(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.

Check figures:

Cash Receipts Journal, total Cash DR: $ 70,348

Cash Payments Journal, total Cash CR: 62,060

Net Income: 25,218 Total Assets: 149,568

Total Post Closing Trial Balance: 151,193

Sun & Surf Company uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledger for Sun & Surf are indicated in the working papers. Below are a series of transactions for Sun & Surf Co. for the month of January. Credit sales terms are 2/10, n/30. The cost of all merchandise sold was 55% of the sales price.

Jan.3 Sell merchandise on account to M. Knast $5,100, invoice no. 825, and to C. Ryder $1,900, invoice no. 826.

5 Purchase merchandise from R. Drifter $5,000 and N. Sova $2,200, terms n/30.

7 Receive checks from V. Arnold $4,000 and I. Tan $2,000 after discount period has lapsed.

8 Pay freight on merchandise purchased $235.

9 Send checks to K. Xerxes for $9,000 less 2% cash discount, and to T. Caper for $11,000 less 1% cash discount.

9 Issue credit of $300 to C. Ryder for merchandise returned.

10 Summary daily cash sales total $15,500.

11 Sell merchandise on account to D. Gallagher $1,600, invoice no. 827, and to V. Arnold $900, invoice no. 828.

12 Pay rent of $1,000 for January.

13 Receive payment in full from M. Knast and C. Ryder less cash discounts.

15 Withdrawal of $800 cash by J. Sandy for personal use.

15 Post all entries to the subsidiary ledgers.

16 Purchase merchandise from T. Caper $18,000, terms 1/10, n/30; K. Xerxes $14,200, terms 2/10, n/30; and R. Drifter $1,500, terms n/30.

17 Pay $400 cash for office supplies.

18 Return $200 of merchandise to K. Xerxes and receive credit.

20 Summary daily cash sales total $20,100.

21 Issue $15,000 note, maturing in 90 days, to M. Griffen in payment of balance due.

21 Receive payment in full from V. Arnold less cash discount.

22 Sell merchandise on account to M. Knast $2,700, invoice no. 829, and to D. Gallagher $1,300, invoice no. 830.

22 Post all entries to the subsidiary ledgers.

23 Send checks to T. Caper and K. Xerxes in full payment less cash discounts.

25 Sell merchandise on account to I. Tan $3,500, invoice no. 831, and to C. Ryder $6,100, invoice no. 832.

27 Purchase merchandise from T. Caper $14,500, terms 1/10, n/30; N. Sova $1,200, terms n/30; and R. Drifter $5,400, terms n/30.

27 Post all entries to the subsidiary ledgers.

28 Pay $275 cash for office supplies.

31 Summary daily cash sales total $21,300.

31 Pay salaries and wages of $8,100. (continued)

Page 2 of 2

Instructions

(a) Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal, a cash payments journal, and a two-column general journal.

(b) Post the journals to the general ledger.

(c) Prepare a trial balance at January 31, 2017, in the trial balance columns of the worksheet. Complete the worksheet using the following additional information.

1. Office supplies at January 31 total $900.

2. Insurance coverage expires on September 30, 2017.

3. Annual depreciation on the equipment is $1,500.

4. Interest of $50 has accrued on the note payable.

(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.

General Ledger
Cash					No. 101
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 37,150


Accounts Receivable					No. 112
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 13,000



Notes Receivable					No. 115
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 39,000
Inventory					No. 120
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 17,795







Office Supplies					No. 125
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 1,200


Prepaid Insurance					No. 130
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 2,205

Equipment					No. 157
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 6,450
Accumulated Depreciation - Equipment					No. 158
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 1,500

Notes Payable					No. 200
Date	Explanation	Ref.	Debit	Credit	Balance

Accounts Payable					No. 201
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 35,000




Interest Payable
Date	Explanation	Ref.	Debit	Credit	Balance

J. Sandy, Capital					No. 301
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1	Balance	â			$ 80,300


J. Sandy, Drawing					No. 306
Date	Explanation	Ref.	Debit	Credit	Balance

Income Summary					No. 350
Date	Explanation	Ref.	Debit	Credit	Balance



Sales					No. 401
Date	Explanation	Ref.	Debit	Credit	Balance



Sales Returns and Allowances					No. 412
Date	Explanation	Ref.	Debit	Credit	Balance


