Chapter 7 Accounting Information Systems – Test Bank | 24th Edition - Answer Key + Test Bank | Fundamental Accounting Principles 24e by John J. Wild. DOCX document preview.
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Fundamental Accounting Principles, 24e (Wild)
Chapter 7 Accounting Information Systems
1) Accounting information systems collect and process data from transactions and events, organize them in useful reports, and communicate results to decision makers.
2) Decision makers in practice do not need a basic knowledge of how accounting information systems work because they can be relied upon to be accurate.
3) Control, competency, compatibility, flexibility and cost-benefit are the five basic principles of accounting information systems.
4) Internal controls include policies to protect company assets and achieve compliance with laws and regulations.
5) The flexibility principle prescribes that an accounting information system be able to adapt to changes in the company, business environment, and needs of decision makers.
6) The compatibility principle requires that an accounting system report useful, understandable, and timely information for decision making.
7) The cost-benefit principle prescribes that the benefits from an activity in an accounting information system should outweigh the costs of that activity.
8) The five basic components of accounting systems are source documents, input devices, information processors, information storage, and output devices.
9) Due to electronic files and Web communications, source documents are no longer required.
10) Information processors take information and transfer it to information processing.
11) With advanced technology there is no need to trace information that has been entered into an accounting information system to its source.
12) Input devices involve converting data on source documents to a form usable for the system.
13) Accounting information processes are structured to eliminate the need for professional judgment.
14) When auditors audit financial statements and a company's controls, they rely on accounting system databases.
15) Input devices are the means to make accounting information available to users.
16) Output devices include journal entries, keyboards and scanners.
17) A special journal is used to record and post transactions of a similar type.
18) A sales journal is used to record cash sales.
19) The purchases journal is used to record purchases of merchandise on credit.
20) The general journal is used for transactions not covered by special journals and for adjusting, closing, and correcting entries.
21) Special journals allow an efficient division of labor, which is also an effective control procedure.
22) When posting from special journals, each individual debit and credit entry of similar transactions is entered in the general ledger.
23) Most transactions for merchandising businesses fall into four groups: sales, purchases, cash receipts, and cash payments.
24) Special journals are designed to be used for unique and infrequent transactions.
25) A subsidiary ledger is a listing of individual accounts that contains detailed information on specific accounts in the general ledger.
26) Two common subsidiary ledgers are cash receipts and cash payments.
27) The accounts receivable ledger is used for storing transaction data regarding individual customers.
28) The controlling account, Accounts Payable in the general ledger has a separate subsidiary account for each supplier in the accounts payable ledger.
29) Equipment can include detailed information in a subsidiary ledger.
30) Subsidiary ledgers are not needed for a merchandiser because inventory analysis is the main focus of decision makers.
31) An advantage of online processing is that databases are updated in batches.
32) Off-the-shelf accounting software is not adequate to meet the needs of small businesses.
33) Enterprise resource planning software packages include the programs that manage a company's operations such as accounting, order taking, and manufacturing.
34) Computer networks are links among computers giving users access to common databases, programs, and hardware.
35) Enterprise resource planning software is primarily used for recording journal entries.
36) Companies use online processing instead of batch processing because online processing immediately updates databases.
37) The SAP enterprise-resource planning software is being used to help direct the operations of many of the world's largest companies.
38) Days' payable outstanding is the average length of time that payables are deferred until payment is made.
39) Delaying payment to a supplier allows the buyer to increase available cash.
40) A local hardware store is comparing their days' payable outstanding of 34.5 days to their competitor's 15.2 days. This means the competitor is taking less time to pay its suppliers.
41) In managing days' payable outstanding, companies want to minimize available cash and pay suppliers as quickly as possible.
42) A columnar journal is any journal with only one column.
43) Individual transactions in the purchases journal are immediately posted to individual creditor accounts in the accounts payable ledger.
44) Three transactions that would be recorded in the sales journal are: (1) recording sales taxes (2) recording sales returns and allowances and (3) recording purchases discounts.
45) Each transaction recorded in the sales journal yields a debit to Accounts Receivable and a credit to Sales.
46) Posting debits from the Sales journal to Accounts Receivable twice—once to the general ledger account Accounts Receivable and once to the customer's subsidiary account—violates the accounting equation of debits equal credits.
47) The Posting Reference column is used when journalizing the sale.
48) Account balances in the general ledger and the subsidiary ledgers should be proved for accuracy after posting is complete.
49) A schedule of accounts receivable is a listing of all customer accounts and account balances.
50) If the total balance of the accounts payable ledger equals the total of the controlling Accounts Payable account, then the accounts are presumed to be correct.
51) A trial balance is completed after posting but before proving the subsidiary ledger by preparing a schedule of the controlling account.
52) A company records the increase in cost of goods sold and decrease in inventory at the time of each sale in the sales journal.
53) The purchases journal is typically used to record only purchases of inventory.
54) A company with few sales returns and allowances can record them in a general journal.
55) Which of the following statements regarding accounting information systems is not true?
A) Accounting information systems collect and process data from transactions and events.
B) Accounting information systems organize data in useful forms.
C) Accounting information systems are not subject to internal control policies.
D) Accounting information systems are useful to effective decision making.
E) Accounting information systems communicate information to business decision makers.
56) Which of the following statements is not true regarding internal control procedures?
A) Internal control procedures are designed to ensure reliable financial reports.
B) Internal control procedures are designed to protect company assets.
C) Internal control procedures help managers control and monitor business activities.
D) Internal control procedures include methods to achieve compliance with laws and regulations.
E) Internal control procedures are not affected by the cost-benefit principle.
57) The control principle for accounting information systems requires that the:
A) Benefits from an activity outweigh the costs of the activity.
B) System report useful, understandable, timely, and pertinent information for effective decision making.
C) System must have methods and procedures allowing managers to control and monitor business activities.
D) System is able to adjust to changes in the company, business environment, and needs of decision makers.
E) System conforms to a company's activities, personnel, and structure.
58) The flexibility principle of accounting information systems prescribes that the:
A) Benefits from an activity in the system outweigh the costs of the activity.
B) System report useful, understandable, timely, and pertinent information for effective decision making.
C) System aid managers in controlling and monitoring business activities.
D) System is able to adapt to changes in the company, business environment, and needs of decision makers.
E) System conforms to a company's activities, personnel, and structure.
59) Which of the following accounting principles prescribes that an accounting information system report useful, understandable, and timely information for decision-making?
A) Control principle.
B) Compatibility principle.
C) Relevance principle.
D) Flexibility principle.
E) Cost-Benefit principle.
60) The five fundamental principles of accounting information systems are:
A) Control, accountability, relevance, compatibility, and flexibility.
B) Historical cost, relevance, compatibility, flexibility, and cost-benefit.
C) Control, relevance, compatibility, flexibility, and safety.
D) Historical cost, relevance, compatibility, timeliness, and cost-benefit.
E) Control, relevance, compatibility, flexibility, and cost-benefit.
61) Which of the following statements regarding accounting information systems is not true?
A) Accounting information systems consist of people, records, methods, and equipment.
B) Accounting information systems are more important than ever to decision makers.
C) Accounting information systems cannot improve on a company's competitive edge.
