1. The individual accounts receivable ledger accounts provide business managers with information on the status of individual customer accounts, which is necessary for managing collections. Managersneed to know which customers owe money, how much they owe, and how long the amount owed has been outstanding.
2. The major advantages of the use of special journals are substantial savings in record-keeping expenses and a reduction of record-keeping errors.
3. a. 400b. None
4. a. 400b. 1
5. a. Sometime following the end of the current month, one of two things may happen: (1) an overdue notice will be received from Kelly Co., and/or (2) a letter will be received from Kelley Co., informing the buyer of the overpayment. (It is also possible that the error will be discovered at the time of making payment if the original invoice is inspected at the time the check is being written.)
b. The schedule of accounts payable would not agree with the balance of the accounts payable account. The error might also be discovered at the time the invoice is paid.
c. The creditor will call the attention of the debtor to the unpaid balance of $800.
d. The error will become evident during the verification process at the end of the month. The total debits in the purchases journal will be less than the total credits by $3,600.
6. a. Purchases journal d. Cash payments journalb. Cash payments journal e. Cash payments journalc. Purchases journal
7. An electronic form is a software window that provides the inputs for a particular transaction. For example, a check form provides the inputs (payee, amount, date) for a cash payment transaction. An electronic invoice provides the inputs (customer, amount sold, item sold) for recording revenues earned on account.
8. Transactions are posted when they are entered into the computerized system. Thus, balances areupdated continuously as transactions occur.
9. For automated systems that use electronic forms, the special journals are not used to record original transactions. Rather, electronic forms capture the original transaction detail from an invoice, for example, and automatically post the transaction details to the appropriate ledger accounts.
10. E-commerce can be used by a business to conduct transactions directly with customers. Thus, an order can be received directly from the customer’s Internet input, and cash can be received from the credit card. Many times, the cash is received prior to actually shipping the product, resulting in a faster revenue/collection cycle. Reducing paperwork throughout the cycle also improves the efficiency of the process. For example, all of the accounting transactions can be fed automatically from the initial Internet-based inputs.
CHAPTER 5ACCOUNTING SYSTEMS
DISCUSSION QUESTIONS
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CHAPTER 5 Accounting Systems
PE 5-1A
Aug. 4 162 Carson Enterprises Co. 25515 163 City Electric Inc. 34025 164 Juniper Co. 185
PE 5-1B
Apr. 6 78 Lemon Co. 1,24011 79 Hitchcock Inc. 2,57019 80 Fletcher Inc. 990
PE 5-2A
Feb. 22. Collected cash of $120 from Horizon Entertainment (Invoice No. 422). Amount posted from Page 106 of the cash receipts journal.
27. Provided $170 of services on account to Horizon Entertainment, itemized on Invoice No. 445. Amount posted from Page 92 of the revenuejournal.
PE 5-2B
Aug. 10. Provided $750 services on account to Moravian Products Inc., itemized on Invoice No. 119. Amount posted from Page 24 of the revenue journal.
17. Collected cash of $610 from Moravian Products Inc. (Invoice No. 106).
Amount posted from Page 46 of the cash receipts journal.
PRACTICE EXERCISES
REVENUE JOURNAL
REVENUE JOURNAL
Date
InvoiceNo.
Account Debited
Post.Ref.
Accounts Rec. Dr.Fees Earned Cr.
Accounts Rec. Dr.Fees Earned Cr.
Date
InvoiceNo.
Post.Ref.
Account Debited
5-2© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CH
AP
TE
R 5
Acc
ount
ing
Sys
tem
s
PE
5-3
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5-3
© 2
018
Cen
gage
Lea
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ll R
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s R
eser
ved.
May
not
be
scan
ned,
cop
ied
or d
upli
cate
d, o
r po
sted
to a
pub
licl
y ac
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ible
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site
, in
who
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par
t.
CHAPTER 5 Accounting Systems
PE 5-4A
Nov. 11. Made purchases of $1,845 on account from Migrant Technology(Invoice No. 85). Amount posted from Page 8 of the purchases journal.
22. Paid $3,270 to Migrant Technology on account (Invoice No. 43). Amount posted from Page 46 of the cash payments journal.
PE 5-4B
Jan. 11. Paid $64 to Colonial Inc. on account (Invoice No. 122). Amount posted from Page 71 of the cash payments journal.
26. Made purchases of $72 on account from Colonial Inc. (Invoice No. 139). Amount posted from Page 55 of the purchases journal.
PE 5-5A
Horizontal analysis:
20Y5 20Y4 Amount Percent
Retail $126,000 $120,000 $ 6,000 5.0%Wholesale 150,000 164,000 (14,000) –8.5%
Total revenues $276,000 $284,000 $ (8,000) –2.8%
Vertical analysis:
Amount Percent Amount Percent
Retail $126,000 45.7% $120,000 42.3%Wholesale 150,000 54.3% 164,000 57.7%
Total revenues $276,000 100.0% $284,000 100.0%
20Y5 20Y4
Increase/(Decrease)
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CHAPTER 5 Accounting Systems
PE 5-5B
Horizontal analysis:
20Y3 20Y2 Amount Percent
Camping $280,000 $240,000 $ 40,000 16.7%Fishing 140,000 160,000 (20,000) –12.5%
Total revenues $420,000 $400,000 $ 20,000 5.0%
Vertical analysis:
Amount Percent Amount Percent
Camping $280,000 66.7% $240,000 60.0%Fishing 140,000 33.3% 160,000 40.0%
Total revenues $420,000 100.0% $400,000 100.0%
Increase/(Decrease)
20Y3 20Y2
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CHAPTER 5 Accounting Systems
Ex. 5-1
1. General ledger accounts: (e)2. Subsidiary ledger accounts: (a), (b), (c), (d)
Ex. 5-2
a., b., and c.
May 1 Bal. 590
31 7,070
31 Bal. 7,660
May 20 2,800 May 1 2,050
31 Bal. 2,800 31 Bal. 2,050
May 10 980 May 1 Bal. 590
31 Bal. 980 27 1,240
31 Bal. 1,830
d.
Alpha GenCorpHazmat Safety Co.Masco Co.Tillman Inc.Total accounts receivable $7,660
EXERCISES
May 31, 20Y3
$2,8002,050
980
Masco Co. Tillman Inc.
Accounts Receivable
BOWMAN CLEANERS INC.Accounts Receivable Customer Balances
Alpha GenCorp Hazmat Safety Co.
1,830
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CHAPTER 5 Accounting Systems
Ex. 5-3
a. Cash receipts journal f. Cash receipts journalb. General journal g. Cash receipts journalc. Revenue journal h. General journal (not a revenue transaction)d. Cash receipts journal i General journal e. Cash receipts journal j. Cash receipts journal
Ex. 5-4
a. Cash payments journal g. General journalb. Purchases journal h. Cash payments journalc. Purchases journal i. General journald. General journal j. Cash payments journale. General journal k. Cash payments journalf. Purchases journal
Ex. 5-5
Apr. 3. Provided service on account; posted from revenue journal Page 44.
6. Granted an invoice adjustment or corrected an error related to sale of April 3; posted from general journal Page 11. This does not represent a collection of cash, since the credit was not posted from the cash receipts journal.
24. Received cash for balance due; posted from cash receipts journal Page 81.
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CHAPTER 5 Accounting Systems
Ex. 5-6
a.
2 Pryor Corp. 5953 Armor Inc. 310
14 Pryor Corp. 20524 Rose Co. 85031 1,960
b. Debit to Accounts Receivable [from revenue journal column total in (a)].Credit to Fees Earned [from revenue journal column total in (a)].
c. $205 ($0 + $595 + $205 – $595)
Accounts Rec. Dr.Fees Earned Cr.
Date
Post.Ref.
Oct.
$1,960$1,960
REVENUE JOURNAL
Account Debited
InvoiceNo.
321322323324
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CHAPTER 5 Accounting Systems
Ex. 5-7
a. and b.
July 1 Bal. 625 July 4 Bal. 1,890
18 950 22 3,660
31 Bal. 1,575 31 Bal. 5,550
July 9 3,410
31 Bal. 3,410
c.
July 1 Bal. 625 July 31 9,910
31 9,910 31 Bal. 9,910
31 Bal. 10,535
d.
Aladdin Co. Clearmark Co.Life Star Inc.Total accounts receivable
The total in the schedule above agrees with the T account balance for the accounts receivable controlling account in part (c).
e. A computerized system would likely use an electronic form specially designed for recording sales transactions, such as an electronic invoice form. The transaction details would be input into the form fields and submitted. Once submitted, the transaction would be saved and automatically posted as a debit to the individual customer account receivable and a credit to the revenueaccount. No control totals would be posted to a controlling account.
