Chapter 9, Problem 1CP

1.

To determine

Journalize the transactions for the month of July.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

• Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
• Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

Journalize the transactions for the month of July:

Date		Account title and explanation	Post Ref.	Amount
				Debit	Credit
20--
July	1	Cash	111	$25,000.00
		Person AV's Capital	311		$25,000.00
	1	Spa Supplies	115	$490.00
		Accounts Payable - Company GSS	211/✓		$490.00
	1	Purchases	511	$5,300.00
		Freight In	515	$145.00
		Accounts Payable - Company SG	211/✓		$5,445.00
	1	Purchases	511	$3,692.00
		Freight In	515	$104.00
		Accounts Payable – Company LP	211/✓		$3,796.00
	2	Purchases	511	$2,623.00
		Freight In	515	$98.00
		Accounts Payable - Company SM	211/✓		$2,721.00
	2	Accounts receivable - Company LOL	113/✓	$351.00
		Merchandise Sales	412		$325.00
		Sales Tax Payable	215		$26.00
	3	Spa Equipment	128	$8,235.00
		Accounts Payable -Incorporation SE	211/✓		$6,235.00
		Cash	111		$2,000.00
	3	Rent Expense	612	$1,650.00
		Cash	111		$1,650.00
	4	Accounts Receivable- Company C	113/✓	$520.02
		Merchandise Sales	412		$481.50
		Sales Tax Payable	215		$38.52
	5	Accounts Payable - Company GSS	211/✓	$492.00
		Cash	111		$492.00
	5	Accounts Payable - Company OS	211/✓	$120.00
		Cash	111		$120.00
	5	Miscellaneous Expense	630	$98.00
		Cash	111		$98.00
	5	Accounts Payable - Incorporation A	211/✓	$397.00
		Cash	111		$397.00
	5	Wages Payable	212	$369.50
		Wages Expense	611	$1,476.00
		Cash	111		$1,845.50
	5	Office Equipment	124	$420.00
		Accounts Payable - Company SE	211/✓		$420.00
	5	Promotion Expense	630	$186.00
		Accounts Payable - Company OS	211/✓		$186.00
	5	Office Supplies	114	$118.00
		Accounts Payable -Company OS	211/✓		$118.00
	5	Purchases	511	$1,253.00
		Freight In	515	$56.00
		Accounts Payable - Company G	211/✓		$1,309.00
	5	Accounts receivable - Company PS	113/✓	$1,961.23
		Merchandise Sales	412		$1,815.95
		Sales Tax Payable	215		$145.28
	7	Cash	111	$4,881.60
		Merchandise Sales	412		$1,410.00
		Income from Services	411		$3,110.00
		Sales Tax Payable	215		$361.60
	7	Cash	111	$150.00
		Accounts Receivable - Company JA	113/✓		$150.00
	10	Accounts Receivable - Company HC	113/✓	$367.47
		Merchandise Sales	412		$340.25
		Sales Tax Payable	215		$27.22
	10	Accounts Receivable - Company MS	113/✓	$222.48
		Merchandise Sales	412		$206.00
		Sales Tax Payable	215		$16.48
	12	Wages Expense	611	$1,845.50
		Cash	111		$1,845.50
	12	Accounts Receivable - Company AFS	113/✓	$521.59
		Merchandise Sales	412		$482.95
		Sales Tax Payable	215		$38.64
	14	Cash	111	$200.00
		Accounts Receivable - Company JM	113/✓		$200.00
	14	Cash	111	$4,158.00
		Merchandise Sales	412		$1,220.00
		Income from Services	411		$2,630.00
		Sales Tax Payable	215		$308.00
	18	Accounts Payable - Company SE	211/✓	$1,150.00
		Cash	111		$1,150.00
	19	Wages Expense	611	$1,840.50
		Cash	111		$1,840.50
	21	Cash	111	$180.00
		Accounts Receivable - Company TL	113/✓		$180.00
	21	Cash	111	$5,248.80
		Merchandise Sales	412		$1,940.00
		Income from Services	411		$2,920.00
		Sales Tax Payable	215		$388.80
	25	Spa Equipment	128	$173.00
		Cash	111		$173.00
	26	Wages Expense	611	$1,842.00
		Cash	111		$1,842.00
	28	Laundry Expense	615	$84.00
		Cash	111		$84.00
	28	Cash	111	$109.00
		Accounts Receivable - Company JW	113/✓		$109.00
	31	Cash	111	$6,471.36
		Merchandise Sales	412		$1,930.00
		Income from Services	411		$4,062.00
		Sales Tax Payable	215		$479.36
	31	Person AV's Drawing	312	$2,500.00
		Cash	111		$2,500.00
	31	Utilities Expense	617	$225.00
		Cash	111		$225.00
	31	Utilities Expense	617	$248.00
		Cash	111		$248.00
	31	Spa Equipment	128	$1,800.00
		Person AV's Capital	311		$1,800.00

Table (1)

2.

