Appe

APPENDIX E
SUBSIDIARY LEDGERS AND SPECIAL JOURNALS
SUMMARY OF QUESTIONS BY OBJECTIVES AND BLOOM’S TAXONOMY

Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT
True-False Statements
1. 1 K 5. 1 K 9. 2 K 13. 2 C 17. 3 K
2. 1 K 6. 1 C 10. 2 K 14. 2 K 18. 3 C
3. 1 K 7. 1 K 11. 2 K 15. 2 K 19. 3 K
4. 1 C 8. 1 C 12. 2 K 16. 3 K 20. 3 K
Multiple Choice Questions
21. 1 K 30. 2 K 39. 2 K 48. 3 K 57. 3 K
22. 1 K 31. 2 K 40. 2 K 49. 3 K 58. 3 K
23. 1 K 32. 2 C 41. 2 C 50. 3 K 59. 3 K
24. 1 C 33. 2 K 42. 2 C 51. 3 K 60. 3 C
25. 1 K 34. 2 K 43. 3 C 52. 3 K 61. 3 K
26. 2 K 35. 2 K 44. 3 C 53. 3 K 62. 3 C
27. 2 K 36. 2 K 45. 3 K 54. 3 K 63. 3 K
28. 2 C 37. 2 C 46. 3 K 55. 3 C 64. 3 K
29. 2 K 38. 2 K 47. 3 K 56. 3 K 65. 3 K
Exercises
66. 1 AN 69. 2 AP 72. 2 C 75. 3 AN 78. 3 C
67. 1 AP 70. 2 AP 73. 2 C 76. 3 AP
68. 2 C 71. 2 AN 74. 3 C 77. 3 C
Completion Statements
79. 1 K 81. 2 K 83. 3 K
80. 2 K 82. 3 K 84. 3 K
Matching
85. 2 K
Short-Answer Essay
86. 3 S
E-2 Test Bank for Financial Accounting: IFRS Edition
SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE

Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Study Objective 1
1. TF 4. TF 7. TF 22. MC 25. MC 79. C
2. TF 5. TF 8. TF 23. MC 66. Ex
3. TF 6. TF 21. MC 24. MC 67. Ex
Study Objective 2
9. TF 14. TF 29. MC 34. MC 39. MC 69. Ex 80. C
10. TF 15. TF 30. MC 35. MC 40. MC 70. Ex 81. C
11. TF 26. MC 31. MC 36. MC 41. MC 71. Ex 85. Ma
12. TF 27. MC 32. MC 37. MC 42. MC 72. Ex
13. TF 28. MC 33. MC 38. MC 68. Ex 73. Ex
Study Objective 3
16. TF 44. MC 50. MC 56. MC 62. MC 76. Ex 86. S-A
17. TF 45. MC 51. MC 57. MC 63. MC 77. Ex
18. TF 46. MC 52. MC 58. MC 64. MC 78. Ex
19. TF 47. MC 53. MC 59. MC 65. MC 82. C
20. TF 48. MC 54. MC 60. MC 74. Ex 83. C
43. MC 49. MC 55. MC 61. MC 75. Ex 84. C
Note: TF = True-False C = Completion Ma = Matching

MC = Multiple Choice Ex = Exercise S-A = Short-Answer Essay
CHAPTER STUDY OBJECTIVES
1. Describe the nature and purpose of a subsidiary ledger. A subsidiary ledger is a group of
accounts with a common characteristic. It facilitates the recording process by freeing the
general ledger from details of individual balances.
2. Explain how companies use special journals in journalizing. Companies use special
journal to group similar types of transactions. In a special journal, generally only one line is
used to record a complete transaction.
3. Indicate how companies post a multi-column journal. In posting a columnar journal:
(a) companies post all column totals except for the Other Accounts column once at the end
of the month to the account title specified in the column heading.
(b) companies do not post the total of the Other Accounts column. Instead, the individual
amounts comprising the total are posted separately to the general ledger accounts
specified in the Account credited (debited) column.
(c) the individual amounts in a column posted in total to a control account are posted daily
to the subsidiary ledger accounts specified in the Account credited (debited) column.
Subsidiary Ledgers and Special Journals E-3
TRUE-FALSE STATEMENTS
1. A subsidiary ledger is a group of control accounts which provides information to the
managers for controlling the operation of the company.
Answer: F, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
AICPA-PC: Project Management, IMA: Business Applications, Sector: General, IFRS: No
2. An accounts receivable subsidiary ledger has all the detailed information about the cash
sales to individual customers.
3. The accounts payable subsidiary ledger provides detailed information about amounts
owed to creditors.
Answer: T, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
4. The total of the individual account balances in the accounts receivable subsidiary ledger
should agree with the total of the individual account balances in the accounts payable
subsidiary ledger.
Answer: F, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
5. Control accounts are always located in the general ledger.

6. A control account and subsidiary ledger can be established for inventory.

Answer: T, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Decision Modeling,
7. A subsidiary ledger provides up-to-date information on specific account balances.

Answer: T, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Reporting, AICPA-
PC: Problem Solving/Decision Making, IMA: Reporting, Sector: General, IFRS: No
8. An advantage of using a subsidiary ledger is that one employee must post to both the
subsidiary ledger and the general ledger.
Answer: F, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Risk Analysis,
AICPA-PC: Project Management, IMA: Internal Controls, Sector: General, IFRS: No
9. Special journals are used to record unique transactions which do not occur very often.
Answer: F, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Decision Modeling,
10. A cash receipts journal can be used to record all transactions involving cash coming into
the business, regardless of the source.
11. The cash payments journal only has one column because all entries recorded in this
journal require a credit to the Cash account.
12. A cash payments journal should not be used to record transactions which require payment
by check.
13. If a transaction cannot be recorded in a special journal, it indicates that the company
should adopt an electronic accounting system.
Answer: F, SO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Decision Modeling, AICPA-
PC: Project Management, IMA: Business Applications, Sector: General, IFRS: No
14. A debit column for Sales Returns and Allowances may be found in the cash payments
journal.
15. A single-column purchases journal is used to record purchases of merchandise on

