DESUIPTORS - ERICtf. 3. FOREWORD. The courSe desCribed in this instructor'sluide, &nal Business...
Transcript of DESUIPTORS - ERICtf. 3. FOREWORD. The courSe desCribed in this instructor'sluide, &nal Business...
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TITLE
INSTITUTION
PUB DATENOTE
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EDRS PRICEDESUIPTORS
DOCUMENT aimumE
CE 009 geo
Small BusinesS" Bookkeeping, Part II., A,Suggestedkdrat ,business Education Course.018 100 York State Education Dept., Albany. Bureau-ofContinuing Education Cur 'culum Development.75114p.; For related document, see CE 009 479
IMF-$0.E3JEC-$6.01 Plus Postage.-*Adult Education; *Bookkeeping: Business Education;'Curriculum Guides; Learning Activities; Lesson Vlans;
e Post' Secondary Education
ABSTRACT,Thas guide is.designed for the second part of a
two-part.bookkeeping glourse for adults who are either keeping a setof records for a small business, or vtio wish to prepare toNdo 'so. Thefollowing seven lessons are included and-are based on a business
-making retail saleS of goods: (1) Introduction; (2) Data Sources andRecording lOr a .Trading Business; (3) -Jourlializing, Posting, indTrial,Balance; (4) Journalizing, Posting, an,Trial Balance(continued); (5) Eight-column Worksheet, and Preparing FinancialStatements; (6) Adjusting and Closing'the General Ledger, and 'Preparing the Post-Closing Trial Balance; and (7) Practical Problems.(1,13ssons I through 6 cover about three hours of class time eaCh...Leson 7'is.a practice problem requiting about four class.sessions ofthree hours each.).The appendixes contain'illusitrations, forms', andsolutions to problems; a practical application,problem; and tips for .teachers of adult classes in small business bookkeeping: (WL)
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'Documents acquired by ERIC include many informal unpublished 1- ** materials not.available from other'sources. ERIt makes every effort *.* to obtain theibest copy, available. Nevertheless, items of margipal *,.* are-oftei encountered and this affEtls t4e quality, ** :he Microfiche and hardcopy reproductions ERIC makes availahle . ** the'ERIC Document Reproduction Service (EDRS). EDRS is not* responsible 4or the quality of the,oAttginal docueent. ReprokIctions ** supplied. by EDRS are the best that can.be made from the original. ******************************************A*******************A********
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-0 THE UNIVERSITY OF THE_STATE OF fIEW rORK / THE STATE EDUCATION DEPARTMENT,-BUREAU OF CONTINUING EDUCATION CURRICULUM DEVELOPMENT/ALBANY,14EW YORK 12 234\
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SINESS
KKEEP1a
U.S. DEPARTMENT OONIALTN.ERUCATION &WELFARE
.r, NMIIONAL INSTITUTE OFEDUCATION
THIS DOCUMENT HAS BEEN REPRO-DUCED EXACTLY AS4 RECEIVED FROMTHE PERSON OR ORGANIZATION ORIGIN.*ATING IT, POINTS OF VIEW OR OPINIONSSTATED DO NOT NECESSARILY REPRE.SENT OFFICIAL NATIONAeINSTITUTE OFEDUCATION POSITION OR POLICY.
A SUGGESTID1ADULT BUSINESS- EDUCATION) COURSE
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THE UNIVERSITy-OF.THE STATE OF NEW YORK-
Regents of the University (with years when terms expire)
.1981 Theodore M. Black, A.B., Litt.D., LL.D., Pd.D.,D.C.L., Chancellor Sands Point
1987 Carl H. pforOeimer, Jr., A:B., M.B.A., D.C.S.,H.H.D., Vice Chancellor Purchase
1978 Alexander J. Allan, Jr,'LL.D., Litt.D. Troy1980 Joseph T.'King, LL.B. Shelter Island1981 Joseph C. Indelicat6, M.D. 0 Brooklyn -1979 Francis W. McGinley, B.S., J.D,, LL.D.