$10,535
July 31, 20Y2
$ 1,5755,5503,410
Accounts Receivable Customer Balances
Accounts Receivable Fees Earned
Aladdin Co. Clearmark Co.
Life Star Inc.
SAPLING CONSULTING INC.
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CHAPTER 5 Accounting Systems
Ex. 5-8
Amber Communications Inc. $3,650Clear Pointe Studios Inc. 1,650Echo Broadcasting Co. 2,980Gold Coast Media Inc. 0Total accounts receivable $8,280
Note: The balances are determined by adding the debits and subtracting the credits for each subsidiary receivable account.
Balance, January 1, 20Y4 $ 3,790Total debits (from revenue journal) 15,680Total credits (from cash receipts journal) (11,190)Balance, January 31, 20Y4 $ 8,280
Ex. 5-9
Page 8
Invoice Post.
No. Ref. Fees Earned Cr.
20Y8 Mar. 2 512 Santorini Co.
8 513 Gabriel Co. 12 514 Yarnell Inc. 20 515 Electronic Central Inc. 31
Page 12
20Y8 Mar. 4 CMI Inc.
19 Yarnell Inc. 28 Fees Earned 16029 Santorini Co.
31 Fees Earned 8531 245 1,665
205555
905
1,91085
205555160905
REVENUE JOURNAL
2,165
CashDr.
Post.Ref.
Account Credited
Fees Earned Cr.
Accts.Rec. Cr.
CASH RECEIPTS JOURNAL
Date
Date
POLARIS PRODUCTIONS INC.Accounts Receivable Customer Balances
January 31, 20Y4
Accounts Receivable(Controlling)
905220845195
Accounts Rec. Dr.
Account Debited
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CHAPTER 5 Accounting Systems
Ex. 5-10
a.
Page 19
20Y5 Oct. 3 622 Palace Corp.
8 623 Sunny Style Inc.18 624 Amex Services Inc. 28 625 Wayfarer Co. 31
Page 25
20Y5 Oct. 5 Champion Co. 1,060
12 Wayfarer Co. 1,45023 Palace Corp. 2,89030 Fees Earned 12031 5,520
b.
Amex Services Inc. $2,970
Sunny Style Inc. 1,940Wayfarer Co. 900
Total accounts receivable $5,810
The total of the customer accounts on October 31, 20Y5, $5,810, equals the
balance of the accounts receivable controlling account, shown as follows:
Oct. 1 Bal. Oct. 313131 Bal.
5,4002,5108,7005,810
Accounts Receivable
LASTING SUMMER INC.Accounts Receivable Customer Balances
October 31, 20Y5
Post.Ref.
AccountCredited
120
1,0601,4502,890
5,400120
Date
8,700
CashDr.
Accts.Rec.Cr.
FeesEarned
Cr.
Date
2,890
Accounts Rec. Dr.Fees Earned Cr.
InvoiceNo.
900
CASH RECEIPTS JOURNAL
REVENUE JOURNAL
Account Debited
1,9402,970
Post.Ref.
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CHAPTER 5 Accounting Systems
Ex. 5-10 (Concluded)
c. The accounts receivable subsidiary ledger is needed to track customer services provided on account and customer collections. Without the subsidiary ledger, Lasting Summer Inc. would not know who owes how much for services rendered. Furthermore, without the subsidiary ledger, it would be impossible to manage collections from individual customers.
Ex. 5-11
1. General ledger account: (g), (h), (i), (j), (k), (l)2. Subsidiary ledger account: (a), (b), (c), (d), (e), (f)3. No posting required: (m)
Ex. 5-12
1. General ledger account: (b), (c), (e), (f), (h), (i), (k), (l)2. Subsidiary ledger account: (a), (d), (g)3. No posting required: (j)
Ex. 5-13
June 6. Purchased services, supplies, equipment, or other commodities on account; posted from purchases journal Page 49.
14. Received an invoice adjustment or corrected an error related to purchase of June 6; posted from general journal Page 12. (A payment
would be recorded in the cash payments journal.)
16. Paid balance owed; posted from cash payments journal Page 23.
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CH
AP
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Acc
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r po
sted
to a
pub
licl
y ac
cess
ible
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who
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par
t.
CHAPTER 5 Accounting Systems
Ex. 5-15
a. and b.
Mar. 4 690 Mar. 1 Bal. 580
26 385 15 325
31 Bal. 1,075 31 Bal. 905
Mar. 20 3,860
31 Bal. 3,860
c.
Mar. 1 Bal. 580 Mar. 31 1,400
31 5,260 31 Bal. 1,400
31 Bal. 5,840
d.
Enviro-Wash Supplies Inc.Nicely Co. Office Mate Inc.Total accounts payable
The total in the schedule above agrees with the T account balance for the accounts payable control account in (c).
e. A computerized system would likely use an electronic form specially designed for recording purchase transactions. The transaction details would be input into the form fields and submitted. Once submitted, the transaction would be saved and automatically posted as a debit to an appropriate asset account and a credit to the individual creditor accounts payable account. No control totals would be posted to a controlling account.
Accounts Payable Creditor Balances
Enviro-Wash Supplies Inc. Nicely Co.
Office Mate Inc.
NEWMARK EXTERIOR CLEANERS INC.
Accounts Payable Cleaning Supplies
March 31, 20Y2$1,075
9053,860
$5,840
5-14© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Ex. 5-16
Augusta Sod Co. $ 6,450Concrete Equipment Co. 6,700Home Centers Lumber Co. 8,430Nu Lawn Fertilizer 0Total accounts payable $21,580
Note: The account balances are determined by subtracting the debits from the credits
for each account.
Balance, June 1, 20Y1 $ 2,230Total credits (from purchases journal) 27,700Total debits (from cash payments journal) (8,350)Balance, June 30, 20Y1 $21,580
Accounts Payable(Controlling)
OUTDOOR ARTISAN LANDSCAPINGAccounts Payable Creditor Balances
June 30, 20Y1
5-15© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CH
AP
TE
R 5
Acc
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Ex.
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pub
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who
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CHAPTER 5 Accounting Systems
Ex. 5-18 (Concluded)
b.
Meow Mart Inc. $ 450
Poodle Pals Inc. 790Office Helper Inc. 2,510
Total accounts payable $3,750
The total of the creditor accounts on September 30, 20Y4, $3,750, equals the balance of the accounts payable controlling account, shown as follows:
Sept. 30 915 Sept. 1 Bal.3030 Bal.
c. Happy Tails Inc. uses a subsidiary ledger for accounts payable to track its credit purchases and payments to the individual supplier. This is needed so that it knowshow much it owes to each individual supplier. Without the subsidiary ledger, Happy Tails Inc. would have difficulty accurately paying suppliers for the amount owed in atimely manner.
Ex. 5-19a. Two errors were made in balancing the accounts in the subsidiary ledger:
(1) The Carbon Supplies Inc. transaction of March 9 should have resulted in a balance of $15,300 instead of $14,000, and the account balance at March 12 should have been $15,000 instead of $13,700. The account balance at March 20 should have been $9,200 instead of $7,900.
(2) The Hudson Bay Minerals Co. transaction of March 25 should have resulted in abalance of $700 instead of $1,700.
4,0453,750
Accounts Payable
HAPPY TAILS INC.Accounts Payable Creditor Balances
September 30, 20Y4
620
5-18© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Ex. 5-19 (Concluded)
b.
C. D. Greer and Son $15,750Carbon Supplies Inc. 9,200Cutler and Powell 7,800Hudson Bay Minerals Co. 700Valley Power 3,150Total accounts payable $36,600
Ex. 5-20
Cash receipts journal: (a)Cash payments journal: (b)Revenue journal: (c)Purchases journal: (d)General journal: (e)
Ex. 5-211. The Cash column is for debits (not credits).
2. The Other Accounts column is for credits (not debits).
3. A better order of columns would be to place the Other Accounts Cr. column to the left of the Fees Earned Cr. column.
A recommended and corrected cash receipts journal is as follows:
Page 12
BUNKER HILL ASSAY SERVICES INC. Accounts Payable Creditor Balances
March 31, 20Y4
Date
CashDr.
Post.Ref.
AccountCredited
Accts.Rec.Cr.
OtherAccounts
Cr.
FeesEarned
Cr.
CASH RECEIPTS JOURNAL
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CHAPTER 5 Accounting Systems
Ex. 5-22
a. In the electronic invoice form from QuickBooks® shown above, typical
fields for data input can be identified as follows:
1. Customer name and address2. Date and invoice number 3. Description of item sold4. Amount of revenue
b. The customer Accounts Receivable is debited, and Fees Earned is credited.A computerized accounting system does not require posting to a separate accounts receivable control account. In this case, the total accounts receivable reported on the balance sheet is merely the sum of the balances of the individual customer account balances. That is, the accounts receivable account summarizes the customer accounts automatically.