Sales Discounts					No. 414
Date	Explanation	Ref.	Debit	Credit	Balance


Cost of Goods Sold					No. 505
Date	Explanation	Ref.	Debit	Credit	Balance




Salaries and Wages Expense					No. 627
Date	Explanation	Ref.	Debit	Credit	Balance


Depreciation Expense					No. 711
Date	Explanation	Ref.	Debit	Credit	Balance

Interest Expense					No. 718
Date	Explanation	Ref.	Debit	Credit	Balance


Insurance Expense					No. 722
Date	Explanation	Ref.	Debit	Credit	Balance


Office Supplies Expense					No. 728
Date	Explanation	Ref.	Debit	Credit	Balance


Rent Expense					No. 729
Date	Explanation	Ref.	Debit	Credit	Balance

peachgerbil35

Solve the following QS and Exercises from your textbook in chapter 8.

QS 8-1

Internal control objectives

An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies. Evaluate each of the following statements and indicate which are true and which are false regarding the objectives of an internal control system.

____	1.	Separation of recordkeeping for assets from the custody over assets is intended to reduce theft and fraud.
____	2.	The primary objective of internal control procedures is to safeguard the business against theft from government agencies.
____	3.	The main objective of internal control procedures is best accomplished by designing an operational system with managerial policies that protect the assets from waste, fraud, and theft.
____	4.	Separating the responsibility for a transaction between two or more individuals or departments will not help prevent someone from creating a fictitious invoice and paying the money to herself or himself.

QS 8-2

Cash and equivalents

Choose from the following list of terms/phrases to best complete the following statements.

a.	Cash
b.	Cash equivalents
c.	Outstanding check
d.	Liquidity
e.	Bank reconciliation
f.	Current assets

____	1.	The category includes currency and coins along with amounts on deposit in bank accounts, checking accounts, and savings accounts.
____	2.	The term __________ refers to a companyâs ability to pay for its near-term obligations
____	3.	The __________ category includes short-term highly liquid investment assets that are readily convertible to a known cash amount and sufficiently close to their due dates so that their market value is not sensitive to interest rate changes.

QS 8-3

Internal control for cash

A good system of internal control for cash provides adequate procedures for protecting both cash receipts and cash disbursements. Identify each of the following statements as either true or false regarding this protection.

____	a.	A basic guideline for safeguarding cash is that all cash receipts be deposited weekly or monthly.
____	b.	A voucher system of control is a control system exclusively for cash receipts.
____	c.	A basic guideline for safeguarding cash is to separate the duties of those who have custody of cash from those who keep cash records.
____	d.	A petty cash system is not a control procedure for safeguarding cash.

QS 8-4

Petty cash accounting

1.

The petty cash fund of the Brooks Agency is established at $150. At the end of the current period, the fund contained $28 and had the following receipts: film rentals, $24; refreshments for meetings, $46 (both expenditures to be classified as Entertainment Expense); postage, $30; and printing, $22. Prepare journal entries to record (a) establishment of the fund and (b) reimbursement of the fund at the end of the current period.

2.

Identify the two events from the following that cause a Petty Cash account to be credited in a journal entry.

____	a.	Fund amount is being reduced
____	b.	Fund amount is being increased
____	c.	Fund is being eliminated
____	d.	Fund is being established

Exercise 8-13^A

Documents in a voucher system

Match each document in a voucher system in column one with its description in column two.

Document

1.	Purchase requisition
2.	Purchase order
3.	Invoice
4.	Receiving report
5.	Invoice approval
6.	Voucher

Description

____	A.	An itemized statement of goods prepared by the vendor listing the customerâs name, items sold, sales prices, and terms of sale.
____	B.	An internal file used to store documents and information to control cash disbursements and to ensure that a transaction is properly authorized and recorded.
____	B.	An internal file used to store documents and information to control cash disbursements and to ensure that a transaction is properly authorized and recorded.
____	C.	A document used to place an order with a vendor that authorizes the vendor to ship ordered merchandise at the stated price and terms.
____	D.	A checklist of steps necessary for the approval of an invoice for recording and payment; also known as a check authorization.
____	E.	A document used by department managers to inform the purchasing department to place an order with a vendor.
____	F.	A document used to notify the appropriate persons that ordered goods have arrived, including a description of the quantities and condition of goods.

Exercise 8-14^B

Record invoices at gross or net amounts

Piere Imports uses the perpetual system in accounting for merchandise inventory and had the following transactions during the month of October. Prepare entries to record these transactions assuming that Piere Imports records invoices (a) at gross amounts and (b) at net amounts.

