TEST BANK OF ACCOUNTING 26TH EDITION BY WARREN

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1.  The methods and procedures for collecting, classifying, summarizing, and reporting a business's financial and operating information are called the accounting system.

a.  True

b.  False

2.  Systems analysis is the final phase in the creation or revision of an accounting system.

a.  True

b.  False

3.  Processing methods are the means by which the system collects, summarizes, and reports accounting information.

a.  True

b.  False

4.  Accounting systems evolve through a three-step process: analysis, design, and feedback.

a.  True

b.  False

5.  An accounting system design consists of internal controls and information processing methods.

a.  True

b.  False

6.  Most accounting systems evolve as the business grows and requires changes in its methods for collecting, accumulating, and reporting information.

a.  True

b.  False

7.  Once an accounting system has been implemented, feedback will be used to continuously analyze and improve the system.

a.  True

b.  False

8.  Designing a system to meet user needs is the final phase in the creation or revision of an accounting system.

a.  True

b.  False

9.  When specialized journals are used, the general journal is not necessary.

a.  True

b.  False

10. Specialized journals are books of original entry.

a.  True

b.  False

11. Transactions must first be recorded into the general journal before they can be entered into specialized journals.

a.  True

b.  False

12. The format and number of specialized journals that a business uses depends upon the legal organization of the business.

a.  True

b.  False

13. The basic procedure of posting from a revenue journal is to make all postings at the end of the month.

a.  True

b.  False

14. The principal ledger that contains all the balance sheet and income statement accounts is the general ledger.

a.  True

b.  False

15. The presence of a subsidiary ledger requires the presence of a summarizing control account in the general ledger.

a.  True

b.  False

16. An account for each supplier of merchandise will appear in the accounts payable subsidiary ledger.

a.  True

b.  False

17. The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable.

a.  True

b.  False

18. When a sale for $1,350 takes place with a $250 deposit having been received in advance, only the $1,100 on account is recorded in the revenue journal.

a.  True

b.  False

19. Even when special journals are used, purchases of store equipment on account are recorded in the general journal.

a.  True

b.  False

20. A control account is used to record the details of the individual subsidiary accounts.

a.  True

b.  False

21. A cash refund paid to a customer who overpaid an account receivable is recorded in the cash payments journal.

a.  True

b.  False

22. Even when special journals are used, a personal withdrawal of cash is recorded in the general journal.

a.  True

b.  False

23. Services provided for cash are recorded in the revenue journal.

a.  True

b.  False

24. Services provided on account are recorded in the revenue journal.

a.  True

b.  False

25. Sales of office supplies for cash, at cost, to a neighboring business as an accommodation are recorded in the revenue journal.

a.  True

b.  False

26. The Other Accounts column in the cash receipts journal is used for recording debits to any account for which there is no special debit column.

a.  True

b.  False

27. The Other Accounts column in the cash payments journal is used for recording debits to any account for which there is no specialized debit column.

a.  True

b.  False

28. Purchases journals will have an Other Accounts Cr. column.

a.  True

b.  False

29. The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable.

a.  True

b.  False

30. The revenue journal is designed for the efficient recording of cash sales transactions.

a.  True

b.  False

31. The Post. Ref. column of the revenue journal will reference the account number of the customer.

a.  True

b.  False

32. The total of the accounts receivable subsidiary accounts and the balance of the accounts receivable control account should equal each other at the end of the period.

a.  True

b.  False

33. Adjusting journal entries are recorded in a special journal.

a.  True

b.  False

34. Even when special journals are used, closing journal entries are recorded in the general journal.

a.  True

b.  False

35. The accounts receivable subsidiary ledger is an example of a special journal.

a.  True

b.  False

36. Posting from a revenue journal to the customer account is normally done only at the end of the month.

a.  True

b.  False

37. The purchase of supplies for cash would be recorded in the purchases journal.

a.  True

b.  False

38. When a large number of individual accounts with a common characteristic are grouped together in a separate ledger, the summarizing account in the general ledger is called a control account.

a.  True

b.  False

39. The customers ledger and the creditors ledger refer to subsidiary ledgers.

a.  True

b.  False

40. The total on the "Accounts Payable Creditor Balances" report at January 31, the end of the first month of operations, agrees with the total of the Accounts Payable debit column in the cash payments journal for the same period.

a.  True

b.  False

41. The columns included in special journals are standardized for all businesses.

a.  True

b.  False

42. Generally, subsidiary ledgers are used for general ledger accounts that consist of a large number of individual items.

