CHAPTER 7

PROBLEMS: SET B
P7-1B Belt Company’s chart of accounts includes the following selected accounts. Journalize transactions in
cash receipts journal; post to
101 Cash 401 Sales Revenue control account and
112 Accounts Receivable 414 Sales Discounts subsidiary ledger.
120 Inventory 505 Cost of Goods Sold (LO 2, 3)
301 Owner’s Capital
On June 1, the accounts receivable ledger of Belt Company showed the following balances:
Suppan & Son $3,000, Guthrie Co. $2,800, Quentin Bros. $2,400, and Hinshaw Co. $2,000.
The June transactions involving the receipt of cash were as follows.
June 1 The owner, Jim Belt, invested additional cash in the business $15,000.
3 Received check in full from Hinshaw Co. less 2% cash discount.
6 Received check in full from Guthrie Co. less 2% cash discount.
7 Made cash sales of merchandise totaling $8,700. The cost of the merchandise
sold was $5,000.
9 Received check in full from Suppan & Son less 2% cash discount.
11 Received cash refund from a supplier for damaged merchandise $450.
15 Made cash sales of merchandise totaling $6,500. The cost of the merchandise
sold was $4,000.
20 Received check in full from Quentin Bros. $2,400.
Instructions
(a) Journalize the transactions above in a six-column cash receipts journal with columns (a) Balancing totals $40,850
for Cash Dr., Sales Discounts Dr., Accounts Receivable Cr., Sales Revenue Cr., Other
Accounts Cr., and Cost of Goods Sold Dr./Inventory Cr. Foot and cross-foot the journal.
(b) Insert the beginning balances in the Accounts Receivable control and subsidiary
accounts, and post the June transactions to these accounts.
(c) Prove the agreement of the control account and subsidiary account balances. (c) Accounts Receivable $0

P7-2B Schellhammer Company’s chart of accounts includes the following selected accounts. Journalize transactions in
101 Cash 157 Equipment cash payments journal; post
to the general and subsidiary
120 Inventory 201 Accounts Payable
ledgers.
130 Prepaid Insurance 306 Owner’s Drawings
(LO 2, 3)
On November 1, the accounts payable ledger of Schellhammer Company showed the fol-
lowing balances: S. Gentry $4,000, D. Montero $2,100, R. Trumbo $800, and W. Olivo
$1,800. The November transactions involving the payment of cash were as follows.
Nov. 1 Purchased merchandise, check no. 11, $950.
3 Purchased store equipment, check no. 12, $1,400.
5 Paid W. Olivo balance due of $1,800, less 1% discount, check no. 13, $1,782.
11 Purchased merchandise, check no. 14, $1,700.
15 Paid R. Trumbo balance due of $800, less 3% discount, check no. 15, $776.
16 M. Richey, the owner, withdrew $400 cash for own use, check no. 16.
19 Paid D. Montero in full for invoice no. 1245, $2,100 less 2% discount, check
no. 17, $2,058.
25 Paid premium due on one-year insurance policy, check no. 18, $2,400.
30 Paid S. Gentry in full for invoice no. 832, $2,700, check no. 19.
Instructions
(a) Journalize the transactions above in a four-column cash payments journal with col- (a) Balancing totals $14,250
umns for Other Accounts Dr., Accounts Payable Dr., Inventory Cr., and Cash Cr. Foot
and cross-foot the journal.
(b) Insert the beginning balances in the Accounts Payable control and subsidiary accounts,
and post the November transactions to these accounts.
(c) Prove the agreement of the control account and the subsidiary account balances. (c) Accounts Payable $1,300

P7-3B The chart of accounts of Henry Company includes the following selected accounts. Journalize transactions in
multi-column purchases
112 Accounts Receivable 401 Sales Revenue
journal; post to the general
120 Inventory 412 Sales Returns and Allowances
and subsidiary ledgers.
126 Supplies 505 Cost of Goods Sold
157 Equipment 610 Advertising Expense (LO 2, 3)
201 Accounts Payable
2 7 Accounting Information Systems

