Chapter 9: Cash Receipts, Cash Payments, and Banking Procedures

Transcription

1 Chapter 9: Cash Receipts, Cash Payments, and Banking Procedures Chapter Opener: Thinking Critically Office expenditures may include petty cash disbursements for office supplies and postage. Cash expenditures might also include payments for rent and utilities. Receipts might include cash sales for services or payments for services on account. Fast Facts H&R Block worked with the IRS to file the first electronic tax returns in 1986, 22,000 in all. In 2005, over 55 million (63%) of all tax returns were filed electronically. The company employs 15,300 full-time employees, but these numbers swell to 96,000 during tax season. In 2005 H&R Block generated $4.2 billion in revenues. The company operates over 9,500 offices. Computers in Accounting: Thinking Critically Answers will vary. Students may express concerns about security of funds or access to account balances. Benefits include 24-hour access to bank accounts and convenience, while disadvantages may include security concerns and increased account costs. Computers in Accounting: Internet Application Banking services will vary, but may include electronic bill payment, account transfers and deposits, wire transfers, monitoring of mortgage payments and balance, online application for loans. Managerial Implications: Thinking Critically Answers will vary, but should include a recognition of need to weigh the earning power (interest income) and the need for liquidity (access to the cash). 194 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

2 Discussion Questions These questions are designed to check students understanding of new terms, concepts, and procedures presented in the chapter. 1. Access to checkbook is restricted; use of prenumbered check forms; checks examined by someone who did not prepare them before they are signed; bank statement reconciled by someone other than employees who handle cash. 2. To record items that have not yet been entered in firm s records. 3. Outstanding checks, deposits in transit, service charges. 4. of Cash account in the general ledger. 5. To reconcile any difference between depositor s checkbook, Cash account, and bank statement. 6. Day-by-day checking account activity, as well as beginning and ending balances. 7. Date, amount, payee, current balance, purpose of check. Stub should be prepared before the check so that it will not be forgotten. 8. Signed, authorized written order instructing a bank to pay a specific sum of money to a designated person. 9. Electronic processing of documents. 10. Restrictive endorsement. 11. Shortages are debited and overages are credited to the Cash Short or Over account 12. Use only for minor payments; establishment check made out to person to be in charge of funds; keep funds locked; payments made from funds should be documented with signatures of recipient. 13. At month-end or when petty cash is replenished. 14. Contra cost account, deduction from Purchases. 15. Cash Payments Journal: total amount of purchase is a debit to Accounts Payable. Discount is recorded as a credit to Purchases Discounts. Amount of cash paid is recorded as a credit to Cash. 16. Cash Receipts Journal: Original sale was recorded as a Credit to Accounts Receivable; amount of the discount is recorded as a debit to Sales Discounts. Amount of cash received is recorded as a debit to Cash. 17. Encourages fast payment. 18. Written promise to pay amount on specific date. Cr. Notes Rec., Cr. Int. Inc., Dr. Cash. Cash receipts journal. 19. Payments made by check and issued only with approved invoice; invoices approved only by designated personnel; checks prepared and recorded in the checkbook or check register by someone different from the person who approves the payments; use prenumbered checks. 20. Employees are investigated by an insurance company, and, if their backgrounds are satisfactory, their employer is insured against losses that may occur because of employee theft or mishandling of funds. 21. Only approved employees can handle cash; keep cash in locked location; record cash receipts as they arrive; check funds against receipt log before deposits to bank made; make deposits promptly; separation of cash deposits, recording, reconciliation duties. 22. See Glossary for terms and definitions. Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 195

