Question

Required information Problem 7-1A Special journals, subsidiary ledgers, trial balance-perpetual LO C3, P1, P2 (The following information applies to the questions displayed below.) Church Company completes these transactions and events during March of the current year (terms for all its credit sales are 1/10, n/30). Mar. a ) 1 Purchased $38,000 of merchandise from Van Industries, invoice dated March 1, terms 1/15, n/30. Sold merchandise on credit to Min Cho, Invoice No. 854, for $15,200 (cost is $7,600). 3 (a) Purchased $1,140 of office supplies on credit from Gabel Company, invoice dated March 3, terms n/10 EOM. 3 (b) Sold merchandise on credit to Linda Witt, Invoice No. 855, for $7,600 (cost is $3,800). Borrowed $72,000 cash from Federal Bank by signing a long-term note payable. Purchased $19,000 of office equipment on credit from Spell Supply, invoice dated March 9, terms n/10 EOM. Sold merchandise on credit to Jovita Albany, Invoice No. 856, for $3,800 (cost is $1,900). Received payment from Min Cho for the March 2 sale less the discount. Sent Van Industries Check No. 416 in payment of the March 1 invoice less the discount. 13 (b) Received payment from Linda Witt for the March 3 sale less the discount. Purchased $30,000 of merchandise from the CD Company, invoice dated March 13, terms 1/10, n/30. Issued Check No. 417, payable to Payroll, in payment of sales salaries expense for the first half of the month, $12,700. Cashed the check and paid the employees. 15 (b) Cash sales for the first half of the month are $60,800 (cost is $48,640). (Cash sales are recorded daily, but are recorded only twice here to reduce repetitive entries.) Purchased $1,660 of store supplies on credit from Gabel Company, invoice dated March 16, terms n/10 EOM. Received a $3,000 credit memorandum from CD Company for the return of unsatisfactory merchandise purchased on March 14. Received a $570 credit memorandum from Spell Supply for office equipment received on March 9 and returned for credit. Received payment from Jovita Albany for the sale of March 10 less the discount. Issued Check No. 418 to CD Company in payment of the invoice of March 13 less the March 17 return and the discount. 27 Sold merchandise on credit to Jovita Albany, Invoice No. 857, for $11,400 (cost is $4,560). Sold merchandise on credit to Linda Witt, Invoice No. 858, for $4,560 (cost is $1,824). Issued Check No. 419, payable to Payroll, in payment of sales salaries expense for the last half of the month, $12,700. Cashed the check and paid the employees. 31 (b) Cash sales for the last half of the month are $66,880 (cost is $40,128). 31 (c) Verify that amounts impacting customer and creditor accounts were posted and that any amounts that should have been posted as individual amounts to the general ledger accounts were posted. Foot and crossfoot the journals and make the month-end postings. (a) Assume the following ledger account amounts Inventory (March 1 beg. bal. is $60,000), Z. Church, Capital (March 1 beg. bal. is $60,000) and Church Company uses the perpetual inventory system.

Answer 1

Legers of Church Company are prepared as shown below:

