ACCT1101 Tutorial Solutions – Week 5 (Tute 4)

CHAPTER 7

DISCUSSION QUESTION

3. ‘In a system which uses several special journals, it is not necessary to have a general journal.’ Do
you agree? Explain.

In a system with several special journals, the need for a general journal remains to account for any
unusual transactions or events which cannot be catered for by any of the special journals.
Furthermore, the general journal is required for recording adjusting and closing entries. Different
special journals may be omitted from an entity’s accounting system, but the general journal is always
needed. In a sophisticated computerised accounting system, the general journal may be the only
journal needed. Such a general journal will provide a chronological record of all transactions and
events as they affect the entity.

Exercise 7.7 Recording transactions in purchases and sales journals

Casey Ltd’s accounting system uses special journals and subsidiary ledgers. The following transactions
occurred during October 2016 (GST is ignored). All sales are n/30.

Oct 3 Purchased inventory from P. Forza, $1030, terms 2/15, n/30.

11 Sold goods to B. Harley on credit, invoice 435, $750.
13 Purchased office furniture on credit from R. Gerace, terms n/30,
$5460.
18 Paid P. Forza for goods purchased on 3 May.
24 Purchased goods from C. Dixon, $970, terms 2/15, n/30.
27 Sold inventory to K. Lee for cash, $1090.

Required
A. Ignoring GST, enter the appropriate transactions into the purchases and sales journals for October, and
explain how each would be posted to accounts in the ledgers.
B. Assuming that the company is registered for the GST, enter the appropriate transactions into suitably
ruled purchases and sales journals, and explain how each would be posted to accounts in the ledgers.

A.
Purchases Journal

Date Date of Account Terms Post Purchases

Inv. Ref.
2016
Oct. 3 P. Forza 2/15, n/30 1 030
24 C. Dixon 2/15, n/30 970
2 000

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 Sales Journal

Date Inv. No. Account Terms Post Sales

Ref.
2016
Oct. 11 435 B. Harley 750
750

Postings are:

Purchases Journal — the accounts of Forza and Dixon in the accounts payable subsidiary ledger
would be credited with the individual purchases on 3 October and 24 October respectively on those
dates. The total of the journal would be debited to the Purchases account and credited to the
Accounts Payable Control account in the general ledger on 31 October.

Sales Journal — the account of Harley in the accounts receivable subsidiary ledger would be debited
with the individual sale on 11 October on that date. The total of the journal would be debited to the
Accounts Receivable Control account and credited to the Sales accounts in the general ledger on 31
October.
B.
Purchases Journal

Date Date of Account Terms Post Purchases GST Accounts

Inv. Ref. Receivabl Payable
e
2016
Oct. 3 P. Forza 2/15, n/30 1 030 103 1 133
24 C. Dixon 2/15, n/30 970 97 1 067
2 000 200 2 200

Sales Journal

Date Inv. Account Terms Post Sales GST Accounts

No. Ref. Payable Receivable
2016
Oct. 11 435 B. Harley 750 75 825
750 75 825

Postings are:

Purchases Journal — the accounts of Forza and Dixon in the accounts payable subsidiary ledger
would be credited with the individual purchases on October 3 and October 24 respectively on those
dates. The total of the journal would be posted on 31 October to the following accounts in the
general ledger as follows: Purchases account debited with total of Purchases column, GST
Receivable debited with the total of the GST Receivable column, and Accounts Payable Control
Account credited for the total of the Accounts Payable column.

Sales Journal — the account of Harley in the accounts receivable subsidiary ledger would be debited
with the individual sale on October 11 on that date. The totals of the journal would be posted on 31
October to the following accounts in the general ledger as follows: Sales account credited with total
of Sales column, GST Payable credited with the total of the GST Payable column, and Accounts
Receivable debited for the total of the Accounts Receivable column.

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Exercise 7.8 Journals, subsidiary ledgers and control accounts

Mazzone and Associates Accounts Receivable Control account in the general ledger on 1 September was
$17 755. The subsidiary ledger contained the following accounts receivable accounts and balances at the
same date: Quach $2330, Ridley $4277, Scafidi $3337, Talbot $7811. At 30 September, a summary of entries
made in the journals shown were:

General journal: Talbot returned goods for a credit of $178.