. Glens Falls1986 Kenneth B. C4ark,,A.B., M.S., Ph.D., LL.D., L.H.D.,
ii.Sc. Hastingson Hudson
1983 Harold E. Newcomb, B.A. Owego1988 'Hard A. Genrichl'LL.B., L,H.D., D.C.L. Buffalo.1982 Em 1. Griffith, A.B., J.D., - Rome1977 Genevieve S. Klein, B.S., M.A. Bayside1981 William Jovanovich, A.B., LL.D., Litt.D., L.H.D. - - Briarcliff
Manor1976 Mary Alice Kendaill, B.S. Irondequoit1984 Jorge L. Batista, B.A., J.D. Bronx1982 Louis E. Yavner, LL.B., New York
Fresident of The University and Commissioner of'EducationEwald B. Nyquist
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Exemitive Deputy Commissioner of EducationGordon M. AmbaCh,
1Tleputy Commissioner for Elementary, Secondary, and Continuing EducationThomas. D. Sheldon 4
4ssociate Comissioner for .InstructionciiServicesL.'Biteer III
Assistant Commissioner for General gduCation and Curricular SerzicesVivienne N. Anderson
ADirector, Division of Currtcuum Devetopment..,Gordon E. Van Hooft
Chief, Burectu of Continuing Education Curriculum DevelopmentHerbert Bothamley 4
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Assisthnt Commissioner for" Occupational and Continuing EducationRobert S, Seckendorf
Director, DiviBior of 0 cupationaZ Education InstructionRobertqL Biefefelds,
Chief, Bureau of Bubiness Education-Hobart H. Conover
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FOREWORD
The courSe desCribed in this instructor'sluide, &nal Business Book-,
keeping, Part II, is an adult course Ibr those who are either keeping a!setof recordg for a small business,,Sr who wish to prepare to do so. Studentsin the cOurse will Very likely include those.operating their'own smallbusinesses and others employed in such businesSes.
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'The scbpe of atwo-part course in small buSiness bookkeeping Wasdetermined by an.adVisory committee.which then.prepareda. general outline,of its content. Partj of that course was published in l973-. Part.II iS:,contained in thisbOok. -
The members of,the advisory cOmmittee Were: 'Stephen Cumberbatch,Business Education Department, NewtoWil High School, Elmhurst;' George'j)Gearhardt, chairmanof-busineigs education,. Guilderland'Central High School,,,Guilderland Center; Bernard.Goldhill, Manpower Development Training Program;New.York; erederick,G. Smith, chairman, Aqcoupting Department, State -University of New YOrk Agricultural and Technical College, Cobleskill;Hobart H. Conover, chief, Bureau of Business Education;,E. Noah Gould,associate in continuing curriculum; and Eugene Whitney, assOciate in busine-seducation. Mr. Conover and Mr. Gould were cochairmen of'the Committee*.
The course in this book was written and,all accounting problems and-,illustrative,forns were prepared by Helen N. Safford; associate profeSsor,School of Education, State,University of New Yorki4t Albany. (Part.I was
,also prepared by Professor Safford.) Mr. Gould guided the developmentand writing of both parts of the Course, edited °the manuscripts., and'prepared them for publication.
GORDON E. VAN HOOri, D:irectorDivision of CUrriculum Development
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Herbert' Botimmley, Chief .BUreau of-Continuing Education,Curriculum,Development
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,MESSAGE TO THE INSTRUCTOR ;
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,- The course described in this book'is suitable for-use in the-adulteducation prograMs of school aistrictsf Boards ofm.Cooper4tive-EducationalServices '(30CES), and in the commUnitli colleges'of New York,State:- Part I,(contained in another book) consists of.10-lessons, five problems, and -.add4ional illustrative, material. ne illustrations and problems are basedon a dry cleaning b6siness.: , , ,
'Part, II.(contained in this °660k) applies th principles CoVered inPart I, iii a,more advanced wav. It is based on a.business making retaiI .salesof goods.-a'tradinghusiness.: ThoSe.who takePart 1,Ishodid eithercomplete-Part,Ifirst7or have the eqdivatent in training or,experience.'PartrIPContains seven lessonS.: Lessons 1 through. 6Cover.about3-hou1tsof.clats time each, .LeSson 7Z however,:consists of a practice probleM whichis likely to require"aboui.fourclaSssessions of 3 hburseach. Amappendixcontains.an additiOnal praCtide-prohlemi
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Students-will probably bring in bookkeepu.problems frowtheir jobs-.or businesses. which ,can ad uch_to the,cO rse. 'You should help them.withthese problems, and if theproblems is bfgeneral interest, youmight wish to explain it tOthe4ole,cla s.
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The illustrationS, fo4rs, and pAoblemsolutions in, this cour, se 411_-,
have figure numbers. In these numbers,the digit to the left-of thedecimal point'is the number' ofthe -lesSOn,in which the' figure iS,firstdiscussed. ,The digit (or, digitS),to thei-right of the decimal point show2,:,the number of the figure withinthe lessdri-- If:a figure,number has a "K°in iti,this means that thefigureiS an answer key. SoMe,answer keys have.-more than One page; digits'to.the rightof the-"K" shbw rie-stet.numbers,for Such an ,answer key. ,, :.
