ACCT 2001 Chapter : Ch3 (brief)

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15 Mar 2019

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Begins with a source document, each transaction is analyzed and entered into the journal. Journal- where a transaction is recorded before its transferred into the accounts. Ledger- entire group of accounts maintained by a company. Genereal ledger- contains all assets, liabilities, and stockholder s equity. Posting- process of transferring the journal entries into the ledger. Then the trail balance- a list of accounts and balances at the given time. The debits and credits are equal but there can still be mistakes.

Related Questions

Record (journalize) transactions in the books) Doherty Tree Cellular, Inc.,
completed the following transactions during April 2012, its first month of operations:

Apr 1	Received $19,800 and issued common stock.
2	Purchased $200 of office supplies on account.
4	Paid $14,300 cash for land to use as a building site.
6	Performed service for customers and received cash of $2,600.
9	Paid $100 on accounts payable.
17	Performed service for UFax on account totaling $1,900.
23	Collected $100 from UFax on account.
30	Paid the following expenses: salary, $1,900; rent, $1,300.

1.Record the transactions in the journal of Doherty Tree Cellular, Inc. Key transactions by date and include an explanation for each entry.

CLASS, LETS TAKE RECORDING STEP 1 STEP FURTHER - THE TRIAL BALANCE

Now that we know what the accounting equation is and we have some experience with Journal Entries.

Letâs review the process and take the recording process one step further.

STEP 1) Analyze transaction: As an actual accountant, we determine if a transaction should be recorded by analyzing source documents.

For example: If the Company makes a sale; they will complete a sales document (or sales
tape is generated). If the Company purchases something a purchase invoice is forwarded to Accounting. There is a different type of source documents for different types of transactions.

Note: as an accountant a large part of the battle is making sure there is a source document for all transactions and that all departments capture and forward these documents to Accounting!

STEP 2) Accounting prepares journal entry: for each transaction based on GAAP. (Mostly using the constraints, assumptions, principles we've discussed: materiality, conservatism, matching, revenue recognition, etc).

The entry is entered into a Journal for those types of Transactions (There is a Sales Journal, A/P Journal for purchases, Payroll journal for payroll related entries, General Journal for misc. entries., etc.

Journal entries are made in the proper form, and include: date, description, indent of credit side of each entry.

STEP 3) The Journal entry is posted to General ledger; which includes all activity for all accounts.

However, the recording process is not over. Letâs talk about the trial balance. Please answer ALL however only post ONE question at a time to allow more to participate.

1) Why do we prepare it?

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2.5. Match the following terms with their definitions.

Term

_____a. dataprocessing cycle

_____b. source documents

_____c. turnaround documents

_____d. source data automation

_____e. general ledger

_____f. subsidiary ledger

_____g. control account

_____h. coding

_____i. sequence code

_____j. block code

_____k. groupcode

_____l. mnemonic code

_____m. chart ofaccounts

_____n. general journal

_____o. specialized journal

_____p. audittrail

_____q. entity

_____r. attribute

_____s. field

_____t. record

_____u. datavalue

_____v. master file

_____w. transactionfile

_____x. database

_____y. batchprocessing

_____z. online, real-time processing

Definition

1. Contains summary-level data for every asset, liability, equity,revenue, and expense account

2. Items are numbered consecutively to account for all items; missingitems cause a gap in the numerical sequence

3. Path of a transaction through a data processing system from pointof origin to final output, or backward from final output to pointof origin

4. List of general ledger account numbers; allows transaction data tobe coded, classified, and entered into proper accounts; facilitatespreparation of financial statements and reports

