Question

Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts havenormal debit and credit balances.

General Ledger
Account Number Account Title January 1 Opening Balance
101 Cash $33,750
112 Accounts Receivable 13,000
115 Notes Receivable 39,000
120 Merchandise Inventory 20,000
125 Office Supplies 1,000
130 Prepaid Insurance 2,000
157 Equipment 6,450
158 Accumulated Depreciation 1,500
201 Accounts Payable 35,000
301 I. Packard, Capital 78,700








Accounts Receivable Subsidiary Ledger Accounts Payable Subsidiary Ledger
Customer January 1 Opening Balance Creditor January 1 Opening Balance
R. Draves $1,500 S. Kosko $ 9,000
B. Hachinski 7,500 R. Mikush 15,000
S. Ingles 4,000 D. Moreno 11,000








Jan. 3 Sell merchandise on account to B. Remy $3,100, invoice no. 510, and J. Fine $1,800, invoice no. 511.
5 Purchase merchandise on account from S. Yost $3,000 and D. Laux $2,700.
7 Receive checks for $4,000 from S. Ingles and $2,000 from B. Hachinski.
8 Pay freight on merchandise purchased $180.
9 Send checks to S. Kosko for $9,000 and D. Moreno for $11,000.
9 Issue credit of $300 to J. Fine for merchandise returned.
10 Summary cash sales total $15,500.
11 Sell merchandise on account to R. Draves for $1,900, invoice no. 512, and to S. Ingles $900, invoice no. 513.
Post all entries to the subsidiary ledgers.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Remy and J. Fine.
15 Withdraw $800 cash by I. Packard for personal use.
16 Purchase merchandise on account from D. Moreno for $15,000, from S. Kosko for $13,900, and from S. Yost for $1,500.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Kosko and receive credit.
20 Summary cash sales total $17,500.
21 Issue $15,000 note to R. Mikush in payment of balance due.
21 Receive payment in full from S. Ingles.
Post all entries to the subsidiary ledgers.
22 Sell merchandise on account to B. Remy for $3,700, invoice no. 514, and to R. Draves for $800, invoice no. 515.
23 Send checks to D. Moreno and S. Kosko in full payment.
25 Sell merchandise on account to B. Hachinski for $3,500, invoice no. 516, and to J. Fine for $6,100, invoice no. 517.
27 Purchase merchandise on account from D. Moreno for $12,500, from D. Laux for $1,200, and from S. Yost for $2,800.
28 Pay $200 cash for office supplies.
31 Summary cash sales total $22,920.
31 Pay sales salaries of $4,300 and office salaries of $3,600.







Hint: AP, S


Instructions

a) Show the effect of each event on the Elements of the financial statements using a horizontal statements model like the following one. Use+ for increase, - for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first transaction is entered as an example.

Answer 1

JOURNAL
Date	Account	Debit	Credit
Jan. 03	Accounts receivable - B. Berg	$3,600
	Accounts receivable - J.Lutz	$1,800
	Sales		$5,400
Jan. 05	Inventory	$7,700
	Accounts Payable - S.Colt		$5,000
	Accounts Payable - D.Kahn		$2,700
Jan. 7	Cash	$6,000
	Accounts receivable - S. Andrus		$4,000
	Accounts receivable - B.Boxberger		$2,000
Jan. 08	Inventory	$180
	Cash		$180
Jan. 09	Accounts Payable - S.Otero	$9,000
	Accounts Payable - D.Baroni	$11,000
	Cash		$20,000
Jan. 09	Sales return & Allowances	$300
	Accounts Receivable - J. Lutz		$300
Jan. 10	Cash	$15,500
	Sales		$15,500
Jan.11	Accounts receivable - R. Kotsay	$2,900
	Accounts receivable - S.Andrews	$900
	Sales		$3,800
Jan. 12	Rent Expense	$1,000
	Cash		$1,000
Jan. 13	Cash	$5,100
	Accounts receivable - B. Berg		$3,600
	Accounts receivable - J.Lutz		$1,500
Jan. 15	I. McBride withdrawal	$800
	Cash		$800
Jan. 16	Inventory	$27,400
	Accounts Payable - D.Baroni		$12,000
	Accounts Payable - S.Otero		$13,900
	Accounts Payable - S.Colt		$1,500
Jan. 17	Supplies	$400
	Cash		$400
Jan. 18	Accounts Payable - S.Otero	$200
	Inventory		$200
Jan. 20	Cash	$17,500
	Sales		$17,500
Jan. 21	Accounts Payable - R.Ramus	$15,000
	Note Payable		$15,000
Jan. 21	Cash	$900
	Accounts receivable - S. Andrus		$900
Jan. 22	Accounts receivable - B. Berg	$3,700
	Accounts receivable - R.Kotsay	$800
	Sales		$4,500
Jan. 23	Accounts Payable - D.Baroni	$12,000
	Accounts Payable - S.Otero	$13,700
	Cash		$25,700
Jan. 25	Accounts receivable - B. Boxberger	$3,500
	Accounts receivable - J.Lutz	$6,100
	Sales		$9,600
Jan. 27	Inventory	$16,500
	Accounts Payable - D.Baroni		$12,500
	Accounts Payable - D.Kahn		$1,200
	Accounts Payable - S.Colt		$2,800
Jan. 28	Supplies	$200
	Cash		$200
Jan. 31	Cash	$22,920
	Sales		$22,920
Jan. 31	Sales Salaries Expense	$4,300
	Office salaries expense	$3,600
	Cash		$7,900