D) Accounting information systems are designed to provide output including financial, managerial, and tax reports.
E) Accounting information systems are designed to capture information about a company's transactions.
62) The basic components of an accounting information system include all of the following except:
A) Source documents.
B) Warehouses.
C) Information processors.
D) Information storage.
E) Output devices.
63) Source documents:
A) Are input devices.
B) Provide the information processed by an accounting system.
C) Cannot be electronic files or web communications.
D) Store processed information for future use.
E) Convert information to the system's processing component.
64) Input devices include:
A) Scanners.
B) Printers.
C) Software.
D) Ledgers.
E) Information processors.
65) Information storage databases:
A) Eliminate the need for professional judgment.
B) Are relied on by auditors of the financial statements.
C) Should not be cloud based.
D) Capture information from source documents.
E) Need not be accessible once data is processed.
66) Which of the following is not an output device?
A) Printers.
B) Monitors.
C) Smartphones.
D) Web communications.
E) Bar code readers.
67) Information processors are systems that:
A) Keep data in an accessible form.
B) Summarize information for use in analysis and reporting.
C) Eliminate the need for professional judgment due to their accuracy.
D) Are the means to make information available to users.
E) Capture information from source documents.
68) Which of the following is not a special journal:
A) Sales journal.
B) Purchases journal.
C) Cash receipts journal.
D) Cash payments journal.
E) General journal.
69) The sales journal is used for recording:
A) Credit purchases.
B) Credit sales.
C) Cash sales.
D) Cash purchases.
E) Cash receipts.
70) The purchases journal is used for recording:
A) Credit purchases.
B) Credit sales.
C) Cash sales.
D) Cash purchases.
E) Cash payments.
71) A journal that is used to record and post transactions of a similar type is a(n):
A) Perpetual journal.
B) Columnar journal.
C) Special journal.
D) General journal.
E) All-purpose journal.
72) When a company uses special journals, the general journal is used to record selected transactions and events including:
A) Closing entries.
B) Sales on credit.
C) Cash payments.
D) Credit purchases.
E) Credit sales.
73) Which of the following is not a feature of special journals?
A) They are efficient tools in helping journalize and post transactions.
B) They allow posting of amounts as column totals rather than as individual amounts.
C) They are used for the most common transactions.
D) They eliminate the need for a general journal.
E) They produce an efficient division of labor.
74) A record that contains detailed information on specific accounts with a common characteristic and is support for a controlling account is a(n):
A) Subsidiary ledger.
B) General ledger.
C) Special ledger.
D) All-purpose ledger.
E) Column balance ledger.
75) A subsidiary ledger:
A) Includes transactions not covered by special journals.
B) Is a listing of all of the accounts of a business.
C) Is a listing of individual accounts and amounts with a common characteristic.
D) Is also called a general ledger.
E) Is also called a special journal.
76) A subsidiary ledger that contains a separate account for each supplier (creditor) to the company is a(n):
A) Controlling account.
B) Accounts receivable ledger.
C) Accounts payable ledger.
D) General ledger.
E) Special journal.
77) An accounts receivable ledger is a:
A) Subsidiary ledger that contains an account for each supplier.
B) List of the separate accounts that show the balances outstanding from credit customers.
C) Book of original entry that is designed and used for recording only sales on credit.
D) Ledger that contains all financial statement accounts of a business.
E) Subsidiary ledger that contains a separate account for each party that grants both short-term and long-term credit on account to the company.
78) Assume that a company uses special journals for sales, purchases, cash receipts, and cash payments. A sales return for credit on account would be recorded in the:
A) Sales journal.
B) General journal.
C) Cash receipts journal.
D) Direct posting journal.
E) Cash payments journal.
79) An accounts payable ledger:
A) Contains an account for each credit customer.
B) Lists the balances of selected accounts that are added to show the total amount of the significant long-term creditors outstanding.
C) Is a book of original entry designed and used for recording only a specified type of transaction.
D) Contains the financial statement accounts of a business.
E) Contains a separate account for each supplier to the company.
80) The Accounts Payable controlling account:
A) Is not included in a company's chart of accounts.
B) Stores the transaction data of individual supplies.
C) Reduces the number of entries in the general journals.
D) Equals the sum of all balances of supplier accounts.
E) Increases the number of columns in the journals.
81) Subsidiary ledgers do all of the following except:
A) Remove excessive detail from the general ledger.
B) Provide up-to-date information on customer or other specific account balances.
C) Aid in error identification for individual accounts.
D) Help with division of labor (recordkeeping tasks).
E) Eliminate the need for individual postings to the customer or supplier accounts.
82) The accounts receivable ledger:
A) Is a substitute for the sales journal.
B) Stores transaction data for individual customers.
C) Stores transaction data for individual suppliers.
D) Is a substitute for the cash receipts journal.
E) Is also the controlling account.
83) Subsidiary ledgers may include all of the following except:
A) Equipment.
B) Prepaid Expenses.
C) Payroll.
D) Accounts Receivable.
E) Accounts Payable.
84) Chandler Company sold merchandise on credit to Jamie Morgan for $700 and the cost of the merchandise was $290. Chandler would record this sale in the:
A) General journal.
B) Cash receipts journal.
C) Sales journal.
D) Cash payments journal.
E) Purchases journal.
85) Chandler Company purchased merchandise on credit from Lighting Supply for $5,600. Chandler would record this purchase in the:
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Sales journal.
86) Doughton Furniture Company sold merchandise on credit from Furniture Supply for $8,000. Two days later Doughton returned $2,000 of the merchandise due to damage. Doughton would record the return of merchandise in the:
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Accounts Payable controlling account.
87) Doughton Furniture Company purchased merchandise on credit from Furniture Supply for $8,000. Two days later Doughton returned $2,000 of the merchandise due to damage. When Doughton pays for the merchandise minus the return, it would record the payment in the:
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Sales journal.
88) Enterprise-resource planning software:
A) Refers to programs that help manage a company's operations.
B) Is another name for spreadsheet programs.
C) Uses batch processing of business information.
D) Is substantially declining in use.
E) Is another name for database programs.
89) An approach that enters and processes data into the accounting system as soon as source documents are available is called:
A) Date storage.
B) Batch processing.
C) Online processing.
D) Computer programming.
E) Web communications.
90) Which of the following is not true about enterprise resource planning (ERP) software:
A) ERP refers to programs that help manage a company's operations.
B) ERP can include programs that extend from order taking to manufacturing to accounting.
C) ERP can speed up business decision making and help reduce costs.
D) ERP is not useful for small businesses.
E) ERP can be designed to link every part of a company's operations.
91) Days' payable outstanding is used to calculate:
A) The cost savings for taking purchase discounts.
B) The average length of time that payables are deferred until payment is made.
C) The cost of storing inventory.
D) The average length of time to collect from credit customers.
E) The average length of time that the bank takes to process payment.
92) Alani's Hawaiian had accounts payable of $4,500 and cost of goods sold of $76,500. The days' payable outstanding for Alani's Hawaiian is:
A) 17 days
B) 31.6 days
C) 21.5 days
D) 33.8 days
E) 25 days
93) Stanley Company days' payable outstanding is 62.1 days. This is potentially:
A) Reducing cash available.
