Problem

The following general ledger accounts are included in the trial balance for an audit clien...

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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