5. Contents of a specific field, such as âGeorgeâ in a name field

6. Portion of a data record that contains the data value for aparticular attribute, like a cell in a spreadsheet

7. Company data sent to an external party and then returned to thesystem as input

8. Used to record infrequent or nonroutine transactions

9. Characteristics of interest that need to be stored

10. Thesteps a company must follow to efficiently and effectively processdata about its transactions

11. Something about which information is stored

12. Storescumulative information about an organization; like a ledger in amanual AIS

13. Contains detailed data for any general ledger account with manyindividual subaccounts

14. Contains records of individual business transactions that occurduring a specific time period

15. Updating each transaction as it occurs

16. Devicesthat capture transaction data in machine-readable form at the timeand place of their origin

17. Used torecord large numbers of repetitive transactions

18. Set ofinterrelated, centrally coordinated files

19. Two ormore subgroups of digits are used to code items

20. Updating done periodically, such as daily

21. Systematic assignment of numbers or letters to items to classifyand organize them

22. Lettersand numbers, derived from the item description, are interspersed toidentify items; usually easy to memorize

23. Initialrecord of a transaction that takes place; usually recorded onpreprinted forms or formatted screens

24. Fieldscontaining data about entity attributes; like a row in aspreadsheet

25. Sets ofnumbers are reserved for specific categories of data

26. Thegeneral ledger account corresponding to a subsidiary ledger, wherethe sum of all subsidiary ledger entries should equal the amount inthe general ledger account

fuchsiahorse793

Narrative andInstructions

Rockford Corporation is awholesale plumbing supply distributor. The corporation wasorganized
in 1981, under the laws of theState of Illinois, with an authorized capitalization of 10,000shares
of no-par common stock with astated value of $18 per share. The common stock is sold overthe
the counter in the local area.You have been hired as of Thursday, December 25, 2014, to replacethe
controller, who has resigned.As controller, you are responsible for the corporation'saccounting
recrods, preparation of thefinancial statements, safeguarding the corporate assets, andproviding
management with financialinformation to set prices and to monitor and controloperations.

Rockford Corporation closesits books annually on December 31 but prepares financialstatements
quarterly. Adjusting entriesare posted to the general ledger only at year-end; at the end ofthe
first, second, and thirdquarter the adjustments are entered only on a work sheet, not inthe general
ledger. Therefore, theadjusting entries to be recorded on December 31 are annualadjustments that
you must journalize and thepost to the general ledger accounts before preparing thefinancial
statements.

Rockford Corporation maintainsa perpetual inventory system and takes a physical count eachyear
to adjust the inventorycarrying amount. Purchases are recorded at the gross amount(discounts
taken are recognized at thedate of payment) of the supplier's invoice, and the terms varywith
each supplier. Sales onaccount are subject to terms of 1/10, n/30. Discounts are taken andgranted
only when the terms are met.The cost of all inventory sold in December was 65% of the salesprice.
The corporation uses thefollowing journals and ledgers:

Journals
1. A sales journal (S) - torecord sales of merchandise on account.
2. A purchase journal (P)- torecord purchases of merchandise on account.
3. A cash receipts journal(CR) - to record all cash receipts.
4. A cash disbursementsjournal (CD) - to record all cash payments.
5. A general journal (J) - torecord all transacitons that cannot be recorded in the otherjournals.

Ledgers
1. A general ledger
2. An accounts receivablesubsidiary ledger.
3. An accounts payablesubsidiary ledger.

In recording salestransactions, each sale should be posted on the day of the saledirectly to the
customer's account in thesubsidiary ledger, using the invoice number as the postingreference
number in the subsidiaryaccount. Also, cash receipts from customers should be posted tothe
subsidiary ledger on the daythey are received. The purchase order number should be used as
the posting reference numberin the subsidiary ledger for purchases on account fromsuppliers.
Purchases from suppliers andpayments to them should be posted daily. All other individualposting
may be made weekly or at themonth-end. Account numbers should be used as posting reference
numbers in the journals.Officers and office personnel are salaried employees and are paidmonthly
on the last day of each month.The delivery truck drivers and warehouse employees are hourlywage
employees and are paidbiweekly. Each biweekly pay period ends Friday. On the followingMonday
you assistants provide youwith a payroll summary from which you prepare general journalentries
to record the biweekly payrolland the employer's taxes on the payroll. The biweeklyemployees'
paychecks are distributed onthe following day (Tuesday).

The January 1, 2014, balancesappear in the general ledger accounts as well as the Noverber 30,2014,
balances, for those accountswhose balances have changed. All transacitons affecting thenon-
current accounts from January1, 2014, through Noverber 30, 2014, with explanations, appearin
these accounts to facilitatethe preparation of the statement of cash flows.