B) Hurting their relationship with suppliers.
C) Resulting in excess inventory in storage.
D) Improving their credit rating.
E) Improving their relationship with customers.
94) When posting the sales journal's activity at the end of the month, the sales column's totals are:
A) Debited to Sales and credited to Accounts Receivable.
B) Debited to Accounts Receivable and credited to Cash.
C) Debited to Cash and credited to Accounts Receivable.
D) Debited to Accounts Receivable and credited to Sales.
E) Debited to Cash and credited to Sales.
95) A list of each customer account and the balance owed is a:
A) Schedule of cash receipts.
B) Controlling account.
C) Schedule of accounts receivable.
D) Sales ledger.
E) Special journal.
96) The Accounts Payable account in the general ledger is:
A) A controlling account for the subsidiary accounts payable ledger.
B) The account that controls the purchases journal.
C) The subsidiary account to the purchases journal.
D) Part of a special journal.
E) Part of a subsidiary ledger.
97) After posting is completed, there may be an error if:
A) The sum of the supplier account balances does not equal the total in the purchases journal.
B) The sum of the accounts receivable ledger does not equal the balance in the Sales account.
C) The sum of the supplier account balances does not equal the general ledger Accounts Payable controlling account balance.
D) The balance in the sales journal does not equal the Accounts Receivable account balance.
E) The sum of the accounts receivable ledger does not equal the balance in the sales journal.
98) Assume that a company using a purchases journal made an error in totaling the journal's accounts payable column. The error should be discovered:
A) When the purchases journal is posted to the general ledger.
B) When the sum of the vendor accounts does not equal the balance in the Purchases journal.
C) When the total of the schedule of accounts payable is compared with the balance of the Accounts Payable account.
D) When the creditors receive their payments.
E) When the financial statements are prepared.
99) The main difference between the accounts receivable and accounts payable subsidiary ledgers is:
A) The accounts receivable ledger stores transaction data on customers instead of suppliers.
B) The accounts payable transaction data is stored for customers instead of suppliers.
C) The total of each subsidiary account in the subsidiary ledger equals the controlling account.
D) Only the accounts receivable ledger uses a controlling account.
E) Only the accounts payable ledger uses a controlling account.
100) The accounting principle that prescribes an accounting information system conform with a company's activities, personnel, and structure is the:
A) Control principle.
B) Compatibility principle.
C) Relevance principle.
D) Flexibility principle.
E) Cost-Benefit principle.
101) All of the following statements regarding source documents are true except:
A) Source documents provide the information processed by an accounting system.
B) Source documents include invoices, bank statements, and employee earnings records.
C) Source documents should not be sent directly from a company's system to its customers or suppliers.
D) Source documents need to be accurate.
E) Source documents can include billings to customers.
102) Which of the following statements regarding input devices is not true?
A) Input devices take information from source documents and transfer it to information processing.
B) Input devices convert data on source documents from written form to a form usable for the system.
C) Input devices include keyboards and scanners.
D) Input devices include journal entries.
E) Input devices make accounting system information available to users.
103) A company would use which of the following journals to record cash payments?
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Sales journal.
104) Which of the following journals would a company use to record closing entries?
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Sales journal.
105) Which of the following journals would a company use to record cash collections from customers, net of discounts taken?
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Sales journal.
106) Which of the following journals would a company use to record period-end adjusting entries to accrue revenues?
A) General journal.
B) Cash receipts journal.
C) Cash payments journal.
D) Purchases journal.
E) Sales journal.
107) For a retailer, the sales journal includes columns for each of the following except:
A) Accounts Receivable and Sales entry.
B) Customer's name.
C) Cost of Goods Sold and Inventory entry.
D) Supplier's name.
E) Invoice number.
108) The process of comparing the debit and credit column totals of a journal for equality is an example of:
A) Reconciling.
B) Footing.
C) Journalizing.
D) Posting.
E) Crossfooting.
109) A company borrowed $80,000 from a bank by signing a long-term note payable. The journal the transaction would be recorded in is the:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
110) A company makes a payment of $5,000 on a long-term note payable. The journal the transaction would be recorded in is the:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
111) A company makes a cash sale of $24,000. The cost of the merchandise is $13,000. Identify the journal the transaction would be recorded in:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchase journal.
E) General journal.
112) A company sells merchandise on credit for $6,000. The merchandise cost is $3,400. The journal that the transaction would be recorded in is the:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
113) If a company purchases $15,200 of merchandise on credit, which journal will the transaction be recorded in?
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
114) Flavor Ice Cream received a payment of $7,800 from a credit customer within the discount period. Identify the journal the transaction would be recorded in:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
115) If a company issues a check for $2,900 in payment of merchandise, identify the journal the transaction would be recorded in:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
116) Barrier Scuba Equipment purchased supplies costing $3,000 on credit. Identify the journal the transaction would be recorded in:
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
117) If a company issues a check for $2,750 in payment of the salaries expense for the last half of the month, the transaction will be recorded in which journal?
A) Cash payments journal.
B) Sales journal.
C) Cash receipts journal.
D) Purchases journal.
E) General journal.
118) Sweet Treats Bakery had accounts payable of $17,500 and cost of goods sold of $306,500. The days' payable outstanding for Sweet Treats Bakery is:
A) 17.5 days.
B) 33.6 days.
C) 20.8 days.
D) 30.8 days.
E) 23.7 days.
119) A company that reports Accounts Payable of $59,700 and Cost of Goods Sold of $614,400, calculated days' payable outstanding of:
A) 25.8 days.
B) 10.3 days.
C) 37.9 days.
D) 43.2 days.
E) 35.5 days.
120) Maxie's Game World sold games to a customer on credit for $2,600, terms 1/10, n/30 and the cost of the games was $1,700. When recording the sales transaction in its sales journal, Maxie's would enter:
A) $1,700 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Cost of Goods Sold Dr./Inventory Cr. column.
B) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $1,700 in the Accounts Payable Dr./Purchases Cr. column.
C) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Cash Cr. column.
D) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $1,700 in the Cost of Goods Sold Dr./Inventory Cr. column.
E) $1,700 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Other Accounts Dr. column.
121) Maxie's Game World sold games to a customer on credit for $2,600, terms 1/10, n/30 and the cost of the games was $1,700. When recording the collection from the customer made within the discount period, in its cash receipts journal, Maxie's would enter:
A) $2,600 in the Cash Dr. column and $2,600 in the Accounts Receivable Cr. column.
B) $2,574 in the Cash Dr. column and $2,574 in the Accounts Receivable Cr. column.
C) $2,574 in the Cash Dr. column, $26 in the Sales Discount Dr. column and $2,600 in the Accounts Receivable Cr. column.
D) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Cash Cr. column.
E) $2,600 in the Cash Dr. column. $2,600 in the Sales Cr. column, and $1,700 in the Cost of Goods Sold Dr./Inventory Cr. column.
122) Wildlife Wholesale Supply sold birdseed to a retailer for $860, receiving cash at the time of sale. The cost of the birdseed was $370. When recording the collection from the customer, in its cash receipts journal, Wildlife would enter:
A) $860 in the Cash Dr. column and $860 in the Accounts Receivable Cr. column.
