ACC 358 Lecture Notes - Lecture 1: Subledger, General Ledger, Accounts Receivable

Shirley’s Beauty Store records sales and purchase transactions in the general journal. In addition to a general ledger, Shirley’s Beauty Store also uses an accounts receivable ledger and an accounts payable ledger. Transactions for January related to the sales and purchase of merchandise are as follows:

Jan. 3 Bought 30 Mango Bath and Shower Gels from Madden, Inc., $660, invoice no. 3487, dated January 1; terms 2/10, n/30; FOB shipping point, freight prepaid and added to the invoice, $125.43 (total $785.43).

4 Bought ten Beauty Candle Travel Sets from Calhoun Candles, Inc., $420, invoice no. 4513, dated January 1; terms net 45; FOB destination.

12 Sold four Mango Bath and Shower Gels on account to R. Kielman, sales slip no. 1456, $120, plus sales tax of $9.60, total $129.60.

13 Received credit memo no. 8715 from Calhoun Candles, Inc., for merchandise returned, $84.

21 Bought five Winter Skin Essentials Kits from Whitney and Waters, $197.50, invoice no. A875, dated January 18; terms 2/15, n/45; FOB destination.

25 Sold three Winter Skin Essentials on account to A. Benner, sales slip no. 1457, $135.75, plus sales tax of $10.86, total $146.61.

27 Issued credit memo no. 33 to A. Benner for merchandise returned, $45.25 plus $3.62 sales tax, total $48.87.

Required

1. Open the following accounts in the accounts receivable ledger and record the balances as of January 1: A. Benner, $45.77; R. Kielman, $175.39. Write Balance in the Item column and place a check mark in the Post. Ref. column.

2. Open the following accounts in the accounts payable ledger and record the balances as of January 1: Calhoun Candles, Inc., $355.23; Madden, Inc., $573.15; Whitney and Waters, $50.25. Write Balance in the Item column and place a check mark in the Post. Ref. column.

3. Record the January 1 balances in the general ledger as given: Accounts Receivable 113 controlling account, $221.16; Accounts Payable 212 controlling account, $978.63; Sales Tax Payable 214, $128.45. Write Balance in the Item column and place a check mark in the Post. Ref. column.

4. Record the transactions in the general journal beginning on page 25.

5. Post the entries to the general journal and accounts receivable ledger or accounts payable ledger as appropriate.

6. Prepare a schedule of accounts receivable.

7. Prepare a schedule of accounts payable.

8. Compare the totals of the schedules with the balances of the controlling accounts.

JUST NEED HELP WITH THE GENERAL LEDGER, AR LEDGER AND AP LEDGER

American Meter Company closes its books and prepares financial statements at the end of each month. American uses the perpetual inventory system. The company completed the following transactions during August, 2017:

Aug 1 Issued check no. 682 for August rent of $1,000

2. Issued check no. 683 to pay salaries of $1,240, which includes salary payable of $930 from July 31 (ignore payroll deductions).

2. Issued invoice no. 503 for sale on account to R. T. Loeb, $600. American’s cost of this merchandise was $190.

3. Purchased inventory on credit terms of 1/15, n/60 from Grant, Inc., $1,400

4. Received net amount of cash on account from Fullam Company, $2,156, within the discount period. The invoice, dated July 26 with terms of 2/10, net 30, was in the amount of $2,200.

4. Sold inventory for cash, $330 (cost, $104)

5. Received from Park-Hee, Inc. merchandise that had been sold earlier for $550 (cost, $174)

5. Issued check no. 684 to purchase supplies for cash, $780

6. Collected interest revenue of $1,100

7. Issued invoice no. 504 for sale on account to K. D. Skipper, $2,400 (cost, $759)

8. Issued check no. 685 to pay Federal Company $2,600 of the amount owed at July 31. This payment occurred after the discount period.