Subsidiary ledger accountbalances as of Noverber 30, 2014, are as follows:

Accounts Receivable			Acct No	Amount
Boecker Builders			117	62,920
The Potts Company			122	46,300
Swanson BrothersContruction			133	22,590
A & B Hardware			143	-
Trudy's Plumbing			155	15,500
Coconino Contractors Inc			160	28,700
Rankin Plumbing Corp			166	74,350
Beverly's BuildingProducts			175	13,600
Bilder Construction Co			180	48,900
Iwanaga Plumbing andHeating			190	5,800
Total				318,660

Accounts Payable			Acct No	Amount
Phoenix Plastics			14	19,280
Business Basics Inc			16	-
Edward's PlumbingSuppliers			18	20,050
DeKalb Transport			20	-
Oxenford Copperworks			35	28,700
Smith Pipe Co			39	37,700
Ron & Rod's PlumbingProducts			44	14,850
Khatan Steel Corp			57	12,000
Total				132,580

The transactions throughDecember 23 have already been recorded by the former controller.You
are to begin your work byentering the transaction of December 25 for the payment of cashto
repurchase stock.

			Dec-14
S	M	T	W	T	F	S
	1	2	3	4	5	6
7	8	9	10	11	12	13
14	15	16	17	18	19	20
21	22	23	24	25	26	27
28	29	30	31