B) $370 in the Cash Dr. column and $370 in the Accounts Receivable Cr. column.
C) $860 in the Cash Dr. column; $860 in the Sales Cr. column; and $370 in the Other Accounts Cr. column.
D) $860 in the Accounts Receivable Dr. column, $860 in the Cash Cr. column; and $370 in the Cost of Goods Sold Dr./Inventory Cr. column.
E) $860 in the Cash Dr. column; $860 in the Sales Cr. column; and $370 in the Cost of Goods Sold Dr./Inventory Cr. column.
123) Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 2/10, n/30 for $15,300. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the purchase transaction in its purchases journal, Farthington would enter:
A) $15,300 in the Accounts Payable Cr. column and $15,300 in the Inventory Dr. column.
B) $15,300 in the Accounts Payable Cr. column and $15,300 in the Supplies Dr. column.
C) $15,300 in the Inventory Dr. column, $14,994 in the Accounts Payable Cr. column, and $306 in the Purchase Discount Cr. column.
D) $14,994 in the Inventory Dr. column and $14,994 in the Accounts Payable Cr. column.
E) $15,300 in the Other Accounts Dr. column and $15,000 in the Inventory Cr. column.
124) Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 2/10, n/30 for $15,300. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the payment of the invoice within the discount period in its cash payments journal, Farthington would enter:
A) $15,300 in the Cash Cr. column and $15,300 in the Inventory Dr. column.
B) $15,300 in the Cash Cr. column and $15,300 in the Accounts Payable Dr. column.
C) $15,300 in the Inventory Cr. column; $14,994 in the Accounts Payable Dr. column; and $306 in the Inventory Cr. column.
D) $14,994 in the Accounts Payable Dr. column and $14,994 in the Cash Cr. column.
E) $15,300 in the Accounts Payable Dr. column; $14,994 in the Cash Cr. column; and $306 in the Inventory Cr. column.
125) Wexim Toys sold merchandise to a customer on credit, terms 2/10, n/30 for $9,300. Three days later, the customer returned $1,100 of the merchandise. When recording the return transaction, Wexim Toys would record:
A) $1,100 in the Accounts Payable Cr. column and $1,100 in the Inventory Dr. column of the purchases journal.
B) Debit Sales Returns and Allowances $1,100 and credit Accounts Receivable $1,100 in the general journal.
C) $1,100 in the Cash Dr. column and $1,100 in the Inventory Cr. column in the cash receipts journal.
D) Debit Cash $1,100 and credit Inventory $1,100 in the general journal.
E) $1,100 in the Accounts Payable Dr. column and $1,100 in the Cash Cr. column of the cash payments journal.
126) Identify the accounting information system principle (in the second column) that applies to each of the situations below (in the first column) by entering the appropriate number next to the statement.
1.International Company's accounting information system can be improved markedly for a cost of about $10,000,000 and the company intends to complete the upgrade because the benefits outweigh this cost. | Flexibility | |
2.International Company has world-wide operations that must handle thousands of different products, so the accounting information system is fairly complex to conform to its activities, personnel, and structure. | Compatibility | |
3.International Company has designed its accounting information system so that key managers can obtain the information they need to make decisions relating to new products, sales, and controlling costs. | Control | |
4.International Company's accounting information system has policies to ensure assets are safeguarded and relevant laws and regulations are complied with. | Cost-benefit | |
5.International Company has designed its accounting information system to be adaptable to changes in the business environment and the needs of decision makers. | Relevance |
127) Enter the number of the following terms on the line next to the appropriate definition of each.
1.The component of an accounting system that makes information from an accounting system available to users. | Accounting information system |
|
2.The means of collecting and processing data from transactions and events, organizing them into useful reports, and communicating results to decision makers. | Purchases journal | |
3.A record of the separate accounts of each supplier that supports its general ledger controlling account. | Cash receipts journal | |
4.The component of an accounting system that keeps data in a form accessible to information processors. | Control principle | |
5.The special journal used to record all receipts of cash. | Relevance principle | |
6.The special journal that is used to record all cash payments. | Information storage | |
7.The component of an accounting system that takes source document information and transfers it to the information processor. | Cash payments journal | |
8.An information system principle that prescribes that an accounting system have methods and procedures allowing managers to control and monitor business activities. | Accounts payable ledger | |
9.The special journal used to record all purchases made on account. | Output devices | |
10.An information system principle requiring that an accounting system report useful, understandable, and timely information for decision making. | Input devices |
128) Match the following accounting system components a-e with their related items 1-10 by placing the correct letter next to each item.
a. Source documents
b. Input devices
c. Information processor
d. Information storage
e. Output devices
____ 1. Computer keyboard
____ 2. Computer hard drive
____ 3. Journal entries
____ 4. Journals
____ 5. Printer
____ 6. Invoice from suppliers
____ 7. Employee paychecks
____ 8. Computer monitor
____ 9. Software
____ 10. Billings to customers
129) Match the following terms with the appropriate definitions.
a. Sales journal
b. Controlling account
c. Accounts receivable ledger
d. Cash payments journal
e. Cash receipts journal
f. Schedule of accounts payable
g. Accounts payable ledger
h. Columnar journal
i. Special journal
j. Purchases journal
____ 1. The special journal used to record all receipts of cash.
____ 2. A journal with more than one column for recording data.
____ 3. A record of the separate accounts of each credit customer that is controlled by a general ledger account.
____ 4. A journal used to record all purchases on credit.
____ 5. A journal used to record sales of merchandise on credit.
____ 6. A record of the separate accounts of each supplier that is controlled by a general ledger account.
____ 7. A special journal used to record all payments of cash.
____ 8. Any journal used for recording and posting transactions of a similar type.
____ 9. A general ledger account, the balance of which, after posting, equals the sum of the balances of the accounts in its related subsidiary ledger.
____10. A list of each customer from the accounts payable ledger with their balances and the total.
130) A company entered into the following transactions. Match each transaction with the appropriate journal in which it should be recorded.
a. Sales journal
b. Purchases journal
c. Cash receipts journal
d. Cash payments journal
e. General journal
____ 1. Borrowed $7,000 cash from the local bank.
____ 2. A customer returned a $250 item purchased on account.
____ 3. Purchased merchandise on account, $2,100.
____ 4. Purchased equipment on account for $4,000.
____ 5. Paid $15,000 cash in wages to employees.
____ 6. Paid a telephone bill for $3,400 cash.
____ 7. Purchased $1,150 of office supplies on account.
____ 8. Recorded depreciation on office equipment of $2,000.
____ 9. Returned defective inventory purchased on account, $2,550.
____ 10. Recorded cash sales of $12,700.
131) A company entered into the following transactions. For each transaction, indicate the appropriate journal in which it should be recorded.
a. Sales Journal
b. Purchases Journal
c. Cash Receipts Journal
d. Cash Payments Journal
e. General Journal
____ 1. Purchased merchandise on credit.
____ 2. Sold merchandise on credit.
____ 3. Purchased merchandise for cash.
____ 4. Sold merchandise for cash.
____ 5. Paid cash to settle the utility bill.
____ 6. Owner invested more cash in the business.
____ 7. Recorded depreciation for the period.
____ 8. Borrowed cash from the bank.
____ 9. Bought office supplies on credit.
____ 10. Received cash from a customer to settle an account receivable.
132) List the five basic principles of accounting information systems.
