The following general ledger accounts are included in the trial balance for an audit client, Jones Wholesale Stationery Store.
Accounts payable | Insurance expense |
Accounts receivable | Interest expense |
Accrued interest expense | Inventory |
Accrued sales salaries | Loans payable |
Accumulated depreciation— | Notes payable |
furniture and equipment | Notes receivable—trade |
Advertising expense | Prepaid insurance |
Allowance for doubtful accounts | Property tax expense |
Bad debt expense | Property tax payable |
Cash | Purchases |
Common stock | Rent expense |
Depreciation expense—furniture | Retained earnings |
and equipment | Salaries, office and general |
Furniture and equipment | Sales |
Income tax expense | Sales salaries expense |
Income tax payable | Telecommunications expense |
Required
a. Identify the accounts in the trial balance that are likely to be included in each transaction cycle. Some accounts will be included in more than one cycle. Use the format that follows.
Cycle
Balance Sheet Accounts
Income Statement Accounts
Sales and collection
Acquisition and payment
Payroll and personnel
Inventory and warehousing
Capital acquisition and repayment
b. How will the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wholesale company? How will they differ for a hospital or a government unit?
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