account.
16. Using special journals can save time in posting because column totals are often posted
rather than individual entries.
17. The reference column in a sales journal is used to indicate the general ledger account
number when the entry is posted.
Answer: F, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
18. Postings are generally made more frequently to the general ledger control accounts than
to the individual accounts in the subsidiary ledgers.
Answer: F, SO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
19. The amounts appearing in the Merchandise Inventory column of the cash payments
journal are posted individually to the accounts in the accounts payable subsidiary ledger.
AICPA-PC: Project Management, IMA: FSA, Sector: General, IFRS: No
20. Transaction amounts recorded in the general journal are never posted to accounts in the
subsidiary ledger.
Answers to True-False Statements
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 4. F 7. T 10. T 13. F 16. T 19. F
2. F 5. T 8. F 11. F 14. T 17. F 20. F
3. T 6. T 9. F 12. F 15. T 18. F
MULTIPLE CHOICE QUESTIONS

21. The balance of a control account in the general ledger
a. must always be zero.
b. must equal the amount of total assets.
c. is always greater than the composite balance of individual accounts in a related
subsidiary ledger.
d. must equal the composite balance of individual accounts in a related subsidiary
ledger.
Answer: d, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
22. A subsidiary ledger is

a. used in place of the general ledger if the general ledger is destroyed or stolen.
b. a group of accounts used by branches and subsidiaries of a corporate business.
c. a group of accounts with a common characteristic that provides detailed information
about a control account in the general ledger.
d. used to post excess transactions if a general ledger account becomes full during an
accounting period.
Answer: c, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
23. A subsidiary ledger frees the general ledger from details of

a. individual balances.
b. external transactions.
c. internal transactions.
d. the control account.
Answer: a, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Reporting, AICPA-
PC: Project Management, IMA: Reporting, Sector: General, IFRS: No
24. A company would not likely use subsidiary ledgers for

a. inventory.
b. retained earnings.
c. equipment.
d. accounts receivable.
Answer: b, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
25. Postings are made daily to subsidiary ledgers so that

a. employees are kept busy.
b. debits equal credits.
c. individual account information is kept current.
d. the control account will balance to the subsidiary ledger.
26. A sales journal is used to record

a. only cash sales of merchandise.
b. sales of all assets on credit and for cash.
c. only credit sales of merchandise.
d. credit sales of merchandise, sales returns and allowances, and sales discounts.
27. If a transaction cannot be recorded in a special journal

a. the company must refuse to enter into the transaction.
b. it is recorded in the general journal.
c. it is recorded directly in the accounts in the general ledger.
d. it is recorded as an adjustment on the work sheet.
Answer: b, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
28. The one characteristic that all entries recorded in a cash receipts journal have in common
is
a. a credit to the Cash account.
b. that they all represent collections from customers.
c. that they originate from the sales of merchandise.
d. a debit to the Cash account.
Answer: d, SO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
29. A single-column purchases journal indicates that

a. only purchases of merchandise on account can be recorded.
b. all purchases of merchandise can be recorded.
c. all acquisitions on account can be recorded.
d. another column must be added so that debits and credits can be recorded.
Answer: a, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
30. The one characteristic that all entries recorded in a multiple-column purchases journal
have in common is a
a. credit to the Cash account.
b. debit to the Cash account.
c. debit to the Accounts Payable account.
d. credit to the Accounts Payable account.
31. A company which uses special journals should record a transaction involving the
purchase of merchandise for cash in a
a. single-column purchases journal.
b. multiple-column purchases journal.
c. cash payments journal.
d. general journal.
32. If merchandise from a cash sale is returned by a customer for a refund, the sales return is
recorded in the
a. general journal.
b. cash receipts journal.
d. sales journal.
Answer: c, SO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
33. Which of the following is not a special journal?

a. Sales journal
b. Purchases journal
c. General journal
d. Cash receipts journal
34. Correcting entries are journalized in

a. a special journal.
b. the general journal.
c. the general ledger.
d. a correcting journal.
35. Adjusting entries are recorded

a. only on the worksheet.
b. only in the general ledger.
c. in the general journal.
d. in the special journals.
36. If a transaction cannot be recorded in a special journal, it is

a. not recorded.
b. a correcting entry.
c. recorded in the general journal.
d. an error.
37. A company uses a sales journal, cash receipts journal, purchases journal, cash pay-
ments journal, and a general journal. A cash sales return would be recorded in the
a. sales journal.
d. general journal.
38. The entries in a sales journal will show

a. all sales of merchandise.
b. the cash sales of the company.
c. the credit sales of merchandise.
d. all sales of the company.
39. Entries in a sales journal

a. are made from sales invoices.
b. will indicate the invoice number in the reference column of the sales journal.
c. will occupy two lines of the sales journal.
d. indicate either a cash debit or accounts receivable debit.
Answer: a, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
40. Journalizing in a sales journal will not

a. require a debit to Accounts Receivable.
b. show a sales invoice number.
c. affect the reference column of the journal.
d. include a credit to the Sales account.
Answer: c, SO: 2, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
41. If a company purchases merchandise for cash, the transaction should be recorded in the
a. purchases journal.
b. general journal.
d. sales journal.
AICPA-PC: Project Management, IMA: Business Applications, Sector: Retail, IFRS: No
42. Cash from sales of merchandise will be recorded in the

a. purchases journal.
b. sales journal.
c. cash receipts journal.
d. general journal.
AICPA-PC: Project Management, IMA: Business Applications, Sector: Retail, IFRS: No
43. Debit postings to the individual accounts in an accounts receivable subsidiary ledger
generally come from the
a. sales journal.
c. purchases journal.
d. cash payments journal.
Answer: a, SO: 3, Bloom: C, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
44. Entries in a sales journal are