3 Exercises Exercise 9.1 CASH RECEIPTS JOURNAL PAGE 12 Accounts Sales Tax Other Accounts Credit Receivable Payable Sales Cash Date Description Ref Credit Credit Credit Account Name Ref. Amount Debit Sept. 1 Cash Sales 448 5,600 Cash Short or Over 16 6,064 2 James Floyd Cash Sales 420 5,250 5,670 4 Investment by Owner Susan Anderson, Capital 17,000 17,000 5 Cash Sales 512 6,400 Cash Short or Over (30) 6,882 Exercise 9.2 CASH PAYMENTS JOURNAL PAGE 15 Accounts Other Accounts Debit Purchases Ck. Post Payable Post Discounts Cash Date No. Description Ref. Debit Account Name Ref. Amount Credit Credit Sept September rent Rent Expense 2,400 2, Carter Company 2,950 2, Bought equipment Equipment 10,250 10, Paid sales tax Sales Tax Payable 1,380 1, Waller Company 1, , Cash purchase Purchases 2,675 2, Withdrawal by owner Susan Anderson, Drawing 1,800 1, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

4 Exercise 9.3 CASH PAYMENTS JOURNAL PAGE 1 Accounts Other Accounts Debit Purchases Ck. Post Payable Post Discounts Cash Date No. Description Ref. Debit Account Name Ref. Amount Credit Credit Jan Established petty cash fund Petty Cash Exercise 9.4 CASH PAYMENTS JOURNAL PAGE Accounts Other Accounts Debit Purchases Ck. Post Payable Post Discounts Cash Date No. Description Ref. Debit Account Name Ref. Amount Credit Credit Jan Replenished petty cash fund Supplies 42 Delivery Expense 36 Misc. Expense Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 197

5 Exercise 9.5 CHENG CORPORATION Bank Reconciliation October 31, on bank statement ,920 Additions: Deposit in transit ,777 Deductions for outstanding checks: Check Check Check ,533 Total outstanding checks ,727 Adjusted bank balance ,050 in books ,362 Deductions: Bank service charge NSF charge Adjusted book balance ,050 GENERAL JOURNAL PAGE 14 Date Description Ref. Debit Credit Nov. 5 Misc. Expense Cash Bank service charge for October 5 Accounts Receivable/James Dear Cash To record NSF check returned by bank Exercise 9.6 Bank Book Accounting Entry 1. X 2. X X 3. X X 4. X X 5. X 6. X X 7. X 198 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

6 Exercise 9.7 CANTU OFFICE SUPPLY COMPANY Bank Reconciliation Statement March 31, on bank statement ,905 Additions: Deposit in transit ,720 Check incorrectly charged ,987 71,892 Deduction for outstanding checks: Check ,130 Check Total outstanding checks ,301 Adjusted bank balance ,591 in books ,387 Additions: Noninterest-bearing note collected by bank.. 6,000 75,387 Deductions: Bank collection fee for note NSF check ,775 5,796 Adjusted book balance ,591 GENERAL JOURNAL PAGE 8 Date Description Ref. Debit Credit April 3 Cash ,000 Notes Receivable ,000 To record receipt of note collected by bank 3 Misc. Expense Cash To record bank collection fee 3 Accounts Receivable/Wilson Construction Company.. 5,775 Cash ,775 To record NSF check returned by bank Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 199

7 Problems Problem 9.1A CASH RECEIPTS JOURNAL PAGE 4 Accounts Sales Tax Other Accounts Credit Receivable Payable Sales Cash Date Description Ref Credit Credit Credit Account Name Ref. Amount Debit Feb. 3 Danielle Pelzel Refund for damaged goods Supplies Cash Sales 384 4,800 Cash Short or Over 620 (60) 5,124 9 Additional Investment Jason Wilson, Capital ,000 15, Kyela Jones Cash Sales 324 4,050 Cash Short or Over , Sadie Nelson Collected promissory Notes Receivable note and interest Interest Income Cash Sales 364 4,550 4, Alfred Herron Cash Sales 328 4,100 Cash Short or Over 620 (36) 4, Totals 1,910 1,400 17,500 15,884 36,694 (111) (231) (401) (X) (101) 200 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