a.  True

b.  False

43. In a computerized accounting system, all postings happen automatically at the end of the month.

a.  True

b.  False

44. In computerized accounting systems, reports may be generated at any time.

a.  True

b.  False

45. Computerized accounting systems prevent all journalizing errors.

a.  True

b.  False

46. Using the Internet to perform business transactions is called e-commerce.

a.  True

b.  False

47. The term B2C refers to transactions conducted between two companies.

a.  True

b.  False

48. E-commerce provides additional business opportunities but at the cost of reduced speed and efficiency.

a.  True

b.  False

49. One way to report revenue earned by a company is to present it by the different segments of business.

a.  True

b.  False

50. A(n)               system is the methods and procedures for collecting, classifying, summarizing and reporting a business’s financial and operating information.

a.  accounting

b.  fiduciary

c.  operations

d.  auditing

51. The phase of accounting system installation in which the information needs of people in the organization are taken into account is

a.  analysis

b.  design

c.  implementation

d.  installation

52. Which of the following is not one of the three phases needed when changing an accounting system, either in its entirety or in part?

a.  analysis

b.  design

c.  review

d.  implementation

53. Which of the following is not part of a three-step process that a growing business uses for the evolution of its accounting system?

a.  analysis

b.  design

c.  implementation

d.  feedback

54. The three phases of setting up an accounting system are, in order

a.  design, implementation, analysis

b.  analysis, design, implementation

c.  design, analysis, implementation

d.  implementation, design, analysis

55. The goal of systems design is to meet

a.  when to implement a system

b.  user needs

c.  the size of the competitor's system

d.  changes to the present system

56. Which of the following is not an element of internal controls?

a.  to protect assets from misuse

b.  ensure the accuracy of business information

c.  ensure that laws and regulations are followed

d.  ensure that company policies are in place to maximize profits

57. After an accounting system has been set up, what is the next step?

a.  create the chart of accounts

b.  obtain input from users to analyze and improve the system

c.  implement analysis and design

d.  set up internal controls

58. Processing methods

a.  are the policies and procedures that protect assets from misuse

b.  must be computerized.

c.  are the means by which the accounting system collects, summarizes, and reports accounting information

d.  ensure that business laws and regulations are followed

59. The means by which the accounting system collects, summarizes, and reports accounting information is called information

a.  reporting methods

b.  accounting methods

c.  control methods

d.  processing methods

60. The primary ledger containing all the balance sheet and income statement accounts is the

a.  general ledger

b.  creditors ledger

c.  customers ledger

d.  subsidiary ledger

61. The subsidiary ledger that includes customer account activity is called the

a.  asset ledger

b.  accounts payable ledger

c.  expense ledger

d.  accounts receivable ledger

62. Every controlling account must have its own

a.  revenue ledger

b.  general ledger

c.  subsidiary ledger

d.  journal

63. At the end of the month, the total of the amount column of the revenue journal is posted as a

a.  debit to Accounts Receivable and a credit to Cash

b.  debit to Accounts Receivable and a credit to Fees Earned

c.  debit to Cash and a credit to Fees Earned

d.  debit to Cash and a credit to Accounts Payable

64. The controlling account in the general ledger that summarizes the individual customer accounts in the subsidiary ledger is entitled

a.  Purchases

b.  Accounts Payable

c.  Fees Earned

d.  Accounts Receivable

65. When there are a large number of individual accounts with a common characteristic, it is common to place them in a separate ledger called a(n)