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CHAPTER 5 Accounting Systems
Ex. 5-22 (Concluded)
c. Controlling accounts are not posted at the end of the month in a computerized accounting system. Transactions are recorded through data input into electronic forms, into electronic special journals, or for infrequent transactions, by an electronic general journal. Balances of affected accounts are automatically postedand updated from the information recorded on the form. If desired, the computercan provide a printout of the monthly transaction history for a particular account, which provides the same information as a journal. In addition, the controlling account is not posted separately. In a manual system, separate posting to the controlling account provides additional control by reconciling the controlling account balance against the sum of the individual customer account balances. However, in a computerized accounting system, there are no separate postings to a controlling account because the computer is not going to make posting or mathematical errors. Therefore, there is no need for the additional control provided by posting a journal total to a controlling account.
Ex. 5-23
a. iTunes is an example of a B2C, or business-to-consumer, e-commerce application.The B, or business, is Apple. The C, or consumers, would mostly be individuals who purchase digital products from the download store.
b. Cash 15Fees Earned 15
c. The cash receipts journal would be used to record debits to Cash from cash sales or collections on account.
d. The electronic invoice form could be used for either transactions on account, as illustrated in the chapter, or for cash sales. The invoice form used for sales on account is different from the one used for cash sales. The latter invoice form makes a debit to Cash, rather than a debit to a customer account.
e. Sales made on B2C e-commerce transactions are computerized transactions, so a special journal is inappropriate. On an e-commerce site, the consumer inputs the transaction information on the web page; thus, there is no need for a separate electronic form for reentering the same information to record the sale. Essentially, the e-commerce application is the form that originates the sales transaction inside the accounting system. Accounting transactions flow directly from the shopping cart information directly into the accounting system.
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CHAPTER 5 Accounting Systems
Ex. 5-24
a. Amazon.com B2C. Sells books, DVDs, and other products to
individual consumers.
b. Dell Inc. B2C and B2B. Sells computer products to both
individuals and corporations. Its site separates
individual and corporate sales.
c. DuPont B2B. Specialty chemicals. DuPont Direct® is its B2B web application.
d. Intuit Inc. B2C and B2B. Arranges its site for both individuals
and businesses because its products are divided this
way.
e. L.L. Bean, Inc. B2C. Consumer clothes e-retailer.
f. W.W. Grainger, Inc. B2B. Sells maintenance, repair, and operating
supplies to manufacturing companies.
Ex. 5-25
a. Horizontal analysis:
Amount Percent
Americas $13,293 $11,980 $1,313 11.0%
EMEA 1,217 1,295 (78) –6.0%China/Asia Pacific 2,396 1,130 1,266 112.0%Channel Development 1,731 1,546 185 12.0%Other 526 497 29 5.8%
Total revenues $19,163 $16,448 $2,715 16.5%
b. Vertical analysis:
Amount Percent Amount Percent
Americas $13,293 69.4% $11,980 72.8%EMEA 1,217 6.4% 1,295 7.9%China/Asia Pacific 2,396 12.5% 1,130 6.9%Channel Development 1,731 9.0% 1,546 9.4%Other 526 2.7% 497 3.0%
Total revenues $19,163 100.0% $16,448 100.0%
Recent Year Prior Year
Increase/(Decrease)Recent Year(in millions)
Prior Year(in millions)
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CHAPTER 5 Accounting Systems
Ex. 5-25 (Concluded)
c. The horizontal analysis indicates that the total revenues of Starbucks increasedby more than 16% (16.5%) from the prior year to the recent year. This increase is
explained by continued consumer preference for Starbucks coffee and aggressiveAsian expansion. Revenues increased by 112% in China/Asia Pacific versus 11%in the Americas. This was a noticeable difference in growth. Apparently, there are more store openings in China/Asia Pacific than in the Americas. EMEA actually declined slightly (−6%) between the two years, indicating a maturing market. Thevertical analysis indicates that the percent of Americas’ revenues to total revenues decreased from 72.8% in the prior year to 69.4% in the recent year. In this sameperiod, the percent of China/Asia Pacific to total revenues increased from 6.9% in the prior year to 12.5% in the recent year. This again confirms significant growth in China. Channel Development grew by 12% and nearly maintained its percentof total revenues between the two years. Both analyses indicate that China/Asia Pacific has been the primary engine for Starbucks’ growth.
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CHAPTER 5 Accounting Systems
Ex. 5-26
a.Twenty-First Century Fox, Inc.Major Product Segments
Cable Network Programming $13,773 45.4%Television 4,895 16.2%Filmed Entertainment 9,525 31.4%Direct Broadcast Satellite Television 2,112 7.0%
Total revenues $30,305 100.0%
b. Twenty-First Century Fox, Inc. is moderately diversified. The Cable Network Programming segment has the largest percent of revenues to total revenues at 45.4%. This segment represents almost half the revenues of the company. However, Television and Filmed Entertainment have a percent of revenues to total revenues of over 16% and 31%, respectively. Thus, these are significant segments suggesting a degree of diversification when all three are considered together.
The Direct Broadcast Satellite Television segment is the smallest segment with revenues equal to 7% of total revenues and thus provides some minor additionaldiversification.
For a Recent Year (in Millions) Percent
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CHAPTER 5 Accounting Systems
Ex. 5-27
a. Horizontal analysis:
Amount Percent
China $ 6,909 $ 6,934 $ (25) –0.4%KFC 2,948 3,193 (245) –7.7%Pizza Hut 1,145 1,148 (3) –0.3%Taco Bell 1,988 1,863 125 6.7%India 115 141 (26) –18.4%
Total revenues $13,105 $13,279 $(174) –1.3%
b. Vertical analysis:
China $ 6,909 52.7% $ 6,934 52.2%KFC 2,948 22.5% 3,193 24.0%Pizza Hut 1,145 8.7% 1,148 8.6%Taco Bell 1,988 15.2% 1,863 14.0%India 115 0.9% 141 1.1%
Total revenues $13,105 100.0% $13,279 99.9%
*The sum is less than 100% due to rounding errors in the percentage calculations.
c. The total revenues have declined by 1.3% between the two years. The largest declines occurred in the KFC (−7.7%) and India (−18.4%) segments. These declines more than offset the increase in the Taco Bell segment. Thus, overall, there was a small decline in revenue. The vertical analysis indicates that China represents the largest segment as a percent of revenues (52.7%), followed by KFC (22.5%) and Taco Bell (15.2%). The KFC segment dropped significantly as a percent of revenues between the two years (24.0% vs. 22.5%), while Taco Bell grew as a percent of total revenues between the two years (14.0% vs. 15.2%).
Year 2(in millions)
Year 1(in millions)
Percent
Year 2 Year 1
Amount(in millions) Percent
Amount(in millions)
Increase/(Decrease)
*
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CHAPTER 5 Accounting Systems
Prob. 5-1A
1. and 2.
Page 1
July 21 1 J. Dunlop 22 2 K. Tisdale 24 3 T. Quinn 27 4 F. Mintz 30 5 D. Chase 30 6 K. Tisdale 31 7 T. Quinn 31
Page 1
Debit Credit
July 25 Supplies 13 300Fees Earned 41 300
105
InvoiceNo.
JOURNAL
Date
1,170
Description
Date
PROBLEMS
225170120
REVENUE JOURNAL
Account Debited
(12) (41)
Post.Ref.
Post.Ref.
115
Accounts Rec. Dr.Fees Earned Cr.
35085
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CHAPTER 5 Accounting Systems
Prob. 5-1A (Continued)
Post.Item Ref. Debit Credit Balance
July 30 R1 170 170
Post.Item Ref. Debit Credit Balance
July 21 R1 115 115
Post.Item Ref. Debit Credit Balance
July 27 R1 225 225
Post.Item Ref. Debit Credit Balance
July 24 R1 85 8531 R1 105 190
Post.Item Ref. Debit Credit Balance
July 22 R1 350 35030 R1 120 470
D. ChaseName:
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Name: J. Dunlop
Date
Date
Name: T. Quinn
Date
Name: F. Mintz
Date
Name: K. Tisdale
Date
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CHAPTER 5 Accounting Systems
Prob. 5-1A (Concluded)
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
July 31 R1 1,170 1,170
Account No. 13
Post.
Item Ref. Debit Credit Debit Credit
July 25 J1 300 300
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
July 25 J1 300 30031 R1 1,170 1,470
3. a. $1,170 ($170 + $115 + $225 + $190 + $470)b. $1,170
4. The computerized system is more efficient. Each sales transaction is entered into an electronic invoice form. The postings to the accounts receivable subsidiary and fees earned ledgers are automatic. Also, all sums and totals in the subsidiary ledgers are calculated automatically. There are no separate postings to an accounts receivable control account because there is no need to verify the accuracy of account totals. There is no math or posting error. The computerizedsystem also provides management with current customer account balanceinformation because the postings are automatic.