8 GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 101 Feb. 1 4, CR4 36,694 41,654 ACCOUNT Notes Receivable ACCOUNT NO. 109 Feb CR ACCOUNT Accounts Receivable ACCOUNT NO. 111 Feb. 1 4, CR4 1,910 2,165 ACCOUNT Supplies ACCOUNT NO. 129 Feb CR ACCOUNT Sales Tax Payable ACCOUNT NO. 231 Feb CR4 1,400 1,695 ACCOUNT Jason Wilson, Capital ACCOUNT NO. 301 Feb. 1 34,000 9 CR4 15,000 49,000 Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 201

9 GENERAL LEDGER ACCOUNT Sales ACCOUNT NO. 401 Feb. 28 CR4 17,500 17,500 ACCOUNT Interest Income ACCOUNT NO. 491 Feb. 19 CR ACCOUNT Cash Short or Over ACCOUNT NO. 620 Feb. 7 CR CR CR Analyze: Total Accounts Receivable collected was $1, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

10 Problem 9.2A CASH PAYMENTS JOURNAL PAGE 8 Accounts Other Accounts Debit Purchases Ck. Post Payable Post Discounts Cash Date No. Description Ref. Debit Account Name Ref. Amount Credit Credit June Monthly rent Rent Expense 620 2,500 2, Tax remittance Sales Tax Payable 231 4,200 4, Perfect Timing Watch Co. 2,780 2, Established petty cash fund Petty Cash Fund Paid promissory note & Notes Payable 201 3,200 interest to Perry Corp. Interest Expense , Cash refund Sales Returns & Allowances Monthly telephone bill Telephone Expense International Jewelry Co. 6, , Store supplies Supplies Nelson s Jewelry & Accessories 3, , Classy Creations 3,650 3, Monthly salaries Salaries Expense 623 7,675 7, Withdrawal by owner Larry Jennings, Drawing 302 5,000 5, Replenish petty cash fund Supplies Delivery Expense Misc Expense Larry Jennings, Drawing Totals 15,930 24, ,519 (205) (X) Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 203

11 PETTY CASH ANALYSIS SHEET PAGE 8 Distribution of Payments Delivery Miscellaneous Vou. Supplies Expense Expense Other Accounts Debit Date No. Description Receipts Payments Debit Debit Debit Account Name Amount June 4 Establish fund Office Supplies Postage stamps Delivery service Personal withdrawal 24 Larry Jennings, Drawing Store windows washed Delivery service Totals on hand on hand Replenish fund Carried forward Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

12 GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 101 June 1 42, CP8 40,519 2,321 ACCOUNT Petty Cash Fund ACCOUNT NO. 105 June 4 CP ACCOUNT Supplies ACCOUNT NO. 129 June 1 1, CP , CP8 30 1,950 ACCOUNT Notes Payable ACCOUNT NO. 201 June 1 3,200 7 CP8 3, ACCOUNT Accounts Payable ACCOUNT NO. 205 June 1 18, CP8 15,930 2,950 ACCOUNT Sales Tax Payable ACCOUNT NO. 231 June 1 4,200 2 CP8 4, Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 205

13 GENERAL LEDGER ACCOUNT Larry Jennings, Drawing ACCOUNT NO. 302 June 30 CP8 5,000 5, CP8 24 5,024 ACCOUNT Sales Returns & Allowances ACCOUNT NO. 451 June 10 CP ACCOUNT Purchases Discounts ACCOUNT NO. 504 June 30 CP ACCOUNT Delivery Expense ACCOUNT NO. 611 June CP ACCOUNT Rent Expense ACCOUNT NO. 620 June 1 CP8 2,500 2,500 ACCOUNT Salaries Expense ACCOUNT NO. 623 June 30 CP8 7,675 7, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