11. Issued check no. 686 to pay Grant, Inc. the net amount owed from August 3

12. Received cash from R. T. Loeb in full settlement of her account receivable from August 2

16. Issued check no. 687 to pay salary expense of $1,240

19. Received half the July 31 amount receivable from K. D. Skipper—after the end of the discount period

19. Purchased inventory for cash $850, issuing check no. 688

22. Purchased furniture on credit terms of 3/15, n/60 from Beaver Corporation, $510

23. Sold inventory on account to Fullam Company, issuing invoice no. 505 for $9,966 (cost, $3,152)

25. Issued check no. 689 to pay utilities, $432

26. Purchased supplies on credit terms 2/10, n/30 from Federal Company, $180

30. Returned damaged inventory to company from whom American made the cash purchase on August 19, receiving cash of $850

30. Granted a sales allowance of $175 to K. D. Skipper

31. Purchased inventory on credit terms 1/10, n/30 from Suncrest Supply, $8,330

31. Issued check no. 690 to Lester Mednick, owner of the business, for personal withdrawal, $1,700

The chart of accounts with account balances as of July 31, 2017 are as follows:

General Ledger

101 Cash $ 8,650 401 Sales Revenue

102 Accounts Receivable 19,560 402 Sales Discounts

104 Interest Receivable 403 Sales Returns & Allowances

105 Merchandise Inventory 41,800 410 Interest Revenue

109 Supplies 2,150 501 Cost of Goods Sold

117 Prepaid Insurance 2,200 510 Salary Expense

140 Note Receivable, Long-Term 11,000 513 Rent Expense

160 Furniture 37,270 514 Depreciation Expense

161 Accumulated Depreciation 10,550 516 Insurance Expense

201 Accounts Payable 13,410 517 Utilities Expense

204 Salary Payable 930 519 Supplies Expense

207 Interest Payable 320 523 Interest Expense

220 Note Payable, Long-Term 42,000

301 Lester Mednick, Capital 55,420

302 Lester Mednick, Withdrawals

400 Income Summary

Accounts Receivable Subsidiary Ledger:

Fullam Company, $3,200

R T. Loeb, 0

Park-Hee Inc., 7,590

K.D. Skipper, 8,770

Accounts Payable Subsidiary Ledger:

Beaver Corporation $ 0

Federal Company 13,410

Grant, Inc, 0

Suncrest Supply 0

Post daily to the general ledger. Also post to the accounts receivable subsidiary ledger and the accounts payable subsidiary ledger when appropriate. On August 31 post to the general ledger.

Retail Store

Tony Zendejas is the owner of Housewares Galore, a housewaresstore that sells a wide variety of items for the kitchen, bathroom,and home. Housewares Galore offers a company credit card tocustomers.

The company has experienced an increase in sales since thecredit card was introduced. Tony is considering replacing hismanual system of recording sales with electronic point-of-sale cashregisters that are linked to a computer.

Cash sales are now rung up by the salesclerks on a cash registerthat generates a tape listing total cash sales at the end of theday. For credit sales, salesclerks prepare handwritten sales slipsthat are forwarded to the accountant for manual entry into thesales journal and accounts receivable ledger.

The electronic register system Tony is considering would use anoptical scanner to read coded labels attached to the merchandise.As the merchandise is passed over the scanner, the code is sent tothe computer. The computer is programmed to read the code andidentify the item being sold, record the amount of the sale,maintain a record of total sales, update the inventory record, andkeep a record of cash received.

If the sale is a credit transaction, the customer's companycredit card number is swiped through a card reader connected withthe register. The computer updates the customer's account in theaccounts receivable ledger stored in computer memory.

If this system is used, many of the accounting functions aredone automatically as sales are entered into the register. At theend of the day, the computer prints a complete sales journal, alongwith up-to-date balances for the general ledger and the accountsreceivable ledger accounts related to sales transactions.

Listed below are four situations that Tony is eager toeliminate. Would use of an electronic point-of-sale system asdescribed above reduce or prevent these problems? Why or whynot?

The accountant did not post a sale to the customer's subsidiaryledger account.

The salesclerk did not charge a customer for an item.

The customer purchased merchandise using a stolen creditcard.

The salesclerk was not aware that the item purchased was on saleand did not give the customer the sale price.