GENERAL LEDGER
Account: Fees Earned
Balance
Date
Balance
Accounts ReceivableAccount:
Date
Account: Supplies
Balance
Date
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CHAPTER 5 Accounting Systems
Prob. 5-2A
1. and 5.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
Apr. 1 Balance 11,35030 CR36 34,390 45,740
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
Apr. 1 Balance 14,83025 J1 3,200 11,63030 R40 23,090 34,72030 CR36 21,500 13,220
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
Apr. 1 Balance 6,00025 J1 3,200 9,200
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
Apr. 30 R40 23,090 23,09030 CR36 12,890 35,980
Date
Cash
GENERAL LEDGER
Account: Fees Earned
Account:
Balance
Date
Account: Accounts Receivable
Balance
Date
Account: Notes Receivable
Balance
Balance
Date
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CHAPTER 5 Accounting Systems
Prob. 5-2A (Continued)
2. and 4.
Post.Item Ref. Debit Credit Balance
Apr. 1 Balance 8,7105 CR36 8,710 —
22 R40 7,470 7,470
Post.Item Ref. Debit Credit Balance
Apr. 2 R40 4,680 4,68019 CR36 4,680 —
Post.Item Ref. Debit Credit Balance
Apr. 1 Balance 6,1206 R40 1,990 8,110
15 CR36 6,120 1,99016 R40 5,500 7,49020 CR36 1,990 5,500
Post.Item Ref. Debit Credit Balance
Apr. 13 R40 3,450 3,45025 J1 3,200 250
Date
Name: Pinecrest Co.
Date
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Name: Ohr Co.
Name: Shilo Co.
Date
Date
Mendez Co.Name:
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CHAPTER 5 Accounting Systems
Prob. 5-2A (Continued)
3., 4., and 5.Page 40
2 793 Ohr Co. 6 794 Pinecrest Co.
13 795 Shilo Co. 16 796 Pinecrest Co. 22 797 Mendez Co. 30
Page 36
5 Mendez Co. 8,71015 Pinecrest Co. 6,12019 Ohr Co. 4,68020 Pinecrest Co. 1,99030 Fees Earned 12,89030 34,390
(11)
Page 1
25 Notes Receivable 14Accounts Receivable—Shilo Co. 12/ 3,200
The subsidiary account of Shilo Co. must also be posted for a $3,000 credit.
3,200
JOURNAL
Post.Ref.
Date Credit
12,89012,890
(41) (12)
Debit
Description
CashDr.
Accts.Rec.Cr.
FeesEarned
Cr.
(12) (41)
Apr.
Apr. 8,7106,1204,6801,990
Date
Post.Ref.
4,680
Accounts Rec. Dr.Fees Earned Cr.
InvoiceNo.
7,470
CASH RECEIPTS JOURNAL
Apr.
REVENUE JOURNAL
Account Debited
1,9903,450
Date
23,090
Post.Ref.
Account Credited
5,500
21,500
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CHAPTER 5 Accounting Systems
Prob. 5-2A (Concluded)
6. The sum of the customer balances is in agreement with the controlling account.Both have balances of $13,220 ($7,470 + $5,500 + $250).
7. In an automated system, individual sales transactions are posted automatically to the general ledger at the time of the original transaction. Thus, there is no need to post summary totals to the general ledger accounts. The accounts receivable account reported on the balance sheet is often merely the sum of the individual customer accounts.
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CHAPTER 5 Accounting Systems
Prob. 5-3A
1. and 4.
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
Oct. 1 Balance 5,92031 P30 11,930 17,850
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
Oct. 1 Balance 75031 P30 1,030 1,780
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
Oct. 1 Balance 12,3005 P30 3,980 16,280
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
Oct. 1 Balance 1,17031 P30 16,940 18,110
Date
Account: Office Equipment
Balance
Date
GENERAL LEDGER
Account: Accounts Payable
Balance
Date
Balance
Office SuppliesAccount:
Account: Field Supplies
Balance
Date
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CHAPTER 5 Accounting Systems
Prob. 5-3A (Continued)
2. and 3.
Post.Item Ref. Debit Credit Balance
Oct. 1 Balance 3909 P30 320 710
29 P30 310 1,020
Post.Item Ref. Debit Credit Balance
Oct. 1 Balance 7802 P30 400 1,180
Post.Item Ref. Debit Credit Balance
Oct. 14 P30 2,940 2,94024 P30 3,880 6,82031 P30 1,800 8,620
Post.Item Ref. Debit Credit Balance
Oct. 5 P30 3,980 3,980
Post.Item Ref. Debit Credit Balance
Oct. 13 P30 1,420 1,42017 P30 1,890 3,310
Executive Office Supply Co.Name:
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Name: Meade Co.
Date
Date
Name: Peach Computers Co.
Date
Name: Omni Co.
Date
Name: Yamura Co.
Date
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CHAPTER 5 Accounting Systems
Prob. 5-4A (Continued)
Page 1
Apr. 16 1 Rent Expense 71 3,50019 2 Field Supplies 14 3,340
Office Supplies 15 40023 3 Land 19 140,00024 4 Hydro Supply Co. 5,340 5,34026 5 Pure Equip. Co. 21,450 21,45030 6 Best Office Supply Co. 510 51030 7 Salary Expense 61 29,40030 27,300 203,940
(21) (11)
1. and 2.Page 1
Apr. 30 Land 19 12,000Field Equipment 17 12,000
CASH PAYMENTS JOURNAL
4003,340
140,000
Post.Ref.
Ck.No.
Account Debited
Date
Debit
3,500
OtherAccounts
Dr.
AccountsPayable
Dr.
29,400176,640
()
Post.Ref.
CashCr.
Credit
Date
Description
JOURNAL
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CHAPTER 5 Accounting Systems
Prob. 5-4A (Continued)
1.
Post.Item Ref. Debit Credit Balance
Apr. 17 P1 510 51023 P1 660 1,17030 CP1 510 660
Post.Item Ref. Debit Credit Balance
Apr. 16 P1 5,340 5,34024 CP1 5,340 —30 P1 7,650 7,650
Post.Item Ref. Debit Credit Balance
Apr. 16 P1 21,450 21,45026 CP1 21,450 —30 P1 6,040 6,040
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Name: Pure Equipment Co.
Date
Name: Hydro Supply Co.
Date
Date
Best Office Supply Co.Name:
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CHAPTER 5 Accounting Systems
Prob. 5-4A (Continued)
2. and 3.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
30 CP1 203,940 203,940
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
19 CP1 3,340 3,34030 P1 14,330 17,670
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
19 CP1 400 40030 P1 1,170 1,570
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
16 P1 21,450 21,45030 P1 4,700 26,15030 J1 12,000 14,150
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
23 CP1 140,000 140,00030 J1 12,000 152,000
GENERAL LEDGER
Account: Field Equipment
Balance
Date
Balance
Field SuppliesAccount:
Account: Cash
Balance
Date
Apr.
Apr.
Apr.
Account:
Apr.
Date
Date
Apr.
Land
Balance
Account: Office Supplies
Balance
Date
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CHAPTER 5 Accounting Systems
Prob. 5-4A (Concluded)
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
30 P1 41,650 41,65030 CP1 27,300 14,350
Account No. 61
Post.
Item Ref. Debit Credit Debit Credit
30 CP1 29,400 29,400
Account No. 71
Post.
Item Ref. Debit Credit Debit Credit
16 CP1 3,500 3,500
4.
Best Office Supply Co. $ 660Hydro Supply Co. 7,650Pure Equipment Co. 6,040Total accounts payable* $14,350
* The total of the schedule of accounts payable is equal to the balance of the accounts
payable control account.
5. A subsidiary ledger for the field equipment would allow the company to track each piece of equipment with respect to cost, location, useful life, and other data. Such information would be useful for safeguarding equipment anddetermining depreciation.
Account:
April 30
Apr.
Balance
Date
AQUAFRESH WATER TESTING SERVICE
Balance
Date
Rent Expense
Accounts Payable Creditor Balances
Account: Salary Expense
Apr.
Apr.
Account: Accounts Payable
Balance
Date
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CHAPTER 5 Accounting Systems
Prob. 5-5A
1., 3., and 4.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 161,68031 CR31 53,880 215,56031 CP34 119,940 95,620
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 12,94031 R35 19,210 32,15031 CR31 14,680 17,470
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 10,85020 J1 3,200 7,65031 P37 3,250 10,900
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 4,90031 CP34 340 5,24031 P37 775 6,015
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 28,5006 P37 4,500 33,000
Balance
Date
Dec.
Account: Office Equipment
Date
Date
Account: Maintenance Supplies
Date
Dec.