14 GENERAL LEDGER ACCOUNT Telephone Expense ACCOUNT NO. 626 June 12 CP ACCOUNT Interest Expense ACCOUNT NO. 634 June 7 CP ACCOUNT Misc. Expense ACCOUNT NO. 635 June 30 CP Analyze: Total payments from the Petty Cash Fund for the month were $146. Problem 9.3A SALES JOURNAL PAGE 7 Invoice Accounts Receivable Dr./ Date No. Customer s Name Ref. Sales Cr. April Soprano Music Center , Music Warehouse , Eagleton Music Center , Contemporary Sounds, Inc.... 9, Total ,700 (111/401) Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 207

15 CASH RECEIPTS JOURNAL PAGE 7 Accounts Other Accouns Credit Sales Post Receivable Sales Post Discounts Cash Date Description Ref. Credit Credit Account Name Ref. Amount Debit Debit April 3 Music Supply Store 1, ,470 5 Cash Sales 1,575 1, Soprano Music Center 3, , Sounds From Yesterday 2,975 2, Eagleton Music Center 10, , Totals 18,875 1, ,132 (111) (401) (452) (101) 208 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

16 GENERAL JOURNAL PAGE 17 Date Description Ref. Debit Credit April 15 Sales Returns & Allowances Accounts Receivable/Music Warehouse / 800 Accepted a return of damaged merchandise, Credit Memo 105, sale originally made on Inv. 9313, April 8 26 Notes Receivable ,500 Accounts Receivable/Country Music Store / 5,500 Received a 2-month, 12% note from Country Music Store to replace open account GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 101 April 1 16, CR7 20,132 36,532 ACCOUNT Notes Receivable ACCOUNT NO. 109 April 26 J17 5,500 5,500 ACCOUNT Accounts Receivable ACCOUNT NO. 111 April 1 21, J , J17 5,500 14, S7 28,700 43, CR7 18,875 24,525 ACCOUNT Sales ACCOUNT NO. 401 April 30 S7 28,700 28, CR7 1,575 30,275 Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 209

17 GENERAL LEDGER ACCOUNT Sales Returns and Allowances ACCOUNT NO. 451 April 15 J ACCOUNT Sales Discounts ACCOUNT NO. 452 April 30 CR UNLIMITED SOUNDS Partial Income Statement Month Ended April 30, Revenue Sales ,275 Less: Sales Returns and Allowances Sales Discount ,118 Net Sales ,157 Analyze: Total sales on account before returns and allowances were $28, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

18 Problem 9.4A PURCHASES JOURNAL PAGE 8 Invoice Inv. Post Purchases Dr./ Date Purchased From Number Date Terms Ref. Accounts Payable Credit June 3 Perfect Fit Shoe Shop 746 5/30 2/10, n/30 2, Juanda s Coat Shop /9 n/30 2, Motor Speedway /20 2/10, n/30 5, Jogging Shoes Store /26 1/10, n/30 1, Total 12,030 (501/205) GENERAL JOURNAL PAGE 20 Date Description Ref. Debit Credit June 5 Equipment ,500 Accounts Payable/Middleton Company / 4,500 Purchased new store equipment, Inv dated June 4, payable in 30 days 18 Accounts Payable/Juanda s Coat Shop / 550 Purchases Returns & Allowances Returned defective goods, receiving CM 203, original purchase made on Inv. 9922, June 9 21 Equipment ,500 Notes Payable ,500 Issued 3-month, 12% note to Warren Company to. purchase new store equipment Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 211

19 CASH PAYMENTS JOURNAL PAGE 8 Accounts Other Accounts Debit Purchases Ck. Post Payable Post Discounts Cash Date No. Description Ref. Debit Account Name Ref. Amount Credit Credit June Monthly rent Rent Expense 611 2,400 2, Leisure Wear Clothing Co. 1,470 1, Perfect Fit Shoe Shop 2, , Monthly telephone bill Telephone Expense Juanda s Coat Shop 1,250 1, Motor Speedway 5, , Monthly salaries Salaries Expense 614 4,800 4, Totals 10,720 7, ,988 (205) (X) (504) (101) 212 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

