8.6: Exercises- Unit 8

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Questions

> Why use special journals?

>What are the advantages to using subsidiary ledgers?

> What are the disadvantages to using subsidiary ledgers?

> Does the term “accounting system” always mean a computerized system? Why or why not?

Exercises

Exercise 1: Match the special journal with its definition:

Journals	Definition
a. Cash Receipts Journal	____ 1. Purchases on account
b. Cash Disbursement Journal	____ 2. Sales on account
c. Sales Journal	____ 3. Cash paid by the company.
d. Purchases Journal	____ 4. Cash Received by the company.
e. General Journal	____ 5. Adusting, closing and returns.

Exercise 2: Enter P for Purchases journal, S for Sales journal, CR for Cash Receipts journal, CD for Cash Disbursements, and G for General journal to identify which special journal these transactions would appear:

a. Purchased supplies for cash	_________
b. Customer paid on account	_________
c. Borrowed cash from the bank.	_________
d. Purchased inventory on account.	_________
e. Sold merchandise for cash.	_________
f. Returned inventory purchased.	_________
g. Paid utility bill.	_________
h. Sold merchandise on credit.	_________
i. Customer returned merchandise.	_________
j. Paid vendor for purchase.	_________

Exercise 3: The following transactions appeared for Some Company, Inc. Identify which special journal each transaction should be recorded (use S for Sales journal, P for Purchases journal, CR for Cash Receipts journal, CD for Cash Disbursements, and G for General journal).

Jan 1 Some Company issued $50,000 in stock to investors.

Jan 5 Purchase a equipment by paying $15,000 cash.

Jan 8 Purchased $2,000 in inventory from Bottle Inc. terms 1/10, N30

Jan 10 Sold $2,000 of inventory to ABC Company for $4,000 terms 2/10,N30.

Jan 15 Made a partial payment to Bottle Inc. for $1,500.

Jan 16 Purchased $1,000 of inventory for cash.

Jan 20 Sold $1,000 of inventory to JKL Company for $2,000 terms 2/10, N30.

Jan 20 Received full payment for Jan 10 sale to ABC less the discount.

Jan 21 JKL Company returned $200 of merchandise for a credit of $400.

Jan 25 Purchased $500 of supplies on credit.

Exercise 4: Using the transactions from Exercise 3, complete the following:

Create an accounts receivable ledger account and customer ledger for ABC Company and JKL Company.
Post the appropriate entries to the accounts receivable control ledger (use the individual transactions) and the customer ledgers.
Prepare a Schedule of Accounts Receivable to prove the balance in accounts receivable.

Exercise 5: Using the transactions from Exercise 3, complete the following:

Create an accounts payable ledger account and vendor ledger for Bottle Inc..
Post the appropriate entries to the accounts payable control ledger (use the individual transactions) and the vendor ledger.
Prepare a Schedule of Accounts Payable to prove the balance in accounts payable.

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