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An instructor for,this course should be eXperienced in bOOkkeepinCasid,,if possible,should have'teaching experienee also. A_qualified instructorcan usually be obtained'from thefaculty of a,high school,. a,collegiateschool of business, a 'school. ofcdupation. or other .similar 'schOols:, 4-s
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e i.The content of Part ,II cgn
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generaily.he covered in p'sessions of,3 hours each,- but 'this pattern is by no.means universal, nor-is it mandatdry.
' For those students:who wish to cover some_topics in greater-depth, theinstructoi can suggest.materials for. in4ependent sttely..,_
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. An.instructor'or adMinistrtor who.needs help in planning or Conductinga course usingthis publication May contact-the"Bureau of'Business EducatiOn.',
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'HOBART H. CONOVER; Clief: Bureau of Business EdUcation'! -.
ROORt H. BIELEFELD, Dire'Otor. . .
Division .of'Occupational Education.Initruction.
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Foreword
Message to'the Instructor iv
List of Illustrations, Forms, and Solutions to Problems
Lessons..
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1 Jntroductiona
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Data Sources and Recording for a-Trading Busines 8
. Problem 1, November TranSactions 14
3 Journalizing, Posting, and Ttial Balance 16
4 Journalizing, Posting, and Trial Balance (continued). 18
Problem 2, December Transactions 18
5 Eight-Column Worksheet, and Preparing Financial-.21
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Statements ,
6 Adjusting and Closing the General1
,edger, and'Preparingthe Post-Closing Trial Balance 27
Practical Problem 28
Appendix AIllustrations, Forms, and Solutions to Problems 30
App-endix BSno ShackPractical Application Problem, Small Trading Business 84
Appendix CTips for Teachers of Adult Classes,in Small Business Bookkeeping 98
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LIST_ OF ILLUSTRATIONS, FORMS, fi4ND SOLUTIONS TO PROBLEMS
Figure Title Page
1.1 Income Statement, Sleepy-Time Motel1.2 Balance Sheet, Sleepy-Time Motel1.3 Comparison of Service Business and Trading 'Business. . .
1.4 Lncome Statement, North Star Appliances1.5 List of Inventory Items, North &tar Appliances1.6 Inventory Card, North,Star Appliances.
31323 3
3435
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2.1 Sales Ticket .,. .2.2 Daily Sales Sheet . , 382.3 Purchase Invoice 392.4 Checkbook .. 402.5 Petty Cash Voucher 41,
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2.6 Petty Cash Book2.7K Answer Key, Petty Cash Book, October 15.2.8K Answer Key, Petty Cash Summary, October 152.9 Combined Cash Journal
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3.1 Chart of Accounts, North Siar'Appliances 463.2 Geneial Ledger form )473.3k Answer Key, Cash Proof, November 30 47
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3.4K Answer Key, Combined Cash Journal, November Trinsactions 483:5K Answer'Key,.General.Ledger, November Transactions 493.6K AnsWer Key, Trial Balance, November 30 . . 56
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4.1K Answer Key, Combined Cash Journal, December Transactions .4.2K Answer Key, General Ledger, qecember Transactions4.3K Answer Key, Trial Balance, ecember 31
5.1 8-ColUmn Work-sheet5:2K Answer Key., 8-Column Worksheet,.December 315.3K Answer Key, Balance Sheet, December 315.4K Answer Key,'Income Statement
6.1K Answer Key, Adjusting Entries and' Closing Entries6.2K Answer Key, General Ledger, Closed (Balanced and-Ruled).6.3K Answer Key, Post-Closing Trial Balance
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LESSON 1 4INTRODUCTION
Content-Outline Teaching Suggestiohs and Techniques
Introduction to the Course Have the students introduce themselves and givegeneiaCcomments as to the type of work they doand their previous bookkeeping experience. Es-tablish an info.rmal relaxed atmosp ere for the-classroom.
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A. Purpose of coUrse
. Course content
C. Reference materials
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1. Textbooks
2. Practice sets
It is assumed that the students enrolled in thistourse-have taken Part I of Sman BusinessBookkeeping or have had some previous bookkeepinginstruction. Part II of &mai PUsiness Bookkeepinis offered for students interested in the recordsnecessary for a trading business. Upon completionof this course a person should be..able to keepthe records Of a small retail trading business.
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Note: The tprm trading business, as uied in thiscourse, means a business which sells goods '-tocustomers at retail.
Mention the topics to be covered in Part II andgive the students an overview of the course.
Explain to the students that this course isself-contained-, with general content andpractice problems'to apply the concepts learned:*The following may be used as general referencefor students interested in further reading andpractice:
,Boynton,..Lewis D. and others. Century 21Accounting, First-Year.lCourse (with key ,toproblems). .Cincinnati, Ohio. South-WesternPublishing Co.. 1972. Chapters 12720.