133) List the five basic components of accounting information systems and give an example of each.
134) Explain the purposes, types, and uses of special journals.
135) What are controlling accounts and subsidiary ledgers? What is the relationship between them?
136) Discuss how technology based information systems affect accounting.
137) What is the days' payable outstanding ratio? What is it used for?
138) Describe the posting process for special journals.
139) Explain how the amounts in the subsidiary ledgers are proved (or reviewed) for accuracy.
140) Discuss the common characteristics of special journals.
141) What is footing and crossfooting of the column totals in special journals? What is the purpose?
142) Alex Reagent, owner of Delectable Candy Company, understands that accounting systems are important for success. Explain how Alex can use the accounting system to assess business operations.
143) A local retailer has Accounts Payable of $46,700 and Cost of Goods Sold of $355,000. Calculate their days' payable outstanding. Assess what the calculated days' payable outstanding implies about the company's available cash and relationship with suppliers.
144) The Stapleton Company uses special journals for sales, purchases, cash receipts, cash payments, and uses a general journal. They operate with a perpetual inventory system. The following transactions occurred during the current month of September:
Sep. | 1 | Paid $2,400 cash for monthly rent to Wabash Properties, Check No. 1630. |
4 | Purchased merchandise on credit for $1,800 from Bell Co., terms 2/10, n/30. Invoice dated September 4. | |
8 | Sold merchandise on credit for $4,300 to Andrews Co., Invoice No. 413. The cost of the goods sold is $2,750. | |
10 | Sold merchandise for $1,500 cash to Lacey Corp., Invoice No. 414. The cost of the good sold is $720. | |
13 | Paid amount owed to Bell Co. from the September 4 purchase, Check No. 1631. | |
17 | Collected $4,300 cash from the Andrews Co. for merchandise sold on September 8. | |
24 | Sold merchandise on credit for $4,500 to Frasier Corp., Invoice No. 415. The cost of goods sold is $2,600. | |
31 | Purchased office supplies for $3,055 from Maxwell Corp., Check No. 1632. |
Record the above transactions into the appropriate journals that follow.
Sales Journal | Page 15 | ||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Purchases Journal | Page 16 | |||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Receipts Journal | Page 17 | ||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods sold Dr. Inventory Cr. |
Cash Payments Journal | Page 22 | |||||||
Date | Ck No. | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
145) The Tigre Company uses special journals for sales, purchases, cash receipts, cash payments, and uses a general journal. They operate with a perpetual inventory system. Record the following transactions related to purchases and cash payments that occurred during the current month of June:
June | 1 | Paid $800 cash for monthly rent to Frontier Properties, Check No. 2116. |
3 | Purchased merchandise on credit for $2,400 from Whistle Co., terms 2/10, n/30. Invoice dated June 3. | |
5 | Returned defective merchandise with a cost of $300 to Whistle from the June 3 purchase. | |
8 | Purchased equipment on credit from Jackson Co. for $6,700, terms 1/10, n/30. | |
13 | Paid amount owed to Whistle Co. from the June 3 purchase with Check No. 2117. | |
30 | Purchased office supplies for $1,075 from Paperly Corp., Check No. 2118. |
Record the above transactions into the appropriate journals shown below.
Purchases Journal | Page 12 | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. | |
| |||||||||
Cash Payments Journal | Page 19 | |||||||
Date | Check No. | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
General Journal | Page 4 | ||||
Date | Accounts | PR | Dr. | Cr. | |
146) The Saginaw Company uses special journals for sales, purchases, cash receipts, cash payments, and uses a general journal. They operate with a perpetual inventory system. Record the following transactions related to sales and cash receipts that occurred during the month of August:
Aug. | 3 | Sold $8,700 merchandise to Kline Co., terms 2/10, n/30, Invoice No. 826. The cost of the goods sold was $3,900. |
6 | Sold merchandise on credit for $3,500 to Mentor Corp., Invoice No. 827. The cost of the good sold is $1,750. | |
10 | Mentor Corp. returned $750 of merchandise from the Aug. 6 sale. The cost of the merchandise was $330. The merchandise was restored to inventory. | |
12 | Collected amount due from the Kline Co. for merchandise sold on Aug. 3. | |
31 | Collected on the Aug. 6 sale to Mentor Corp., net of the return. |
Record the above transactions into the appropriate journals that follow.
Sales Journal | Page 31 | ||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Cash Receipts Journal | Page 23 | ||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods sold Dr. Inventory Cr. |
Cash Receipts Journal | Page 23 | ||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods sold Dr. Inventory Cr. |
General Journal | Page 8 | |||
Date | Accounts | PR | Dr. | Cr. |
147) A company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. A perpetual inventory system is used. The following transactions were completed by the company during the current month of February:
Feb. | 3 | Sold merchandise for $5,000 to the North Corp. on credit, Invoice No. 785. Cost of the goods sold is $2,900. |
6 | Sold a piece of land for $25,000 cash. The land was originally purchased for $25,000. | |
11 | Purchased supplies from Office Mate for $240 Cash. Check No. 2316. | |
15 | Issued a credit memo for $850 to North Corp. for returned merchandise. Cost of the goods returned is $410. | |
21 | Returned $130 of merchandise purchased from Shifton Corp. for credit on account. | |
22 | Paid cash to Rentals Inc. for monthly rent of $3,500. Check No. 2317. | |
27 | Recorded depreciation on equipment of $7,000 |
Record these transactions in the appropriate journals that follow.
Sales Journal | |||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Purchases Journal | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Receipts Journal | |||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Disc. Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Cash Payments Journal | ||||||||
Date | Ck. No. | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
General Journal | |||
Date | Accounts | DR | CR |
148) Salem Co. uses special journals to record its transactions. They use the perpetual inventory system. Shown below are the purchasing and cash payment transactions for current month of July:
July | 1 | Purchased merchandise for cash from Van Co. $4,400, Check No. 1033. |
2 | Purchased office equipment from Bat Co. on credit, $6,700, terms n/60. Invoice dated July 2. | |
6 | Paid Badger, Inc., $3,900 cash for previous purchases on account, which is net of a $100 discount, Check No. 1034. | |
9 | Purchased merchandise from Aztec, Inc. on credit, terms 1/15, n/30, $23,600. Invoice dated July 9. | |
10 | Paid Bat Co. cash for May 2 purchase, Check No. 1035. | |
18 | Purchased office supplies on credit $130, terms net EOM from Roberts, Co., Invoice dated July 18. |
Record these transactions in the following journals.