a.  general ledger

b.  income statement ledger

c.  group ledger

d.  subsidiary ledger

66. A purchase of supplies for cash is recorded in the

a.  revenue journal

b.  purchases journal

c.  cash receipts journal

d.  cash payments journal

67. A purchase of supplies on account is recorded in the

a.  revenue journal

b.  general journal

c.  purchases journal

d.  cash payments journal

68. Which of the following transactions is recorded in the purchases journal?

a.  purchase of store supplies on account

b.  return of damaged office equipment

c.  purchase of store supplies for cash

d.  purchase of office equipment for cash

69. When posting column totals in the purchases journal, a credit should be posted to

a.  Merchandise Inventory

b.  Accounts Payable

c.  Sales Returns and Allowances

d.  Cash

70. In which journal would an adjustment for an overcharge by a creditor be recorded?

a.  general journal

b.  purchases journal

c.  cash payments journal

d.  cash receipts journal

71. Which of the following transactions is recorded in the revenue journal?

a.  sale of excess office equipment for cash

b.  rendering services for cash

c.  rendering services on account

d.  sale of excess office equipment on account

72. Each individual entry in the revenue journal is posted to

a.  the accounts receivable controlling account

b.  the accounts receivable subsidiary ledger

c.  the revenue controlling account

d.  the accounts receivable subsidiary ledger and the controlling account

73. Which of the following is always recorded in the general journal?

a.  services rendered for cash

b.  correction of error in billing client

c.  purchases of equipment on account

d.  purchases of equipment for cash

74. Which of the following is always recorded in the general journal?

a.  rendering services for cash

b.  purchases of supplies on account

c.  rendering services on account

d.  closing entries

75. Which of the following is recorded in the cash receipts journal?

a.  cash withdrawn by the owner

b.  cash purchase of equipment

c.  cash received on customer's account

d.  adjusting entry for depreciation

76. Services performed for cash should be recorded in the

a.  revenue journal

b.  purchases journal

c.  cash receipts journal

d.  cash payments journal

77. Which of the following is recorded in the cash payments journal?

a.  adjusting entry for accrued salaries

b.  receipt of cash on supplies returned

c.  receipt of cash from services rendered

d.  payment of employees' salaries

78. A cash payments journal would not include a

a.  Cash credit column

b.  Sales Discounts credit column

c.  Accounts Payable debit column

d.  Other Accounts debit column

79. In which journal is the return of supplies purchased on account recorded?

a.  general journal

b.  cash receipts journal

c.  cash payments journal

d.  purchases journal

80. A cash purchase of supplies should be recorded in the

a.  cash receipts journal

b.  purchase journal

c.  general journal

d.  cash payments journal

81. When posting the column totals of a cash payments journal, a debit should be posted to

a.  Cash

b.  Accounts Payable

c.  Sales Discounts

d.  Unearned Revenue

82. In which journal is the receipt of a promissory note from a customer on account recorded?

a.  revenue journal

b.  cash receipts journal

c.  general journal

d.  purchases journal

83. Subsidiary ledgers

a.  are used only for Accounts Payable and Accounts Receivable

b.  may be used for various general ledger accounts

c.  may be used only for the Cash account

d.  are never used for more than four accounts

84. Some of the more common subsidiary ledgers are

a.  accounts payable, accounts receivable, and owner’s equity subsidiary ledgers

b.  accounts receivable and accounts payable subsidiary ledgers

c.  accounts receivable, accounts payable, cash, checking, petty cash, and owner’s equity subsidiary ledgers

d.  cash and owner’s equity subsidiary ledgers

85. If the individual subsidiary ledger accounts contained the following data:

Cadence Company - Vendor - $200 - credit balance

Franklin Enterprises - Customer - $750 - debit balance

Marcelo Construction - Client - $125 - debit balance

Peyton Supplies - Supplier - $375 - credit balance

The accounts receivable (A/R) control account and the accounts payable (A/P) control account balances would be: a. A/R - $1,375, A/P - $375

b. A/R - $525, A/P - $175 c. A/R - $875, A/P - $575 d. A/R - $750, A/P - $700

86. Which of the following is not considered a special journal?

a.  purchases journal

b.  cash receipts journal

c.  general journal

d.  cash payments journal

87. Which of the following journals is called an all-purpose journal?

a.  general journal

b.  purchases journal

c.  revenue journal

d.  accounting journal

88. Which of the following is true about the revenue journal?

a.  Cash revenues and revenues on account are recorded in the revenue journal.

b.  Only cash revenues are recorded in the revenue journal.

c.  Only revenues on account are recorded in the revenue journal.

d.  Unearned revenues are also recorded in the revenue journal.

89. The cash receipts journal will be used for

a.  only cash received from customers on account

b.  all cash received for any purpose

c.  cash received from customers on account and cash sales

d.  only cash received from cash sales

90. An “Accounts Receivable Customer Balances” report shows

a.  revenues by customer for a specified date range

b.  customer balances owed as of a specific date

c.  cash payments to creditors for a specific date range

d.  sales by customer as of a specific date

91. A cash investment made by the owner should be recorded in the

a.  cash receipts journal

b.  purchases journal

c.  cash payments journal

d.  revenue journal

92. A withdrawal of cash made by the owner will be found in the

a.  cash receipts journal

b.  cash payments journal

c.  revenue journal

d.  purchases journal

93. An owner transfers a personal automobile to the company with a fair market value of $12,000.  The entry will be made in the