Freeman, M.11: and Others. Accounting 10/12;2d'ed. New York,..N.Y.. MtGraw-Hill Rook 'Company.1973. Part II: Accounting Systemic, andProcedures, and Part IV: Specia AccountingProcedures.
Use a published practice set at the end of thiscourse to Provide the students with the-experienceof using.related business papers upon whichtransactiohs are based. The following practicesets are suggested: ,°
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.Comperst Cove Business Simulation (with businesspapers) b Lewis D. Boynton and others.Published by,South-Western Publishing Company,'Cincinnati, (Ago, .1972f
Judd Paint Company; Practice Set for Accounting10/12, Part II by M.H. Freeman and others.Published by Gregg Division, McGraw-Hill BookCompany, 1968.
3: Supplemental A supplemental practice problem is provided inproblem *this bock as lessons 7 through 10. Also included
are forms to be duplicated by the instructorand keys for the problem.
The time covered by lessons 7 through 10 shouldbe used either for completing a commercialpractice set or for doing the supplementalproblem.
For review, a motel is used in this book as an_example of a service business. Part I of thiscourse i416sed on a dry cleaning business,another example of a typical servieebusiness.
Draw out from the class the sources-of cashor a motel boasiness. These,sources are:
1. Room rentals (the primary source of incomefor armotel)
2. Additional investment by owner3. Sale' of,old furnishings and equipment
II. Records of a TypicalService Business
A. Cash received
B. Cash paid out
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.1. Expense itemS
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Have students describe'some of the common items
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of expense for a, tel owner. List them on atransparency or th chakboard as the studentsmention them.. The listimight include items suchas: . I
room furnishingslinen serviceutilitiesoffice supplies.an44uipmentsalaries I(room maintenance suppries and equipmentinsurancegrounds careland and buildings
-6-taxes
Show transparencies of Figures 1)1, Income State-ment, and 1.2, Sheet for Steepy-TimeMotel. Review wit class and discuss.
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III. Records of a TypicalTrading Business
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A. Cash received
l; Sources of cash
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B. Cash paid cut
Typical expenseitems r
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The trading business upon which this,courseis based is a small electrical applianceimsiness (North Star Appliances) at the retaillevel.
Generate from the class the sources of cashfor a small electrical appliance business.List them on chalkboard or transparency anddiscuss. The main souroes are:
Sale of goodsAdditional investment by ownerSale of old store equipment or fixtures
The mdin source of cash for this business is fromthe -Ale of goods to customers.
Elicit from the class the typical expenses of asmall retail merchant. Assume that the smallelectrical appliance store is in a centralshopping area and that the owner of thebusiness is renting store space, List theitems as students describe them. Typical ex-penseJtems inclUde:
cost of item sold (cost to merchant)heatlights (electricity)rentsalatiesinsurancetelephone .store fixtures and equipment (display
counters, shelves, cash register,'addingmachine; etc.)
store supplies (wrapping material, officesupplies, store supplies)
C. Operation of a small'', Discuss with the class the overall operation oftrading business a smalltrading business. Emphasize the
following:
The retai merchant must maintain anin7ventory of ioodS-for.sale to prospectivecustomers.-Regular store. hóU
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IV., Income StateMent, Small'Appliance.Buiineis
A. General Ledger 'accounts of a ,service business
New accounts neededfor a trading business.
1. MerchandiseInventory
2. Purcihases
a. Debits andCredits
Accounts'payable
Show a'transparencY of Figure 1.4, IncomeStatement, North Star Appliances. CoipareFigure 1.4 with the income statement of.,Sleepy-Time,Motel, Figure 1.1.
Point out.that an income statement for%trading business differs from that of aservice business in that it has a Cost of GoodsSold section, and a.Gross Profit on Salegsection. Operating expenses,are shown afterthe gross profit, then net profit is shown. .
briifly revieW the ledger accounts of a servicebusiness dncluding assets, liabilities,capital, income, and eXpenses. Refer to,Figures 1.1 and 1.2,.if necessary. '
Describe fully the hew accounts:by title andclassification.
Merchandise Inventory is an asset account.,This account represents the goods on hand fOr,gale to customers at the time the balancesheet is prepared. 'The balance of this accountis determined by an actual physical count.ofitems on hand (in storage,and On the shelves)and is, in general, at cost.
Purchases is a cost account, listed with theexpense accounts. When goods for_regale tocustomers are purchased by the husiness, thelaMbunt paid for the goods is entered as a debitto the Purchases account. The merchant eitherpays cash,for the goods or buys it on credit%The entry.to rycord the transaction would beeither .
Debit: Purchases AccountCredit: Cash Account ,(cash)
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Debit: Purchases Account' rCredit: AccOunts Payable (credit)
Demonstrate in T-account form on chalkboard.