20 GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 101 June 1 18, CP8 17, ACCOUNT Equipment ACCOUNT NO. 131 June 1 56,000 5 J20 4,500 60, J20 9,500 70,000 ACCOUNT Notes Payable ACCOUNT NO. 201 June 21 J20 9,500 9,500 ACCOUNT Accounts Payable ACCOUNT NO. 205 June 1 4,880 5 J20 4,500 9, J , P8 12,030 20, CP8 10,720 10,140 ACCOUNT Purchases ACCOUNT NO. 501 June 30 P8 12,030 12,030 ACCOUNT Purchases Returns & Allowances ACCOUNT NO. 503 June 18 J Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 213

21 GENERAL LEDGER ACCOUNT Purchases Discounts ACCOUNT NO. 504 June 30 CP ACCOUNT Rent Expense ACCOUNT NO. 611 June 1 CP8 2,400 2,400 ACCOUNT Salaries Expense ACCOUNT NO. 614 June 30 CP8 4,800 4,800 ACCOUNT Telephone Expense ACCOUNT NO. 617 June 15 CP HIKER AND BIKER OUTLET CENTER Partial Income Statement Month Ended June 30, Purchases ,030 Less: Purchases Returns & Allowances. 550 Purchases Discount Net Purchases ,320 Analyze: Total liabilities at month-end were $19, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

22 Problem 9.5A VACATION PARADISE Bank Reconciliation Statement April 30, on bank statement ,639 Additions: Deposit of April 30 in transit ,839 Deductions for outstanding checks: Check 1214 of April Check 1215 of April Total outstanding checks Adjusted bank balance ,806 in books ,972 Deductions: NSF check Bank service charge Adjusted book balance ,806 GENERAL JOURNAL PAGE 1 Date Description Ref. Debit Credit May 2 Accounts Receivable/Doris Fisher Cash To record NSF check returned by bank 2 Miscellaneous Expense Cash To record bank service charge for April Analyze: Outstanding checks are 1214 and 1215 totaling $33. Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 215

23 Problem 9.6A HAMPTON INN Bank Reconciliation Statement August 31, on bank statement ,097 Additions: Deposit of August 30 in transit Deposit of August 31 in transit ,357 14,454 Deductions for outstanding checks: Check Check Check Check Check Check Total outstanding checks ,173 Adjusted bank balance ,281 in books ,549 Additions: Note receivable collected by bank ,000 Interest on note receivable , ,609 Deductions: NSF check Bank service charge Adjusted bank balance ,281 GENERAL JOURNAL PAGE 10 Date Description Ref. Debit Credit Sept. 4 Cash ,060 Notes Receivable ,000 Interest Income To record receipt of amount due on note plus interest collected by bank in August 4 Accounts Receivable/Neal Woodson Cash To record NSF check returned by bank 4 Misc. Expense Cash To record bank service charge for August Analyze: Net effect on the accounting equation of the journal entries recorded as a result of the bank reconciliation was an increase in assets by $52 and an increase in equity by $ Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

24 Problem 9.7A BAXTER COMPANY Bank Reconciliation Statement April 30, in books ,275 Additions: Check 2104 dated April 15 was recorded as $800; check was actually written for $ ,995 Deductions: Check 2147 dated April 20 was recorded as $308; check was actually written for $ Adjusted bank balance ,915 GENERAL JOURNAL PAGE 11 Date Description Ref. Debit Credit May 2 Cash Supplies Expense To correct error in entry for check 2104 of April 15 2 Utilities Expense Cash To correct error in entry for check 2147 of April 20 Analyze: Net Income would have been understated by $640 ($720 $80). Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 217

