Selected accounts from the chart of accounts

Reference no: EM131018884

Selected accounts from the chart of accounts of Fornelli Co. are shown below.

101	Cash	306	Owner’s Drawings
112	Accounts Receivable	401	Sales Revenue
120	Inventory	414	Sales Discounts
126	Supplies	505	Cost of Goods Sold
131	Prepaid Rent	631	Supplies Expense
201	Accounts Payable	729	Rent Expense
301	Owner’s Capital

Presented below are the purchases and cash payments journals for Fornelli Co. for its first month of operations.

PURCHASES JOURNAL
			P1
Date	Account Credited	Ref	Inventory Dr. Accounts Payable Cr.
July 4	N. Alvarado		7,183
5	F. Rees		8,300
11	J. Gallup		6,484
13	C. Werly		14,800
20	M. Mangus		7,835
			44,602

CASH PAYMENTS JOURNAL
						CP1
Date	Account Debited	Ref	Other Accounts Dr.	Accounts Payable Dr.	Inventory Cr.	Cash Cr.
July 4	Supplies		698			698
10	F. Rees			8,300	83	8,217
11	Prepaid Rent		6,104			6,104
15	N. Alvarado			7,183		7,183
19	Owner’s Drawings		2,519			2,519
21	C. Werly			14,800	148	14,652
			9,321	30,283	231	39,373

In addition, the following transactions have not been journalized for July. The cost of all merchandise sold was 65% of the sales price.

July 1		The founder, N. Fornelli, invests $74,700 in cash.
6		Sell merchandise on account to Dow Co. $6,200 terms 1/10, n/30
7		Make cash sales totaling $7,500.
8		Sell merchandise on account to S. Goebel $5,200, terms 1/10, n/30.
10		Sell merchandise on account to W. Leiss $5,800, terms 1/10, n/30.
13		Receive payment in full from S. Goebel.
16		Receive payment in full from W. Leiss.
20		Receive payment in full from Dow Co.
21		Sell merchandise on account to H. Kenney $5,600, terms 1/10, n/30.
29		Returned damaged goods to N. Alvarado and received cash refund of $345.

Journalize the transactions that have not been journalized in the sales journal and the cash receipts journal. (Record entries in the order displayed in the problem statement.)

Sales Journal
S1
Date	Account Debited	Ref	Accounts Receivable Dr. Sales Revenue Cr.	Cost of Goods Sold Dr. Inventory Cr.
		√
		√
		√
		√

			(112)(401)	(505)(120)

Cash Receipts Journal
CR1
Date	Account Credited	Ref	Cash Dr.	Sales Discounts Dr.	Accounts Receivable Cr.	Sales Revenue Cr.	Other Accounts Cr.	Cost of Goods Sold Dr. Inventory Cr.
		301

		√
		√
		√
		120

			(101)	(414)	(112)	(401)	(X)	(505)(120)

Post to the accounts receivable and accounts payable subsidiary ledgers. (Post entries in the order of entries presented in the previous part.)

Accounts Receivable Subsidiary Ledger
Dow Co.
Date	Explanation	Ref	Debit	Credit	Balance
		S1
		CR1
H. Kenney
Date	Explanation	Ref	Debit	Credit	Balance
		S1
W. Leiss
Date	Explanation	Ref	Debit	Credit	Balance
		S1
		CR1
S. Goebel
Date	Explanation	Ref	Debit	Credit	Balance
		S1
		CR1

Accounts Payable Subsidiary Ledger
C. Werly
Date	Explanation	Ref	Debit	Credit	Balance
		P1
		CP1
F. Rees
Date	Explanation	Ref	Debit	Credit	Balance
		P1
		CP1
M. Mangus
Date	Explanation	Ref	Debit	Credit	Balance
		P1
N. Alvarado
Date	Explanation	Ref	Debit	Credit	Balance
		P1
		CP1
J. Gallup
Date	Explanation	Ref	Debit	Credit	Balance
		P1

Post the individual entries and totals to the general ledger.

