Week 7

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Allied American University

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This paper was prepared for [INSERT COURSE NAME], [INSERT COURSE ASSIGNMENT] taught by [INSERT INSTRUCTOR’S NAME].

PART I: SHORT RESPONSE

Directions: Please respond to each of the following questions. Write at least 3 to 5 sentences for each question.

1. Explain why a business would choose to use special journals. Must a business open all four special journals in order to use special journals?

2. What are the advantages of using a cash receipts journal and cash payments journal?

PART II: APPLICATION

Directions: Please answer each of the following questions. Show your work as necessary.

1. The following transactions were completed by Figureroa Supplies during the first half of May. Terms of sale are 2/10, n/30.

May 2	Sold merchandise on account to Riggs Company, invoice no. 253, $2,300.
4	Bought merchandise on account from Smokey Supplies, invoice no. 1190, $4,720; terms 2/10, n/60; dated May 2; FOB shipping point, freight prepaid and added to the invoice, $135 (total $4,855).
7	Issued credit memo no. 28 to Riggs Company, $250, for merchandise returned.
8	Bought merchandise on account from Gamble Supplies, invoice no. 1233, $845; terms 1/10, n/30; dated May 6.
11	Received credit memo no. 178, $89, from Gamble Supplies for damaged merchandise.
11	Cash sales for May 1 through May 10, $5,278.
13	Issued Ck. No. 3499, $1,666, to O'Neal Company, in payment of invoice no. C1272 for $1,700 less discount.

Instructions:

Record the transactions for the first half of May, using a general journal, page 8.

GENERAL JOURNAL	PAGE	8
Date	Description	Post. Ref.	Debit	Credit
20--
May	2	Accounts Receivable, Riggs Company
		Sales
		Sold merchandise to Riggs
		Company, invoice no. 253.

	4	Purchases
		Freight In
		Accounts Payable, Smokey Supplies
		Purchased merchandise from
		Smokey Supplies, invoice no.
		1190, invoice dated May 2, terms
		2/10, n/60.

	7	Sales Returns and Allowances
		Accounts Receivable, Riggs
		Company
		Issued credit memo no. 28.

	8	Purchases
		Accounts Payable, Gamble Supplies
		Purchased merchandise from
		Gamble Supplies, invoice no.
		1233, invoice dated May 6, terms
		1/10, n/30.

	11	Accounts Payable, Gamble Supplies
		Purchases Returns and Allowances
		Credit memo no. 178 for
		damaged merchandise.

	11	Cash
		Sales
		Cash sales, May 1-10.

	13	Accounts Payable, O'Neal Company
		Purchases Discounts
		Cash
		Paid invoice no. C1272, Ck. No.
		3499.

2. The following transactions were completed by Figureroa Supplies during the second half of May. Terms of sale are 1/10, n/30.

May 17	Received check from Petty, Inc., $841.50, in payment of $850 invoice less discount.
18	Issued Ck. No. 3500, $748.44, to Gamble Supplies, in payment of $756 invoice less discount.
20	Borrowed $5,000 from First Bank, signing a promissory note for cash.
21	Cash sales for May 11 through May 20, $5,098.
22	Sold merchandise to G. Johnson, invoice no. 278, $225. Johnson used a credit card. The credit card fee is 1.5 percent.
26	Issued Ck. No. 3501, $154, to S. Forbert for miscellaneous expenses not recorded previously.
30	Received and paid bill for advertising in the Daily News, $375, Ck. No. 3502.
31	Cash sales for May 21 through May 31, $5,768.
31	Issued Ck. No. 3503, $5,300.62, for salaries for the month.

Instructions:

Record the transactions for the second half of May, using a cash receipts journal, page 13, or a cash payments journal, page 19.