25 Problem 9.1B CASH RECEIPTS JOURNAL PAGE 14 Accounts Sales Tax Other Accounts Credit Receivable Payable Sales Cash Date Description Ref Credit Credit Credit Account Name Ref. Amount Debit June 3 Clear Images Copy Center Collected note and Notes Receivable 115 1,600 interest Interest Income ,702 5 Refund for damaged supplies Office Supplies Cash sales 136 1,700 1, Linda James 1,400 1, Additional investment Sergio Guzman, Capital ,000 10, Cash sales 128 1,600 1, Karen Carter 1,060 1, Nelsy Marroquin 1,200 1, Cash sales 144 1,800 1, Alexander Neal Totals 4, ,100 12,062 22,430 (111) (231) (401) (X) (102) 218 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

26 GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 102 June 1 1, CR14 22,430 23,630 ACCOUNT Accounts Receivable ACCOUNT NO. 111 June 1 8, CR14 4,860 3,540 ACCOUNT Notes Receivable ACCOUNT NO. 115 June 1 1,600 4 CR14 1, ACCOUNT Office Supplies ACCOUNT NO. 129 June 1 1,000 5 CR ACCOUNT Sales Tax Payable ACCOUNT NO. 231 June CR Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 219

27 GENERAL LEDGER ACCOUNT Sergio Guzman, Capital ACCOUNT NO. 302 June 1 7, CR14 10,000 17,600 ACCOUNT Sales ACCOUNT NO. 401 June 30 CR14 5,100 5,100 ACCOUNT Interest Income ACCOUNT NO. 791 June 4 CR Analyze: Total Assets for the Avid Reader at June 30, are $27, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

28 Problem 9.2B CASH PAYMENTS JOURNAL PAGE 12 Accounts Other Accounts Debit Purchases Ck. Post Payable Post Discounts Cash Date No. Description Ref. Debit Account Name Ref. Amount Credit Credit Sept Tax remittance Sales Tax Payable 231 1,344 1, Monthly rent Rent Expense 620 1,700 1, Established petty cash Petty Cash Fund Elegant Glassware 1, , Store equipment Equipment 141 1,000 1, Taylor Company 970 Sales Returns & Allowances Cash refund Monthly telephone bill Telephone Expense African Imports Paid promissory note Notes Payable 201 1,000 and interest Interest Expense , Atlantic Ceramics 1,240 1, Personal withdrawal Fred Lin, Drawing 302 1,500 1, Monthly salaries Salaries Expense 623 2,500 2, Replenish petty cash Delivery Expense Miscellaneous Expense Fred Lin, Drawing ,560 9, ,370 (205) (X) (504) (101) Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 221

29 PETTY CASH ANALYSIS SHEET PAGE 12 Distribution of Payments Delivery Miscellaneous Vou. Supplies Expense Expense Other Accounts Debit Date No. Description Receipts Payments Debit Debit Debit Account Name Amount Sept 4 Establish fund Delivery service Bought office supplies Personal withdrawal 10 Fred Lin, Drawing Bought stamps Delivery service Totals on hand on hand Replenish fund Carried forward Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

30 GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 101 Sept. 1 21, CP12 14,370 7,160 ACCOUNT Petty Cash Fund ACCOUNT NO. 105 Sept. 4 CP ACCOUNT Equipment ACCOUNT NO. 141 Sept. 1 43,000 9 CP12 1,000 44,000 ACCOUNT Notes Payable ACCOUNT NO. 201 Sept. 1 1, CP12 1, ACCOUNT Accounts Payable ACCOUNT NO. 205 Sept. 1 9, CP12 4,560 5,240 ACCOUNT Sales Tax Payable ACCOUNT NO. 231 Sept. 1 1,344 1 CP12 1, Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 223

31 GENERAL LEDGER ACCOUNT Fred Lin, Drawing ACCOUNT NO. 302 Sept. 28 CP12 1,500 1, CP ,510 ACCOUNT Sales Returns and Allowances ACCOUNT NO. 451 Sept. 14 CP ACCOUNT Purchases Discounts ACCOUNT NO. 504 Sept. 30 CP ACCOUNT Delivery Expense ACCOUNT NO. 511 Sept. 30 CP ACCOUNT Interest Expense ACCOUNT NO. 611 Sept. 24 CP Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