a. posted only to accounts in an accounts receivable subsidiary ledger.
b. posted only to accounts in the general ledger.
c. posted to accounts in an accounts receivable subsidiary ledger and to accounts in the
general ledger.
d. never posted.
45. Which one of the following columns in a cash receipts journal is not posted in total to an
account in the general ledger?
a. Cash column
b. Sales Discounts column
c. Accounts Receivable column
d. Other Accounts column
Answer: d, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
46. The use of special journals to record transactions

a. eliminates the need for a general ledger.
b. can save time in the posting process.
c. eliminates the need for a general journal.
d. should only be used if the volume of transactions is small.
47. Posting a sales journal to the accounts in the general ledger requires a
a. debit to Cash and a credit to Sales.
b. debit to Sales and a credit to Inventory.
c. debit to Accounts Receivable and a credit to Merchandise Inventory.
d. debit to Accounts Receivable and a credit to Sales.
48. The entries recorded in the Other Accounts column of a cash payments journal
a. are posted to the accounts payable subsidiary ledger daily.
b. are posted individually to accounts in the general ledger.
c. are not posted individually but are posted as a column total to the general ledger.
d. do not require posting.
49. Proving the equality of the totals in the columns of multiple-column special journals is
called
a. posting to the subsidiary.
b. debiting and crediting.
c. footing and crossfooting.
d. updating the master file.
50. If a company records merchandise it returns to suppliers in the general journal, then
a. a posting must be made only to the accounts payable control account.
b. a posting must be made only to the accounts payable subsidiary ledger account.
c. a dual posting must be made.
d. there will be a debit to Merchandise Inventory.
E - 10 Test Bank for Financial Accounting: IFRS Edition
51. Gable's Wholesale uses a sales journal. An entry in this journal represents a
a. debit to Cash; credit to Sales.
b. debit to Accounts Receivable; credit to Sales.
c. debit to Sales Discounts; credit to Cash.
d. debit to Accounts Payable; credit to Sales Returns and Allowances.
Answer: b, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
52. Which accounts in the general ledger are affected when the monthly posting is made from
the sales journal?
a. Accounts Receivable; accounts receivable subsidiary accounts
b. Accounts receivable subsidiary accounts; Sales
c. Accounts Receivable; Sales
d. Accounts Receivable; Merchandise Inventory
53. Which of the following is not a true statement about the daily posting of the sales journal?
a. There is a debit posting to accounts in the accounts receivable subsidiary ledger.
b. There is no credit posting.
c. The reference column in the sales journal is checked when the posting is complete for
each entry in the journal.
d. The invoice number supporting the sales transaction is posted to the reference column
in the subsidiary ledger.
54. Evidence that the monthly posting of the sales journal total has been accomplished is
indicated by
a. a signature of the accountant doing the posting.
b. a date under the double-line total.
c. the general ledger account numbers under the double-lined total.
d. inspecting the postings in the accounts payable subsidiary ledger.
55. Which of the following economic events would not be recorded in the cash receipts
journal?
a. Cash sales of merchandise
b. Collections of accounts receivable
c. Cash from sale of land
d. Cash purchases of merchandise
Answer: d, SO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
56. The "Other Accounts" column in a cash receipts journal is also referred to as the
a. miscellaneous column.
b. excess column.
c. sundry accounts column.
d. compound-entry column.
Subsidiary Ledgers and Special Journals E - 11
57. The process of totaling the columns of a journal is termed

a. ruling.
b. columnizing.
c. sizing.
d. footing.
58. An (x) below the "Other Accounts" column in a cash receipts journal indicates the
a. total has been posted to the general ledger.
b. total is not posted to the general ledger.
c. column has been footed.
d. column has been cross-footed.
59. Crossfooting a cash receipts journal means

a. the equality of debits and credits in the journal has been proved.
b. each line of the journal has a horizontal total.
c. the columns of the journal have been cross-referenced.
d. all necessary postings have been completed.
Answer: a, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
60. Which of the following would not be an appropriate heading for a column in the cash
receipts journal?
a. Cash
b. Accounts Payable
c. Sales Discounts
d. Sales
Answer: b, SO: 3, Bloom: C, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
61. Proving the postings of a single-column purchases journal would involve comparing the
a. general ledger posting to Accounts Payable to the debit postings of the accounts
receivable subsidiary ledger.
b. general ledger posting to Accounts Payable to the general ledger posting to
Merchandise Inventory.
c. general ledger credit posting to Accounts Payable to the general ledger debit posting
to Merchandise Inventory.
d. debit postings to the accounts receivable subsidiary ledger to the credit postings to the
accounts payable subsidiary ledger.
62. If a company uses a multiple-column purchases journal, which of the following possible
headings for debit columns of the journal would not be appropriate?
a. Accounts Payable
b. Merchandise Inventory
c. Store Supplies
d. Office Supplies
Answer: a, SO: 3, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
63. Entries in the cash payments journal are made from

a. sales invoices.
b. purchase invoices.
c. prenumbered checks.
d. canceled checks.
64. The reference column of a multiple-column cash payments journal after posting
a. will only contain check marks.
b. will be blank.
c. will only contain account numbers.
d. may contain either account numbers or check marks.
65. The reference column of the accounts in the accounts payable subsidiary ledger after
posting may show
a. only P references.
b. CP, P, or G references.
c. G, P, or S references.
d. only CP references.
Answer: b, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
Answers to Multiple Choice Questions
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
21. d 28. d 35. c 42. c 49. c 56. c 63. c
22. c 29. a 36. c 43. a 50. c 57. d 64. d
23. a 30. d 37. c 44. c 51. b 58. b 65. b
24. b 31. c 38. c 45. d 52. c 59. a
25. c 32. c 39. a 46. b 53. d 60. b
26. c 33. c 40. c 47. d 54. c 61. c
27. b 34. b 41. c 48. b 55. d 62. a
EXERCISES
Ex. 66
After Artie Company had completed all posting for the month of December, the sum of the
balances in the following accounts payable subsidiary ledger did not agree with the balance of the
control account in the general ledger.
Name Aston's
Address 286 Buck Avenue
——————————————————————————————————————————
Date Item Post. Ref. Debit Credit Balance
——————————————————————————————————————————
Dec. 2 P25 2,400 2,400
Name Carson Company

