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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)

Step by step solution

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

What is accounting?

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.

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