Cash					No. 101
Date	Explanation	Ref	Debit	Credit	Balance
		CR1
		CP1
Accounts Receivable					No. 112
Date	Explanation	Ref	Debit	Credit	Balance
		S1
		CR1
Inventory					No. 102
Date	Explanation	Ref	Debit	Credit	Balance
		P1
		CR1
		CP1
		S1
		CR1
Supplies					No. 127
Date	Explanation	Ref	Debit	Credit	Balance
		CP1
Prepaid Rent					No. 131
Date	Explanation	Ref	Debit	Credit	Balance
		CP1
Accounts Payable					No. 201
Date	Explanation	Ref	Debit	Credit	Balance
		P1
		CP1
Owner’s Capital					No. 301
Date	Explanation	Ref	Debit	Credit	Balance
		CR1
Owner’s Drawings					No. 306
Date	Explanation	Ref	Debit	Credit	Balance
		CP1
Sales Revenue					No. 401
Date	Explanation	Ref	Debit	Credit	Balance
		S1
		CR1
Sales Discounts					No. 414
Date	Explanation	Ref	Debit	Credit	Balance
		CR1
Cost of Goods Sold					No. 505
Date	Explanation	Ref	Debit	Credit	Balance
		S1
		CR1

Prepare a trial balance at July 31, 2014.

FORNELLI CO. Trial Balance July 31, 2014
	Debit	Credit
	$	$
	$	$

Determine whether the subsidiary ledgers agree with the control accounts in the general ledger.

Accounts receivable balance		$

Subsidiary accounts balance
		$

Accounts payable balance		$

Subsidiary accounts balance
		$
		$

The following adjustments at the end of July are necessary.

1. A count of supplies indicates that $198 is still on hand.

2.. Recognize rent expense for July, $465.

Prepare the necessary entries in the general journal. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
1.
2.

Post the entries to the general ledger.

Cash					No. 101
Date	Explanation	Ref	Debit	Credit	Balance
July 31		CR1	99,635		99,635
July 31		CP1		39,373	60,262
Accounts Receivable					No. 112
Date	Explanation	Ref	Debit	Credit	Balance
July 31		S1	22,800		22,800
July 31		CR1		17,200	5,600
Inventory					No. 120
Date	Explanation	Ref	Debit	Credit	Balance
July 31		P1	44,602		44,602
July 29		CR1		345	44,257
July 31		CP1		231	44,026
July 31		S1		14,820	29,206
July 31		CR1		4,875	24,331
Supplies					No. 127
Date	Explanation	Ref	Debit	Credit	Balance
July 4		CP1	698		698
	Adjusting Entry	G1
Prepaid Rent					No. 131
Date	Explanation	Ref	Debit	Credit	Balance
July 11		CP1	6,104		6,104
	Adjusting Entry	G1
Accounts Payable					No. 201
Date	Explanation	Ref	Debit	Credit	Balance
July 31		P1		44,602	44,602
July 31		CP1	30,283		14,319
Owner’s Capital					No. 301
Date	Explanation	Ref	Debit	Credit	Balance
July 1		CR1		74,700	74,700
Owner’s Drawings					No. 306
Date	Explanation	Ref	Debit	Credit	Balance
July 19		J1	2,519		2,519
Sales Revenue					No. 401
Date	Explanation	Ref	Debit	Credit	Balance
July 31		S1		22,800	22,800
July 31		CR1		7,500	30,300
Sales Discounts					No. 414
Date	Explanation	Ref	Debit	Credit	Balance
July 31	Balance	CR1	110		110
Cost of Goods Sold					No. 505
Date	Explanation	Ref	Debit	Credit	Balance
July 31		S1	14,820		14,820
July 31		CR1	4,875		19,695
Supplies Expense					No. 631
Date	Explanation	Ref	Debit	Credit	Balance
	Adjusting Entry	G1
Rent Expense					No. 729
Date	Explanation	Ref	Debit	Credit	Balance
	Adjusting Entry	G1

Prepare an adjusted trial balance at July 31, 2014.

FORNELLI CO. Adjusted Trial Balance July 31, 2014
	Debit	Credit
	$	$
	$	$

Reference no: EM131018884

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