Dec.
Balance
Date
Balance
Dec.
Dec.
Account: Office Supplies
GENERAL LEDGER
Balance
Accounts ReceivableAccount:
Account: Cash
Balance
5-41© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-5A (Continued)
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 6,900
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 95,9005 P37 37,300 133,200
16 CP34 39,800 173,000
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 14,700
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 3,92031 P37 45,825 49,74531 CP34 45,720 4,025
Account No. 31
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 289,250
Account No. 32
Post.
Item Ref. Debit Credit Debit Credit
24 CP34 3,000 3,000
Account: Vehicles
Dec.
Account: S. Holmes, Capital
Dec.
Account: Accounts Payable
Date
Date
Dec.
Account: Accumulated Depreciation—Office Equipment
Balance
Date
S. Holmes, Drawing
Balance
Date
Balance
Date
Dec.
Account: Accumulated Depreciation—Vehicles
Balance
Date
Balance
Balance
Dec.
Dec.
Account:
5-42© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-5A (Continued)
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
16 CR31 20,300 20,30031 CR31 18,900 39,20031 R35 19,210 58,410
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
30 CP34 16,900 16,900
Account No. 52
Post.
Item Ref. Debit Credit Debit Credit
20 J1 3,200 3,200
Account No. 53
Post.
Item Ref. Debit Credit Debit Credit
9 CP34 600 600
Account No. 61
Post.
Item Ref. Debit Credit Debit Credit
30 CP34 7,100 7,100
Account No. 62
Post.
Item Ref. Debit Credit Debit Credit
1 CP34 4,200 4,200
Balance
Date
Dec.
Account: Fees Earned
Dec.
Account: Driver Salaries Expense
Balance
Balance
Date
Dec.
Account: Fuel Expense
Balance
Date
Balance
Date
Account: Maintenance Supplies Expense
Dec.
Date
Account: Office Salaries Expense
Dec.
Dec.
Balance
Date
Account: Rent Expense
5-43© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-5A (Continued)
Account No. 63
Post.
Item Ref. Debit Credit Debit Credit
20 CP34 1,780 1,780
Account No. 64
Post.
Item Ref. Debit Credit Debit Credit
17 CP34 500 500
Balance
Date
Dec.
Account: Advertising Expense
Account: Miscellaneous Administrative Expense
Balance
Date
Dec.
5-44© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CH
AP
TE
R 5
Acc
ount
ing
Sys
tem
s
Pro
b. 5
-5A
(C
on
tin
ued
)
2. a
nd
4.
Pag
e37
Dec
.5
18
37,3
006
16
4,50
018
19
37
523
40
031
775
41,8
00
(15)
()
P
age
31
Dec
.3
Rya
n C
o.
4,
800
10S
ing
Co
.
4,04
012
Clif
ford
Co
.
1,74
016
Fee
s E
arn
ed41
20,3
0025
Rya
n C
o.
4,
100
31F
ees
Ear
ned
4118
,900
3153
,880
(11)
McC
lain
Co
.
P
ost
.R
ef.
Am
ou
nt
Mai
nte
nan
ceS
up
plie
sD
r.
P
ost
.R
ef.
1,75
0
400
45,8
25
1,87
5
Off
ice
Su
pp
lies
Dr.
Oth
erA
cco
un
tsD
r.
PU
RC
HA
SE
S J
OU
RN
AL
Dat
e
P
ost
.R
ef.
Acc
ou
nts
Pay
able
Cr.
37,3
004,
500
Dat
e
Off
ice
To
Go
Inc.
Acc
ou
nt
Cre
dit
ed
Pla
tin
um
Mo
tors
Au
stin
Co
mp
ute
r C
o.
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enti
al S
up
ply
Co
.1,
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Veh
icle
sO
ffic
e E
qu
ipm
ent
1,75
0
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ou
nt
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dit
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Oth
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un
tsC
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eiva
ble
Cr.
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ash
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SH
RE
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IPT
S J
OU
RN
AL
(21)
3,25
0
(14) 4,
800
4,04
01,
740
()
(12)
20,3
004,
100
14,6
8018
,900
39,2
00
5-45
© 2
018
Cen
gage
Lea
rnin
g. A
ll R
ight
s R
eser
ved.
May
not
be
scan
ned,
cop
ied
or d
upli
cate
d, o
r po
sted
to a
pub
licl
y ac
cess
ible
web
site
, in
who
le o
r in
par
t.
CHAPTER 5 Accounting Systems
Prob. 5-5A (Continued)
2. and 4.Page 35
2 940 Clifford Co. 6 941 Ernesto Co.
10 942 Joy Co. 24 943 Sing Co. 25 944 Ernesto Co. 31
Page 34
1 610 Rent Expense 62 4,200
9 611 Fuel Expense 53 600
10 612 Office To Go Inc. 330 330
11 613 Essential Supply Co. 3,090 3,090
11 614 Porter Co. 500 500
13 615 Platinum Motors 37,300 37,300
16 616 Vehicles 18 39,800
17 617 Misc. Admin. Expense 64 500
20 618 Advertising Expense 63 1,780
24 619 S. Holmes, Drawing 32 3,000
26 620 Austin Computer Co. 4,500 4,500
30 621 Driver Salaries Exp. 51 16,900
Office Salaries Exp. 61 7,10031 622 Office Supplies 15 340
31 45,720 119,940
(21) (11)
74,220
Dec. 4,200
39,800
()
7,100340
500
16,900
1,780
3,000
Account Debited
Post.Ref.
Ck.No.
600
Date
Dec.
CashCr.
OtherAccounts
Dr.
3,870
Accounts Rec. Dr.Fees Earned Cr.
Post.Ref.
Account Debited
REVENUE JOURNAL
Date
19,210
CASH PAYMENTS JOURNAL
6,100
(12) (41)
1,970
5,530
Accounts Payable
Dr.
1,740
InvoiceNo.
5-46© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-5A (Concluded)3. Page 1
Dec. 20 Maintenance Supplies Expense 52 3,200Maintenance Supplies 14 3,200
5.
Account Debit CreditNo. Balances Balances
Cash 11 95,620Accounts Receivable 12 17,470Maintenance Supplies 14 10,900Office Supplies 15 6,015Office Equipment 16 33,000Accumulated Depreciation—Office Equipment 17 6,900Vehicles 18 173,000Accumulated Depreciation—Vehicles 19 14,700Accounts Payable 21 4,025S. Holmes, Capital 31 289,250S. Holmes, Drawing 32 3,000Fees Earned 41 58,410Driver Salaries Expense 51 16,900Maintenance Supplies Expense 52 3,200Fuel Expense 53 600Office Salaries Expense 61 7,100Rent Expense 62 4,200Advertising Expense 63 1,780Miscellaneous Administrative Expense 64 500
373,285 373,285
Debit Credit
REVERE COURIER COMPANYUnadjusted Trial Balance
JOURNAL
Date DescriptionPost.Ref.
December 31
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CHAPTER 5 Accounting Systems
Prob. 5-1B
1. and 2.
Page 1
Jan. 18 1 Murphy Co. 20 2 Qwik-Mart Co. 24 3 Hopkins Co. 27 4 Carson Co. 28 5 Amber Waves Co. 30 6 Qwik-Mart Co. 31 7 Hopkins Co. 31
Page 1
Jan. 28 Supplies 14 100Fees Earned 41 100
Date
Post.Ref.
490
Accounts Rec. Dr.Fees Earned Cr.
InvoiceNo.
(12) (41)
340750
295
680120
REVENUE JOURNAL
Account Debited
200
Post.Ref.
Description
Date
2,875
JOURNAL
Debit
Credit
5-48© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-1B (Continued)
Post.Item Ref. Debit Credit Balance
Jan. 28 R1 120 120
Post.Item Ref. Debit Credit Balance
Jan. 27 R1 680 680
Post.Item Ref. Debit Credit Balance
Jan. 24 R1 750 75031 R1 295 1,045
Post.Item Ref. Debit Credit Balance
Jan. 18 R1 490 490
Post.Item Ref. Debit Credit Balance
Jan. 20 R1 340 34030 R1 200 540
Hopkins Co.
Amber Waves Co. Name:
Name:
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Name: Carson Co.
Date
Date
Qwik-Mart Co.
Date
Date
Name: Murphy Co.
Date
Name:
5-49© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-1B (Concluded)
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
31 R1 2,875 2,875
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
28 J1 100 100
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
28 J1 100 10031 R1 2,875 2,975
3. a. $2,875 ($120 + $680 + $1,045 + $490 + $540)b. $2,875
4. The computerized system is more efficient. Each sales transaction is entered intoan electronic invoice form. The postings to the accounts receivable subsidiary and fees earned ledgers are automatic. Also, all sums and totals in the subsidiary ledgers are calculated automatically. There are no separate postings to an accounts receivable control account because there is no need to verify the accuracy of account totals. There is no math or posting error. The computerized system also provides management with current customer account balance information becausethe postings are automatic.