Accounts Payable is a liability account. Thisaccount represents amounts owed u) ereditors.When a purchase is uni4d on credit to be paidat a later datd, the amount,is entered on thecredit side-of-Accounts Payabld., The entrY.to record the transaction wouldbe
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a. Debits and Debit: Purchases (for.goodsto be resoldCredits\ 't0 tUstoters)
,Credit: Accounts)Payable
When the amount is_pakd (at a later date),the entry to record the traAaction would be
. Debit: Accounis PayableCredit: Call
Demonstrate imT--acdount forin on-chalkboard..Discuss with'clais and, if needed, brieflyreview the debit/credit-increase/decrease concept for assets', liabilities, capital, income,and expenses. .
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Sales is in income account; FOr.a tradingbusiness, this account represents the totalamount receiyed"from the sale of goods (atretail). Wheri.a- sale is made, the Sales accountis Credited. The transaction involves receivingcash for ihe sale of.in item and the entry wouldbe
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4. Sales
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a. Debits and Debit: 'Cash)(Credits Credit: Sales .
V. TheWhy ofincome and The retail merchant is confronted with theCost Accounts problem of keeping records that will show the
cost of doing business. This.involves the :concept of markup to arrimat a. retail pricefor 'ihe goods he sells. The merchant must alsomaintain accurate inventory and purchase .-figures. And he must underttand how to usemthesfigures to determine the cost of goods soldand to arrive at gross profit.
A. Computation ofCost Demonstrate fully, using theichalkboard or anof Goods Sold ,overhead projector, how to-compute Cost of
. -Goods Sold.
1. Formula rormula:.Beginning InventoryplusPurchates° k
a =Cost of)Goods Available for Saleminus
0 Ending-Inventory
2. Computations
=Cost of Goods Sold
Problem: Find Cost of Goods Sold.,Beginning Inventory (Jan. 1) ,48/,600Ending Inventory (March 31) 7,200Purchases 8,100.
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f. .Cuthputa'tions_ Solution:." Me.rehandiese. ImAntorY, Jan. 1 $8,600.00
! i :o: Purchases,' ,I 8_,100.00...00'tis' AvaiXable,-foil. Sale
x .146,70000
''. *6 ... Less : Mdse Inventozy Mar., 31_ 7200.00
Cost of ds_16old. 1g-wow. .. , 1 1 /
3 Rea/ctice... Have students do4h, T011owing an ividually. .1 -:
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. , ' . ,Prtiblenu.' yind Cc-,h of Goods Sold..
,d4. Beginning.Inventory (Jan:61); $9,050...-
Ending InyeOtory (Dec. 31) . " 9,600C. I . ,.. .. Purchases - , 53,192-
I . - ,Answex: Cost ,Of Goosit Sold $52 64Z.00,41110'
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B. CoRputatiortra-fselling price1. Markup .:
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e:principles' . The markup process is a way of determining the
selling price of an item from the cost. In retail, bizinesses, the 71)2240.4p rate 'for a given item (or ,
kind of item),is usually statSd ai a policy., Then,.1 for each item, the selling price is conputee
I Present and demonstrate the following probiem.
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Supply m ore practice pr ob1ems,4f needed.
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2. Problem A Merchant withestto sell electrid frypan whichcost him $14.00, to realiz a gross pro.fit of,:30%based on retail selling pri What will be theselling price (S.P.) of the f ?Np
ronfi.:t The markup rate' is the s as the gross ".,
a. Analysisi Analyze the problem with the c It gives thecost of the frypan to the merc t, and the ,esired markup5e-30%, base selling price.
b Restatement Costof problem Markup (on S.P.)
Selling price
Selittg price (s..?.)Markup (on S.P.)Cost must be equal to
= $14.00= .30%
= 100%= 30%
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c. Solution Selling price ( k).= cost 70%14.00 .70 = $20.00
d. Checking the Check the answer iy taking 30% of selling price,'result .30 X 20 = $6.00
and adding'the result ($6) to cost ($14) to see.ifit proves equal to the selling price ($20).
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3. Fractioe,. -problem.
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Cosi c70%) i
'''/IP Markup (30%) ; -
Selling Price, (100%)
,t''The answer'checks. -'. .
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1.4.00,6.00
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4. Guidelines onpricing
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C. MerchandiseInventory
1. Inventoryrecordsa. Manydtems
involved
b. Varietiek_of items
.*Have ths.students try another problem woking
% individ*llyTWhntwould be the Selling priaSi an- electric.
