Complete Questions P 7-5 on pages 353 to 354 of Horngren’s Financial Accounting 8th Ed.
P7-5 Using all the journals, posting and balancing the ledgers [30-40 mini]
Prudhoe Bay uses the perpetual inventory system and makes all credit sales on terms of 2/10, n/30. During March, Prudhoe Bay completed these transactions:
Mar 2 Issued invoice no. 191 for sale on credit to L. E. Wooten, $2350. Prudhoe Bay’s cost of this inventory was $1 390.
3 Purchased inventory on credit terms of 3/10, n/60 from Delwood Plaza, $5900.
4 Sold inventory for cash, $3410 (cost, $1 820).
5 Issued cheque no. 473 to purchase furniture for cash, $1 080.
8 Collected interest revenue of $120.
9 Issued invoice no. 192 for sale on credit to Canberra Associates, $6250 (cost, $3 300).
10 Purchased inventory for cash, $770, issuing cheque no. 474.
12 Received $2303 cash from L. E. Wooten in full settlement of her account receivable, net of the discount, from the sale of 2 March.
13 Issued cheque no. 475 to pay Delwood Plaza net amount owed from 3 March.
13 Purchased supplies on credit from Houghton Supplies, $680. Terms were net end-of-month.
15 Sold inventory on credit to J. R. Wakeland, issuing invoice no. 193 for $740 (cost, $410).
17 Issued credit memo to J. R. Wakeland for $740 for defective goods returned by Wakeland. Also accounted for receipt of the inventory at cost.
18 Issued invoice no. 194 for credit sale to L. E. Wooten, $1 825 (cost, $970).
19 Received $6 125 from Canberra in full settlement of its account receivable from 9 March.
20 Purchased inventory on credit terms of net 30 from Jasper Sales, $2 150.
22 Purchased furniture on credit terms of 3/10, n/60 from Delwood Plaza, $775.
22 Issued cheque no. 476 to pay for insurance coverage, debiting Prepaid insurance for $1 345.
24 Sold supplies to an employee for cash of $80, which was Prudhoe Bay’s cost.
25 Issued cheque no. 477 to pay electricity and gas, $380.
28 Purchased inventory on credit terms of 2/10, n/30 from Houghton Supplies, $420.
29 Returned damaged inventory to Houghton Supplies, issuing a debit memo for $420. 29 Sold goods on credit to Canberra Associates, issuing invoice no. 195 for $1 800 (cost, $1 000).
30 Issued cheque no. 478 to pay Houghton Supplies on account from 13 March.
31 Received cash in full from L. E. Wooten on credit sale of 18 March. There was no discount. 31 Issued cheque no. 479 to pay monthly salaries of $1 100.
1 Open four-column general ledger accounts using Prudhoe Bay’s account numbers that follow.
|Accounts receivable||112||Sales discounts||412|
|Supplies||116||Sales returns and allowances||413|
|Prepaid insurance||117||Interest revenue||419|
|Inventory||118||Cost of sales||511|
|Accounts payable||211||Electricity and gas expense||541|
2 Open these accounts in the subsidiary ledgers: Accounts receivable ledger—Canberra Associates, J. R. Wakeland and L. E. Wooten; Accounts payable ledger—Delwood Plaza, Houghton Supplies and Jasper Sales.
3 Enter the transactions in a sales journal (page 8), a cash receipts journal (page 3), a purchases journal (page 6), a cash payments journal (page 9) and a general journal (page 4), as appropriate.
4 Post daily to the accounts receivable ledger and to the accounts payable ledger. On 31 March, post to the general ledger.
5 Total each column of the special journals. Show that total debits equal total credits in each special journal.
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