To determine

Post the entries to the accounts receivable, accounts payable and general ledger.

Explanation of Solution

Post the entries to the accounts receivable, accounts payable and general ledger:

General Ledger:

Sales journal
Date		Invoice  No.	Customer's name	Post Ref.	Accounts Receivable debit ($)	Sales tax payable credit ($)	Merchandise sales credit ($)
20--
July	2	14	Company LOL		351.00	26.00	325.00
	4	15	Company C		520.02	38.52	481.50
	5	16	Company PS		1,961.23	145.28	1,815.95
	10	17	Company HC		367.47	27.22	340.25
	10	18	Company MS		222.48	16.48	206.00
	12	19	Company AFS		521.59	38.64	482.95
	31		Totals		3,943.79	292.14	3,651.65
					(113)	(215)	(412)

Table (2)

Table (3)

Account: Cash					Account No. 111
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$15,170.00
	1		J6	$25,000.00		$40,170.00
	3		J6		$2,000.00	$38,170.00
	3		J6		$1,650.00	$36,520.00
	3		J7		$89.00	$36,431.00
	5		J7		$492.00	$35,939.00
	5		J7		$120.00	$35,819.00
	5		J7		$98.00	$35,721.00
	5		J7		$397.00	$35,324.00
	5		J7		$1,845.50	$33,478.50
	7		J8	$4,881.60		$38,360.10
	7		J8	$150.00		$38,510.10
	12		J8		$1,845.50	$36,664.60
	14		J8	$200.00		$36,864.60
	14		J9	$4,158.00		$41,022.60
	18		J9		$1,150.00	$39,872.60
	19		J9		$1,840.50	$38,032.10
	21		J9	$180.00		$38,212.10
	21		J9	$5,248.80		$43,460.90
	25		J9		$173.00	$43,287.90
	26		J9		$1,842.00	$41,445.90
	28		J9		$84.00	$41,361.90
	28		J9	$109.00		$41,470.90
	31		J9	$6,471.36		$47,942.26
	31		J10		$2,500.00	$45,442.26
	31		J10		$225.00	$45,217.26
	31		J10		$248.00	$44,969.26

Table (4)

Account: Accounts receivable					Account No. 113
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$1,273.00
	2		J6	$367.20		$1,640.20
	4		J7	$513.54		$2,153.74
	5		J8	$1,639.39		$3,793.82
	7		J8		$150.00	$3,643.82
	10		J8	$351.54		$3,995.36
	10		J8	$244.08		$4,239.44
	12		J8	$503.23		$4,742.67
	14		J8		$200.00	$4,542.67
	21		J9		$185.00	$4,357.67
	28		J9		$110.00	$4,247.67

Table (5)

Account: Office supplies					Account No. 114
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$130.00
	2		J7	$118.00		$248.00

Table (6)

Account: Spa supplies					Account No. 115
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$205.00
	5		J7	$490.00		$695.00

Table (7)

Account: Prepaid insurance					Account No. 117
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$800.00

Table (8)

Account: Office equipment					Account No. 124
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$1,150.00
	5		J7	$420.00		$1,570.00

Table (9)

Account: Accumulated Depreciation, Office equipment					Account No. 125
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓				$10.00

Table (10)

Account: Spa equipment					Account No. 128
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓			$7,393.00
	3		J6	$8,235.00		$15,628.00
	25		J9	$173.00		$15,801.00
	31		J10	$1,800.00		$17,601.00

Table (11)

Account: Accumulated Depreciation, Spa equipment					Account No. 129
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓				$64.88

Table (12)

Account: Accounts payable					Account No. 211
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓				$2,248.00
	1		J6		$490.00		$2,738.00
	1		J6		$5,445.00		$8,183.00
	1		J6		$3,796.00		$11,979.00
	2		J6		$2,721.00		$14,700.00
	3		J6		$6,235.00		$20,935.00
	3		J7	$89.00			$20,846.00
	5		J7	$492.00			$20,354.00
	5		J7	$120.00			$20,234.00
	5		J7	$397.00			$19,837.00
	5		J7		$420.00		$20,257.00
	5		J7		$186.00		$20,443.00
	5		J7		$118.00		$20,561.00
	5		J8		$1,309.00		$21,870.00
	18		J9	$1,150.00			$20,720.00