a.  purchases journal

b.  cash payments journal

c.  cash receipts journal

d.  general journal

94. In which journal would adjusting entries be found?

a.  cash receipts journal

b.  cash payments journal

c.  general journal

d.  purchases journal

95. In which journal would you find cash revenues recorded?

a.  cash payments journal

b.  general journal

c.  revenues journal

d.  cash receipts journal

96. In which journal would the payment of salaries be posted?

a.  cash receipts journal

b.  special journal

c.  cash payments journal

d.  expense journal

97. The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service Company. Which of the following statements is false?

Date	Account Debited	Post. Ref.	Accounts Receivable Cr.	Cash Cr.	Other Accounts Dr.

a.  The second column should be Account Credited.

b.  The Cash column should be a debit.

c.  The Other Accounts column should be a credit.

d.  The Accounts Receivable column should be a debit.

98. Which of the following is not a special journal?

a.  cash receipts journal              b. purchases journal

c. accounts receivable journal   d. cash payments journal

99. Which of the following general ledger accounts normally has a subsidiary ledger?

a.  Capital Stock     b. Retained Earnings

c. Supplies            d. Accounts Payable

100. Which transaction is normally recorded in a special journal?

a.  sales returns                   b. depreciation expense

c. purchases on account    d. issued stock dividend

101. An adjustment resulting from a creditor reducing the amount owed on an unpaid invoice due to an invoicing error would be recorded in the

a.  general journal

b.  purchases journal

c.  cash payments journal

d.  cash receipts journal

102. If a company uses special journals

a.  it must have one for cash, receivables, and payables

b.  it may have no more than four

c.  the quantity and design depend on the needs of the company

d.  the design must comply with the FASB requirements

103. Mocha Coffee Shop has asked the accountant to keep track of the purchases for beverage, food, and retail items.  The accountant has implemented a purchases journal.  Which of the following columns should be included in the new purchases journal?

a.  Accounts Payable Cr., Beverage Supplies Dr., Food Supplies Dr., Retail Items Dr., Other Accounts Dr.

b.  Accounts Payable Dr., Other Accounts Dr., Beverage Supplies Cr., Food Supplies Cr., Retain Items Cr.

c.  Beverage Supplies Dr., Food Supplies Dr., Retail Items Dr., Other Accounts Dr., Cash Cr.

d.  Beverage Supplies Dr., Food Supplies Dr., Retail Items Dr., Other Accounts Cr., Accounts Payable Dr.

104. When using a purchases journal

a.  all cash and credit purchases are recorded in the journal

b.  posting to creditor accounts is only done at the end of the month

c.  the “Other Accounts” total is posted to Accounts Payable at month’s end

d.  there will always be an “Accounts Payable Cr.” column

105. When using a revenue journal

a.  separate “Fees Earned” and “Accounts Receivable” columns are included

b.  both cash sales and sales on account are recorded in the journal

c.  revenues are normally recorded when the company sends customer invoices

d.  postings to customer accounts are done at month's end

106. Beachside Coffee Shop, in an effort to streamline its accounting system, has decided to utilize a cash receipts journal in its operations.  If the company records the cash sale of food for $18, which is the correct entry?

a.  Cash Cr., $18; Food Revenue Dr., $18

b.  Cash Dr., $18; Food Revenue Dr., $18

c.  Cash Dr., $18; Food Revenue Cr., $18

d.  Cash Cr., $18; Food Revenue Cr., $18

107. A basic manual accounting system includes all of the following except

a.  a chart of accounts

b. a two­column journal

c.  a general ledger

d.  a computer on which the system runs

108. Which of the following statements is false?

a.  Most computerized accounting systems use principles from manual systems.

b.  Subsidiary ledgers and special journals are only useful when a business doesn’t have a large number of similar transactions.

c.  Even small companies use computerized accounting systems.

d.  Large companies often integrate their accounting system with their automated business systems.

