The July transactions of Burns Industries are described in Problem 7-1B. Required...

The July transactions of Burns Industries are described in Problem 7-1B.

Required

1. Prepare a general journal, a purchases journal like that in Exhibit 7.9, and a cash disbursements journal

like that in Exhibit 7.11. Number all journal pages as page 3. Review the July transactions of

Burns Industries and enter those transactions that should be journalized in the general journal, the

purchases journal, or the cash disbursements journal. Ignore any transactions that should be journalized

in a sales journal or cash receipts journal.

2. Open the following general ledger accounts: Cash, Inventory, Office Supplies, Store Supplies, Store

Equipment, Accounts Payable, Long-Term Notes Payable, Sales Salaries Expense, and Advertising

Expense. Enter the June 30 balances of Cash ($116,000), Inventory ($150,000), Long-Term Notes

Payable ($166,000), and R. Burns, Capital ($100,000). Also open accounts payable subsidiary ledger

accounts for Cheever Supply, Tryon Company, Dart Company, and Patton, Inc.

3. Verify that amounts that should be posted as individual amounts from the journals have been posted.

(Such items are immediately posted.) Foot and crossfoot the journals and make the month-end postings.

4. Prepare a trial balance of the general ledger and a schedule of accounts payable.

sales are 2/10, n/30).

July 1 Purchased $15,200 of merchandise on credit from Tryon Company, invoice dated June 30,

terms 2/10, n/60.

3 Issued Check No. 300 to The Weekly for advertising expense, $890.

5 Sold merchandise on credit to Karen Noyes, Invoice No. 918, for $4,100 (cost is $3,300).

6 Sold merchandise on credit to Meg Azura, Invoice No. 919, for $9,200 (cost is $7,500).

7 Purchased $1,580 of store supplies on credit from Patton, Inc., invoice dated July 7, terms n/10

EOM.

8 Received a $90 credit memorandum from Patton, Inc., for the return of store supplies received

on July 7.

9 Purchased $11,155 of store equipment on credit from Cheever Supply, invoice dated July 8,

terms n/10 EOM.

10 Issued Check No. 301 to Tryon Company in payment of its June 30 invoice, less the discount.

13 Sold merchandise on credit to Tom Murphy, Invoice No. 920, for $13,600 (cost is $7,100).

14 Sold merchandise on credit to Karen Noyes, Invoice No. 921, for $6,500 (cost is $4,700).

15 Received payment from Karen Noyes for the July 5 sale, less the discount.

15 Issued Check No. 302, payable to Payroll, in payment of sales salaries expense for the first

half of the month, $39,250. Cashed the check and paid employees.

15 Cash sales for the first half of the month are $59,920 (cost is $42,900). (Cash sales are recorded

daily using data from the cash registers but are recorded only twice in this problem to reduce

repetitive entries.)

16 Received payment from Meg Azura for the July 6 sale, less the discount.

17 Purchased $12,650 of merchandise on credit from Dart Company, invoice dated July 17, terms

2/10, n/30.

20 Purchased $1,050 of office supplies on credit from Cheever Supply, invoice dated July 19,

terms n/10 EOM.

21 Borrowed $74,000 cash from College Bank by signing a long-term note payable.

23 Received payment from Tom Murphy for the July 13 sale, less the discount.

24 Received payment from Karen Noyes for the July 14 sale, less the discount.

24 Received a $1,050 credit memorandum from Dart Company for the return of defective merchandise

received on July 17.

26 Purchased $11,635 of merchandise on credit from Tryon Company, invoice dated July 26, terms

2/10, n/60.

27 Issued Check No. 303 to Dart Company in payment of its July 17 invoice, less the return and

the discount.

29 Sold merchandise on credit to Meg Azura, Invoice No. 922, for $3,340 (cost is $2,580).

30 Sold merchandise on credit to Tom Murphy, Invoice No. 923, for $6,200 (cost is $4,480).

31 Issued Check No. 304, payable to Payroll, in payment of the sales salaries expense for the last

half of the month, $39,250.

31 Cash sales for the last half of the month are $74,200 (cost is $67,400).

Required

1. Prepare a sales journal like that in Exhibit 7.5 and a cash receipts journal like that in Exhibit 7.7.

Number both journals as page 3. Then review the transactions of Burns Industries and enter those

transactions that should be journalized in the sales journal and those that should be journalized in the

cash receipts journal. Ignore any transactions that should be journalized in a purchases journal, a cash

disbursements journal, or a general journal.

2. Open the following general ledger accounts: Cash, Accounts Receivable, Inventory, Long-Term Notes

Payable, Cost of Goods Sold, Sales, and Sales Discounts. Enter the June 30 balances for Cash ($116,000),

Inventory ($150,000), Long-Term Notes Payable ($166,000), and R. Burns, Capital ($100,000). Also

open accounts receivable subsidiary ledger accounts for Karen Noyes, Tom Murphy, and Meg Azura.

3. Verify that amounts that should be posted as individual amounts from the journals have been

posted. (Such items are immediately posted.) Foot and crossfoot the journals and make the monthend

postings.

4. Prepare a trial balance of the general ledger and prove the accuracy of the subsidiary ledger by preparing

a schedule of accounts receivable.

Analysis Component

5. Assume that the total for the schedule of Accounts Receivable does not equal the balance of the

controlling account in the general ledger. Describe steps you would take to discover the error(s).