Table (13)

Account: Wages payable					Account No. 212
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓				$369.50
	5		J7	$369.50

Table (14)

Account: Sales tax payable					Account No. 215
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	2		J6		$26.00		$26.00
	4		J7		$38.52		$64.52
	5		J8		$145.28		$209.80
	7		J8		$361.60		$571.40
	10		J8		$27.22		$598.62
	10		J8		$16.48		$615.10
	12		J8		$38.64		$653.74
	14		J9		$308.00		$961.74
	21		J9		$388.80		$1,350.54
	31		J9		$479.36		$1,829.90

Table (15)

Account: Person AV, Capital					Account No. 311
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1	Balance	✓				$23,419.62
	1		J6		$25,000.00		48,419.62
	31		J10		$1,800.00		50,219.62

Table (16)

Account: Person AV, Drawing					Account No. 312
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	31		J10		$2,500.00		$2,500.00

Table (17)

Account: Income summary					Account No. 313
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (18)

Account: Income from services					Account No. 411
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	7		J8		$3,110.00		$3,110.00
	14		J9		$2,630.00		$5,740.00
	21		J9		$2,920.00		$8,660.00
	31		J9		$4,062.00		$12,722.00

Table (19)

Account: Merchandise sales					Account No. 412
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	2		J6		$325.00		$325.00
	4		J7		$481.50		$806.50
	5		J8		$1,815.95		$2,622.45
	7		J8		$1,410.00		$4,032.45
	10		J8		$340.25		$4,372.70
	10		J8		$206.00		$4,578.70
	12		J8		$482.95		$5,061.65
	14		J9		$1,220.00		$6,281.65
	21		J9		$1,940.00		$8,221.65
	31		J9		$1,930.00		$10,151.65

Table (20)

Account: Purchases					Account No. 511
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1		J6	$5,300.00		$5,300.00
	1		J6	$3,692.00		$8,992.00
	2		J6	$2,623.00		$11,615.00
	5		J8	$1,253.00		$12,868.00

Table (21)

Account: Freight In					Account No. 515
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	1		J6	$145.00		$145.00
	1		J6	$104.00		$249.00
	2		J6	$98.00		$347.00
	5		J8	$56.00		$403.00

Table (22)

Account: Wages expense					Account No. 611
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	5		J7	$1,476.00		$1,476.00
	12		J8	$1,845.50		$3,321.50
	19		J9	$1,840.50		$5,162.00
	26		J9	$1,842.00		$7,004.00

Table (23)

Account: Rent expense					Account No. 612
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	3		J6	$1,650.00		$1,650.00

Table (24)

Account: Office supplies expense					Account No. 613
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (25)

Account: Spa supplies expense					Account No. 614
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (26)

Account: Laundry expense					Account No. 615
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	28		J9	$84.00		$84.00

Table (27)

Account: Advertising expense					Account No. 616
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (28)

Account: Utilities expense					Account No. 617
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	31		J10	$225.00		$225.00
	31		J10	$248.00		$473.00

Table (29)

Account: Insurance expense					Account No. 618
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (30)

Account: Depreciation expense, Office equipment					Account No. 619
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (31)

Account: Depreciation expense, Spa equipment					Account No. 620
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--

Table (32)

Account: Miscellaneous expense					Account No. 630
Date		Item	Post Ref.	Debit	Credit	Balance
						Debit	Credit
20--
July	5		J7	$98.00		$98.00
	5		J7	$186.00		$284.00

Table (33)

Accounts receivable ledger:

Accounts receivable ledger
Name : Company AFS
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	12		J8	$521.59		$521.59

Table (34)

Accounts receivable ledger
Name : Company JA
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1		✓			$325.00
	7		J8		$150.00	$175.00

Table (35)

Accounts receivable ledger
Name : Company C
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	4		J7	$520.02		$520.02

Table (36)

Accounts receivable ledger
Name : Company HC
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	10		J8	$367.47		$367.47

Table (37)

Accounts receivable ledger
Name : Company TL
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$344.00
	21		J9		$180.00	$164.00

Table (38)

Accounts receivable ledger
Name : Company LOL
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	2		J6	$351.00		$351.00