109. A computerized accounting system will not allow which of the following types of journalizing errors?

a.  entering an amount in an incorrect account

b.  reversing the debit and credit accounts in a transaction

c.  processing a transaction that has unequal debits and credits

d.  entering a transaction with an incorrect date

110. Computerized accounting systems

a.  are only used by medium- and large-sized companies

b.  are generally not as accurate as manual systems

c.  record and post transactions at the same time

d.  must make use of special journals

111. The total on the "Cash Receipts" report generated by QuickBooks software at January 31 would be equal to the

a.  total revenue earned for the month of January

b.  total of the purchases journal on January 31

c.  total of the Cash Dr. column of the cash receipts journal in a manual system

d.  balance in Accounts Receivable at January 31

112. Put the following into the correct order for processing a sale on account with QuickBooks.

A.  Prepare reports.

B.  Record the sale by completing an electronic invoice form.

C.  Record collection of payment by completing a "receive payment" form.

a.  B­C­A

b.  A­B­C

c.  B­A­C

d.  C­B­A

113. Which of the following is not an advantage of a computerized system over a manual system?

a.  Transactions are recorded and posted at the same time.

b.  Accuracy is usually better with a computerized system.

c.  Current balances are always available.

d.  Internal controls are optional to the computerized system.

114. A recent trend in which the accounting system and data are stored and distributed over the Internet by a third-party is called

a.  supply chain management.

b. cloud software solutions.

c.  customer management.

d. life­cycle computing.

115. Month-end postings to control accounts in a computerized accounting system are not required because

a.  control accounts are not used in computerized systems

b.  transactions are posted to accounts immediately

c.  the input operator can choose to post to accounts at any time

d.  transactions are posted at the end of the financial year

116. Computerized accounting systems

a.  provide a tedious form of record keeping

b.  improve the timeliness of reporting

c.  prevent all journalizing errors

d.  are only used in medium and large businesses

117. What is meant by the term B2C?

a.  balance to cash

b.  business to cash

c.  book to capital

d.  business to consumer

118. In addition to B2B and B2C transactions, the Internet is commonly used in all of the following business activities except

a.  supply chain management                b. regulatory compliance management

c. customer relationship management   d. product life cycle management

119. When Richard Miller purchases a fishing pole through Amazon.com, he is utilizing

a.  B1C e­commerce.

b.  B2B e­commerce.

c.  B2C e­commerce.

d.  B1B e­commerce.

120. Which of the following is not an area where the Internet is used for business purposes?

a.  business cycle management

b. customer relationship management

c.  supply chain management

d. product life­cycle management

121. E-commerce

a.  accounts for less than 1% of all retail sales

b.  only relates to transactions between a company and a consumer

c.  can improve the speed and efficiency of transactions

d.  increases paperwork

122. Business may be segmented by all except

a.  region

b.  product line

c.  customer type

d.  time period

123. Connie's Specialties Inc. offers exclusive interior design services. The following revenue information was determined from Connie's records.

Current Year                                Prior Year

Consultation Services             $1,000,000      $   800,000

Design Services                        1,800,000       1,500,000

Using a horizontal analysis, which is correct?

a.  The consultation services showed an increase in revenue of 25%.

b.  The consultation services showed a decrease in revenue of 25%.

c.  The design services showed an increase in revenue of 25%.

d.  The design services showed a decrease in revenue of 25%.

124. Segment data

a.  can be used for vertical, but not horizontal analysis

b.  is gathered from invoices entered into the accounting system

c.  is only useful by product line

d.  analysis is required by GAAP

125. Waller Company does business in two regional segments: North and South.  The following annual revenue information was determined from the accounting system’s invoice data:

Segment	Current Year	Prior Year
North	$  80,000	$100,000
South	260,000	200,000
Total revenues	$340,000	$300,000

Using horizontal analysis, determine the percentage change in revenues for the North region. Round to one decimal place.

a. 22.4%     b. (20.0%)

c. 20.0%     d. (22.4%)

126. Snelling Company does business in two regional segments: North and South.  The following annual revenue information was determined from the accounting system’s invoice data:

Segment	Current Year	Prior Year
North	$  75,000	$100,000
South	260,000	220,000
Total revenues	$335,000	$320,000

Using horizontal analysis, determine the percentage change in revenues for the South region. Round to one decimal place.