Sales journal: Recorded credit sales were: Talbot $1290, Quach $2180, Ubhey $1670, Scafidi $1780.
Cash receipts journal: Cash amounts received from accounts receivable were (no discounts were
allowed):
Talbot $3730, Ubhey $660, Scafidi $2120, Ridley $2920, Quach $2010.

Required
A. Enter the opening balances of the control account and subsidiary ledger accounts and post the
September entries and totals in the three journals to the accounts (ignore GST).
B. Prepare a schedule of accounts receivable at 30 September and reconcile the total with the control
account in the general ledger.

A.
General Ledger

Accounts Receivable Control A/c

Date Explanation Post Ref. Debit Credit Balance
Sep. 1 Balance 17 755
Sales return GJ 178 17 577
Sales SJ 6 920 24 497
Cash receipts CRJ 11 440 13 057

Accounts Receivable Subsidiary Ledger

Quach
Date Explanation Post Ref. Debit Credit Balance
Sep. 1 Balance 2 330
Sale S 2 180 4 510
Cash receipt CR 2 010 2 500

Ridley
Date Explanation Post Ref. Debit Credit Balance
Sep. 1 Balance 4 277
Cash receipt CR 2 920 1 357

Scafidi
Date Explanation Post Ref. Debit Credit Balance
Sep. 1 Balance 3 337
Sale S 1 780 5 117
Cash receipt CR 2 120 2 997

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 Talbot
Date Explanation Post Ref. Debit Credit Balance
Sep. 1 Balance 7 811
Sales return GJ 178 7 633
Sale S 1 290 8 923
Cash receipt CR 3 730 5 193

Ubhey
Date Explanation Post Ref. Debit Credit Balance
Sep. Sale S 1 670 1 670
Cash receipt CR 660 1 010

B.
Schedule of Accounts Receivable
as at 30 September
Quach $ 2 500
Ridley 1 357
Scafadi 2 997
Talbot 5 193
Ubhey 1 010
$13 057

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Problem 7.5 Accounting with sales, cash receipts and general journals

Galluzo Ltd uses a sales journal, a cash receipts journal, a general journal and an accounts receivable
subsidiary ledger within a periodic inventory system. The terms of all credit sales are 2/10, n/30. Where
necessary, round amounts to the nearest dollar.

The accounts receivable subsidiary ledger balances on 31 May 2016 were:

A. Guthrie $ —
C. Haigh 3 980
E. Katsambit 750
G. Lintvelt 3 316
I. Dowden 3 184
K. Coldwell 1 990
$13 220

The trial balance as at 1 June included, among others, the following accounts:

Account no. Account title Account balance

1-1100 Cash at Bank $ 17 950
1-1150 Marketable Securities 30 485
1-1200 Accounts Receivable Control 13 220
1-1300 Bills Receivable —
2-2200 Bills Payable 2 400
4-4100 Sales 207 030
4-4150 Sales Returns and Allowances 2 572
4-4200 Dividend Revenue 1 005
4-4300 Interest Revenue 905
4-4400 Gain on Sale of Marketable Securities 280
5-5200 Discount Allowed 1 930

The following transactions during June were recorded in the sales, cash receipts or general journals (ignore
GST):

June 2 Sold inventory on credit to A. Guthrie, $1930, invoice 671.

4 Issued an adjustment note to K. Coldwell for defective goods sold on credit during
April for $180. Received a cheque from E. Katsambit for payment of a May
purchase, $750.
7 Sold inventory on credit to G. Lintvelt, $270, invoice 672.
10 Sold inventory on credit to C. Haigh, $430, invoice 673.
12 Received payment in full from K. Coldwell.
14 Received payment from A. Guthrie for invoice 671.
17 Borrowed $20 000 cash from the bank for 3 months at 10%. Issued a bill payable
in favour of the bank to cover the loan.
20 Sold inventory for cash, $295.
21 Sold marketable securities that had been held as a short-term investment for
$12 000 cash. The securities were originally purchased for $12 000.
24 Received a 60-day promissory note (bill receivable) from G. Lintvelt in settlement
of his account receivable balance.
25 Received a cheque from C. Haigh for $4410, for payment on his account.
26 Sold inventory on credit to E. Katsambit, $540, invoice 674.
30 Received payment from E. Katsambit for invoice 674.