Table (39)

Accounts receivable ledger
Name : Company MS
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	10		J8	$222.48		$222.48

Table (40)

Accounts receivable ledger
Name : Company JM
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1		✓			$486.00
	14		J8		$200.00	$286.00

Table (41)

Accounts receivable ledger
Name : Company PS
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	5		J8	$1,961.23		$1,961.23

Table (42)

Accounts receivable ledger
Name : Company JW
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$109.00
	28		J8		$109.00

Table (43)

Accounts payable ledger:

Accounts payable ledger
Name : Incorporation A
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$397.00
August	5			$397.00

Table (44)

Accounts payable ledger
Name : Company G
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	5		J8		$1,309.00	$1,309.00

Table (45)

Accounts payable ledger
Name : Company GSS
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$492.00
	1		J6		$490.00	$982.00
	5		J7	$492.00		$490.00

Table (46)

Accounts payable ledger
Name : Company LP
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	J6		$3,796.00	$3,796.00

Table (47)

Accounts payable ledger
Name : Company OS
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$120.00
	5		J7	$120.00		$0.00
	5		J7		$186.00	$186.00
	5		J7		$118.00	$304.00

Table (48)

Accounts payable ledger
Name : Incorporation SE
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$89.00
	3		J6		$6,235.00	$6,324.00
	3		J7	$89.00		$6,235.00

Table (49)

Accounts payable ledger
Name : Company SG
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1		J6		$5,445.00	$5,445.00

Table (50)

Accounts payable ledger
Name : Company SM
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	2		J6		$2,721.00	$2,721.00

Table (51)

Accounts payable ledger
Name : Company SE
Date		Item	Post Ref.	Debit	Credit	Balance
20--
July	1	Balance	✓			$1,150.00
	5		J7		$420.00	$1,570.00
	18		J9	$1,150.00		$420.00

Table (52)

3.

To determine

Prepare trial balance as of July 31.

Explanation of Solution

Trial balance: Trial balance is a summary of all the asset, liability, and equity accounts and their balances.

Prepare the trial balance.

Company AAY
Trial balance
As on July 31, 20--
Account name	Debit	Credit
Cash	$44,969.26
Accounts Receivable	$4,568.79
Office Supplies	$248.00
Spa Supplies	$695.00
Prepaid Insurance	$800.00
Office Equipment	$1,570.00
Accumulated Depreciation, Office Equipment		$10.00
Spa Equipment	$17,601.00
Accumulated Depreciation, Spa Equipment		$64.88
Accounts Payable		$20,720.00
Sales Tax Payable		$1,829.90
Person AV, Capital		$50,219.62
Person AV, Drawing	$2,500.00
Income from Services		$12,722.00
Merchandise Sales		$10,151.65
Purchases	$12,868.00
Freight In	$403.00
Wages Expense	$7,004.00
Rent Expense	$1,650.00
Laundry Expense	$84.00
Utilities Expense	$473.00
Miscellaneous Expense	$284.00
Total	$95,718.05	$95,718.05

Table (53)

Thus, the total of trial balance of Company AAY is $95,718.05.

4.

To determine

Prepare a schedule of accounts receivable.

Explanation of Solution

Schedule of accounts receivable: A schedule of accounts receivable is a subsidiary ledger that list out the accounts of credit customers individually in alphabetical or numeric order with their respective balances.

Prepare a schedule of accounts receivable:

Company AAY
Schedule of Accounts receivable
July 31, 20--
Particulars	Amount
Company AFS	$521.59
Company JA	$175.00
Company C	$520.02
Company HC	$367.47
Incorporation TL	$164.00
Company LOL	$351.00
Company MS	$222.48
Company JM	$286.00
Company PS	$1,961.23
Total Accounts receivable	$4,568.79

Table (54)

5.

To determine

Prepare a schedule of Accounts payable.

Explanation of Solution

Schedule of accounts payable: A schedule of accounts payable lists is a subsidiary ledger that list out the accounts of creditors (vendors/suppliers) individually in alphabetical or numeric order with their respective balances.

Prepare a schedule of Accounts payable:

Company AAY
Schedule of Accounts payable
July 31, 20--
Particulars	Amount
Company G	$1,309.00
Company GSS	$490.00
Company LP	$3,796.00
Company OS	$304.00
Incorporation SE	$6,235.00
Company SG	$5,445.00
Company SM	$2,721.00
Company SE	$420.00
Total Accounts payable	$20,720.00

Table (55)