Address 818 Western Avenue
——————————————————————————————————————————
——————————————————————————————————————————
Dec. 1 Balance 7,600
10 CP23 7,600 —
20 P32 3,300 3,300
29 J15 200 3,500
Name Diana Fenn Company

Address 90210 Baker Boulevard
——————————————————————————————————————————
——————————————————————————————————————————
18 CP28 9,900 —
29 P34 13,600 3,700
Name Maria Lopez

Address 2720 Sommers Avenue
——————————————————————————————————————————
——————————————————————————————————————————
Dec. 8 P27 6,000 6,000
27 P33 8,000 14,000
Ex. 66 (cont.)
Name Oster Supplies

Address 1560 Puckett Street
——————————————————————————————————————————
——————————————————————————————————————————
7 P26 5,600 12,800
12 J11 420 12,380
20 CP29 5,000 17,380
The balance in the Accounts Payable control account of $41,480 has been verified as correct.
Also assume that the journals references in the Post Ref. columns of the accounts payable
subsidiary ledger have been verified as correct.
Instructions
Determine the errors in the preceding accounts payable subsidiary accounts and prepare a
corrected schedule of accounts payable.
Answer: N/A, SO: 1, Bloom: AN, Difficulty: Hard, Min: 10, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement, AICPA-
PC: Problem Solving/Decision Making, IMA: Business Applications, Sector: General, IFRS: No
Solution 66 (10 min.)

IDENTIFICATION OF ERRORS:
Carson Company
The $200 represents merchandise returned and should be subtracted from the balance owed.
Correct balance is $3,100.
Diana Fenn Company

The $13,600 represents new purchases on account and should be added to the previous balance
of zero. The correct balance is $13,600.
Oster Supplies
There is an addition error. Adding $5,600 to the beginning balance of $8,200 yields a balance of
$13,800. Subtracting merchandise returned of $420 leaves a balance of $13,380. The $5,000 is a
payment on account, not an increase. The correct balance is $8,380.
ACCOUNTS PAYABLE SUBSIDIARY LEDGER ACCOUNT BALANCES
Aston's $ 2,400
Carson Company 3,100
Diana Fenn Company 13,600
Maria Lopez 14,000
Oster Supplies 8,380
Total $41,480
Ex. 67
On December 1, the accounts receivable control account balance in the general ledger of Mitus
Company was $9,000. The accounts receivable subsidiary ledger contained the following detailed
customer balances: Acme $1,500, Baker $2,100, Fare $2,600, and Grote $2,800. The following
information is available from the company's special journals for the month of December:
Cash Receipts Journal: Cash received from Farr $1,900, from Acme $1,600, from Santos $1,700,
and from Baker $1,800.
Sales Journal: Sales to Santos $2,300, to Fare $1,700, to Acme $2,300, and to Grote $2,400.
Additionally, Fare returned defective merchandise for credit for $900. Acme returned defective
merchandise for $600 which he had purchased for cash.
Instructions
(a) Using T-accounts for Accounts Receivable Control and the detail customer accounts, post
the activity for the month of December.
(b) Reconcile the accounts receivable control account with the subsidiary ledger by preparing a
detail list of customer balances at December 31.
Answer: N/A, SO: 1, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
AICPA-PC: Problem Solving/Decision Making, IMA: Business Applications, Sector: General, IFRS: No

(a) Control Account: Accounts Receivable
9,000 (CR) 7,000
(SJ) 8,700 (G) 900
Bal. 9,800
Subsidiary Accounts:
Acme Baker
1,500 (CR) 1,600 2,100 (CR) 1,800
(S) 2,300 Bal. 300
Bal. 2,200
Fare Grote
2,600 (CR) 1,900 2,800
(S) 1,700 (G) 900 (S) 2,400
Bal. 1,500 Bal. 5,200
Santos
(S) 2,300 (CR) 1,700
Bal. 600
Solution 67 (cont.)
(b) Listing of accounts receivable at end of the month:

Acme $2,200
Baker 300
Fare 1,500
Grote 5,200
Santos 600
Total $9,800 Accounts receivable balance
Ex. 68
Gates Company maintains four special journals and a general journal to record its transactions.
Using the code below, indicate in the space provided the appropriate journal for recording the
transactions listed.
Code Journals
S Sales journal
CR Cash receipts journal
CP Cash payments journal
P Single-column purchases journal
G General journal
_____ 1. Shareholders invested cash in the business in exchange for ordinary shares.
_____ 2. Purchased store supplies on account.
_____ 3. Sold merchandise to customer on account.
_____ 4. Purchased a 2-year fire insurance policy for cash.
_____ 5. Received a check from a customer as payment on account.
_____ 6. Paid for store supplies purchased in transaction 2.
_____ 7. Purchased merchandise on account.
_____ 8. Issued a credit memorandum to a customer who returned defective merchandise
previously sold on account.
_____ 9. Purchased office equipment for cash.
_____ 10. Made an adjusting entry for store supplies used during the period.
Answer: N/A, SO: 2, Bloom: C, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement, AICPA-
1. CR 6. CP
2. G 7. P
3. S 8. G
4. CP 9. CP
5. CR 10. G
Ex. 69
Sasser Company uses a sales journal, a cash receipts journal, and a general journal to record
transactions with its customers. Record the following transactions in the appropriate journals. The
cost of all merchandise sold was 70% of the sales price.
July 2 Sold merchandise for $18,000 to B. Stine on account. Credit terms 2/10, n/30. Sales
invoice No. 100.
July 5 Received a check for $800 from R. Hyatt in payment of his account.
July 8 Sold merchandise to F. Wendel for $700 cash.
July 10 Received a check in payment of Sales invoice No. 100 from B. Stine minus the 2%
discount.
July 15 Sold merchandise for $9,000 to J. Nott on account. Credit terms 2/10, n/30. Sales
invoice No. 101.
July 18 Borrowed $25,000 cash from United Bank signing a 6-month, 10% note.
July 20 Sold merchandise for $15,000 to C. Karn on account. Credit terms 2/10, n/30. Sales
invoice No. 102.
July 25 Issued a credit memorandum for $600 to C. Karn as an allowance for damaged
merchandise previously sold on account.
July 31 Received a check from J. Nott for $5,000 as payment on account.
SASSER COMPANY
Sales Journal
S1
——————————————————————————————————————————
Invoice Acct. Rec. Dr. COGS Dr.
Date Account Debited No. Ref. Sales Cr. Mer. Inv. Cr.
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
SASSER COMPANY
General Journal
G1
——————————————————————————————————————————
Date Explanations Ref. Debit Credit
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
——————————————————————————————————————————
Ex. 69 (cont.)
SASSER COMPANY
Cash Receipts Journal
CR1
———————————————————————————————————————————
Sales Accounts Other COGS Dr.
Accounts Cash Discounts Rec. Sales Accounts Mer. Inv. Cr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
Answer: N/A, SO: 2, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
SASSER COMPANY
Sales Journal
S1
———————————————————————————————————————————
Invoice Acct. Rec. Dr. COGS Dr.
Date Account Debited No. Ref. Sales Cr. Mer. Inv. Cr.
———————————————————————————————————————————
July 2 B. Stine 100 18,000 12,600
———————————————————————————————————————————
July 15 J. Nott 101 9,000 6,300
———————————————————————————————————————————
July 20 C. Karn 102 15,000 10,500
———————————————————————————————————————————
SASSER COMPANY
General Journal
G1
———————————————————————————————————————————
Date Explanation Ref. Debit Credit
———————————————————————————————————————————
July 25 Sales Returns and Allowances 600
———————————————————————————————————————————
Accounts Receivable—C. Karn 600
———————————————————————————————————————————
Solution 69 (cont.)
SASSER COMPANY
Cash Receipts Journal
CR1
———————————————————————————————————————————
Sales Accounts Other
Accounts Cash Discounts Rec. Sales Accounts COGS Dr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr. Mer. Inv. Cr.
———————————————————————————————————————————
July 5 R. Hyatt 800 800
———————————————————————————————————————————
July 8 Sales 700 700 490
———————————————————————————————————————————
July 10 B. Stine 17,640 360 18,000
———————————————————————————————————————————
July 18 Notes Pay. 25,000 25,000
———————————————————————————————————————————
July 31 J. Nott 5,000 5,000
———————————————————————————————————————————
Ex. 70
Ward Company uses a single-column purchases journal, a cash payments journal, and a general
journal to record transactions with its suppliers and others. Record the following transactions in
the appropriate journals.
Transactions
Oct. 5 Purchased merchandise on account for $10,000 from Groton Company. Terms:
2/10, n/30; FOB shipping point.
Oct. 6 Paid $7,200 to Federated Insurance Company for a two-year fire insurance policy.
Oct. 8 Purchased store supplies on account for $700 from Flynn Supply Company. Terms:
2/10, n/30.
Oct. 11 Purchased merchandise on account for $14,000 from Buehler Corporation. Terms:
Oct. 13 Issued a debit memorandum for $5,000 to Buehler Corporation for merchandise
purchased on October 11 and returned because of damage.
Oct. 15 Paid Groton Company for merchandise purchased on October 5, less discount.
Oct. 16 Purchased merchandise for $8,000 cash from Clifford Company.
Oct. 21 Paid Buehler Corporation for merchandise purchased on October 11, less
merchandise returned on October 13, less discount.
Oct. 25 Purchased merchandise on account for $22,000 from Dooley Company. Terms:
Oct. 31 Purchased office equipment for $30,000 cash from Paten Office Supply Company.
Ex. 70 (cont.)
WARD COMPANY
Purchases Journal
P1
———————————————————————————————————————————
Merchandise Inv. Dr.
Date Account Credited Ref. Accounts Payable Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
WARD COMPANY
General Journal
G1
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
WARD COMPANY
Cash Payments Journal
CP1
———————————————————————————————————————————
Other Accounts Merchandise
Accounts Accounts Payable Inventory Cash
Date Debited Ref. Dr. Dr. Cr. Cr.
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
———————————————————————————————————————————
Answer: N/A, SO: 2, Bloom: AP, Difficulty: Hard, Min: 15, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement, AICPA-