Purchases Journal | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Payments Journal | ||||||||
Date | Ck. No. | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
149) The following special journal is taken from a merchandising company that uses the perpetual inventory system:
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods Sold Dr. Inventory Cr. |
1/31 | Balance | 51,739 | 1,023 | 13,265 | 5,567 | 33,930 | 3,000 | ||
2/2 | H. Jones | Inv. 452 | x | 637 | 13 | 650 | |||
2/14 | Notes Payable | Note to bank | 351 | 1,300 | 1300 | ||||
2/17 | Sales | Cash sales | x | 1,248 | 1,248 | 680 | |||
2/22 | Equipment | 181 | 651 | 651 | |||||
2/28 | M. Simms | Inv. 403 | x | 156 | 156 | ||||
55,731 | 1,036 | 14,071 | 6,815 | 35,881 | 3,680 | ||||
(101) | (413) | (112) | (411) | (X) | (511/113) |
1. What is the name of the journal shown above?
2. Write an explanation for each entry in this journal.
3. What do the numbers in parentheses at the bottom of the journal indicate?
150) A company records its transactions and events in four special journals and a general journal. The company completed the following transactions a through j. Identify the journal in which each transaction should be recorded.
a. Sold merchandise for cash. ________
b. Collected on a customer's account. ________
c. Paid the monthly electric bill. ________
d. Purchased office supplies on credit. ________
e. Sold merchandise on credit. ________
f. Paid a creditor on account. ________
g. Received returned merchandise for credit. ________
h. Purchased merchandise on account. ________
i. Received proceeds from a note issued to the bank. ________
j. Returned damaged merchandise to the supplier. ________
151) Gershwin Company uses four special journals: purchases, sales, cash receipts, and cash payments. The following sales and cash collections transactions were incurred during October:
Oct. | 1 | Sold merchandise on credit to Lake Co. for $3,000, terms 2/15, n/30, Invoice No. 245. Cost of the goods sold is $1,320. |
5 | Sold merchandise on credit to Sigma Corp. for $2,000, terms, 2/10, n/30, Invoice No. 246. Cost of the goods sold is $740. | |
10 | Accepted merchandise returned by Lake Co. from October 1 sale. Issued credit memorandum for $500. Cost of the goods returned is $290. | |
13 | Received cash payment from Lake Co. for October 1 sale. | |
19 | Received cash payment in full from Sigma Corp. for the October 5 sale. | |
28 | Recorded cash sales for the month, $8,000. Cost of the goods sold is $4,220. |
Record these transactions in the appropriate special journals below.
Sales Journal | ||||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. | |
Cash Receipts Journal | |||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Cr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Dr. | Cost of Goods Sold Dr. Inventory Cr. |
General Journal | |||
Date | Accounts | DR | CR |
152) A company uses four special journals: purchases, sales, cash receipts, and cash payments. The following purchase and cash payments transactions were incurred during August:
Aug. | 1 | Purchased merchandise from Able Co. for $2,000, terms 2/10, n/30. Invoice dated August 1. |
7 | Paid salaries accrued on July 31, $2,100 to manager Ms. Krenz, Check No. 756. | |
9 | Returned merchandise costing $200 to Able Co. from August 1 purchase. | |
11 | Paid Able Co. for the August 1 purchase, Check No. 757. | |
28 | Purchased office supplies from Mercantile Co. on credit, terms 1/10, n/EOM for $335. | |
29 | Paid cash to Incite Telephone Co. for monthly telephone bill $250, Check No.758. |
Record these transactions in the appropriate special journals below.
Purchases Journal | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Payments Journal | ||||||||
Date | Ck. No | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
General Journal | |||
153) Trimble Company began business on July 1. They use the perpetual inventory method. The following transactions involving purchases and cash payments occurred during July.
July | 4 | Purchased $25,000 of merchandise inventory on credit from the Fort City Company, terms 2/15, n/30. Invoice dated July 4. |
July | 5 | Purchased $12,000 of merchandise inventory on credit from the Phoenix Company, terms 2/10, n/30. Invoice dated July 5. |
July | 8 | Purchased $3,000 of office supplies for cash from Gleason Co. Check no. 1267. |
July | 10 | Purchased $36,000 of office equipment on credit from Office Minder, terms n/60. Invoice dated July 10. |
July | 13 | Paid the amount due for the merchandise purchased from Fort City Company. Check no. 1268. |
July | 22 | Purchased $14,500 of merchandise inventory for cash from the Shilling Co. Check no. 1269. |
a. Use the purchases journal and the cash payments journal provided to record these transactions.
b. Prepare a schedule of accounts payable as of July 31. There were no accounts payable on July 1.
Purchases Journal | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Payments Journal | ||||||||
Date | Ck. No | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
154) The Moonlight Company completed the following sales and cash receipts transactions during November. The Moonlight Company uses the perpetual inventory system.
Nov. 1 | Sold merchandise for $6,700 on credit to the Three Rivers Co., terms 2/10, n/30. Invoice no. 1455. Cost of the merchandise sold is $3,600. |
Nov. 1 | Sold merchandise for $3,400 on credit to the Milwaukee Co., terms 2/10, n/30. Invoice no. 1456. Cost of the merchandise sold is $1,800. |
Nov. 2 | Sold merchandise for $590 for cash to the Madison Co. Invoice no. 1457. Cost of the merchandise sold is $300. |
Nov. 3 | Borrowed $10,000 from Lake City Bank on a long-term note payable. |
Nov. 3 | Sold merchandise for $7,200 on credit to the Pare Co., terms 2/10, n/30. Invoice no. 1458. Cost of the merchandise sold is $4,000. |
Nov. 5 | Received the amount due from the Three Rivers Co. from the sale on November 1. |
Nov. 6 | Sold merchandise on credit for $950 to the Manitowoc Co., terms 2/10, n/30. Invoice No. 1459. Cost of the merchandise is $500. |
Nov. 10 | Received the amount due from the Milwaukee Co. from the sale on November 1. |
a. Use the sales journal and the cash receipts journal to record these transactions.
b. Prepare a schedule of accounts receivable as of November 10. There was no accounts receivable balance at November 1.
Sales Journal | |||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Cash Receipts Journal | |||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods Sold Dr. Inventory Cr. |
155) Climbers Unlimited uses special journals to record its daily transactions. They use the perpetual inventory system. Shown below is its cash receipts journal and selected ledger accounts. Post the cash receipts journal to the appropriate ledger accounts.
Date | Account Credited | Explanation | PR | Cash Debit | Sales Disc. Debit | Accts. Rec. Credit | Sales Credit | Other Accts. Credit | COGS Dr. Inv. Cr. | |
July | 4 | Bale Co. | Invoice 303 | 3,200 | 34 | 3,234 | 2,000 | |||
7 | Sales | Cash sales | 700 | 700 | 450 | |||||
9 | SMT Co. | Invoice 304 | 950 | 950 | ||||||
10 | Notes Pay. | Bank loan | 5,400 | 5,400 | ||||||
20 | Notes Rec. | Delta Co. | 2,200 | |||||||
20 | Int. Rev. | 2,310 | 110 | |||||||
12,560 | 34 | 4,184 | 700 | 7,710 | 2,450 | |||||
General Ledger | ||||||||||
Cash No. 101 | Notes Payable No. 250 | |||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | |
7/1 | 4,500 | |||||||||
Accounts Receivable No. 106 | Sales No. 403 | |||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | |
7/1 | 6,700 | 7/1 | 30,000 | |||||||
Inventory No. 109 | Sales Discounts No. 405 | |||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | |
7/1 | 15,000 | 7/1 | 400 | |||||||
Notes Receivable No. 115 | Interest Revenue No. 415 | |||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | |
7/1 | 2,200 | |||||||||
Accounts Payable No. 201 | Cost of Goods Sold No. 502 | |||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | |
7/1 | 3,450 | 7/1 | 18,000 | |||||||
Accounts Receivable Subsidiary Ledger | |||||||||
Bale Co. | SMT Co. | ||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance |
7/1 | 4,750 | 7/1 | 1,950 | ||||||
156) The Skyview Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. They use the periodic inventory method. The following sales and cash collections transactions occurred during the month of December:
Dec. | 4 | Sold merchandise on credit for $3,300 to the B&A Co., Invoice No. 313. |
10 | Sold merchandise for $500 cash to CAR Corp., Invoice 314. | |
13 | Collected $3,300 from the B&A Co. for merchandise sold on December 4. | |
24 | Sold merchandise on credit for $4,500 to Cowl Corp., Invoice No. 315. |
Record these transactions using the journals below.
