West Texas Exploration Co was established on October 15

2014 #8829
West Texas Exploration Co. was established on October 15, 2014, to provide oil-drilling
services. West Texas uses field equipment (rigs and pipe) and field supplies (drill bits and
lubricants) in its operations. Transactions related to purchases and cash payments during the
remainder of October are as follows:Oct. 16. Issued Check No. 1 in payment of rent for the
remainder of October, $7,000.16. Purchased field equipment on account from Petro Services
Inc., $32,600.17. Purchased field supplies on account from Midland Supply Co., $9,780.18.
Issued Check No. 2 in payment of field supplies, $4,570, and office supplies, $650.20.
Purchased office supplies on account from A-One Office Supply Co., $1,320.Post the journals
to the accounts payable subsidiary ledger.24. Issued Check No. 3 to Petro Services Inc., in
payment of October 16 invoice.Oct. 26. Issued Check No. 4 to Midland Supply Co. in payment
of October 17 invoice.28. Issued Check No. 5 to purchase land, $240,000.28. Purchased office
supplies on account from A-One Office Supply Co., $3,670.Post the journals to the accounts
payable subsidiary ledger.30. Purchased the following from Petro Services Inc. on account: field
supplies, $25,300 and office equipment, $5,500.30. Issued Check No. 6 to A-One Office Supply
Co. in payment of October 20 invoice.30. Purchased field supplies on account from Midland
Supply Co., $12,450.31. Issued Check No. 7 in payment of salaries, $32,000.31. Rented
building for one year in exchange for field equipment having a cost of $15,000.Post the journals
to the accounts payable subsidiary ledger.Instructions1. Journalize the transactions for October.
Use a purchases journal and a cash payments j0o0urnal, similar to those illustrated in this
chapter, and a two-column general journal.Set debit columns for Field Supplies, Office Supplies,
and Other Accounts in the purchases journal. Refer to the following partial chart of accounts:11
Cash 14 Field Supplies 15 Office Supplies 16 Prepaid Rent 17 Field Equipment 18 Office
Equipment19 Land21 Accounts Payable61 Salary Expense71 Rent ExpenseAt the points
indicated in the narrative of transactions, post to the following subsidiary accounts in the
accounts payable ledger:A-One Office Supply Co.Midland Supply Co.Petro Services Inc.2. Post
the individual entries (Other Accounts columns of the purchases journal and the cash payments
journal; both columns of the general journal) to the appropriate general ledger accounts.3. Total
each of the columns of the purchases journal and the cash payments journal, and post the
appropriate totals to the general ledger. (Because the problem does not include transactions
related to cash receipts, the cash account in the ledger will have a credit balance.)4. Sum the
balances of the accounts payable creditor balances.5. Why might West Texas consider using a
subsidiary ledger for the field equipment?View Solution:
West Texas Exploration Co was established on October 15 2014

ANSWER
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