In May, the following selected transactions were completed. All purchases and sales were
on account except as indicated. The cost of all merchandise sold was 60% of the sales price.
May 2 Purchased merchandise from Berkman Company $5,000.
3 Received freight bill from Fast Freight on Berkman purchase $250.
5 Sales were made to Persinger Company $1,300, Fehr Bros. $2,300, and Mount
Company $1,000.
8 Purchased merchandise from Kayser Company $5,400 and Neufeld Company $3,000.
10 Received credit on merchandise returned to Neufeld Company $350.
15 Purchased supplies from Rabel’s Supplies $600.
16 Purchased merchandise from Berkman Company $3,100, and Kayser Company $4,200.
17 Returned supplies to Rabel’s Supplies, receiving credit $70. (Hint: Credit Supplies.)
18 Received freight bills on May 16 purchases from Fast Freight $325.
20 Returned merchandise to Berkman Company receiving credit $200.
23 Made sales to Fehr Bros. $1,600 and to Mount Company $2,500.
25 Received bill for advertising from Mock Advertising $620.
26 Granted allowance to Mount Company for merchandise damaged in shipment $140.
28 Purchased equipment from Rabel’s Supplies $400.
Instructions
(a) Purchases journal— (a) Journalize the transactions above in a purchases journal, a sales journal, and a general
Accounts Payable, Cr. journal. The purchases journal should have the following column headings: Date, Account
$22,895 Credited (Debited), Ref., Accounts Payable Cr., Inventory Dr., and Other Accounts Dr.
Sales journal—Sales (b) Post to both the general and subsidiary ledger accounts. (Assume that all accounts
Revenue total $8,700 have zero beginning balances.)
(c) Accounts Receivable $8,560 (c) Prove the agreement of the control and subsidiary accounts.
Accounts Payable $22,275
Journalize transactions in P7-4B Selected accounts from the chart of accounts of Conley Company are shown below.
special journals.
101 Cash 201 Accounts Payable
(LO 2, 3)
112 Accounts Receivable 401 Sales Revenue
120 Inventory 414 Sales Discounts
126 Supplies 505 Cost of Goods Sold
140 Land 610 Advertising Expense
145 Buildings
The cost of all merchandise sold was 65% of the sales price. During October, Conley Company
completed the following transactions.
Oct. 2 Purchased merchandise on account from Kent Company $15,000.
4 Sold merchandise on account to Doumit Co. $5,600. Invoice no. 204, terms 2/10, n/30.
5 Purchased supplies for cash $60.
7 Made cash sales for the week totaling $6,700.
9 Paid in full the amount owed Kent Company less a 2% discount.
10 Purchased merchandise on account from Wrigley Corp. $2,600.
12 Received payment from Doumit Co. for invoice no. 204.
13 Returned $150 worth of damaged goods purchased on account from Wrigley
Corp. on October 10.
14 Made cash sales for the week totaling $6,000.
16 Sold a parcel of land for $20,000 cash, the land’s original cost.
17 Sold merchandise on account to JR’s Warehouse $4,900, invoice no. 205, terms
2/10, n/30.
18 Purchased merchandise for cash $1,600.
21 Made cash sales for the week totaling $6,000.
23 Paid in full the amount owed Wrigley Corp. for the goods kept (no discount).
25 Purchased supplies on account from Francisco Co. $190.
25 Sold merchandise on account to Fryer Corp. $3,800, invoice no. 206, terms 2/10, n/30.
25 Received payment from JR’s Warehouse for invoice no. 205.
26 Purchased for cash a small parcel of land and a building on the land to use
as a storage facility. The total cost of $26,000 was allocated $16,000 to the
land and $10,000 to the building.
27 Purchased merchandise on account from Marte Co. $6,200.
28 Made cash sales for the week totaling $5,500.
30 Purchased merchandise on account from Kent Company $10,000.
30 Paid advertising bill for the month from the Gazette, $290.
30 Sold merchandise on account to JR’s Warehouse $3,400, invoice no. 207, terms 2/10, n/30.
 Problems: Set B 3

Conley Company uses the following journals.