a. 18.2%        b. 84.6%

c. (18.2%)     d. 15.4%

127. The following is an example of

Segment	Current Year	Prior Year	Amount	Percent
College textbooks	$  78,000	$  55,000	$23,000	41.8%
High school textbooks	129,000	115,000	14,000	12.2%
Elementary school textbooks	105,000	121,000	(16,000)	(13.2%)
Total textbook revenue	$312,000	$291,000	$21,000	7.2%

a.  product analysis       b. vertical analysis

c. horizontal analysis   d. percentage analysis

128. The following is an example of

Segment	Current Year	Percent	Prior Year	Percent
College textbooks	$  78,000	25.0%	$  55,000	18.9%
High school textbooks	129,000	41.3%	115,000	39.5%
Elementary school textbooks	105,000	33.7%	121,000	41.6%
Total textbook revenue	$312,000	100.0%	$291,000	100.0%

a.  product analysis       b. vertical analysis

c. horizontal analysis   d. percentage analysis

129. Briefly describe the three-step process of accounting system development.

130. Define and describe an accounting system.

131. Utilizing the revenue journal below, journalize the following five transactions of Porshe Creations:

(a)           On March 20, Porshe sells 25 cell phone covers to Xtreme at $4.50 per cover on invoice 887.

(b)          On March 21, Porshe sells 5 cell phone covers to Sidekick for $7.50 per cover on invoice 908.

(c)           On March 22, Porshe sells 18 cell phone covers to Rock-On at $4.25 per cover on invoice 938.

(d)          On March 26, Porshe sells 200 cell phone covers to Micro at $3.75 each on invoice 959.

(e)           On March 29, Porshe sells 6 cell phone covers to Charmers for $8.35 each on invoice 997.

Revenue Journal				Page 15
Date	Invoice No.	Account Debited	Post. Ref.	Accts. Rec. Dr. Sales Rev. Cr.

132. Discuss the process of posting from a revenue journal to the subsidiary ledger and to the general ledger.

133. Two transactions were posted to the following customer account.

NAME:  Boogie Board Water Wear ADDRESS:  2340 Xtreme Surf

Date	Item	Post. Ref.	Debit	Credit	Balance
July   1	Balance				805
6	Invoice 406	R42	645		1,450
24	Invoice 456	CR56		710	740

Describe each transaction and the source of each posting.

134. The following purchase transactions occurred during August for Backcountry Kayak Excursions.

Aug.   1   Purchased kevlar kayaks (equipment) for $5,600 on account from Gear Inc.

6   Purchased kayaks paddles (supplies) for $3,250 on account from Southland Company.

 14   Purchased life vests (supplies) for $2,500 on account from Gear Inc.

Record these transactions in a purchase journal.

Purchases Journal
Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount

135. For each of the following businesses, explain how a purchase journal might be modified for the specific business.

1. North County Medical Center

2. Tri-County Farms, Inc.

3. Prescott’s Quick Lube and Tire Store

136. For each of the following businesses, explain how a revenue journal might be modified for the specific business.

1. Jon’s Auto Repair Business

2. Esquire Movie Theater

3. Beach Hut Snack Bar, Restaurant, and Lounge

137. Explain what subsidiary ledgers are and give examples of three types of subsidiary ledgers that a business might use.

138. Two transactions were posted to the following customer account:

NAME:   Gen-X Products, Inc. Address:  123 My Way

Date	Item	Post. Ref.	Debit	Credit	Balance
Mar.  1	Balance	√			1,150
10	Invoice 987	R45	990		2,140
19	Invoice 995	CR78		825	1,315

Describe each transaction and the source of each posting.

139. Two transactions were posted to the following customer account:

NAME:   Roswell Communications, Inc. Address:  345 Alien Way

Date	Item	Post. Ref.	Debit	Credit	Balance
May   1	Balance	√			750
14	Invoice 522	CR230		625	125
25	Invoice 545	R115	3,500		3,625

Describe each transaction and the source of each posting.

140. Two transactions were posted to the following supplier’s (creditor’s) account:

NAME:    Banner Computer Services, Inc. Address:  890 Novice Lane

Date	Item	Post. Ref.	Debit	Credit	Balance
July     1	Balance	√			5,645
19	Invoice 45	P16		1,755	7,400
26	Invoice 39	CP36	3,500		3,900

Describe each transaction and the source of each posting.

141. The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?

Date	Account Credited	Post. Ref.	Fees Earned Cr.	Accounts Receivable Cr.	Cash Cr.	Other Accounts Dr.

142. Two transactions were posted to the following supplier’s (creditor’s) account:

NAME:    Xample, Inc. Address:  567 Harrison Blvd.

Date	Item	Post. Ref.	Debit	Credit	Balance
Nov.    1	Balance	√			125
9	Invoice 564	CP45	55		70
18	Invoice 574	P28		75	145

Describe each transaction and the source of each posting.