Balance
Date
Account: Supplies
Jan.
Jan.
Date
Balance
Date
GENERAL LEDGER
Account: Fees Earned
Jan.
Balance
Accounts ReceivableAccount:
5-50© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-2B
1. and 5.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
June 1 Balance 18,34030 CR36 9,270 27,610
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
June 1 Balance 2,65030 J1 1,800 85030 R40 6,200 7,05030 CR36 4,750 2,300
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
June 1 Balance 34,70030 J1 1,800 36,500
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
June 30 R40 6,200 6,20030 CR36 4,520 10,720
GENERAL LEDGER
Account: Fees Earned
Balance
Date
Balance
Accounts ReceivableAccount:
Account: Cash
Balance
Date
Date
Account: Office Equipment
Balance
Date
5-51© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-2B (Continued)
2. and 4.
Post.Item Ref. Debit Credit Balance
June 1 Balance 1,6703 CR36 1,670 —
23 R40 860 860
Post.Item Ref. Debit Credit Balance
June 1 Balance 9807 R40 670 1,650
14 CR36 980 67016 R40 400 1,07020 CR36 670 400
Post.Item Ref. Debit Credit Balance
June 10 R40 2,840 2,84030 J1 1,800 1,040
Post.Item Ref. Debit Credit Balance
June 2 R40 1,430 1,43018 CR36 1,430 —
Date
Name: Ridge Communities
Date
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Name: Cooper Development Co.
Name: Yee Co.
Date
Date
Auto-Flex Co.Name:
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CHAPTER 5 Accounting Systems
Prob. 5-2B (Continued)
3., 4., and 5.Page 40
2 717 Yee Co. 7 718 Cooper Development Co.
10 719 Ridge Communities 16 720 Cooper Development Co. 23 721 Auto-Flex Co. 30
Page 36
3 Auto-Flex Co. 1,67014 Cooper Development Co. 98018 Yee Co. 1,43020 Cooper Development Co. 67030 Fees Earned 4,52030 9,270
(11)
Page 1
30 Office Equipment 18Accounts Receivable—RidgeCommunities 12/ 1,800
The subsidiary account for Ridge Communities must also be posted for an $1,800 credit.
Date
Post.Ref.
1,430
860400
June
REVENUE JOURNAL
Account Debited
6702,840
Accounts Rec. Dr.Fees Earned Cr.
InvoiceNo.
CashDr.
Accts.Rec.Cr.
Post.Ref.
4,520
6,200
Account Credited
(12) (41)
CASH RECEIPTS JOURNAL
June
JOURNAL
June
Post.Ref. CreditDebit
Date
FeesEarned
Cr.
1,670
4,750
9801,430
670
4,520
(41)
Description
Date
1,800
(12)
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CHAPTER 5 Accounting Systems
Prob. 5-2B (Concluded)
6. The sum of the customer balances is in agreement with the controlling account.Both have balances of $2,300 ($860 + $400 + $1,040).
7. In an automated system, individual sales transactions are posted automaticallyto the general ledger at the time of the original transaction. Thus, there is no need to post summary totals to the general ledger accounts. The accounts receivable account reported on the balance sheet is often merely the sum of the individual customer accounts.
5-54© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-3B
1. and 4.
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
May 1 Balance 6,20031 P30 16,900 23,100
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
May 1 Balance 1,49031 P30 1,105 2,595
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
May 1 Balance 19,40019 P30 8,150 27,550
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
May 1 Balance 5,14531 P30 26,155 31,300
Date
Account: Office Equipment
Balance
Date
GENERAL LEDGER
Account: Accounts Payable
Balance
Date
Balance
Office SuppliesAccount:
Account: Field Supplies
Balance
Date
5-55© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-3B (Continued)
2. and 3.
Post.Item Ref. Debit Credit Balance
May 1 Balance 3,90019 P30 8,150 12,050
Post.Item Ref. Debit Credit Balance
May 1 Balance 73015 P30 500 1,23026 P30 265 1,495
Post.Item Ref. Debit Credit Balance
May 1 Balance 5153 P30 340 855
Post.Item Ref. Debit Credit Balance
May 8 P30 4,500 4,50023 P30 2,450 6,95030 P30 3,040 9,990
Post.Item Ref. Debit Credit Balance
May 1 P30 3,240 3,24012 P30 3,670 6,910
Accu-Vision Supply Co.Name:
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Name: J-Mart Co.
Date
Date
Name: Tri Cities Supplies
Date
Name: Lassiter Co.
Date
Name: Wendell Co.
Date
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CH
AP
TE
R 5
Acc
ount
ing
Sys
tem
s
Pro
b. 5
-3B
(C
on
clu
ded
)
3. a
nd
4.
Pag
e30
May
1
3,24
03,
240
3
340
340
8
4,50
04,
500
12
3,67
03,
670
15
500
500
19
8,15
0O
ffic
e E
qu
ipm
ent
188,
150
23
2,45
02,
450
26
265
265
30
3,04
03,
040
3126
,155
16,9
001,
105
8,15
0
(21)
(14)
(15)
()
5.
a.$3
1,30
0 ($
12,0
50 +
$1,
495
+ $
855
+ $
9,99
0 +
$6,
910)
b.
$31,
300
6.S
up
ply
ch
ain
man
agem
ent
e-co
mm
erce
ap
plic
atio
ns
wo
uld
be
use
d t
o p
lan
an
d c
oo
rdin
ate
tran
sact
ion
s w
ith
su
pp
liers
.
Acc
ou
nts
Pay
able
Cr.
Off
ice
Su
pp
lies
Dr.
Oth
erA
cco
un
tsD
r.
P
ost
.R
ef.
Am
ou
nt
Dat
e
Tri
Cit
ies
Su
pp
lies
J-M
art
Co
.
J-M
art
Co
.A
ccu
-Vis
ion
Su
pp
ly C
o.
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Cit
ies
Su
pp
lies
PU
RC
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SE
S J
OU
RN
AL
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ldS
up
plie
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r.
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Cit
ies
Su
pp
lies
Wen
del
l Co
.
Acc
ou
nt
Cre
dit
ed
Wen
del
l Co
.L
assi
ter
Co
.
P
ost
.R
ef.
5-57
© 2
018
Cen
gage
Lea
rnin
g. A
ll R
ight
s R
eser
ved.
May
not
be
scan
ned,
cop
ied
or d
upli
cate
d, o
r po
sted
to a
pub
licl
y ac
cess
ible
web
site
, in
who
le o
r in
par
t.
CH
AP
TE
R 5
Acc
ount
ing
Sys
tem
s
Pro
b. 5
-4B
1., 2
., an
d 3
.P
age
1
16
32,6
00F
ield
Eq
uip
men
t17
32,6
0017
9,
780
9,78
020
1,
320
1,32
028
3,
670
3,67
030
Pet
ro S
ervi
ces
Inc.
30,8
0025
,300
Off
ice
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uip
men
t18
5,50
030
12
,450
12,4
5031
90,6
2047
,530
4,99
038
,100
(21)
(14)
(15)
()
PU
RC
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S J
OU
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AL
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ldS
up
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sD
r.
A-O
ne
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ice
Su
pp
ly C
o.
A-O
ne
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ice
Su
pp
ly C
o.
Acc
ou
nt
Cre
dit
ed
Pet
ro S
ervi
ces
Inc.
M
idla
nd
Su
pp
ly C
o.
P
ost
.R
ef.
Oct
.
Dat
e
Mid
lan
d S
up
ply
Co
.
Acc
ou
nts
Pay
able
Cr.
Off
ice
Su
pp
lies
Dr.
Oth
erA
cco
un
tsD
r.
P
ost
.R
ef.
Am
ou
nt
5-58
© 2
018
Cen
gage
Lea
rnin
g. A
ll R
ight
s R
eser
ved.
May
not
be
scan
ned,
cop
ied
or d
upli
cate
d, o
r po
sted
to a
pub
licl
y ac
cess
ible
web
site
, in
who
le o
r in
par
t.
CHAPTER 5 Accounting Systems
Prob. 5-4B (Continued)
1. and 2.Page 1
Oct. 31 Prepaid Rent 16 15,000Field Equipment 17 15,000
1., 2., and 3.
Page 1
Oct. 16 1 Rent Expense 71 7,00018 2 Field Supplies 14 4,570
Office Supplies 15 65024 3 Petro Services Inc. 32,600 32,60026 4 Midland Supply Co. 9,780 9,78028 5 Land 19 240,00030 6 A-One Office Supply Co. 1,320 1,32031 7 Salary Expense 61 32,00031 43,700 327,920
(21) (11)
Ck.No.