1. Sales journal.
2. Single-column purchases journal.
3. Cash receipts journal with columns for Cash Dr., Sales Discounts Dr., Accounts Receivable
Cr., Sales Revenue Cr., Other Accounts Cr., and Cost of Goods Sold Dr./Inventory Cr.
4. Cash payments journal with columns for Other Accounts Dr., Accounts Payable Dr.,
Inventory Cr., and Cash Cr.
5. General journal. (b) Sales journal $17,700
Purchases journal $33,800
Instructions Cash receipts journal—
Using the selected accounts provided: Cash, Dr. $54,490
(a) Record the October transactions in the appropriate journals. Cash payments journal,
(b) Foot and cross-foot all special journals. Cash, Cr. $45,100
(c) Show how postings would be made by placing ledger account numbers and check
marks as needed in the journals. (Actual posting to ledger accounts is not required.)
Journalize in purchases and
cash payments journals; post;
P7-5B Presented below are the sales and cash receipts journals for Lowery Co. for its first prepare a trial balance; prove
month of operations. control to subsidiary; prepare
adjusting entries; prepare an
adjusted trial balance.
(LO 2, 3)

SALES JOURNAL S1
Accounts Receivable Dr. Cost of Goods Sold Dr.
Date Account Debited Ref. Sales Revenue Cr. Inventory Cr.
Feb. 3 C. Ogleby 4,000 2,400
9 S. Hauke 5,000 3,000
12 T. Ghosh 6,500 3,900
26 W. Hoy 5,500 3,300
21,000 12,600

CASH RECEIPTS JOURNAL CR1

Sales Accounts Sales Other
Owner’s Cash Discounts Receivable Revenue Accounts Cost of Goods Sold Dr.
Date Account Credited Ref. Dr. Dr. Cr. Cr. Cr. Inventory Cr.
Feb. 1 Owner’s Capital 23,000 23,000
2 4,500 4,500 2,700
13 C. Ogleby 3,960 40 4,000
18 Inventory 120 120
26 S. Hauke 5,000 5,000
36,580 40 9,000 4,500 23,120 2,700

In addition, the following transactions have not been journalized for February 2017.
Feb. 2 Purchased merchandise on account from B. Setterstrom for $5,600, terms
2/10, n/30.
7 Purchased merchandise on account from A. Dambro for $23,000, terms 1/10,
n/30.
9 Paid cash of $980 for purchase of supplies.
12 Paid $5,488 to B. Setterstrom in payment for $5,600 invoice, less 2% discount.
15 Purchased equipment for $4,500 cash.
16 Purchased merchandise on account from D. Budke $1,900, terms 2/10, n/30.
17 Paid $22,770 to A. Dambro in payment of $23,000 invoice, less 1% discount.
20 S. Lowery withdrew cash of $800 from the business for personal use.
21 Purchased merchandise on account from Eberle Company for $8,000, terms
1/10, n/30.
28 Paid $1,900 to D. Budke in payment of $1,900 invoice.
4 7 Accounting Information Systems

Instructions
(a) Open the following accounts in the general ledger.
101 Cash 301 Owner’s Capital
112 Accounts Receivable 306 Owner’s Drawings
120 Inventory 401 Sales Revenue
126 Supplies 414 Sales Discounts
157 Equipment 505 Cost of Goods Sold
158 Accumulated Depreciation—Equipment 631 Supplies Expense
201 Accounts Payable 711 Depreciation Expense
(b) Purchases journal total (b) Journalize the transactions that have not been journalized in a one-column purchases
$38,500 journal and the cash payments journal (see Illustration 7-16).
Cash payments journal— (c) Post to the accounts receivable and accounts payable subsidiary ledgers. Follow the
Cash, Cr. $36,438 sequence of transactions as shown in the problem.
(d) Post the individual entries and totals to the general ledger.
(e) Totals $56,500 (e) Prepare a trial balance at February 28, 2017.
(f) Accounts Receivable (f) Determine that the subsidiary ledgers agree with the control accounts in the general ledger.
$12,000 (g) The following adjustments at the end of February are necessary.
Accounts Payable $8,000 (1) A count of supplies indicates that $200 is still on hand.
(2) Depreciation on equipment for February is $150.
Prepare the adjusting entries and then post the adjusting entries to the general ledger.
(h) Totals $56,650 (h) Prepare an adjusted trial balance at February 28, 2017.