CASH RECEIPTS JOURNAL	PAGE	13

Date	Account Credited	Post. Ref.	Cash Debit	Credit Card Expense Debit	Sales Discounts Debit	Accounts Receivable Credit	Sales Credit	Other Accounts Credit
20—
May	17	Petty, Inc.
	20	Notes Payable
	21	---------------
	22	---------------
	31	---------------

CASH PAYMENTS JOURNAL	PAGE	19

Date	Ck. No.	Account Debited	Post. Ref.	Other Accounts Debit	Accounts Payable Debit	Purchases Discounts Credit	Cash Credit
20—
May	18	3500	Gamble Supplies
	26	3501	Miscellaneous Expense
	30	3502	Advertising Expense
	31	3503	Salaries Payable

3. The following transactions were completed by Fox and Company during the second half of December for the current year. Terms of sale are 2/10, n/30 using a periodic inventory system.

Dec. 11	Sold merchandise on account to Bear, Inc., $875, invoice 222.
14	Bought merchandise on account from Bobcat Suppliers, $335; terms 1/10, n/30, FOB shipping point, invoice 535.
15	Paid Roadrunner Freight for freight charges on merchandise purchased from Bobcat Suppliers, $78, Ck. No. 792.
18	Received payment in full from Bear, Inc.
19	Returned $50 of defective merchandise to Bobcat Suppliers, credit memo 25.
20	Cash sales for December 1 through 7, $2,925.
21	Paid weekly wages, $1,272, Ck. No.793, previously recorded.
23	Sold merchandise on account to Deer Company, $1,975, invoice 223, including sales tax of $75.
23	Bought merchandise on account from Elk, Inc., $675, terms 2/10, n/60, FOB Denver, including prepaid and added to the invoice, $125 for a total of $800.
24	Issued Ck. No. 794 to Bobcat Suppliers for invoice 535 to pay in full.
25	Issued credit memo 65 to Deer Company for merchandise returned from sale on the 13th, $203.
25	K. Furr, the owner, withdrew $500 for personal use, Ck. No. 795.

Instructions:

1.	Journalize the transactions for December in the appropriate journals.
2.	Total and rule the journals.
3.	Prove the equality of the debit and credit totals.

1-2.)

SALES JOURNAL

Date	Inv. No.	Customer’s Name	Post. Ref.	Accounts Receivable Debit	Sales Tax Payable Credit	Sales Credit
20—
Dec.	11	222	Bear, Inc.
	23	223	Deer Company
	31		Totals

PURCHASES JOURNAL

Date	Supplier’s Name	Inv. No.	Terms	Post. Ref.	Accounts Payable Credit	Freight In Debit	Purchases Debit
20—
Dec.	14	Bobcat Suppliers
	23	Elk, Inc.
	31	Totals

CASH RECEIPTS JOURNAL

Date	Account Credited	Post. Ref.	Cash Debit	Credit Card Expense Debit	Sales Discounts Debit	Accounts Receivable Credit	Sales Credit	Other Accounts Credit
20—
Dec.	18	Bear, Inc.
	20	-----------
	31	Totals

CASH PAYMENTS JOURNAL

Date	Ck. No.	Account Debited	Post. Ref.	Other Accounts Debit	Accounts Payable Debit	Purchases Discounts Credit	Cash Credit
20—
Dec.	15	792	Freight In
	21	793	Wages Payable
	24	794	Bobcat Suppliers
	25	795	K. Furr, Drawing
	31

GENERAL JOURNAL
Date	Description	Post. Ref.	Debit	Credit
20--
Dec.	19	Accounts Payable - Bobcat Suppliers
		Purchases Returns and Allowances
		record return cm 28

	25	Sales Returns and Allowances
		Accounts Receivable - Deer Company
		record return cm 65

3.)

SALES JOURNAL	PURCHASES JOURNAL
Debit Totals		Credits Total	Debit Totals	Credits Total

CASH RECEIPTS JOURNAL	CASH PAYMENT JOURNAL
Debit Totals		Credits Total	Debit Totals	Credits Total