WARD COMPANY
Purchases Journal
P1
———————————————————————————————————————————
Merchandise Inv. Dr.
Date Account Credited Ref. Accounts Payable Cr.
———————————————————————————————————————————
Oct. 5 Groton Company 10,000
———————————————————————————————————————————
Oct. 11 Buehler Corporation 14,000
———————————————————————————————————————————
Oct. 25 Dooley Company 22,000
———————————————————————————————————————————
WARD COMPANY
General Journal
G1
———————————————————————————————————————————
———————————————————————————————————————————
Oct. 8 Store Supplies 700
———————————————————————————————————————————
Accounts Payable—Flynn Supply Company 700
———————————————————————————————————————————
Oct. 13 Accounts Payable—Buehler Corp. 5,000
———————————————————————————————————————————
Merchandise Inventory 5,000
———————————————————————————————————————————
WARD COMPANY
Cash Payments Journal
CP1
———————————————————————————————————————————
Accounts Accounts Payable Inventory Cash
Date Debited Ref. Dr. Dr. Cr. Cr.
———————————————————————————————————————————
Oct. 6 Prepaid Insurance 7,200 7,200
———————————————————————————————————————————
Oct. 15 Groton Company 10,000 200 9,800
———————————————————————————————————————————
Oct. 16 Merchandise Inventory 8,000 8,000
———————————————————————————————————————————
Oct. 21 Buehler Corp. 9,000 180 8,820
———————————————————————————————————————————
Oct. 31 Office Equipment 30,000 30,000
———————————————————————————————————————————
Ex. 71
Sandy Company uses both special journals and a general journal. The company accountant
made the following errors during July.
1. Incorrectly added the credit entries in a customer's account in the accounts receivable
subsidiary ledger. The total was listed as $2,690; it should have been $2,790.
2. A remittance of $400 from Tom Short was correctly recorded in the cash receipts journal,
but the amount was posted incorrectly to the account of customer Will Short in the
subsidiary ledger.
3. A purchase of merchandise on account from Easton Company for $1,000 was incorrectly
entered in the purchases journal at $10,000.
4. In the sales journal, the entries were incorrectly added for the month. The monthly total
was listed as $24,820; it should have been $24,280.
Instructions
Indicate how each of the above errors might be discovered.
1. The subsidiary ledger will not agree with the general ledger control account. Refooting the
subsidiary ledger should locate the error.
2. The error will be discovered when the customer receives his statement. Mr. Tom Short's
statement will indicate a balance of $400 more than he owes.
3. The error may not be discovered until the payment is sent to the supplier. Then, hopefully
Easton will send back the excess payment. Additionally, analysis of gross profit may indicate
it is inordinately out of line with prior periods.
4. When the accounts receivable control account is reconciled with the accounts receivable
subsidiary ledger, it will be $540 higher than the subsidiary ledger. Refooting the sales journal
should then locate the error.
Ex. 72
Below are some typical transactions incurred by Harley Company.
_____ 1. Purchase of merchandise on account.

_____ 2. Collection on account from customers.
_____ 3. Payment of employee's wages.
_____ 4. Sales of merchandise for cash.
_____ 5. Close Income Summary to Retained Earnings.
_____ 6. Adjusting entry for depreciation on machinery.
_____ 7. Payment of creditors on account.
_____ 8. Purchase of office equipment on credit.
_____ 9. Sales discount taken on goods sold on credit.
_____ 10. Sales of merchandise on account.
_____ 11. Purchase of a delivery truck for cash.
_____ 12. Return of merchandise purchased on credit.
_____ 13. Payment of rent in advance.
_____ 14. Adjusting entry for accrued interest expense.
_____ 15. Purchase of office supplies for cash.
For each transaction, indicate by the code letter the appropriate journal where the transaction
would be journalized.
CR — Cash Receipts Journal

CP — Cash Payments Journal
S — Sales Journal
P — Single-Column Purchases Journal
G — General Journal

1. P 6. G 11. CP
2. CR 7. CP 12. G
3. CP 8. G 13. CP
4. CR 9. CR 14. G
5. G 10. S 15. CP
Ex. 73
Circle the correct answer to each situation.
(a) A sales journal will be used for:
Credit Sales Cash Sales Sales Discounts

Yes No Yes No Yes No
(b) A single-column purchases journal will be used for:

Purchase Returns
Cash Purchases Purchases on Account and Allowances
(c) A multiple-column purchases journal will be used for:

Supplies Purchased Equipment Purchases
Cash Purchases on Account on Account
(d) A cash payments journal will be used for:

Payments to Purchases Payment of
Creditors Discounts Dividends
(e) A cash receipts journal will be used for:

Sale of Shares Purchases Discounts Cash Sales
(a) Yes, No, No (d) Yes, Yes, Yes
(b) No, Yes, No (e) Yes, No, Yes
(c) No, Yes, Yes
Ex. 74
Listed below are various column headings that may appear in special journals. Using the
following code letters, identify for each column heading (1) the special journal where the column
heading would appear, and (2) whether the amounts entered under the column heading would be
posted in total, individually, or both in total and individually. (Note: column headings may appear
in more than one special journal)
Code: Special Journals Code: Posting

S = Sales journal I = Individual posting
P = Single-column purchases journal T = Total posting
CR = Cash receipts journal B = Both individual and total posting
CP = Cash payments journal
Heading Special Journal Posting
1. Accounts Payable—Cr. ____________ _____
2. Sales—Cr. ____________ _____
3. Sales Discounts—Dr. ____________ _____
4. Merchandise Inventory—Dr. ____________ _____
5. Cash—Cr. ____________ _____
6. Accounts Receivable—Dr. ____________ _____
7. Other Accounts—Cr. ____________ _____
8. Merchandise Inventory—Cr. ____________ _____
9. Accounts Receivable—Cr. ____________ _____
10. Accounts Payable—Dr. ____________ _____

Heading Special Journal Posting
1. Accounts Payable—Cr. P B
2. Sales—Cr. S, CR T
3. Sales Discounts—Dr. CR T
4. Merchandise Inventory—Dr. P, CP T
5. Cash—Cr. CP T
6. Accounts Receivable—Dr. S B
7. Other Accounts—Cr. CR I
8. Merchandise Inventory—Cr. CP, CR, S T
9. Accounts Receivable—Cr. CR B
10. Accounts Payable—Dr. CP B
Ex. 75
Horton Company uses four special journals, (cash receipts, cash payments, sales, and purchases
journal) in addition to a general journal. On November 1, 2011, the control accounts in the
general ledger had the following balances: Cash $12,000, Accounts Receivable $200,000 and
Accounts Payable $42,000. Selected information on the final line of the special journals for the
month of November is presented below:
Cash Receipts Journal:

Sales Accounts Other Accounts
Cash Discount Receivable Sales Cr. C. of G. S. Dr.
Dr. Dr. Cr. Cr. Acct. Ref. Amount Mer. Inv. Cr.
? $600 $6,400 $29,000 (X) $1,000 $17,400
Cash Payments Journal:

Other Accounts Accounts Office Store Merchandise
Dr. Payable Supplies Supplies Inventory Cash
Acct. Ref. Amount Dr. Dr. Dr. Cr. Cr.
(X) $1,600 ? $1,300 $1,100 $700 $18,600
Purchases Journal:
Accounts Merchandise Office Store Other Accounts
Payable Inventory Supplies Supplies Dr.
Cr. Dr. Dr. Dr. Acct. Ref. Amount
? $36,000 $800 $650 (X) $3,300
Additional Data:
The Sales Journal total was $45,000. A customer returned merchandise for credit for $360 and
Norton Company returned store supplies to a supplier for credit for $400.
Instructions
(a) Determine the missing amounts in the special journals.
(b) Determine the balances in the general ledger accounts (Cash, Accounts Receivable, and
Accounts Payable) at the end of November.