Sales Journal | Page 15 | ||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | |
Cash Receipts Journal | Page 17 | |||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Cr. | Accounts Receiv. Cr. | Sales Cr. | Other Accounts Dr. |
157) The Skyview Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. They use the periodic inventory method. The following purchase and cash payments transactions occurred during the month of December:
Dec | 8 | Purchased merchandise on credit for $1,800 from the Wexler Co., terms 2/10, n/30. Invoice dated December 8. |
17 | Paid amount owed to Wexler Co. from December 8 purchase, Check No. 1011. | |
27 | Paid $400 cash for monthly rent to Iowa Properties, Check No. 1012. | |
31 | Purchased equipment for $3,055 from Gore Corp., Check No. 1013. |
Record these transactions using the journals below.
Purchases Journal | Page 20 | |||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Purchases Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Payments Journal | Page 22. | |||||||
Date | Ck. No. | Payee | Account Debited | PR | Cash Cr. | Purchase Discounts Cr. | Other Accounts Dr. | Accounts Payable Dr. |
| ||||||||
158) Daisy Company began business on May 1. They use the periodic inventory method. The following transactions involving purchases and cash payments occurred during the first week of May.
May 2 | Purchased $25,000 of merchandise inventory on credit from the Farthing Company, terms 2/10, n/30. Invoice dated May 2. |
May 3 | Purchased $12,000 of merchandise inventory on credit from the Hacks Company, terms 2/10, n/30. Invoice dated May 3. |
May 3 | Purchased $3,000 of office supplies for cash from Liston Co. Check no. 1267 May. |
May 4 | Purchased $36,000 of office equipment on credit from Superior Office, terms n/60. Invoice dated May 4. |
May 6 | Paid the amount due for the merchandise purchased from Farthing Company. Check no. 1268. |
May 6 | Purchased $14,500 of merchandise inventory for cash from the Hills Co. Check no. 1269. |
a. Use the purchases journal and the cash payments journal to record these transactions.
b. Prepare a schedule of accounts payable. There was no accounts payable balance on May 1.
Purchases Journal | Page 20 | |||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr | Purchases Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Payments Journal | Page 22 | |||||||
Date | Ck. No | Payee | Account Debited | PR | Cash Cr. | Purchases Discount Cr. | Other Accounts Dr. | Accounts Payable Dr. |
159) The Lavender Company completed the following sales and cash receipts transactions during the first week of December. The Lavender Company uses the periodic inventory system.
Dec. 1 | Sold merchandise for $6,700 on credit to the Banks Co., terms 2/10, n/30, invoice no. 1455. Cost of the merchandise sold is $3,600. |
Dec. 1 | Sold merchandise for $3,400 on credit to the Warsaw Co., terms 2/10, n/30. Invoice no. 1456. Cost of the merchandise sold is $1,800. |
Dec. 2 | Sold merchandise for $590 for cash to the Draper Co. Invoice no. 1457. Cost of the merchandise sold is $300. |
Dec. 3 | Borrowed $10,000 from Franklin Savings on a long-term note payable. |
Dec. 3 | Sold merchandise for $7,200 on credit to the Wentner Co., terms 2/10, n/30. Invoice no. 1458. Cost of the merchandise sold is $4,000. |
Dec. 5 | Received the amount due from the Banks Co. from the sale on December 1. |
Dec. 6 | Sold merchandise on credit for $950 to the Global Co., terms 2/10, n/30. Invoice No. 1459. |
Dec. 6 | Received the amount due from the Warsaw Co. from the sale on December 1. |
a. Use the sales journal and the cash receipts journal to record these transactions.
b. Prepare a schedule of accounts receivable. There was no accounts receivable balance at December 1.
Sales Journal | ||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. |
Cash Receipts Journal | ||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. |
160) The following information is available for Soda Station, Inc.:
Accounts Payable | 2,120 |
Cost of Goods Sold | 35,800 |
a. Determine the days' payable outstanding.
b. Comment on the results.
161) The following information is available for Fresh Snacks, Inc. :
Accounts Payable | 1,200 |
Cost of Goods Sold | 12,100 |
a. Determine the days' payable outstanding
b. Comment on the results.
162) Plimpton Sales uses special journals to record business transactions. Plimpton sells office equipment. The company completed the following transactions a through j. Identify the journal in which each transaction should be recorded.
a. | Paid an installment on a bank loan. | |
b. | Purchased inventory on credit. | |
c. | Paid cash to a creditor. | |
d. | Sold equipment to a customer on credit. | |
e. | Sold equipment to a customer for cash. | |
f. | Paid employees' salaries in cash. | |
g. | Received payment from a customer on credit. | |
h. | Purchased office supplies on account. | |
i. | Returned inventory to creditor before payment. | |
j. | Sold equipment on account. |
163) Jamison Company uses special journals to record transactions. All of the companies listed below supply inventory to Jamison except McGarry Co. that supplies equipment. Use the purchases journal given below to answer the following questions:
a. Foot and crossfoot the journal for accuracy.
Purchases Journal | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
5/3 | Jones Co. | 5/3 | 2/10, n/30 | 20,000 | 20,000 | |||
5/5 | Perry Co. | 5/5 | 2/10, n/30 | 18,000 | 18,000 | |||
5/7 | McGarry Co./Equip. | 5/7 | n/60 | 36,000 | 36,000 | |||
5/8 | Colder Co. | 5/8 | 2/10, n/30 | 10,000 | ||||
5/9 | French Co. | 5/9 | 2/10, n/30 | 12,000 | 12,000 | |||
b. An error was made in the journal. Identify the error and indicate how to correct it.
c. When Jamison compares the general ledger Accounts Payable account to the Accounts Payable ledger, it notices that the general ledger control account is $10,000 more than the schedule of Accounts Payable. What is the most likely cause and how should it be corrected?
164) Morris Company uses special journals to record transactions. Below are the sales journal and cash receipts journal for Morris. Prepare the following:
a. Open an accounts receivable subsidiary ledger having a T-account for each customer. Post the invoices to the subsidiary ledger.
b. Open an Accounts Receivable controlling T-Account. Post the end-of the month totals that affect the Accounts Receivable account only.
c. Prepare a schedule of accounts receivable and prove that its total equals the Accounts Receivable controlling account balance.
