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Chapter 1: AB-12SE (page 35)

Recording transactions in a general journal
Mar. 2 Sold merchandise inventory on account, terms n/30, to B. Kelp, issuing
invoice no. 501 for \(1,000 (cost, \)680).
6 Issued credit memo to B. Kelp for \(1,000 for merchandise returned to
thebusiness by the customer. Also accounted for receipt of the
merchandiseinventory at cost.
21 Purchased merchandise inventory on credit terms of 3/10, n/30 from
PondCo., \)600.
28 Returned damaged merchandise inventory to Pond Co., issuing a debit
memo for $600.
Journalize the above transactions that should be recorded in the general journal.If a transaction should not be recorded in the general journal, identify the specialjournal that should be used. Assume the company uses the perpetual inventorysystem.

Short Answer

Expert verified

Total of general journal amounts to$2,280.

Step by step solution

01

Transactions to be recorded in General Journal

Date	Particular	Debit	Credit

Mar. 6	Sales Return	$1,000
	B. Kelp		$1,000
	Being goods returned by the customer

6	Merchandise Inventory	680
	Cost of goods sold		680
	Being cost of inventory returned to pool

28	Pond Co.	600
	Purchase Return		600
	Being goods returned to the creditor

02

Transactions not to be recorded in General Journal

March 2– This transaction would not be recorded in the general journal. This is a sales transaction on account and would be recorded in the sales journal.

March 21– This transaction would also not be recorded in the general journal. This is related to purchase on account and would be reported in the purchase journal.

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Most popular questions from this chapter

Let’s examine a case using Greg’s Tunes and Sal’s Silly Songs. It is now the end of the first year of operations, and the stockholders want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and no dividends were paid. The businesses throw together the data shown on the next page at year-end: \( 23,000 8,000 35,000 22,000 \) 10,000 6,000 44,000 9,000 Total Assets Common Stock Total Revenues Total Expenses Greg’s Tunes: Sal’s Silly Songs: Total Liabilities Common Stock Total Expenses Net Income To gain information for evaluating the businesses, the stockholders ask you several questions. For each answer, you must show your work to convince the stockholders that you know what you are talking about.

Requirements 2. Which business owes more to creditors?

Annette Pachelo recently opened her own law office on March 1, which she operates as a corporation. The name of the new entity is Annette Pachelo, Attorney. Pachelo experienced the following events during the organizing phase of the new business and its first month of operation, March 2018. Some of the events were personal and did not affect the law practice. Others were business transactions and should be accounted for by the business. Mar. 1 Sold personal investment in Amazon stock, which she had owned for several years, receiving \(35,000 cash. 2 Deposited the \)35,000 cash from the sale of the Amazon stock in her personal bank account. 3 Deposited \(73,000 cash in a new business bank account titled Annette Pachelo, Attorney. The business issued common stock to Pachelo. 5 Paid \)700 cash for ink cartridges for the printer. 7 Purchased computer for the law office, agreeing to pay the account, \(5,000, within three months. 9 Received \)2,800 cash from customers for services rendered. 15 Received bill from The Lawyer for magazine subscription, \(400. (Use Miscellaneous Expense account.) 23 Finished court hearings on behalf of a client and submitted a bill for legal services, \)10,000, on account. 28 Paid bill from The Lawyer. 30 Paid utilities, \(1,200. 31 Received \)3,300 cash from clients billed on March 23. 31 Cash dividends of $5,500 were paid to stockholders. Requirements 2. Prepare the following financial statements: b. Statement of retained earnings.

Meg McIntyre opened a public relations firm called Pop Chart on August 1, 2018. The following amounts summarize her business on August 31, 2018During September 2018, the business completed the following transactions: a. Received contribution of \(14,000 cash from Meg McIntyre in exchange for common stock. b. Performed service for a client and received cash of \)1,600. c. Paid off the beginning balance of accounts payable. d. Purchased office supplies from OfficeMax on account, \(1,200. e. Collected cash from a customer on account, \)2,300. f. Cash dividends of \(1,500 were paid to stockholders. g. Consulted for a new band and billed the client for services rendered, \)4,000. h. Recorded the following business expenses for the month: Paid office rent: \(900. Paid advertising: \)450. Analyze the effects of the transactions on the accounting equation of Pop Chart using the format presented above.:

Using the following information, complete the income statement, statement of retained earnings, and balance sheet for DR Painting for the month of March 2018. The business began operations on March 1, 2018. Accounts Receivable \( 1,400 Salaries Expense \) 800 Accounts Payable 1,000 Service Revenue 7,000 Cash 22,300 Office Supplies 1,800 Stock issued during March 40,000 Truck 20,000 Dividends paid during March 1,500 Utilities Expense 200

How does retained earnings increase? What are the two ways that retained earnings decreases?

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