Oct.	2	Purchased merchandise at a $3,000 price, invoice dated October 2, terms 2/10, n/30.
	10	Received a $500 credit memorandum (at full invoice price) for the return of merchandise that it purchased on October 2.
	17	Purchased merchandise at a $5,400 price, invoice dated October 17, terms 2/10, n/30.
	27	Paid for the merchandise purchased on October 17, less the discount.
		31Paid for the merchandise purchased on October 2. Payment was delayed because the invoice was mistakenly filed for payment today. This error caused the discount to be lost. Please provide all the answer thank you

tanmouse0

Johnson Corp is interested in purchasing some newmaterial-handling equipment right after the beginning of the newyear. They would like to finance the new equipment with cash andmarketable securities, but if necessary they can get a short-termloan from a local bank. You have been engaged to prepare a masterbudget for Johnson Corp for the first quarter of 20x1. Johnson Corpis a small, rapidly growing wholesaler of consumer electronicproducts. The companyâs main product lines are small kitchenappliances and power tools. The marketing manager has recentlycompleted a sales forecast. She believes the companyâs sales duringthe first quarter of 20x1 will increase by 10 percent each monthover the previous monthâs sales. Then sales are expected to remainconstant for several months. Johnson Corpâs projected balance sheetas of December 31, 20x0 is as follows:

Cash: $ 70,000

Accounts receivable: 476,000

Marketable securities: 30,000

Inventory: 269,500

Buildings and equipment (net of accumulated depreciation):1,252,000

Total assets: $ 2,097,500

Accounts payable: $ 308,700

Bond interest payable: 25,000

Property taxes payable: 7,600

Bonds payable (10%; due in 20x6): 600,000

Common stock: 1,000,000

Retained earnings: 156,200

Total liabilities and stockholders' equity: $ 2,097,500

The controller is now preparing a budget for the first quarterof 20x1. In the process, the following information has beenaccumulated:

1) Projected sales for December 20x0 are $700,000. Credit salesare typically 80% of totals sales. Johnson Corpâs credit experienceindicates that 15% of credit sales are collected during the monthof sale, and the remainder are collected during the followingmonth.

2) Johnson Corpâs cost of goods sold generally runs at 70% ofsales. Inventory is purchased on account and 40% of each monthâspurchases are paid during the month of purchase. The remainder ispaid during the following month. In order to have adequate stocksof inventory on hand, the company attempts to have inventory onhand at the end of each month equal to half of the next monthâsprojected cost of goods sold.

3) The controller has estimated that Johnson Corpâs othermonthly expenses will be as follows: Sales salaries $ 40,000Advertising and promotion 35,000 Administrative salaries 37,000Depreciation 45,000 Interest on bonds 5,000 Property taxes 1,900 Inaddition, sales commissions run at the rate of 2 percent ofsales.

4) The company president has indicated that the company shouldinvest $225,000 in an automated inventory-handling system tocontrol the movement of inventory in the companyâs warehouse justafter the new year begins. This equipment purchase will be financedprimarily from the companyâs cash and marketable securities.However, the president believes the company needs to keep a minimumcash balance of $50,000. If necessary, the remainder of theequipment purchases will be financed using short-term credit from alocal bank. The minimum period for such a loan is three months. Thecurrent short-term interest rates are 10 percent per year and areexpected to remain at this rate through the time the equipment ispurchased. If a loan is necessary, the president has decided thatit should be paid off by the end of the first quarter if possible.If the entire loan cannot be paid off, the maximum amount should bepaid while maintaining the minimum cash balance.

5) Johnson Corpâs board of directors has indicated an intentionto declare and pay dividends of $100,000 on the last day of eachquarter.

6) The interest on any short-term borrowing will be paid whenthe loan is repaid. Interest on Johnson Corpâs bonds is paidsemiannually on January 31 and July 31 for the preceding sixmonthperiod.

7) Property taxes are paid semiannually on February 28 andAugust 31 for the preceding six-month period.

Required: Prepare Johnson Corpâs master budget for the firstquarter of 20x1 by completing the following schedules andstatements.

4) Cash disbursements budget:

20x1

January February March 1st Quarter

Inventory purchases: Cashpayments for purchases during the current month

Cash payments for purchasesduring the preceding month

Total cash payments for inventorypurchases

Other expenses:

Sales salaries

Advertising andpromotion

Administrative salaries Intereston bonds

Property taxes

Sales commissions

Total cash payments for otherexpenses

Total cashdisbursements

lemonrabbit62

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