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Chapter 1: AB-10SE (page 34)

Recording transactions in a cash payments journal

Jan. 5 Issued check no. 430 to purchase equipment for cash, \(1,700.

7 Purchased merchandise inventory for cash, \)450, issuing check no. 431.

18 Paid Kat Co. amount owed, \(775, less \)100 discount. Issued check no.

432.

28 Issued check no. 433 to pay utilities, $260. The bill was just received,

andthere is no liability recorded.

Use the following cash payments journal to record the preceding transactions.

Cash Payments Journal Page 8

Date

Ck. No.

Account Debited

Post. Ref.

Other Accounts DR

Accounts Payable DR

Merchandise Inventory CR

Cash CR

2018

Short Answer

Expert verified

Total Cash payment:$3,085

Step by step solution

01

Cash Payment Journal

A cash payment journal is used to record all cash payment-related transactions. Cash payments may be related to the payment to creditors, expenses, or other cash purchases. Cash payments also include payments by check.

02

Posting to cash payment journal

Cash Payments Journal Page 8

Date

Ck. No.

Account Debited

Post. Ref.

Other Accounts DR

Accounts Payable DR

Merchandise Inventory CR

Cash CR

2018

Jan 5

430

Equipment

$1,700

$1,700

7

431

Merchandise Inventory

450

450

18

432

Kat Co.

$775

$100

675

28

433

Utilities

260

260

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Most popular questions from this chapter

Identifying accounts on the financial statements Consider the following accounts: a. Accounts Payable b. Cash c. Common Stock d. Accounts Receivable e. Rent Expense f. Service Revenue g. Office Supplies h. Dividends i. Land j. Salaries Expense Identify the financial statement (or statements) that each account would appear on. Use I for Income Statement, RE for Statement of Retained Earnings, B for Balance Sheet, and C for Statement of Cash Flows.

Match the accounting terminology to the definitions. 7. Cost principle a. oversees the creation and governance of accounting standards in the United States 8. GAAP b. requires an organization to be a separate economic unit 9. Faithful representation c. oversees U.S. financial markets 10. SEC d. states that acquired assets and services should be recorded at their actual cost 11. FASB e. creates International Financial Reporting Standards 12. Monetary unit assumption f. the main U.S. accounting rule book 13. Economic entity assumption g. assumes that an entity will remain in operation for the foreseeable future 14. Going concern assumption h. assumes that items on the financial statements are recorded in a monetary unit 15. IASB i. requires information to be complete, neutral, and free from material error

Identifying users of accounting information

For each of the users of accounting information, identify whether the user is an external decision maker (E) or an internal decision maker (I):

a. customer

b. company manager

c. Internal Revenue Service

d. lender

e. investor

f. controller

g. cost accountant

h. SEC

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 3. Which business has more stockholders’ equity at the end of the year?

As the manager of a Papa Sean’s restaurant, you must deal with a variety of business transactions. Give an example of a transaction that has each of the following effects on the accounting equation: a. Increase one asset and decrease another asset. b. Decrease an asset and decrease equity. c. Decrease an asset and decrease a liability. d. Increase an asset and increase equity. e. Increase an asset and increase a liability
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