Account Debited
OtherAccounts
Dr.
32,000284,220
()
7,000
JOURNAL
Date
Post.Ref.
650
240,000
4,570
CashCr.
Accounts Payable
Dr.
Debit
CASH PAYMENTS JOURNAL
Description
Credit
Date
Post.Ref.
5-59© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-4B (Continued)
1.
Post.Item Ref. Debit Credit Balance
Oct. 20 P1 1,320 1,32028 P1 3,670 4,99030 CP1 1,320 3,670
Post.Item Ref. Debit Credit Balance
Oct. 17 P1 9,780 9,78026 CP1 9,780 —30 P1 12,450 12,450
Post.Item Ref. Debit Credit Balance
Oct. 16 P1 32,600 32,60024 CP1 32,600 —30 P1 30,800 30,800
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Name: Petro Services Inc.
Date
Name: Midland Supply Co.
Date
Date
A-One Office Supply Co.Name:
5-60© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-4B (Continued)
2. and 3.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
31 CP1 327,920 327,920
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
18 CP1 4,570 4,57031 P1 47,530 52,100
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
18 CP1 650 65031 P1 4,990 5,640
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
31 J1 15,000 15,000
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
16 P1 32,600 32,60031 J1 15,000 17,600
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
31 P1 5,500 5,500 Oct.
Balance
Date
Office Supplies
Balance
Date
Oct.
Balance
Date
Field Equipment
Oct.
Account:
Date
Balance
Date
Oct.
Account: Office Equipment
GENERAL LEDGER
Account: Prepaid Rent
Oct.
Oct.
Balance
Date
Account:
Balance
Field SuppliesAccount:
Account: Cash
5-61© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 5 Accounting Systems
Prob. 5-4B (Concluded)
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
28 CP1 240,000 240,000
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
31 P1 90,620 90,62031 CP1 43,700 46,920
Account No. 61
Post.
Item Ref. Debit Credit Debit Credit
31 CP1 32,000 32,000
Account No. 71
Post.
Item Ref. Debit Credit Debit Credit
16 CP1 7,000 7,000
4.
A-One Office Supply Co. $ 3,670Midland Supply Co. 12,450Petro Services Inc. 30,800Total accounts payable* $46,920
* The total of the schedule of accounts payable is equal to the balance of the accounts
payable control account.
5. A subsidiary ledger for the field equipment would allow the company to track each piece of equipment with respect to cost, location, useful life, and other data. Such information would be useful for safeguarding equipment and determining depreciation.
Oct.
Oct.
Balance
Date
Balance
Account: Land
Oct.
October 31
Oct.
Balance
Date
Accounts Payable
Accounts Payable Creditor Balances
Account:
WEST TEXAS EXPLORATION CO.
Account: Salary Expense
Balance
Date
Rent Expense
Date
Account:
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CHAPTER 5 Accounting Systems
Prob. 5-5B
1., 3., and 4.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 65,20031 CR31 96,050 161,25031 CP34 135,365 25,885
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 31,95031 R35 39,540 71,49031 CR31 38,950 32,540
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 7,24020 J1 4,400 2,84031 P37 5,070 7,910
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 3,69031 CP34 600 4,29031 P37 2,490 6,780
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 17,3003 P37 1,570 18,870
Balance
Date
Mar.
Account: Office Equipment
Date
Date
Account: Maintenance Supplies
Date
Mar.
Mar.
Balance
Date
Balance
Mar.
Mar.
Account: Office Supplies
GENERAL LEDGER
Balance
Accounts ReceivableAccount:
Account: Cash
Balance
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CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 4,250
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 62,4002 P37 26,900 89,300
16 CP34 28,500 117,800
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 17,800
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 2,75531 P37 36,030 38,78531 CP34 31,225 7,560
Account No. 31
Post.
Item Ref. Debit Credit Debit Credit
1 Balance 162,975
Account No. 32
Post.
Item Ref. Debit Credit Debit Credit
27 CP34 4,000 4,000
Account: Vehicles
Mar.
Account: J. Wu, Capital
Mar.
Account: Accounts Payable
Date
Date
Mar.
Account: Accumulated Depreciation—Office Equipment
Balance
Date
J. Wu, Drawing
Balance
Date
Balance
Date
Mar.
Account: Accumulated Depreciation—Vehicles
Balance
Date
Balance
Balance
Mar.
Mar.
Account:
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CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
16 CR31 26,800 26,80031 CR31 29,400 56,20031 R35 39,540 95,740
Account No. 42
Post.
Item Ref. Debit Credit Debit Credit
18 CR31 900 900
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
30 CP34 33,300 33,300
Account No. 52
Post.
Item Ref. Debit Credit Debit Credit
20 J1 4,400 4,400
Account No. 53
Post.
Item Ref. Debit Credit Debit Credit
9 CP34 820 820
Account No. 61
Post.
Item Ref. Debit Credit Debit Credit
31 CP34 21,200 21,200
Balance
Date
Mar.
Balance
Date
Mar.
Account: Fees Earned
Mar.
Account: Driver Salaries Expense
Account: Rent Revenue
Mar.
Mar.
Balance
Date
Account: Office Salaries Expense
Balance
Date
Account: Maintenance Supplies Expense
Balance
Date
Mar.
Account: Fuel Expense
Balance
Date
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CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
Account No. 62
Post.
Item Ref. Debit Credit Debit Credit
1 CP34 2,450 2,450
Account No. 63
Post.
Item Ref. Debit Credit Debit Credit
20 CP34 8,590 8,590
Account No. 64
Post.
Item Ref. Debit Credit Debit Credit
17 CP34 4,680 4,680
Balance
Date
Account: Rent Expense
Mar.
Balance
Date
Balance
Mar.
Account: Advertising Expense
Account: Miscellaneous Administrative Expense
Date
Mar.
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CH
AP
TE
R 5
Acc
ount
ing
Sys
tem
s
Pro
b. 5
-5B
(C
on
tin
ued
)
2. a
nd
4.
Pag
e37
Mar
.2
18
26,9
003
16
1,57
018
19
1,
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990
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age
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.
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ent
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ees
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ash
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ost
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ost
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ice
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lies
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nt
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ice
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e In
c.
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tille
Co
.
Off
ice
Cit
yM
aste
r S
up
ply
Co
.
Dat
e
5-67
© 2
018
Cen
gage
Lea
rnin
g. A
ll R
ight
s R
eser
ved.
May
not
be
scan
ned,
cop
ied
or d
upli
cate
d, o
r po
sted
to a
pub
licl
y ac
cess
ible
web
site
, in
who
le o
r in
par
t.
CHAPTER 5 Accounting Systems
Prob. 5-5B (Continued)
2. and 4.Page 35
5 91 Ellis Co. 7 92 Trent Co.
11 93 Jarvis Co. 24 94 Sajeev Co. 25 95 Trent Co. 31
Page 34
1 205 Rent Expense 62 2,450
9 206 Fuel Expense 53 820
10 207 Office City 450 450
10 208 Bastille Co. 1,890 1,890
11 209 Porter Co. 415 415
13 210 McIntyre Sales Co. 26,900 26,900
16 211 Vehicles 18 28,500
17 212 Misc. Admin. Expense 64 4,680
20 213 Advertising Expense 63 8,590
26 214 Office Mate Inc. 1,570 1,570
27 215 J. Wu, Drawing 32 4,000
30 216 Driver Salaries Expense 51 33,300
31 217 Office Salaries Expense 61 21,20031 218 Office Supplies 15 600
31 31,225 135,365
(21) (11)
104,140
Mar. 2,450
28,500
4,000
()
21,200600
4,680
33,300
8,590
Account Debited
Post.Ref.
Ck.No.
820
Date
Mar.
CashCr.
OtherAccounts
Dr.
9,840
Accounts Rec. Dr.Fees Earned Cr.
Post.Ref.
Account Debited
REVENUE JOURNAL
Date
39,540
CASH PAYMENTS JOURNAL
9,200
(41) (12)
7,200
6,300
Accounts Payable
Dr.
7,000
InvoiceNo.
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CHAPTER 5 Accounting Systems
Prob. 5-5B (Concluded)3. Page 1
Mar. 20 Maintenance Supplies Expense 52 4,400Maintenance Supplies 14 4,400
5.
Account Debit CreditNo. Balances Balances
Cash 11 25,885Accounts Receivable 12 32,540Maintenance Supplies 14 7,910Office Supplies 15 6,780Office Equipment 16 18,870Accumulated Depreciation—Office Equipment 17 4,250Vehicles 18 117,800Accumulated Depreciation—Vehicles 19 17,800Accounts Payable 21 7,560J. Wu, Capital 31 162,975J. Wu, Drawing 32 4,000Fees Earned 41 95,740Rent Revenue 42 900Driver Salaries Expense 51 33,300Maintenance Supplies Expense 52 4,400Fuel Expense 53 820Office Salaries Expense 61 21,200Rent Expense 62 2,450Advertising Expense 63 8,590Miscellaneous Administrative Expense 64 4,680
289,225 289,225
Debit Credit
AM EXPRESS COMPANYUnadjusted Trial Balance
JOURNAL
Date DescriptionPost.Ref.