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Required
A. Record the June transactions in the appropriate journals. Make all postings to the appropriate
general ledger accounts and to the accounts receivable subsidiary ledgers.
B. Reconcile the subsidiary ledger with the Accounts Receivable Control account in the general ledger.

A.
Sales Journal
p. 1.
Date Invoice Account Post Amount
Ref.
2/6 671 A Guthrie  1 930
7/6 672 G Lintvelt  270
10/6 673 C Haigh  430
26/6 674 E Katsambit  540
3 170
(1-1200/
4-4100)

Cash Receipts Journal

p. 1.
Date Account Post. Cash at Dis. Sales Accts. Other
Ref. Bank All’d Rec’ble
4/6 E Katsambit  750 750
12/6 K Coldwell  1 810 1 810
14/6 A Guthrie  1 930 1 930
17/6 Bills Pay. 2 20 000 20 000
200
20/6 Cash Sales 295 295
21/6 Market Sec. 1 12 000 12 000
150
25/6 C Haigh  4 410 4 410
30/6 E Katsambit  529 11 540
41 724 11 295 9 440 32 000
(1-1100) (5-5200) (4-4100) (1-1200) (x)

General Journal

Date Description Post Ref. Debit Credit

4/6 Sales Returns & Allowances 4-4150 180
Accts. Rec’ble Control – K Coldwell 1-1200/ 180
Return of defective goods.

24/6 Bills Receivable 1-1300 3 586

Accts Rec’ble Control – G Lintvelt 1-1200 3 586
Receipt of promissory note.

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 General Ledger

Cash at Bank 1-1100

1/6 Balance 17 950
30/6 CRJ1 41 724
59 674

Marketable Securities 1-1150

1/6 Balance 30 485 21/6 CRJ1 12 000
Balance 18 485
30 485 30 485
18 485

Accounts Receivable Control 1-1200

1/6 Balance 13 220 4/6 GJ1 180
30/6 SJ1 3 170 24/6 GJ1 3 586
30/6 CRJ1 9 440
30/6 Balance c/d 3 184
16 390 16 390
30/6 Balance b/d 3 184

Bills Receivable 1-1300

24/6 GJ1 3 586

Bills Payable 2-2200

1/6 Balance 2 400
17/6 CRJ1 20 000
22 400

Sales 4-4100
1/6 Balance 207 030
30/6 SJ1 3 170
30/6 CRJ1 295
210 495

Sales Returns and Allowances 4-4150

1/6 Balance 2 572
4/6 GJ1 180
2 752

Dividend Revenue 4-4200

1/6 Balance 1 005

Interest Revenue 4-4300

1/6 Balance 905

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 Gain on Sale of Marketable Securities 4-4400
1/6 Balance 280

Discount Allowed 5-5200

1/6 Balance 1 930
30/6 CRJ1 11
1 941

Accounts Receivable Subsidiary Ledger

A. Guthrie
Date Post Ref Debit Credit Balance
2/6 SJ1 1 930 1 930
14/6 CRJ1 1 930 —

C. Haigh
Date Post Ref Debit Credit Balance
31/5 3 980
10/6 SJ1 430 4 410
25/6 CRJ1 4 410 —

E. Katsambit
Date Post Ref Debit Credit Balance
31/5 750
4/6 CR1 750 —
26/6 SJ1 540 540
30/6 CR1 540 —

G. Lintvelt
Date Post Ref Debit Credit Balance
31/5 3 316
7/6 SJ1 270 3 586
24/6 GJ1 3 586 —

I. Dowden
Date Post Ref Debit Credit Balance
31/5 3 184

K. Coldwell
Date Post Ref Debit Credit Balance
31/5 1 990
4/6 GJ1 180 1 810
12/6 CR1 1 810 —

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B.
Schedule of Accounts Receivable
as at 30 June 2016
A. Guthrie $ —
C. Haigh —
E. Katsambit —
G. Lintvelt —
I. Dowden 3 184
K. Coldwell —
Total $3 184

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