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Chapter 1: AB-3SE (page 31)

Use the following abbreviations to indicate the journal in which you would record transactions a through n.

J = General journal

S = Sales journal

CR = Cash receipts journal

P = Purchases journal

CP = Cash payments journal

Transactions:

a. Cash purchase of merchandise inventory

b. Collection of dividend revenue earned on an investment

c. Prepayment of insurance

d. Borrowing money on a long-term note payable

e. Purchase of equipment on account

f. Cost of goods sold along with a credit sale

g. Cash sale of merchandise inventory

h. Payment of rent

i. Depreciation of computer equipment

j. Purchase of merchandise inventory on account

k. Collection of accounts receivable

l. Expiration of prepaid insurance

m. Sale on account

n. Payment on account

Short Answer

Expert verified

J

S

CR

P

CP

(i)

(f)

(b)

(e)

(a)

(l)

(m)

(d)

(j)

(c)

(g)

(h)

(k)

(n)

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01

General Journal

A general journal is used to record transactions that are general in nature. This journal records the transactions that are not related to any of the other special-purpose journals.

From the given transaction, the following transactions would be recorded under General Journal –

i)Depreciation of computer equipment

l) Expiration of prepaid insurance

02

Sales Journal

A sales journal is a special purpose journal that is used to record sales transactions on the account.

From the given list, the following transactions would be recorded under Sales Journal –

f) Cost of goods sold along with a credit sale

m) Sale on account

03

Cash Receipts Journal

A cash receipts journal is used to record any cash receipt-related transactions. These transactions can be related to sales revenue, receivables recovery, other revenue, etc.

From the given list, the following transactions would be recorded under the Cash receipts Journal –

b) Collection of dividend revenue earned on an investment

d) Borrowing money on a long-term note payable

g)Cash sale of merchandise inventory

k) Collection of accounts receivable

04

Purchase Journal

A purchase journal is used to record the purchases on account. These purchases can be for merchandise, assets, or any other resources.

From the given list, the following transactions would be recorded under the Purchase Journal –

e)Purchase of equipment on account

j) Purchase of merchandise inventory on account

05

Cash Payment Journal

Any type of transaction involving cash payment is recorded under this journal.

From the given list, the following transactions would be recorded under the Cash Payment Journal –

a)Cash purchase of merchandise inventory

c)Prepayment of insurance

h) Payment of rent

n) Payment on account

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Most popular questions from this chapter

Presented here are the accounts of Pembroke Bookkeeping Company for the year ended December 31, 2018: Land \( 10,000 Common Stock \) 29,000 Notes Payable 31,000 Accounts Payable 7,000 Property Tax Expense 3,100 Accounts Receivable 1,200 Dividends 28,000 Advertising Expense 12,000 Rent Expense 7,000 Building 147,400 Salaries Expense 64,000 Cash 2,800 Salaries Payable 800 Equipment 15,000 Service Revenue 192,000 Insurance Expense 1,700 Office Supplies 12,000 Interest Expense 6,600 Retained Earnings, Dec. 31, 2017 51,000 Requirements 1. Prepare Pembroke Bookkeeping Company’s income statement. 2. Prepare the statement of retained earnings. 3. Prepare the balance sheet.

Consider the following accounting terms and definitions, and match each term to the definition:

1. Accounting equation

2. Asset

3. Balance sheet

4. Expense

5. Income statement

6. Liability

7. Net income

8. Net loss

9. Revenue

10. Statement of cash flows

11. Statement of retained

earnings

a. An economic resource that is expected to be of benefit

in the future

b. Debts that are owed to creditors

c. Excess of total expenses over total revenues

d. Excess of total revenues over total expenses

e. The basic tool of accounting, stated as

Assets = Liabilities + Equity

f. Decreases in equity that occur in the course of selling

goods or services

g. Increases in equity that occur in the course of selling

goods or services

h. Reports on a business’s cash receipts and cash payments

during a period

i. Reports on an entity’s assets, liabilities, and stockholders’

equity as of a specific date

j. Reports on an entity’s revenues, expenses, and net

income or loss for the period

k. Reports how the company’s retained earnings balance

changed from the beginning to the end of the period

Amos Sharp recently opened his own accounting firm on October 1, which he operates as a corporation. The name of the new entity is Amos Sharp, CPA. Sharp experienced the following events during the organizing phase of the new business and its first month of operations in 2018. Oct. 5 Sharp deposited \(45,000 in a new business bank account titled Amos Sharp, CPA. The business issued common stock to Sharp. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(6,500. 10 Consulted with tax client and received \)3,300 for services rendered. 11 Paid utilities, \(340. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)16,000. 18 Paid office rent, \(1,800. 25 Received amount due from client that was billed on October 12. 27 Paid full amount of Accounts Payable created on October 7. 31 Cash dividends of \)3,800 were paid to stockholders. Requirements 1. Analyze the effects of the events on the accounting equation of Amos Sharp, CPA. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet

Match the accounting terminology to the definitions. 1. Certified management accountants a. information system that measures business activities, processes that information into reports, and communicates the results to decision makers 2. Accounting b. professional accountants who serve the general public 3. Managerial accounting c. person or business to whom a business owes money 4. Certified public accountants d. field of accounting that focuses on providing information for internal decision makers 5. Financial accounting e. professionals who work for a single company 6. Creditor f. field of accounting that focuses on providing information for external decision makers

Tiny Town Kennel earns service revenue by caring for the pets of customers. Tiny

Town Kennel is organized as a corporation. During the past month, Tiny Town

Kennel has the following transactions:

a. Received \(520 cash for service revenue earned.

b. Paid \)325 cash for salaries expense.

c. Received a \(1,000 contribution in exchange for common stock.

d. Earned \)640 for service revenue, but the customer has not paid Tiny Town

Kennel yet.

e. Received utility bill of \(85, which will be paid next month.

f. Cash dividends of \)100 were paid to stockholders.

Indicate the effects of the business transactions on the accounting equation for Tiny

Town Kennel. Transaction (a) is answered as a guide.

Increase asset (Cash); Increase equity (Service Revenue)
See all solutions

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