(a) The missing amounts can be determined by crossfooting the journals.
Cash Receipts
Credits ($6,400 + $29,000 + $1,000) $36,400
Debits 600
Cash debit $35,800
Cash Payments
Credits ($700 + $18,600) $19,300
Debits ($1,600 + $1,300 + $1,100) 4,000
Accounts payable debit $15,300
Purchases
Debits ($36,000 + $800 + $650 + $3,300) $40,750
Credits -0-
Accounts payable credit $40,750
(b) Cash Accounts Receivable

12,000 (CP) 18,600 200,000 (CR) 6,400
(CR) 35,800 (S) 45,000 (G) 360
Bal. 29,200 Bal. 238,240
Accounts Payable
(CP) 15,300 42,000
(G) 400 (P) 40,750
Bal. 67,050
Ex. 76
Easton Company began business on October 1. The sales journal, as it appeared at the end of
the month, follows:
SALES JOURNAL Page 1
———————————————————————————————————————————
Invoice Post.
Date Account Debited Number Ref. Amount
———————————————————————————————————————————
Oct. 5 Donna Miner 10001 275
11 Mike Barr 10002 335
16 Donna Miner 10003 818
19 Laura Cher 10004 147
26 Myron Silas 10005 1,184
2,759
1. Open general ledger T-accounts for Accounts Receivable (No. 112) and Sales (No. 401) and
an accounts receivable subsidiary T-account ledger with an account for each customer. Make
the appropriate postings from the sales journal. Fill in the appropriate posting references in
the sales journal above.
2. Prove the accounts receivable subsidiary ledger by preparing a schedule of accounts
receivable.
Answer: N/A, SO: 3, Bloom: AP, Difficulty: Hard, Min: 15, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement, AICPA-

1. SALES JOURNAL Page 1
———————————————————————————————————————————
Invoice Post
Date Account Debited Number Ref. Amount
———————————————————————————————————————————
Oct. 5 Donna Miner 10001  275
11 Mike Barr 10002  335
16 Donna Miner 10003  818
19 Laura Cher 10004  147
26 Myron Silas 10005  1,184
2,759
(112)/(401)
GENERAL LEDGER SUBSIDIARY LEDGER
Accounts Receivable 112 Barr, Mike

10/31 (S1) 2,759 10/11 (S1) 335
Sales 401 Cher, Laura

10/31 (S1) 2,759 10/19 (S1) 147
Miner, Donna
10/5 (S1) 275
10/16 (S1) 818
1,093
Silas, Myron
10/26 (S1) 1,184
2. SCHEDULE OF ACCOUNTS RECEIVABLE
Mike Barr $ 335

Laura Cher 147
Donna Miner 1,093
Myron Silas 1,184
Total Accounts Receivable $2,759
Ex. 77
CASH PAYMENTS JOURNAL Page 45
———————————————————————————————————————————
Ck. Account Post. Accounts Payable Inventory Cash
Date No. Debited Ref. Dr. Dr. Cr. Cr.
———————————————————————————————————————————
2011
Jan. 4 659 M. Tate (a) 4,000 40 3,960
11 660 Prepaid Rent (b) 1,000 1,000
13 661 Merch. Inv. (c) 565 565
14 662 Cash Dividends (d) 2,000 2,000
18 663 Welch (e) 1,300 1,300
20 664 Merch. Inv. (f) 450 450
29 665 Equipment (g) 3,400 3,400
7,415 5,300 40 12,675
(h) (i) (j) (k)
Using the cash payments journal above, identify each of the posting references indicated by a
letter, as representing:
(1) a posting to a general ledger account.
(2) a posting to a subsidiary ledger account.
(3) that no posting is required.
a. 2 g. 1
b. 1 h. 3
c. 1 i. 1
d. 1 j. 1
e. 2 k. 1
f. 1
Ex. 78
Shown below is a page from a special journal.
1. What is the name of this journal?
2. Give an explanation for each of the transactions in this journal.
3. Explain the following:
(a) the numbers under the bottom lines.
(b) the checks entered into the Post. Ref. column.
(c) the numbers 113 and 416 in the Post. Ref. column.
(d) the (x) below the Other Accounts column.
———————————————————————————————————————————
Sales Accounts Other COGS Dr.
Accounts Post Cash Discounts Receivable Sales Accounts Mer. Inv. Cr.
Date Credited Ref. Dr. Dr. Cr. Cr. Cr.
———————————————————————————————————————————
May 27 Ted Roth  980 20 1,000
28 Notes Receivable 113 3,000
Interest Revenue 416 3,360 360
29 370 370 260
31 Don Calb  400 400
5,110 20 1,400 370 3,360 260
(111) (412) (114) (411) (x) (505)(120)