' 'coffee pot that-dcosi the merchant $1.8.,00 if t14
markup is 2(11.based On selling price? ',
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4As before, = 100%
. Markup on 'S.F.= 20%,=
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S.P. = Cost + 80%% = 8.00 .80 = $10.db
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Point out that markup can .also be a percent basedon cost. Sometimes the manufacturer will have asuggested Selling pricear a suggested percent ofmarkw-to guide the retail merchant.
4 -"'412Oxidise Inventory is carried on the' books asan asset' account because it .represents an invest-ment in goods lor resale to customers. Themerchant owns the goods until they are sold tocustomers.
Briefly deicribe why inventory records are kept.)how, a transparency of FigInT_LS, List of Inven-tOry.Items, North Star Appliances. This gives
'examples of sOme of the itemsfthich might be foundin an appliance store.
Point otat'that there is a large number of itemswithin an inventory. For example, smallelectrical appliance store has a wide range ofitems and a variety within each item.
For variety within an item, far example, theretail merchant might carry two or more brande--'of toasters. Each brand might have two or moresizes or models. Each sizeor-model might havetwo or more colors (trim, oaktype of metal).Each of these brands, sizesNnd models wouldprobably e a different price.
_7. Information, FOr each item kn inventory, the retail merchantneeded on will have a stock inventory record. The recordrecord should/show
-.--"-0 ; Stock number of item
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Name of the item
_ How many are currently in inlitntory
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d-: InventorypCard
2. Inventorycontrol,
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D. Profit teris
1. Grss profit
2. Net profit
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. Minimum and maximun number -t-o be in inventory_,' (a g-Ofie for repider) -
Number sold and dates of sales4,.. .Number entemtinto stock an1:1 dates
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Show` a transparency pf Rig Ure 1.6/Inventory Card:discuss it. . .Briefly describe the-procedurejpaintain&ng anadequateto satrify cusXomers. Thestablishment poliéy to:
Celitzvl-the quantity of hand-Keep accurate-upple-ditë records of inven ryGuard against loss through theft oi dama
.131stinguish_tho diffg#nce between gross proiXtand net profit.
A retail merchant nakes his gross pzvfit fromselling goods at a price higher than he paid for
, the goods._ Grosia p fit is. found by subtractingthe cost of go,ds s ld from net sales.
Net torofit is( found by subtracting the expensesof doing business (operating expenses) from grossfirofit.* Refer back to Figure 1.4, 'Incoe State-
-ment,if neecessary.
of a bus(iness inty of goods on hand,nerally involves the
LESSON 2 iN.DATA SOURCES AND RECORDING ,F0
\Content Outline
Sources of D\Ita for aTrading Blisiness
A. Cash received1. Sales ,Slip (or.
Sales Ticket)
TRADING BUSINESS ,
Teaching Suggestions and Techniquese0
Psoblems ipnarrative form provide practice inracor&Iiirtransactions. But in a real business -situation, the bookkeeper must recognize the kindof book entry needed for a given series of events.
The purpose of this section is to discusarthe typeof business papers that usually support thereceipt or payment of 'cash.
Explain that there arer various procedures usedby. a small businessman in a trading business towrite up a sale. One common procedure is to usea multifile-copy. sales slip that is written tipat the time of the sale. The original is given tothe customer. ,The copies are kept by the business-man for cash control, and control of inventory.
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a. Anotherprocedure
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Show tradsparency of-Figure 2.1, Sales Slip, anddiscuss it. .
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Another procedure used is,to provide the customdrwith only a ca4h,iegiSter tape.(duplicate of tape,
( made within the 'cash register for the business-N min).- The clerk mdking the sale will record the,tiliformation on a form retained by the business-' man for cash, and-inventory control. In this meihod,the clerk is usUally required to,make a one-line
.d'entry on theform showing date, item (description:'model No., color, size), quantity, price, salestax, and t6tal amount'of cash received..
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v ._ Show tTansparency f Figure 2.2-, Okily Sales
O:She \t, C ^ > -. V.., % ...... 4_1) oses- Wgittever me d.is 0, the business needs
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- written eviaence of with sale to verify the cash,salese6x, and tdtal sales. Generally,wthe
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business 400per generated at the time.of the ''' .-.Isale is also used tp,keep a check on inventory.
\qt,Also, it is good ailiness practice to supply the.7.%ustomer witfi written evidence (sales slip orcash register tape) for proof of purchase, in -cake an item purchased hai to be returned. .
2. Cash registerpe '
Use 'o? a cash register, with printed tape,
$'*tr day. At the end,of the dayof cash for thetotal cagh-in
proyides a chron4ogical re
the drawer, after subtractin e change fund,should agree with the total cash taken in asindicated by the_tape. This amount should alsoagree with the total amount deriyed from theduplicate sales slips for the day or the salessummary sheet
NOTE: Change fivid refers to the amount of cashput in the drawer at the beginning of the dayto make change. A typical amount for a small'trading business is $50.00.