32 GENERAL LEDGER ACCOUNT Miscellaneous Expense ACCOUNT NO. 614 Sept. 30 CP ACCOUNT Rent Expense ACCOUNT NO. 620 Sept. 2 CP12 1,700 1,700 ACCOUNT Salaries Expense ACCOUNT NO. 623 Sept. 30 CP12 2,500 2,500 ACCOUNT Telephone Expense ACCOUNT NO. 626 Sept. 18 CP Analyze: Total debits made to general ledger liability accounts during the month of September were $6,904. Problem 9.3B SALES JOURNAL PAGE 10 Invoice Accounts Receivable Dr./ Date No. Customer s Name Ref. Sales Cr. Aug Jamison Builders , Branch Construction Company. 18, Contemporary Homes , Denton County Builders , Total ,290 (111/401) Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 225

33 CASH RECEIPTS JOURNAL PAGE 10 Accounts Other Accouns Credit Sales Post Receivable Sales Post Discounts Cash Date Description Ref. Credit Credit Account Name Ref. Amount Debit Debit Aug. 1 Construction Supply Company 6, , Jamison Builders 19, , Cash sales 7,050 7, Branch Construction Company 18, , Garcia Homes Center 6,000 6, Totals 50,600 7, ,758 (111) (401) (452) (101) 226 Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

34 GENERAL JOURNAL PAGE 24 Date Description Ref. Debit Credit Aug. 4 Notes Receivable ,000 Accounts Receivable/Davis Custom Homes / 12,000 Received a 3-month, 12% note from Davis Custom Homes to replace open account 26 Sales Returns and Allowances Accounts Receivable/Contemporary Homes / 550 Accepted a return of damaged merchandise, Credit Memo 101; sale originally made on Inv. 2980, August 22 GENERAL LEDGER ACCOUNT Cash ACCOUNT NO. 101 Aug. 1 15, CR10 56,758 71,828 ACCOUNT Notes Receivable ACCOUNT NO. 109 Aug. 4 J24 12,000 12,000 ACCOUNT Accounts Receivable ACCOUNT NO. 111 Aug. 1 22,507 4 J24 12,000 10, J , S10 62,290 72, CR10 50,600 21,647 ACCOUNT Sales ACCOUNT NO. 401 Aug. 31 S10 62,290 62, CR10 7,050 69,340 Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 227

35 GENERAL LEDGER ACCOUNT Sales Returns and Allowances ACCOUNT NO. 451 Aug. 26 J ACCOUNT Sales Discounts ACCOUNT NO. 452 Aug. 31 CR ROYAL CONSTRUCTION COMPANY Partial Income Statement Month Ended August 31, Revenue Sales ,340 Less Sales Returns and Allowances Sales Discounts ,442 Net Sales ,898 Analyze: Total sales on account in August were $61, Chapter 9 Copyright The McGraw-Hill Companies, Inc. All rights reserved.

36 Problem 9.4B PURCHASES JOURNAL PAGE 12 Invoice Inv. Post Purchases Dr./ Date Purchased From Number Date Terms Ref. Accounts Payable Credit Dec. 1 Alexis Products for Homes /28 2/10, n/30 6, Baxter Corporation /7 2/10, n/30 9, Household Appliance Center /16 3/10, n/30 12, Zale Corporation /19 n/30 5, Total 34,000 (501/205) GENERAL JOURNAL PAGE 30 Date Description Ref. Debit Credit Dec. 4 Equipment ,000 Notes Payable ,000 Issued 2-month, 10% note to Kesterson Company to purchase new store equipment 20 Equipment ,000 Accounts Payable/Safety Security Systems, Inc / 6,000 Purchased new store equipment, Inv. 536, dated December 17, payable in 45 days 28 Accounts Payable/Safety Security Systems / 1,050 Purchases Returns and Allowances ,050 Returned damaged goods, receiving Credit Memo 201; original purchase made on Inv. 536, December 17 Copyright The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 229