March 31
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CHAPTER 5 Accounting Systems
CP 5-1
a. The half-price offer is a normal business practice so long as it is not the result of price collusion with other competitors or is considered “unfair pricing” according to federal statutes. Many businesses offer low initial services to entice customers to a subscription service. For example, cable and satellite companies often offer premium channels, such as HBO, for free for the first several months of service. The business objective of low initial pricing is to demonstrate the value of the service so that customers will elect to continue the service at the full subscription price. Thus, there is nothing inherently unethical about such a practice, and it is considered a fairly typical business practice.
b. Customer “lock-in” can be unethical if it is the result of fixing prices or acquiring competitors to achieve monopolistic concentration within an industry. However, in this case, the customer lock-in is a function and nature of the product. Namely, the data that are created by the product cannot be easily migrated to another application. Note that Netbooks is not denying the customer ownership of the data; rather, Netbooks is making it costly to switch. Such lock-in is not considered an unethical business practice. Indeed, we see such lock-in characteristics in many settings. For example:
● Razor blades are designed to be used only by the handle of the manufacturer. Thus, customers become locked in to the razor blades of the handle manufacturer. This is such a common strategy in many arenas that it has been termed the “razor blade strategy.”
● Movie theaters prevent customers from walking in with refreshments, thus locking theater goers in to the popcorn and refreshment stand of the theater. Theater pricing of refreshments reflects this lock-in.
● Sony designs video games so that they only work on its PlayStation®
equipment. Therefore, the games are locked in to the consoles. This allows Sony and its licensees to limit and control competition for games.
● Many manufacturers control replacement parts for equipment by custom-designing the parts. Customers then become locked in to the original manufacturer for replacement parts.
● Apple Computer’s iTunes can only be played on an iTunes-compatible player. Thus, Apple reduces competition for songs for its player and locks customers in to its music platform. Apple employs the same lock-in strategy for its Mac®
operating system.
CASES & PROJECTS
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CHAPTER 5 Accounting Systems
CP 5-2
Note to Instructors: While the list of functions and services can be quite large, the key
services are identified below. The purpose of these services is fairly advanced formost students. The activity asks for a listing rather than an explanation because most students have limited experience by which to provide much explanation. Use this caseto demonstrate the scope and basic nature of these application tools.
Selected JDA Supply Chain Management Solutions
● Demand management● Factory planning and scheduling● Merchandise operations● Supplier relationship management● Transportation and logistics management● Space and category management● Visibility, collaboration, and performance management● Inventory optimization● Planning on demand● Replenishment and fulfillment● Customer order management
Selected Salesforce.com Customer Relationship Management Solutions
● Provide the sales force with real-time information about all customer contacts with the firm to improve the effectiveness of the sales call
● Provide real-time forecast estimation and accumulation tools
● Support promotion plans and integrate the plans with forecasting and manufacturing
● Provide decision tools for evaluating marketing campaign effectiveness
● Provide tools to support call center responsiveness
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CHAPTER 5 Accounting Systems
CP 5-3
To: Senior ManagementFrom: StudentRe: Cloud-based accounting software
A new approach to automating our accounting requirements is now available. It iscalled cloud-based accounting using a cloud computing provider. Rather than
purchasing our accounting software and loading it on our own computers, cloud-based accounting software is rented and resides on the provider’s computers. Our data, along with the accounting software, stay with the provider. There are severaladvantages to this approach.
1. We don’t need to administer the application or data on our own computers. This becomes the job of the service provider, thus saving us computer systempersonnel costs. All we need is a desktop computer and a browser to use thesoftware.
2. Our people can work with our data anytime or anyplace. We don’t need to rely onour own internal computer network for accounting-related work. Instead, this product is available on the Internet. So, we can enter transactions and access our accounting data from anywhere in the world, meaning that we don't have to be plugged into our corporate network. This also will save us network support costs.
3. We don't need to purchase and load software upgrades. All upgrades are provided on the provider’s server when they are available. Thus, we are alwaysusing the latest version.
4. Providers promise a highly secure environment for our data.
5. A cloud-based accounting system should help us when data, such as orders,are passed between us and our customers and suppliers.
We also need to consider a number of disadvantages.
1. The cost of the software is recurring. Thus, we are trading the recurring costs ofmaintaining our system infrastructure for the recurring cost of the service. A financial analysis should be conducted to determine whether the service is cost-effective.
2. The Internet can be slow. During busy times, we may experience slow responsetimes.
3. Our data physically reside with the service provider. Thus, we don’t control thesecurity of our own data; the provider does. Our data are our lifeblood, so confidence in the provider’s controls is paramount.
4. Once we begin, we become “locked in” to the provider. It will be hard to change ourmind at a later date. However, to some extent, this is also true for purchasedsoftware.
MEMORANDUM
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CHAPTER 5 Accounting Systems
CP 5-4
Kyle is missing some of the principal benefits of the computerized system. Acomputerized system has three primary advantages. First, the computerized system is more efficient and accurate at transaction processing. In the computerized system, once the transaction data have been input, the information is simultaneously recorded in the electronic journal (file) and posted to the ledger accounts. This saves a significant amount of time in recording and posting transactions. Second, the computerized environment is less prone to mathematical, posting, and recording errors. The computer does not make these types of mistakes. Thus, the computerized environment should require less time correcting errors. Third, the computerized system provides more timely information to management because account balances are kept current. Under the manual system, ledger accounts are only as current as the latest posting date, but the computerized system posts every transaction when it is journalized or recorded on a form. Thus, management has more current information with which to make decisions.
As an additional note, Kyle may be reacting out of fear of the unknown. This is a common reaction to change. Thus, Kyle may be overreacting to the new computer environment because it will require significant change in the way the job is done as compared to the manual approach.
CP 5-5a. The accounts receivable and accounts payable accounts consist of transactions
with individual customers and creditors (suppliers). In both cases, the subsidiaryledger tracks what is collectible from customers or owed to suppliers. Thus, the subsidiary ledger is required for tracking the collection and payment process to individual customers and suppliers, respectively.
b. The equipment account could use a subsidiary ledger. The subsidiary ledger for equipment would track individual items of equipment, including their cost, location, and useful lives. The subsidiary ledger would be useful for determining equipment depreciation and safeguarding equipment assets.
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CHAPTER 5 Accounting Systems
CP 5-6
1. Special journals are used to reduce the processing time and expense to record transactions. A special journal is usually created when a specific type of transaction occurs frequently enough so that the use of the traditional two-column journal becomes cumbersome. The frequency of transactions for Omni Care would probably justify the following special journals:
Purchases journalCash payments journalRevenue journalCash receipts journal
Note to Instructors: Judgment is required in determining the number and nature
of the special journals to be established for Omni Care. Differences of opinion may exist as to whether all the preceding special journals are necessary or cost-efficient. You may want to use this time to comment further on the costs of establishing special journals and the potential benefits of reducing the processing time to record transactions.
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CH
AP
TE
R 5
Acc
ount
ing
Sys
tem
s
CP
5-6
(C
on
clu
ded
)
2.P
age
1
P
age
1
3.T
he
bu
sin
ess
sho
uld
mai
nta
in s
ub
sid
iary
led
ger
s fo
r cu
sto
mer
acc
ou
nts
rec
eiva
ble
, su
pp
lier
acco
un
ts
pay
able
, an
d m
edic
al e
qu
ipm
ent.
PU
RC
HA
SE
S J
OU
RN
AL
Dat
e
P
ost
.R
ef.
RE
VE
NU
E J
OU
RN
AL
Acc
ou
nt
Cre
dit
ed
P
ost
.R
ef.
Am
ou
nt
Med
ical
Su
pp
lies
Dr.
Off
ice
Su
pp
lies
Dr.
Oth
erA
cco
un
tsD
r.
Acc
ou
nts
Pay
able
Cr.
Po
st.
Ref
.
Dat
e A
cco
un
ts R
ec. D
r.F
ees
Ear
ned
Cr.
In
voic
eN
o.
A
cco
un
t D
ebit
ed
5-75
© 2
018
Cen
gage
Lea
rnin
g. A
ll R
ight
s R
eser
ved.
May
not
be
scan
ned,
cop
ied
or d
upli
cate
d, o
r po
sted
to a
pub
licl
y ac
cess
ible
web
site
, in
who
le o
r in
par
t.