3. Other sources Point out that other sources of cash for theof cash received business might include additional,investments
/- by the owner, and the sale of old furniture orequipment of the business. In either case, thecash would.probably bein the form of a check.An entry-yould be made directly'into the books %.foflowed by a deposit in the bank. This typeof a transaction usually would not be handledthrough the cash register. These sources ofcash represent receipts other than from the saleof goods to customers.
9
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B. Cash paid out
i. Purchase invoice'
J
a.Used for' checking
goods -°
\b. Bs of°7'
book .entrie
g
c. Credit termson invoicei
,
d. Explanationof tetns
e. Summary ofPurchase In-voice
(Refer back td Lesson I, IV-B.) Discu'se withthe-class the Purthises account and AccountI4PayableAccount incliiding /he procedure of buyinggoods fer resale.to customers.
,
The supplier will send a'Furchase Invoice to ' :the businessmav whdh tile goods are shiPped.Show transparency of Figure 2.3, Purchase'.Inv6icb.
,e
When the goods.are received by the business,before t y are put into inventory, they arechecked gainst the original order and°thePurch .111voicef' '
,
ter the godts'reteived ahd th, computations-havebeen' verified,'the Purchase Invoice becomes 'the basis'for the entries in the books:.
150-it: -Purchases Akcount.Credit: Accounts Payable Account
The Purchase Invoitegis evidence of money owed:for goods received.
f
At this time, the terms of thelpvoice would alsobe noted and a note would be made as to when 'tshould be paid. Review briefly the terms ofinvoice and how cash discounts are computed.
4Now show Figure 2.3, Purchase Invoice and disaussit: The invoice is dated October 8 and the ternsare 2/15, 1/30, n/60.
. //
If.this invoice is paid not'later than 15 daysfrom its date (on or before October 23), thebusinessman can take a 2% cash discount. If itis paid within 30 days of its date (on or beforeNovember 7), the businessmaki E:ftn take a 1% cashdiscount. If it is paid after'November 7, nocash discount is given. But the total amountshould be paid on or before December 7 (60 dayi fromdate of invoice).
Supply more examples, if needed.
Summarize the uses of the Purchase InvOice. Itis a business paper used by the businessmin to
Verify the goods received (quantity, typp,and cpst)
17
10
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s
Estab th' cost figuretfor inventoryreco dsProvide a cost figure for computation ofbelli priceFurnish evidence that money.isiowed to thesUpplier
d.
;,
2. Checks dood cash Control equiresthatahjeceivedbe deposejted in the bank promptly, an ash paid
. CheckboO
out be in the form of a check. This sho ld bethe generil rule.
_4 -Usually the ownerpf a small business will main-tain a Checkbook bn addition to the CanbineeCash Journal.
Show transparency of Figures2.4, Checkbook.1
/ 4 - / 4I.
\\Ity,
b. Book entries -.Oen a,check,is itten, the stub informatiOn is.
entered in the Ch Idmk,.and a current balance-maintained. The check.,supportedvby :the invoite;would then be.the business paper, to cause an,entry in the cash payments section of the Combined
. Cash JournalJ
. 4!,At the eng otthe month, the cash balance in theCheckbook Register would be.reconciled with thebank statement. It should also agreawith theash balance of the)Combined Cgsh Journal.
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3. Signed recei e,general-4
rule for good cashconprol Wto,for cash Assue a,check for all cash.payments, but some.pajrmOts , businesses.do issue CaSh from. the Cash drawer for
.7".
',eagle bills. For example, in a small grocerY .buiiness: for daily deliveries suCh as dairY",products and.baked goods, catiOaght_be used._ Inthis Case, the* delivery personprepares an invoicecdth is\paid out,and the p r receilling the
. cash signs a receipt. *The eipt is writteneither directly on the face o e Invoice Or ona stparate\sheet. It is placed,in the cash drawer.
.,\.
.
a. Book -0, If cash is &id out, a 'signed receipt must,beentries' tplaced in the\cash drawer as eyidence of-payment.
-,- This signed-receipt,'with.the suppokting.invoice,(or bill),then becomes the,business-paper use4-torecord the payment of'cash in the CombinedCaah 'Journal-.
, .
. \ .
Pqty Cash Discuss,the general concept of a petty.cash fund.Voilchers . When cash is paid\trom the fund a signed receipt
.'-i is placed in the petty cast'. box. This signed.'receipt is called a POty dash Voucher. ,
1811
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4.
