614 PART 3 Accounting for a Merchandising Business
COMPREHENSIVE Question 2: ACCOUNTING CYCLE
WITH SUBSIDIARY LEDGERS, PART 1
During the second half of December 20-1, TJ’s Specialty Shop engaged in the following
Dec. 16 Received payment from Lucy Greene on account, $1,960.
16 Sold merchandise on account to Kim Fields, $160, plus sales tax of $8. Sale No. 640.
17 Returned merchandise to Evans Essentials for credit, $150.
18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of $1,250, less the credit received on December 17.
19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31. Sale No. 641.
22 Received payment from John Dempsey on account, $1,560.
23 Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies)
24 Purchased merchandise on account from West Wholesalers, $1,200.
Invoice No. 465, dated December 24, terms n/30.
26 Purchased merchandise on account from Nathen Co., $800.
Invoice No. 817, dated December 26, terms 2/10, n/30.
27 Issued Check No. 815 in payment of utilities expense for the month of December, $630.
27 Sold merchandise on account to John Dempsey, $2,020, plus tax of $101.
Sale No. 642.
29 Received payment from Martha Boyle on account, $2,473.
29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week
period ending December 28, $1,100.
30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, $200.
As of December 16, TJ’s account balances were as follows:
Account Account No. Debit Credit
Cash 101 $ 9,705
Accounts Receivable 122 10,256
Merchandise Inventory 131 21,800
Supplies 141 1,035
Prepaid Insurance 145 1,380
Land 161 8,700
Building 171 52,000
Accum. Depr.––Building 171.1 $ 9,200
Store Equipment 181 28,750
Accum. Depr.––Store Equipment 181.1 9,300
Accounts Payable 202 3,600
Wages Payable 219
Sales Tax Payable 231 1,378
Mortgage Payable 251 12,525
Tom Jones, Capital 311 90,000
Tom Jones, Drawing 312 8,500
Income Summary 313
Sales 401 124,900
Comprehensive Question 2 Accounting Cycle with Subsidiary Ledgers, Part 1 615
Sales Returns and Allowances 401.1 $ 1,430
Purchases 501 64,400
Purchases Returns and Allowances 501.1 $ 460
Purchases Discounts 501.2 698
Freight-In 502 175
Wages Expense 511 26,100
Advertising Expense 512 4,700
Supplies Expense 524
Telephone Expense 525 2,180
Utilities Expense 533 6,900
Insurance Expense 535
Depr. Expense—Building 540
Depr. Expense––Store Equipment 541
Miscellaneous Expense 549 2,700
Interest Expense 551 1,350 000 0000
TJ’s also had the following subsidiary ledger balances as of December 16:
Accounts Receivable Ledger
12 Jude Lane
Hartford, CT06117 $3,796
52 Juniper Road
Hartford, CT06118 2,100
700 Hobbes Dr.
Avon, CT06108 1,560
5200 Hamilton Ave.
Hartford, CT06117 ––
236 Bally Lane
Simsbury, CT06123 2,800
Accounts Payable Ledger
34 Harry Ave.
East Hartford, CT05234 $3,600
1009 Drake Rd.
Farmington, CT06082 ––
43 Lucky Lane
Bristol, CT06007 ––
888 Anders Street
Newington, CT06789 ––
At the end of the year, the following adjustments (a)–(g) need to be made:
(a, b) Merchandise inventory as of December 31,
(c) Unused supplies on hand, $525.
(d) Unexpired insurance on December 31, $1,000.
(e) Depreciation expense on the building for the
(f) Depreciation expense on the store equipment for
the year, $450.
(g) Wages earned but not paid as of December 31,
Requirements and working papers for this problem are provided in two versions:
General Journal based and Special Journals based. Complete the version as directed
by your instructor.
REQUIRED—GENERAL JOURNAL REQUIRED—SPECIAL JOURNALS
For those not using working papers: For those not using working papers:
1. If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the December 16 balance of each of the accounts, with a check mark in the Posting Reference column.
1. If you are not using the working papers:
a. Open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of
December 16. Enter the following December 16 balances in the general ledger accounts and
place a check mark in the Posting Reference column.
Cash $ 11,500
Accounts Receivable 7,823
Accounts Payable 6,850
Sales Tax Payable 933
Purchases Discounts 575
b. Enter the December 16 balances in the rest of the general ledger accounts, as indicated in the trial balance, and place a check mark in the Posting Reference column.
c. Enter the December 16 balances in the accounts receivable and accounts payable ledgers, as
indicated in the subsidiary ledger account listings, and place a check mark in the Posting
Reference column. d. Insert Dec. 1–15, Cumulative Amount, and the
following amounts in the special journal columns.
Sales Journal: Accounts Receivable Dr., 4,263;
Sales Cr., 4,060; Sales Tax Payable Cr., 203.
Cash Receipts Journal: Accounts Receivable
Cr., 1,830; Sales Cr., 4,840; Sales Tax Pay.
Cr., 242; Cash Dr., 6,912.
Purchases Journal: Purchases Dr./Accts. Pay.
Cash Payments Journal: General Dr., 1,680;
Accounts Payable Dr., 7,150; Purchases
Discounts Cr., 123; Cash Cr., 8,707.
For working paper users and nonusers: For working paper users and nonusers:
2. Enter transactions for the second half of December in the general journal. Post immediately to the accounts receivable and accounts payable ledgers.
2. Enter transactions for the second half of December in the proper journals. If you are using the working papers, the cumulative amount of entries in the special journals for December 1–15 has been entered in these journals for you.
Post immediately to the Accounts receivable and accounts payable ledgers.
3. Post from the journal to the general ledger. 3. Post from the journals to the general ledger. Post the journals in the following order: general, sales,
purchases, cash receipts, and cash payments.