143. Davidson, Inc. incurred the following transactions during the month of January.  Record the appropriate ones in the cash receipts journal. If a transaction should not be recorded in the cash receipts journal, indicate where it should be posted.

(a)           On January 3, a one-year insurance policy was purchased for $2,400.  The account number for prepaid insurance is 16.

(b)          On January 5, Davidson received a payment on account from Pasher Industries of $625.

(c)           On January 12, Davidson made sales on account of $3,500 and sales for cash of $2,300.

The fees earned account number is 41.

(d)          On January 26, Davidson received $1,250 in rent revenue from a tenant who leases a portion of its building.  The rent revenue account number is 44.

(e)           On January 29, Davidson received a payment on account from Gooden, Inc. for $2,000.

​ Date	Account Credited	Post. Ref.	Other Accounts Cr.	Accounts Receivable Cr.	Cash Dr.

144. Harris, Inc. incurred the following transactions during the month of February.  Record the appropriate ones in the cash payments journal. Include posting references. If a transaction should not be recorded in the cash payments journal, indicate where it should be posted.

(a)           On February 3, the company purchased $650 worth of supplies on account. The supplies account number is 15.

(b)          On February 5, Harris made a payment on account to Sanders Industries in the amount of $1,215 - check number 2214.

(c)           On February 14, Harris bought a one-year insurance policy for $1,500.  The prepaid insurance account number is 14 - check number 2215

(d)          On February 22, Harris paid monthly rent of $2,000.  The rent expense account number is 63 - check number 2216.

(e)           On February 26, Harris purchased equipment making a down payment of $3,000 (check number 2217) and agreeing to pay the $4,000 balance in 30 days. The equipment account number is 18.

Date	Check Number	Account Debited	Post. Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.

145. The following purchases journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?

Date	Account Credited	Post. Ref.	Accounts Payable Dr.	Accounts Receivable Cr.	Cash Cr.	Other Accounts Dr.

146. Two transactions were posted to the following creditor’s account.

NAME         Windsurf, Inc. ADDRESS   343 Coastline Road

Date	Item	Post. Ref.	Debit	Credit	Balance
Aug.    1	Balance				1,210
8	Invoice 333	CP38	1,210		—
15	Invoice  567	P11		735	735

Describe each transaction and the source of each posting.

147. List the four most common special journals used in accounting and describe the transactions recorded in each journal.

148. If a two-column (all-purpose) general journal, a revenue journal, and a cash receipts journal are used, indicate the journal in which each of the following transactions should be recorded:

(a)         Investment of additional cash in the business by the owner.

(b)         Rendering of services for cash.

(c)         Rendering of services on account.

(d)         Receipt of cash on account from a customer.

(e)         Sale of office supplies for cash, at cost, to a neighboring business.

(f)          Adjustment to record supplies used at the end of the year.

(g)         Closing of drawing account at the end of the year.

149. If a two-column (all-purpose) general journal, a purchases journal, and a cash payments journal are used, indicate the journal in which each of the following transactions should be recorded:

(a)         Payment of rent.

(b)         Purchase of supplies on account.

(c)         Purchase of computer on account.

(d)         Purchase of supplies for cash.

(e)         Advance payment of a one-year fire insurance policy on the office.

(f)          Adjustment to record accrued salaries at the end of the period.

(g)         Adjustment to record depreciation at the end of the month.

(h)         Payment of an account payable.

150. The posting references in the following purchases journal are indicated by letters.  Identify each posting reference [(a) through (i)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required.

PURCHASES JOURNAL

Date                 Account             Post. Credited             Ref.			Accounts Payable Cr.	Office Supplies Dr.	Store Supplies Dr.	) ) )
						)
July  3	Morton Company	(a)	1,150	.....	1,150	)
7	Jackson Co.	(b)	4,800	4,800	.....	)
14	Fallon Inc.	(c)	7,000	7,000	.....	)
26	Simpson Bros.	(d)	2,350	.....	.....	)
31			15,300	11,800	1,150	)
			(e)	(f)	(g)	)

(

(

( (     Account Other Accounts Dr. Post. Ref. Amount (     ...... (     ...... (     ...... (     ...... (     Equipment ... ... ... ... (h) ...... ...... ...... ...... 1,950 ( 1,950 ( (i)

(

151. The following are selected transactions related to purchases on account and cash payments completed during April of the current year.

April   1  Issued Check No. 60 in payment of rent for month, $2,400.