Inventory

GENERAL LEDGER

Accounts Payable

Date

Debit

Date

Credit

Cash

Date

Debit

Date

Credit

Mar-01

65,000

Date

Debit

Date

Credit

March 13a

40,000

Mar-01

40,000

Mar. 01

40,000

Mar-02

8,000

Mar-06

72,000

March 13a

39,200

Mar-17

2,800

March 3a

1,200

Mar-14

28,000

March 3b

4,000

Mar-12

15,680

Mar-15

13,900

Mar-19

-600

Mar-09

20,000

Mar-10

2,000

March 13b

7840

Mar-23

24,696

Mar-23

25,200

Mar-14

28,000

March 13a

800

Mar-15

64,000

Mar-31

13,900

Mar-16

1,720

Mar-15

51,200

Mar-20

3,920

67,400

90,920

Mar-17

2,800

Mar-31

70,400

Mar-31

23,520

Mar-23

504

233,840

91,696

Mar-27

4,800

Mar-31

142,144

ACCOUNTS PAYABLE LEDGER

Mar-28

1,920

CD Company

Mar-31

42,240

Z. Church, Capital

Date

Debit

Date

Credit

133,000

118,264

Date

Debit

Date

Credit

Mar-17

2,800

Mar-14

28,000

14,736

Mar. 01

10,000

Mar-23

25,200

Accounts Receivable

28,000

28,000

Date

Debit

Date

Credit

Mar-02

16,000

Mar-12

16,000

March 3b

8,000

March 13b

8,000

Long-Term Notes Payable

Spell Supply

Mar-10

4,000

Mar-20

4,000

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar-27

12,000

Mar-06

72,000

Mar-19

-600

Mar-09

20,000

Mar-28

4,800

0

72,000

-600

20000

44,800

28,000

Mar-31

72,000

Mar-31

20600

Mar-31

16,800

Gabel Company

ACCOUNTS RECEIVABLE LEDGER

Date

Debit

Date

Credit

Jovita Albany

Sales

March 3a

1,200

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar-16

1,720

Mar-10

4,000

Mar-20

4,000

Mar-02

16,000

Mar-27

12,000

March 3b

8,000

Mar-31

2,920

16,000

4,000

Mar-10

4,000

Mar-31

12,000

Mar-15

64,000

Van Industries

Linda Witt

Mar-27

12,000

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar-28

4,800

March 13a

40,000

Mar-01

40,000

March 3b

8,000

March 13b

8,000

Mar-31

70,400

Mar-28

4,800

0

179200

12,800

8,000

Mar-31

179200

Mar-31

4,800

Cost of Goods Sold

Date

Debit

Date

Credit

Min Cho

Mar-02

8,000

Date

Debit

Date

Credit

March 3b

4,000

Mar-02

16,000

Mar-12

16,000

Mar-10

2,000

16,000

16,000

Mar-15

51,200

Mar-27

4,800

Mar-28

1,920

Mar-31

42,240

Office Supplies

114,160

Date

Debit

Date

Credit

Mar-31

114,160

Mar. 03 (a)

1,200

Sales Discount

Date

Debit

Date

Credit

Mar-31

1,200

Mar-12

320

Office Equipment

March 13b

160

Date

Debit

Credit

Balance

Mar-20

80

Mar-09

20,000

Mar-19

600

20,000

600

560

0

Mar-31

19,400

Mar-31

560

Sales Salaries Expense

Store Supplies

Date

Debit

Date

Credit

Date

Debit

Date

Credit

Mar-15

13,900

Mar-16

1,720

Mar-31

13,900

1,720

0

Mar-31

1,720

Mar-31

27,800

Working Notes:

	Merchandise Inventory	Account Receivable	Office Supplies	Store Supplies	Office Equipment	Cash	Accounts payable	Sales	Cost of goods sold	Long term note payable	Sales Discount	Salaries Expense	Capital
Opening balance	65,000												65,000
1	40,000						40,000
2	-8,000	16,000						16,000	8,000
3a			1,200				1,200
3b	-4,000	8,000						8,000	4,000
6						72,000				72,000
9					20,000		20,000
10	-2,000	4,000						4,000	2,000
12		-16,000				15,680					320
13 a	-800					-39200	-40,000
13b		-8,000				7840					160
14	28,000						28,000
15a						-13,900						13,900
15b	-51,200					64,000		64,000	51,200
16				1,720			1,720
17	-2,800						-2,800
19					-600		600
20		-4,000				3,920					80
23	-504					-24,696	-25,200
27	-4,800	12,000						12,000	4,800
28	-1,920	4,800						4,800	1,920
31						-13,900						13,900
31	-42,240					70,400		70,400	42,240
Total	14,736	16,800	1,200	1,720	19,400	142,144	23,520	179,200	114,160	72,000	560	27,800	65,000