AFM101 Lecture Notes - Lecture 1: The Home Depot, Accrual, Cash Out

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tancockroach82

29 Mar 2016

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM101

Professor

Donna Psutka

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AFM101 Full Course Notes

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DIRECTIONS:

A) Prepare journal entries for the following items

B) Post the journal entries into t-accounts or three-column form of account (starting balances would be those amounts per the post-closing trial balance)

C) Prepare an Income Statement for the month ended January 31,2017

D) Prepare a Statement of Retained Earnings for the month ended January 31, 2017

E) Prepare a Balance Sheet for January 31, 2017

The following transactions occurred during 2017 (the company uses a perpetual inventory system with FIFO):

1) Jan 4 Stockholders invested an additional $10,000 cash in the business in exchange for common stock

2) Jan 4 Purchased 20 turkeys at $50 each on account from Turkey Farms.

3) Jan 4 Established a $200 petty change fund

4) Jan 5 Sold 6 turkeys for $200 each to Mr. Pilgrim, terms 2/10, n/30.

5) Jan 6 Sold 12 turkeys at $200 each for cash

6) Jan 8 Paid wages of $240

7) Jan 9 Mr. Pilgrim returned one turkey because they originally ordered only 5.

8) Jan 12 Purchased equipment on account for $2,000

9) Jan 14 Received payment in full from Mr. Pilgrim

10) Jan 15 Purchased 10 turkeys at $52 each on account from Thanksgiving Industries, terms 1/10, n/30.

11) Jan 15 Paid utility bill of $120

12) Jan 16 Returned 2 turkeys to Thanksgiving Industries because they were defective.

13) Jan 17 Sold 8 turkeys for $245 each for cash

14) Jan 18 Paid tax bill from 2016.

15) Jan 18 Performed the service of turkey grooming ($800 worth); we received the cash in 2016

16) Jan 19 Paid Accounts Payable in full from 2016

17) Jan 20 Received $2,200 cash from customers paying on their accounts

18) Jan 21 Received a bill from the local radio station for advertising in the amount of $400

19) Jan 22 Purchased 20 turkeys for $55 each on account from Stuffing & Cranberry Company; terms 2/5, n/30

20) Jan 23 Sold 10 turkeys to Turkey Leg Corporation for $260 each on account; terms 3/10, n/30

21) Jan 25 Paid freight costs from Stuffing & Cranberry Company of $10.

22) Jan 26 Received payment in full from Turkey Leg Corporation

23) Jan 27 Sold 10 turkeys to customers on credit for $260 each.

24) Jan 28 Paid Stuffing & Cranberry Company for the

purchase on Jan 22

25) Jan 29 Petty cash was replenished and had the following receipts: gas receipt for $20, postage stamps for $39, Office Depot receipt for $16, miscellaneous receipt for $30, travel receipts for $40

26) Jan 30 Performed a physical inventory count and counted

only 1 turkey on hand.

27) Jan 30 Bank statement arrives today and there is a $20 bank service charge as well as a $120 NSF check.

28) Jan 31 One monthâs prepaid insurance needs to be expensed for January ($1,200 is for the whole year)

29) Jan 31 Depreciate one monthâs worth of the building and equipment (Using straight line method; building

has a useful life of 20 years, equipment has a useful life of 5 years and no salvage value)

30) Jan 31 The estimated bad debt expense under the percentage of sales basis is $120.

31) Jan 31 Paid dividends of $500

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Required information

Problem 7-1A Special journals, subsidiary ledgers, trialbalance-perpetual LO C3, P1, P2

[The following information applies to the questionsdisplayed below.]

Church Company completes these transactions and events during Marchof the current year (terms for all its credit sales are 3/10,n/30).