5  Purchased office supplies from Clauson Co., $850.

9    Issued Check No. 61 to Dame Co. for $9,750 for cash purchase of equipment.

10    Purchased store supplies from Ewing Co., $425.

15  Issued Check No. 62 to Clauson Co. in payment of April 5 invoice.

17  Purchased store supplies from Patton Co., $7,500.

20  Issued Check No. 63 to Ewing Co. in payment of April 10 invoice of $425.

25  Purchased equipment from Sloan Co., $7,750.

27  Issued Check No. 64 to Patton Co. for partial payment of the April 17 invoice, $4,000.

30  Purchased office supplies from Winthrop Co., $400.

(a)             Record the transactions in the purchases and cash payments journals.

(b)             Total and rule the purchases and cash payments journals as of April 30.

(c)             Indicate the method of posting the individual items and the totals of the purchases and cash payments journals in the following manner:

(1)         For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Posting Reference column or below the totals.

(2)         For individual items and totals to be posted to the general ledger, insert the letter "G" (as a substitute for specific account numbers) in the Posting Reference column or below the totals.

CASH PAYMENTS JOURNAL

				Other	Accounts
	Check	Account	Post.	Accounts	Payable	Cash
Date	No.	Debited	Ref.	Dr.	Dr.	Cr.

PURCHASES JOURNAL                                          )

					)
			Accounts	Store	)
	Account	Post.	Payable	Supplies	)
Date	Credited	Ref.	Cr.	Dr.	)

(                                                                                           (                                    Other              Accounts              Dr.                    (   Office

(

Supplies

Post.

(     Dr.        Account            Ref.              Amount   

152. Listed below are selected transactions completed by Ridge Company during March of the current year.

Mar.   5  Rendered services on account to Quinton Co., Invoice No. 92,$3,250.

10  Rendered services on account to Martin Inc., Invoice No. 93, $4,500.

13  Received $5,000 in payment of monthly rent, which was due on March 1.

15  Received payment from Quinton Co. for invoice of March 5.

19    Received payment from Martin Inc. for balance due on invoice of March 10.

20    Received amount due from Thomas Co. on sale made in February, $5,200.

31  Recorded cash from services rendered for cash during the month, $15,750.

(a)             Record the transactions in the revenue journal and cash receipts journal.

(b)             Total and rule the revenue and cash receipts journals.

(c)             Indicate the method of posting the individual items and the columnar totals of the revenue and cash receipts journals in the following manner:

(1)         For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Posting Reference column or below the totals.

(2)         For individual items and totals to be posted to the general ledger, insert the letter "G" (as a substitute for specific account numbers) in the Posting Reference column or below the totals.

REVENUE JOURNAL

			Post.	Accts. Rec. Dr.
Date	Invoice No.	Account Debited	Ref.	Services Revenue Cr.

CASH RECEIPTS JOURNAL

			Other	Accts.
	Account	Post.	Accounts	Rec.	Cash
Date	Credited	Ref.	Cr.	Cr.	Dr.

153. Down-Under, an aquatic supply store, makes the following five payments during August. Journalize them in the cash payments journal as appropriate.

(a)          On August 2, Down-Under paid Pondmaster, Inc. with check 6420 for 6 pumps at $435.00 each.  The pumps had been purchased in July on account.

(b)         On August 10, Down-Under purchased $785.00 of office supplies from Business Systems with check 6421.

(c)          On August 15, Down-Under paid Aqua Magic $215.00 on account with check 6422.

(d)         On August 27, Down-Under paid an invoice for merchandise received earlier from Spindrifter, Inc. for 8 drains at $73.50 each with check 6423.

(e)          On August 31, Down-Under purchased $65.00 of koi clay from The Natural Wonder Company by writing check 6424. (Record in Pond Supplies Expense.)

Cash Payments Journal					Page 17
Date	Check Number	Account Debited	Post. Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.

154. Voyager Electronic Services has three customers in its accounts receivable subsidiary ledger with beginning balances as follows:

Fred Yao Ming, $1,150.00 Kohl Townson, $850.00 Chandra Jahi, $1,075.00

Record the following transactions in a general journal. Then post to the accounts receivable account in the general ledger and to the customer accounts in the accounts receivable subsidiary ledger.

On June 3, Kohl Townson paid $325.00 on account.

On June 10, Chandra Jahi purchased $475.00 on account.

On June 15, Fred Yao Ming paid $395.00 on account.

On June 16, Fred Yao Ming purchased $685.00 on account. On June 23, Kohl Townson purchased $155.00 on account.