December Transactions
December
1	Received a check in the amount of $22,364 fromSwanson Brothers Contruction in full
	payment of invoice No. 1120 dated Novermber 26 inthe amount of $22,590.
1	Sold sewer and drainage pipe to Beverly's BuildingProducts on account, invoice No. 1201
	for $28850.
2	Purchased copper tubing and fittings from Edward'sPlumbing Supplies Inc. on account,
	purchase order No. 315 for $32660, terms n/60.
2	Issued check No. 1580 for $28,700 to OxenfordCopperworks in settlement of the
	balance owned on purchase order No. 280.
3	A court notice indicates that Iwanaga Plumbing andHeating is bankrupt and payment
	of its account improbable; the president orders theaccount to be written off as a
	bad debt (invoice No. 780).
3	Sold bathroom fixtures to Bilder Construction Co onaccount, invoice No. 1202 for
	$47,700.00
4	Received a check in the amount of $45,374 from thePotts Co in full payment of invoice
	No. 1128 dated November 27 for $46,300.
4	Sold plumbing supplies and plastic pipe to CoconinoContractors Inc. on account, invoice
	No. 1203 for $12,300.
4	Issued check No. 1581 for $720 to Standard Oil Co,in payment of gas, oil, and truck repair
	from Tierney's Standard Service.
5	Issued check No. 1582 for $11,880 to Khatan SteelCorp. in full settlement of purchase order
	No. 312 for $12,000.
5	Issued check No. 1583 for $12,054 to PhoenixPlastics in full payment of Phoenix's invoice
	dated November 28 in the amount of $12,300, forpurchase order No. 313, terms 2/10, n/30.
5	Received a check in the amount of $72,863 fromRankin Plumbing Corp. in full payment
	of invoice No. 1129 dated November 28 for$74,350.
8	Sold cast pipe to Trudy's Plumbing on account,invoice No. 1204 for $26,300.
8	Received a check in the amount of $28,700 fromCoconion Contractors, Inc. in full payment
	of invoice No. 1091 dated October 20.
8	Purchased bathroom fixtures from Phoenix Plastics,on account, purchcase order No. 316
	for $56,800 terms 1/10, n/30.
8	Received a check in the amount of $29,600 fromBoecker Builders in partial payment of
	balance outstanding covering invoice Nos. 1050 and1071.
9	The payroll summary for the biweekly pay periodended Friday, December 5 contained the
	follwing information:
	Delivery and warehouse wages				4,860
	FICA taxes withheld				410
	Federal income taxes withheld				900
	State income taxes withheld				190
		Net pay			3,360
	Employer's payroll taxes:
	FICA tax				410
	Federal unemployment tax				-
	State unemployment tax				-
	Issued check No. 1584 for the amount of the net payand deposited it in the payroll bank
	account. Individual payroll checks were thenpreppared for distributions to the biweekly
	emplyees on Tuesday, December 9, 2014.
9	Issued check No. 1585 for $650 to Scooter Gordonfor lettering and sign painting on some
	delivery trucks.
9	Issued check No. 1586 for $6,980 to PhoenixPlastics, in payment of Phoenix's invoice dated
	November 12 in the amount of $6,980, our purchaseorder No. 299.
10	Issued check No. 1587 for $37,323 to Smith Pipe Coin full payment of their invoice dated
	November 28, terms 1/15, n/30, our purchase orderNo. 314.
10	Received a check in the amount of $15,500 fromTrudy's Plumbing in full settlement of
	invoice No. 1106 dated November 7.
10	Sold pipe, fixtures, and accessories to Trudy'sPlumbing on account, invoice No. 1205 for
	$26,850.00
11	Sold pumbing supplies and copper tubing to ThePotts Company on account, invoice No.
	1206 for $31,450.
11	Received a check in the amount of $33,320 fromBoecker Builders in full payment of invoice
	No. 1071.
11	Cash sales to date totaled $10,232.
12	Received a check in the amount of $25,774 fromTrudy's Plumbing in payment of inoivce
	No. 1204.
12	Sold plumbing fixtures and supplies to BoeckerBuilders, on account, invoice No. 1207
	for $24,730.
15	The Potts Co returned defective copper tubing thatis purchased on December 11. A credit
	memo in the amount of $5680 is issued relative toinvoice No. 1206. The copper tubing
	had a cost of $3692.
15	The defective copper tubing is returned to Edward'sPlumbing supplies, Inc. along with
	a debit memo in the amount of $3692 in reduction ofpurchase order No. 315.
15	Issud check No. 1588 for $599 in payment ofNovember telephone bill to Northern
	Illinois Communications.
16	Issued check No. 1589 in the amount of $12,360 inpayment of federal withholding taxes,
	$10,573, and FICA taxes, $1787, payable on Novembersalaries and wages; The check is
	remitted to the Winnebago County Bank as thedepository.
16	Issued check No. 1590 for $56,232 to PhoenixPlastics, Inc, in payment of purchase order
	No. 316.
17	The president informs you that Bilder ConstructionCo agrees to convert the $48900
	overdue account receivable (invoice No. 1120) to a8% note due six months from today.
17	Purchased plumbing materials from Smith PipeCompany on account, purcase order No.
	317 for $,51,120 terms 1/15, n/60.
17	Sold drain tile, plastic pipe, and copper tubing toA & B Hardware on account, invoice No.
	1208 for $7,340.
18	Sold fixtures and materials to CoconinoContractors, Inc. on account, invoice No. 1209 for
	$44,530.
18	An invoice in the amount of $1,021 was receivedfrom S. White Trucking Company for
	freight on purchase order No. 317 and paid byissuing check No. 1591.
18	Received a check in the amount of $26,582 fromTrudy's Plumbing in payment of invoice
	No. 1205.
19	Purchased office supplies from the Pen & Pad,issuing check No. 1592 in the amount of
	$1,460. (Note: Debit asset account).
19	Purchased a new Faith computer for $5600 fromBusiness Basics, Inc, purchase order
	No, 318, paying $600 down through check No. 1593with the balance due in thirty days
	(n/30). The computer has an estmated life of 4years with a salvage value of $2200.
22	Purchased bathroom and kitchen fixtures fromPhoenix Plastics, on account, purchase
	order No. 319 for $48,330, terms 1/10, n/30.
22	Received a bill from DeKalb Transport for $2580 forfreight costs incurred during the last 30
	days, terms n/30.
23	The payroll summary for the biweekly pay periodended Friday, December 19 contained the
	follwing information:
	Delivery and warehouse wages				5,770
	FICA taxes withheld				415
	Federal income taxes withheld				1,067
	State income taxes withheld				225
		Net pay			4,063
	Employer's payroll taxes:
	FICA tax				415
	Federal unemployment tax				-
	State unemployment tax				-
	Issued check No. 1594 for the amount of the net payand deposited it in the payroll bank
	account. Individual payroll checks were thenprepared for distributions to the biweekly
	emplyees on Tuesday, December 23.

	NOTE: Transactions up to this point have beenrecorded. At this point you became
	controller and are responsible for recordign allfurther transactions.