Mar.	1		Purchased $40,000 of merchandisefrom Van Industries, invoice dated March 1, terms 3/15, n/30.
	2		Sold merchandise on credit to MinCho, Invoice No. 854, for $16,000 (cost is $8,000).
	3	(a)	Purchased $1,200 of office supplieson credit from Gabel Company, invoice dated March 3, terms n/10EOM.
	3	(b)	Sold merchandise on credit to LindaWitt, Invoice No. 855, for $8,000 (cost is $4,000).
	6		Borrowed $72,000 cash from FederalBank by signing a long-term note payable.
	9		Purchased $20,000 of officeequipment on credit from Spell Supply, invoice dated March 9, termsn/10 EOM.
	10		Sold merchandise on credit toJovita Albany, Invoice No. 856, for $4,000 (cost is $2,000).
	12		Received payment from Min Cho forthe March 2 sale less the discount.
	13	(a)	Sent Van Industries Check No. 416in payment of the March 1 invoice less the discount.
	13	(b)	Received payment from Linda Wittfor the March 3 sale less the discount.
	14		Purchased $34,000 of merchandisefrom the CD Company, invoice dated March 13, terms 3/10, n/30.
	15	(a)	Issued Check No. 417, payable toPayroll, in payment of sales salaries expense for the first half ofthe month, $15,200. Cashed the check and paid the employees.
	15	(b)	Cash sales for the first half ofthe month are $64,000 (cost is $51,200). (Cash sales are recordeddaily, but are recorded only twice here to reduce repetitiveentries.)
	16		Purchased $1,720 of store supplieson credit from Gabel Company, invoice dated March 16, terms n/10EOM.
	17		Received a $3,400 credit memorandumfrom CD Company for the return of unsatisfactory merchandisepurchased on March 14.
	19		Received a $600 credit memorandumfrom Spell Supply for office equipment received on March 9 andreturned for credit.
	20		Received payment from Jovita Albanyfor the sale of March 10 less the discount.
	23		Issued Check No. 418 to CD Companyin payment of the invoice of March 13 less the March 17 return andthe discount.
	27		Sold merchandise on credit toJovita Albany, Invoice No. 857, for $12,000 (cost is $4,800).
	28		Sold merchandise on credit to LindaWitt, Invoice No. 858, for $4,800 (cost is $1,920).
	31	(a)	Issued Check No. 419, payable toPayroll, in payment of sales salaries expense for the last half ofthe month, $15,200. Cashed the check and paid the employees.
	31	(b)	Cash sales for the last half of themonth are $70,400 (cost is $42,240).
	31	(c)	Verify that amounts impactingcustomer and creditor accounts were posted and that any amountsthat should have been posted as individual amounts to the generalledger accounts were posted. Foot and crossfoot the journals andmake the month-end postings.

Assume the following ledger account amounts Inventory (March 1 beg.bal. is $63,000), Z. Church, Capital (March 1 beg. bal. is $63,000)and Church Company uses the perpetual inventory system.

Problem 7-1A Part 2

Required:
2-a. Enter the transactions in a sales journal.
2-b. Enter the transactions in a purchasesjournal.
2-c. Enter the transactions in a cash receiptsjournal.
2-d. Enter the transactions in a cashdisbursements journal.
2-e. Enter the transactions in a generaljournal.

Enter the transactions in a sales journal.

SALES JOURNAL
Date	Account Debited	Invoice Number	Accounts Receivable Dr. Sales Cr.	Cost of Goods Sold Dr. Inventory Cr.






Mar.31	Totals		$0	$0

Enter the transactions in a purchases journal.

PURCHASES JOURNAL
Date	Account	Date of Invoice	Terms	Accounts Payable Cr.	Inventory Dr.	Office Supplies Dr.	Other Accounts Dr.






Mar.31	Totals			$0	$0	$0	$0

Enter the transactions in a cash receipts journal.

CASH RECEIPTS JOURNAL
Date	Account Credited	Cash Dr.	Sales Discount Dr.	Accounts Receivable Cr.	Sales Cr.	Other Accts. Cr.	Cost of Goods Sold Dr. Inventory Cr.







Mar.31	Totals	$0	$0	$0	$0	$0	$0

Enter the transactions in a cash disbursements journal.

CASH DISBURSEMENTS JOURNAL
Date	Ck.No.	Payee	Account Debited	Cash Cr.	Inventory Cr.	Other Accounts Dr.	Accounts Payable Dr.





Mar.31		Totals		$0	$0	$0	$0

Enter the transactions in a general journal.

Journal Entry Worksheet

Received a $3,400 credit memorandum from CD Company for thereturn of unsatisfactory merchandise purchased on March 14.

Received a $600 credit memorandum from Spell Supply for officeequipment received on March 9 and returned for credit.

Mar. 17

*Enter debits before credits

Enter the transactions in a general journal.

Journal Entry Worksheet

Received a $3,400 credit memorandum from CD Company for thereturn of unsatisfactory merchandise purchased on March 14.

Received a $600 credit memorandum from Spell Supply for officeequipment received on March 9 and returned for credit.

Mar. 19

*Enter debits before credits

ivoryox215

Argosy, Inc. has ten transactions during 2017 as follows:

Inventory purchases on credit for $2,800 (assume perpetual inventory system).

Merchandise sales to customers for $4,000 cash; $3,000 of related inventory cost.

Employees earn wages of $1,000, which are settled / paid during 2017.

Cash receipts from customers in the amount of $2,200 for credit sales made during 2016.

Payments to suppliers of $4,000 for credit purchases made during 2016.

Declaration and payment of cash dividends of $5,000.

Purchase of machinery for $8,000 with short-term notes payable.

Payment for short-term notes payable of $1,000, which includes $750 of interest from 2016.

Credit merchandise sales to customers for $6,000, with $3,900 of related inventory cost.

Payment of utility billings received in early 2017 for services received during 2016 for $1,200.

Required: Record the journal entries for these transactions (ignore dating the JEâs)

Trans #	Account Description	Debit	Credit	B/S Effect	Perm/Temp
1


2




3


4


5


6


7


8



9




10

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AFM101 Lecture Notes - Lecture 1: The Home Depot, Accrual, Cash Out

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