Sales Journal | |||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
12/1 | Wazoo Co. | 1200 | 6,900 | 3,500 | |
12/1 | Fargo Co. | 1201 | 3,400 | 1,800 | |
12/3 | Jansen Co. | 1202 | 7,200 | 4,000 | |
12/6 | Marsh Co. | 1203 | 3,000 | 1,500 | |
Totals | 20,500 | 10,800 | |||
Cash Receipts Journal | |||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods Sold Dr. Inventory Cr. |
12/2 | Sales | Cash sales | 12,000 | 12,000 | 6,500 | ||||
12/3 | Notes Payable | Bank loan | 15,000 | 15,000 | |||||
12/5 | Wazoo Co. | Invoice 12/1 | 6,762 | 138 | 6,900 | ||||
12/6 | Fargo Co. | Invoice 12/1 | 3,332 | 68 | 3,400 | ||||
Totals | 37,094 | 206 | 10,300 | 12,000 | 15,000 | 6,500 | |||
165) Fagin Company uses special journals to record transactions. Below are the sales journal and cash receipts journal for Fagin in the first part of August.
Required:
a. Open an accounts receivable subsidiary ledger having a T-account for each customer. Post the invoices to the subsidiary ledger.
b. Open an Accounts Receivable controlling T-Account. Post the end-of the month totals that affect the Accounts Receivable account only.
c. Prepare a schedule of accounts receivable and prove that its total equals the Accounts Receivable controlling account balance.
Sales Journal | ||||||
Date | Account Debited | Invoice No. | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. | |
8/1 | Pip Co. | 1200 | 6,900 | 3,000 | ||
8/1 | Rivers Co. | 1201 | 4,200 | 1,900 | ||
8/3 | Lloyd Co. | 1202 | 7,200 | 4,000 | ||
8/6 | Carmen Co. | 1203 | 2,500 | 1,200 | ||
Totals | 20,800 | 10,100 | ||||
Cash Receipts Journal | |||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods Sold Dr. Inventory Cr. |
8/2 | Sales | Cash sales | 10,000 | 10,000 | 5,500 | ||||
8/3 | Notes | Bank loan | 12,000 | 12,000 | |||||
8/5 | Pip Co. | Invoice 8/1 | 6,762 | 138 | 6,900 | ||||
8/9 | Lloyd Co. | Invoice 8/3 | 7,056 | 144 | 7,200 | ||||
Totals | 35,818 | 282 | 14,100 | 10,000 | 12,000 | 6,500 | |||
166) Valley Company shows the following customer accounts in its subsidiary ledger and the Accounts Receivable account in the general ledger for the month of July. Prepare a schedule of accounts receivable as proof that the subsidiary ledger balances equals the Accounts Receivable controlling account balance.
Laredo | Spring | Dallas | Preston | ||||
2,500 | 1,200 | 5,650 | 5,650 | 3,950 | 1,950 | 7,200 | |
1,300 | 0 | 2,000 | 7,200 | ||||
Accounts Receivable | |
19,300 | 8,800 |
10,500 | |
167) Health Co. Company uses special journals to record transactions. Health Co. uses the perpetual inventory system. Journalize the following transactions in the appropriate special journal. All credit sales have 2/10, n/30 terms.
Nov. 3 | The company purchased $5,500 of merchandise on credit from Hatch, terms 2/10, n/30. |
5 | The company sold merchandise costing $5,250 to Level Company for $8,900, invoice no. 278. |
7 | The owner, L. Garvey, contributed $15,000 cash to the company. |
8 | The company purchased $7,200 of merchandise on credit from Gentry Company, terms 1/15, n/30. |
10 | The company sold merchandise costing $4,630 to Nance Company for $8,250, invoice no. 279. |
14 | The company received payment from Level Company for the November 5 sale within the discount period. |
15 | Health Co. paid salaries of $5,560 for the first half of the month, check no. 214. |
16 | Health Co. returned $1,200 of the merchandise purchased on November 8 to Gentry Company. |
20 | Health Co. paid Gentry for the purchase on November 8 within the discount period, check no. 215. |
22 | Health Co. purchased office equipment from Vale Co. costing $12,000 on credit, terms n/30. |
Sales Journal | |||||
Date | Account Debited | Invoice Number | PR | Accounts Receivable Dr. Sales Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Purchases Journal | ||||||||
Date | Account | Date of Invoice | Terms | PR | Accounts Payable Cr. | Inventory Dr. | Office Supplies Dr. | Other Accounts Dr. |
Cash Receipts Journal | |||||||||
Date | Account Credited | Explanation | PR | Cash Dr. | Sales Discount Dr. | Accounts Receivable Cr. | Sales Cr. | Other Accounts Cr. | Cost of Goods Sold Dr. Inventory Cr. |
Cash Payments Journal | ||||||||
Date | Ck. No. | Payee | Account Debited | PR | Cash Cr. | Inventory Cr. | Other Accounts Dr. | Accounts Payable Dr. |
General Journal | |||
168) The following information is available for Napa, Inc.:
Accounts Payable | 2,320 |
Cost of Goods Sold | 25,590 |
a. Determine the days' payable outstanding
169) The ________ principle requires that the benefits from an activity in an accounting information system outweigh the costs of that activity.
170) The ________ principle requires that an accounting information system aid managers in controlling and monitoring business activities.
171) ________ consist of people, records, methods, and equipment that collect and process data from transactions and events, organize them in useful reports and communicate results to decision makers.
172) The ________ principle requires that an accounting information system report useful, understandable, and timely information for decision making.
173) The ________ principle requires that an accounting information system conforms to a company's activities, personnel, and structure.
174) The ________ principle requires that an accounting information system must be able to adapt to changes in the company, business environment, and needs of decision makers.
175) ________ provide the information processed by an accounting system, and can include bank statements, billings to customers, and employee earnings records.
176) ________ take information from source documents and transfer it to the system's information processing component.
177) ________ are the part of the accounting information system that summarizes information for use in analysis and reporting.
178) ________ is the accounting system component that keeps data in a form accessible to information processors.
179) ________ are the part of the accounting information system that make accounting information available to users.
180) A ________ journal is used to record and post transactions of similar type.
181) A ________ is an all-purpose journal that can record any type of transaction.
182) Using ________ ledgers, that store transaction data of individual accounts with common characteristics, removes unnecessary details from the general ledger.
183) ________ refers to the programs that help managers direct a company's operations.
184) ________ processing of transactions enters and processes data as soon as source documents are available.
185) ________ processing of transactions accumulates source documents for a period of time and then processes them all at once such as daily, weekly, or monthly.
186) ________ are links among computers giving users access to common databases and programs.
187) ________ is a measure of the average length of time that payables are deferred until payment is made.
188) Individual transactions in the sales journal are posted regularly to customers' accounts in the ________.
189) A ________ is a listing of accounts from the accounts payable ledger with their balances and the sum of all balances.
190) The difference in the sales journal between the perpetual and periodic inventory systems is a column to record ________ and ________ for each sale. This column is used in the perpetual system but not in the periodic.
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Answer Key + Test Bank | Fundamental Accounting Principles 24e
By John J. Wild