ance !ethod over direct ,rite o is the uture hope ocollection o accounts receivable# and the respective loss is the adDusted ,ith allo,anceor doubtul accounts undB

P=-/b

(a)+-E%TT@;E@M@4 -%M=A;>

Journal entrieso Date Account title and explanation Ref Debit Credit

1

2

3

)

*

Jul *

## 1)

## 1)

## 1*

## 2*

Accounts receivable +ales(To record goods on Accounts

6200

68121

))0

6100

2*37*

6200

700

))0

6000 100

2*000 37*

-ash(70021+ervice charge epanse (700.3 +ales

Accounts receivable nterest revenue(To record received cash or +ales on I+A card

-ash;ote receivable

nterest revenue (6000.10.)*'360(To record received cash ro! ;'= ,ith interest

Accounts receivable ;ote receivable

nterest revenue(9000.10.60'360(To record Eughey note is dishonest

7/25/2019 c 5-10.doc

61/63

6 ## 31 100100

nterest receivable nterest revenue(1*000.8.30'360(To record interest earned on ;'4

(b)+-E%TT@;E@M@4 -%M=A;>

edger Account;ote receivable


Jul 1## 1*## 2*

&alance60002*000

)6000)00001*000

Accounts receivable


Jul *## 1*

##2*

6200))0

2*37*

620066)0

3201*

nterest receivable


Jul 1## 1*## 2*## 31

&alance

100

7*16*

2)016*0100

(c)+-E%TT@;E@M@4 -%M=A;>

&alance sheet

ece!ber 31# 2008Assets and liabilities Aount Aount

Assets-urrent Assets? ;ote receivable

Accounts receivable nterest receivable

Total receivable

90003201* 100

)111*

P=-0b$4>&@;A -%M=A;>

Journal entrieso Date Account title and explanation Ref Debit Credit

1 2008JanB* Accounts receivable

+ales(+old !erchandise on account# ter!s n'30

63006300

7/25/2019 c 5-10.doc

62/63

2

3

)

*

6

7

8

9

10

$ebB2

## 12

## 26

AprB*

## 12

JunB 2

JulB*

## 1*

%ct1*

6300

7800

)000

7930

7930

6*10

)080

7000

7210

6300

7800

)000

7930

7800

130

6300210

)000 80

7000

7000210

;ote receivable+ales

(4eceived a /6300# 120 day# 10note

;ote receivable+ales

(4eceived a /7800# 60 day# 10note or sales onaccount

Accounts receivable ou" coB +ales(+old !erchandise on account# ter!s n'10

;ote receivableAccounts receivable ou" coB

(4eceived a /)000# 90 day# 8note ro!a custo!er

-ash;ote receivable

nterest revenue(4eceived cash ro!

7/25/2019 c 5-10.doc

63/63

Accounts receivable

Documents

c 5-10.doc