25	The board of directors voted to purchase 2,500shares of its own stock from stockholder
	Dionne Schivone at $76 per share and issued checkNo. 1595 in payment. Stock repurchases
	are recorded at cost. Rockford is purchasing theseshares because Ms. Schivone had been
	a valuable employee.
26	The baord of directors declared a $1.25 per sharecash dividend payable on January 14 to
	shareholders of record by the end of the day ofDecember 26.
26	The president informs you that Beverly's BuildingProducts agrees to convert the $13,600
	overdue accounts receivable (invoice No. 1119)balance to a 10% note due six months from
	today.
29	A half-acre parcel of land adjacent to the buildingis acquired in exchange for 750 shares
	of unissued common stock. The land has a fair valueof $58,400 and will be used
	immediately as an outside storage lot and parkinglot.
29	An invoice in the amount of $1,860 is received fromWayne McManus, lawyer, for legal
	services involved in the acquisition of theadjacent parcel of land; check No. 1596 is issued.
29	Sold pipe and plumbing materials to BoeckerBuilders on account, invoice No. 1210 for
	$44,280
30	Issued check No. 1597 in the amount of $3,500 tothe Northern Star for adverstisement run in
	the home building supplement of December 13.
30	Issued check No. 1598 in the amount of $830 toStandard Oil Co. in payment of gas, oil,
	and truck repairs from Standard Oil Co. (useFreight-out).
30	Purchased copper and cast iron pipe from OxenfordCopperworks on account, purchase
	order No. 320 for $55,240, terms 1/10, n/30.
30	Check No. 1599 for $9,400 is issued to the bondsinking fund trustee, Chicago Trust Co.,
	for deposit in the sinking fund. (Use OtherAssets).
30	Sold plumbing supplies to Swanson BrothersConstruction on account, invoice No. 1211
	for $24,150.
31	Received a check for $24,730 from Boecker Buildersin payment of invoice No. 1207.
31	Issued check No. 1600 for $50,609 to Smith PipeCompany in payment of purchase order
	No. 317.
31	The custodian of the petty cash fund submits thefollowing receipts for reimbursement
	and reports a cash-on-hand count of $8.
	Postage stampls used (supplies)			$38
	United Parcel (freight-out)			23
	C.O.D postage (freight costs)			51
	Christmas office decorations (Misc exp)			30
	Check No. 1601 is issued and cashed to reimbursethe fund.
31	Sold an electric truck-lift to Leila Stierman Co.for $2600 cash. The original cost was
	$7900 with salvage value of $900, a life of 10years, and accumulated depreciation
	recorded through 12/31/13 is $4,550. Thestraight-line method is used. (Note: the
	company follows the practice of recording a halfyear's depreciation in the year of
	acquisition and a half year in the year ofdisposal.) First, bring the depreciation expense
	up to date in the general journal. Then journalizethe entire entry for the sale in the cash
	receipts journal.
31	Sold bathroom fixtures and plumbing supplies toTrudy's Plumbing on account, invoice
	No. 1212 for $56370.
31	Because for some time the petty cash fund has beensmaller than required for monthly
	expenditures, the fund is increased by $95 bycashing check No. 1602 and placing the
	money in the petty cash fund.
31	The payroll summary for the monthly paid employeesin submitted so that December
	checks can be distributed before the year-end; thedetails are as follows:
	Office and administrative salaries				$43,900
	Federal income taxes withheld				7,696
	State income taxes withheld				1,517
	FICA taxes withheld				3,120
		Net pay			$31,567
	Issued check No, 1603 for the amount of the net payand deposited it in the payroll bank
	account. Individual payroll checks were preparedfor distribution to all monthly employees
	by the end of the day.
	Employer's payroll taxes:
	FICA tax (all office and administrative)				$3,120
	Federal unemployment tax				0
	State unemployment tax				0
31	Cash sale since December 12 total $42150.




Instructions
1	Make the entries in the appropriate journal forDecember 25 through December 31.
	(adjusting entries are recorded in generaljournal)
2	Post any amounts to be posted as individual amountsfrom journals to the general ledger
	and update the receivable and payable subsidiaryledger accounts.
	(only a few entries are posted for Dec, e.g.,account receivable. Please post all other entries)
3	Foot and cross-foot the columnar journals andcomplete the month-end postings of all
	books of orginal entry.

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ACCT 2001 Chapter : Ch3 (brief)

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