1. Cash receipts journal.
2. May 27— Td Roth has paid for merchandise previously purchased on account. He is paying
within the discount period and taking the discount.
May 28— A note receivable has matured. Payment is received for the $3,000 face value and
$360 of interest revenue.
May 29— A cash sale of merchandise is made for $370. The cost of the merchandise sold
was $260.
May 31— Don Calb has paid $400 on account.
3. (a) The numbers in parentheses under the bottom line of the journal indicate that these
column totals have been posted to the general ledger accounts with these account
numbers.
(b) The checks in the posting reference column of the journal indicate that the accounts
receivable subsidiary account for that customer has been credited for the amount shown
in the accounts receivable column of this journal.
(c) The 113 indicates that account No. 113 in the general ledger, Notes Receivable, has
been credited for the $4,000. The 416 indicates that account No. 416 in the general
ledger, Interest Revenue, has been credited for $480.
(d) The (x) below the Other Accounts column indicates that this column total is not posted. All
the amounts in this column have already been posted individually to the appropriate
general ledger account.
COMPLETION STATEMENTS
79. The accounts receivable _____________ provides detailed information about customer
accounts which is summarized in one ______________ account in the general ledger.
Answer: N/A, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
80. If a certain type of transaction occurs with great frequency, it is more efficient to create a
______________ to record that type of transaction.
81. If a company maintains special journals, sales of merchandise on credit should be

recorded in a _______________ whereas sales of merchandise for cash should be
recorded in the _______________.
82. The use of special journals often saves time in the _______________ process.
83. The entries in the Accounts Receivable Credit column of the cash receipts journal must be
posted _______________ to the accounts in the accounts receivable subsidiary ledger
and in _______________ to the control account in the general ledger.
84. Transactions that cannot be entered in a special journal are recorded in the
_______________, and if control and subsidiary accounts are involved, there must be a
_______________ posting.
Answers to Completion Statements

79. subsidiary ledger, control
80. special journal
81. sales journal, cash receipts journal
82. posting
83. individually, total
84. general journal, dual
MATCHING
85. Match the items below by entering the appropriate code letter in the space provided.
A. Accounts payable ledger D. Subsidiary ledger

B. Columnar journal E. Control account
C. Special journals
_____ 1. A general ledger account that summarizes detailed information in a subsidiary ledger.
_____ 2. A subsidiary ledger that contains accounts with individual creditors.
_____ 3. A special journal with more than one column.
_____ 4. Detailed information about a group of accounts with a common characteristic.
_____ 5. Used to record high volume, similar type transactions.

Answers to Matching
1. E
2. A
3. B
4. D
5. C
SHORT-ANSWER ESSAY
S-A E 86
At the end of the month, the accountant for Slater Company prepared a schedule of accounts
receivable from the accounts receivable subsidiary ledger. Its total did not agree with the balance
in the Accounts Receivable control account in the general ledger. Briefly describe the procedure
that should be followed in reconciling the two balances.
Answer: N/A, SO: 3, Bloom: S, Difficulty: Medium, Min: 3, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
Measurement, AICPA-PC: Problem Solving/Decision Making, IMA: Business Applications, Sector: General, IFRS: No
Solution 86
The first step would be to go back and double check the total of the accounts receivable
subsidiary ledger. There may have been a math error which caused the total to be incorrect. If the
math is accurate, then the next step would be to review the postings in the accounts receivable
control account. This review includes checking both the accuracy of the math and the accuracy of
the posting from the journals. If the control account is correct, then the next step is to repeat the
procedure with each individual subsidiary account. If the error still has not been found, then the
final step is to look at the journals to see if there were any entries that failed to get recorded.

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APPENDIX E

SUBSIDIARY LEDGERS AND SPECIAL JOURNALS

SUMMARY OF QUESTIONS BY OBJECTIVES AND BLOOM’S TAXONOMY

SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE

Note: TF = True-False C = Completion Ma = Matching

CHAPTER STUDY OBJECTIVES

5. Control accounts are always located in the general ledger.

6. A control account and subsidiary ledger can be established for inventory.

7. A subsidiary ledger provides up-to-date information on specific account balances.

15. A single-column purchases journal is used to record purchases of merchandise on

Answers to True-False Statements

MULTIPLE CHOICE QUESTIONS

22. A subsidiary ledger is

23. A subsidiary ledger frees the general ledger from details of

24. A company would not likely use subsidiary ledgers for

25. Postings are made daily to subsidiary ledgers so that

26. A sales journal is used to record

27. If a transaction cannot be recorded in a special journal

29. A single-column purchases journal indicates that

33. Which of the following is not a special journal?

34. Correcting entries are journalized in

35. Adjusting entries are recorded

36. If a transaction cannot be recorded in a special journal, it is

38. The entries in a sales journal will show

39. Entries in a sales journal

40. Journalizing in a sales journal will not

42. Cash from sales of merchandise will be recorded in the

44. Entries in a sales journal are

46. The use of special journals to record transactions

57. The process of totaling the columns of a journal is termed

59. Crossfooting a cash receipts journal means

63. Entries in the cash payments journal are made from

Answers to Multiple Choice Questions

Name Carson Company

Name Diana Fenn Company

Name Maria Lopez

Name Oster Supplies

Solution 66 (10 min.)

Diana Fenn Company

ACCOUNTS PAYABLE SUBSIDIARY LEDGER ACCOUNT BALANCES

Solution 67 (10 min.)

(b) Listing of accounts receivable at end of the month:

Solution 69 (15 min.)

Solution 70 (15 min.)

Solution 71 (10 min.)

_____ 1. Purchase of merchandise on account.

CR — Cash Receipts Journal

Solution 72 (10 min.)

(a) A sales journal will be used for:

Credit Sales Cash Sales Sales Discounts

(b) A single-column purchases journal will be used for:

(c) A multiple-column purchases journal will be used for:

(d) A cash payments journal will be used for:

(e) A cash receipts journal will be used for:

Code: Special Journals Code: Posting

Heading Special Journal Posting

1. Accounts Payable—Cr. ____________ _____

2. Sales—Cr. ____________ _____

3. Sales Discounts—Dr. ____________ _____

1. Accounts Payable—Cr. ________ _

2. Sales—Cr. ________ _

3. Sales Discounts—Dr. ________ _

4. Merchandise Inventory—Dr. ________ _

5. Cash—Cr. ________ _

6. Accounts Receivable—Dr. ________ _

7. Other Accounts—Cr. ________ _

8. Merchandise Inventory—Cr. ________ _

9. Accounts Receivable—Cr. ________ _

10. Accounts Payable—Dr. ________ _