Questions
> Why use special journals?
>What are the advantages to using subsidiary ledgers?
> What are the disadvantages to using subsidiary ledgers?
> Does the term “accounting system” always mean a computerized system? Why or why not?
Exercises
Exercise 1: Match the special journal with its definition:
Journals | Definition |
a. Cash Receipts Journal | ____ 1. Purchases on account |
b. Cash Disbursement Journal | ____ 2. Sales on account |
c. Sales Journal | ____ 3. Cash paid by the company. |
d. Purchases Journal | ____ 4. Cash Received by the company. |
e. General Journal | ____ 5. Adusting, closing and returns. |
Exercise 2: Enter P for Purchases journal, S for Sales journal, CR for Cash Receipts journal, CD for Cash Disbursements, and G for General journal to identify which special journal these transactions would appear:
a. Purchased supplies for cash | _________ |
b. Customer paid on account | _________ |
c. Borrowed cash from the bank. | _________ |
d. Purchased inventory on account. | _________ |
e. Sold merchandise for cash. | _________ |
f. Returned inventory purchased. | _________ |
g. Paid utility bill. | _________ |
h. Sold merchandise on credit. | _________ |
i. Customer returned merchandise. | _________ |
j. Paid vendor for purchase. | _________ |
Exercise 3: The following transactions appeared for Some Company, Inc. Identify which special journal each transaction should be recorded (use S for Sales journal, P for Purchases journal, CR for Cash Receipts journal, CD for Cash Disbursements, and G for General journal).
Jan 1 Some Company issued $50,000 in stock to investors. |
Jan 5 Purchase a equipment by paying $15,000 cash. |
Jan 8 Purchased $2,000 in inventory from Bottle Inc. terms 1/10, N30 |
Jan 10 Sold $2,000 of inventory to ABC Company for $4,000 terms 2/10,N30. |
Jan 15 Made a partial payment to Bottle Inc. for $1,500. |
Jan 16 Purchased $1,000 of inventory for cash. |
Jan 20 Sold $1,000 of inventory to JKL Company for $2,000 terms 2/10, N30. |
Jan 20 Received full payment for Jan 10 sale to ABC less the discount. |
Jan 21 JKL Company returned $200 of merchandise for a credit of $400. |
Jan 25 Purchased $500 of supplies on credit. |
Exercise 4: Using the transactions from Exercise 3, complete the following:
- Create an accounts receivable ledger account and customer ledger for ABC Company and JKL Company.
- Post the appropriate entries to the accounts receivable control ledger (use the individual transactions) and the customer ledgers.
- Prepare a Schedule of Accounts Receivable to prove the balance in accounts receivable.
Exercise 5: Using the transactions from Exercise 3, complete the following:
- Create an accounts payable ledger account and vendor ledger for Bottle Inc..
- Post the appropriate entries to the accounts payable control ledger (use the individual transactions) and the vendor ledger.
- Prepare a Schedule of Accounts Payable to prove the balance in accounts payable.