PettytCAth.Pr edures
. Purpose of.pettycash fund
B. Establishment ofthe fund
# 1. Check issued
2. Example
C. "loperation of fund
. Use of Petty
. Cash Book
.4
t,
Show a transparency of Figure 2.5, Petty CashVaucher.
The Petty Cesh Voucher is evidence,of paymentof cash from the fund. When, the_fund is re-plenisp§0 with ca9h, the petty,cash voucherstogethe-t.ytth a summary sheet form the bus' esspapers to record the expenies in_ the Comb' edCash Journal. 4 4.
A petty'Apash fund i.êstabshed provide-anominal amount of c s , in a pat,ate fund, forsmall cash payments.' E indlude postagedue, package delivery,eh es, postage, donations,ad in local newspaper,s d incidental stase 1supplies. ills saves writing checks forrsmallamounts.
:
k i ,Discuss witfithe cLass that when a_fund is 4established, one person,is iade respeigIble far.its maintenance. 7,1* size...of(the fund iSdetermiAd by the needs of they-business. It
wshoulcrbe large'enougb)to cover smail cash?expenditures,for 2 to 4 week's.- The fund is -usually kept, in a'cash box separate,from the
..'i-tegular cash register draweri Se arate recordsAimare also kept for the petty cash d.. .
,
To start the fund, a cheek is issued from theregular business cash account made payable to cashor petty cash. The check is then'cashed and'themoney placed in the petty cash box.
ior example, to establish a petty cash fund fOr$50, the journal entry -
Debi t: 'Petty' Cash $50.00Uedit: Cash
Demonstrate in T-account form on chalkboard. -Thisis-mbrely the transfer of cash from one asset ,account (Cash) to another (Petty4Cash).
Book. Di tribute.copies of this form.to thethow a of Figure 2,6, Petty Cah,
class.
Demonstrate, Iiingiroverhead projector or Chalk-board, the recording of he $50 in the Petty Cash
1Book to establish the pe ty cash,fund. Have thestudents record the foll wing'-expend es intheir copies of the peetty,Cash Book. ,
-
A
a
petty cashexpenditures
Oct. 1. N.Established pettrbash fund, $50 .,3., Paid mailman 14# for postage 'due
Pistage) .
,
7. d $4.00 for_vindow washing (miscel-laneous)
8. Paid $4.24 for parcel post char
((postage)Paid $8.00 doniiiion to Heart Alm ti8. on- ' J.
(donations) .
9. Paid,$5.00 for Obstage stampspostage)12. Paid $6.50 for ad in local pap r
k (advertising)O 14. Paid $3.l2 for instant offee, sugar,
t"4,0......-,and powd re4 cream (stScellaneous)
15. Paid $4. 9 for envelopes, 6 ballpointpens, an& adding machine tape (storesupplie
After they have made the entries, show the,students Figure 2.7K, Answer Key, Petty CashBook. 'Point ouf to them the totalinsummarizing, 6d replenishing of theBook. Use Figure 2.8K, Answer Key.,Submary. ,
Expla4n that fhe cash to repf d/gash Rind willthe the diffe 4 ii,J,b4lance on hand in the fund ( ...; ana $50.0 .After the funlAsdreplenished again ha e \....,$50.00 in cash. ,
,1
1Replenishient of The Petty CashluTary (Fi :8K) sind the sIgnedthe fund PettyCash Vouchers const nte7the business papers
for drawing a cheFk to rep ish the petty caihfund and to'recolg the trans ction in the °Cpmbined Cash Journal. The ent in the Journal
-4 aiuld be
. 1. Entries in the Debit:Combined CashJournal
Advertising Expense 0onations 'Expense 8.00
Pos age Expense. 9.38Stork Supplies'Exp. 4.89Mis . Expense , 7.12C dit: Cash $35.89
When the 35.89 chea is cashed, the petty cashfund has a balance of $50.00 cash. .
Demonstrate the recording of the 'cash received($35.89) in the Ratty Cash Book.
r
At all times the petty cash fund must have either$50.00 actua' cash or the combination of actualcash plus the total of theagned vouchers.equalto $50.00.
13
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III. Combined Cash Journal for'a Trading Busines
A. Format
/ Number ofcolumns needed
B. Recording thetransactions ofProblem 1
1.. Basic'steps'.
a
Show a/transparency of Figu 2.9, Combined CashJournal. Most small businesses use this journalrather_than-speclil journals. The Combined CashJournal,J6 used to record all the transactions
-of the small business.
ighe nupber of columns.ved iJourndl is flexible. colwhenever there is enou rep
a Combinla Cashban be,addea
tition of one kindof entry. It can be eliminated-whenever it pecomesclear that it is not needed.
.ftOlem 1 is a selected group of typical trans-_SEtions for a small applipnce businpss, WithStar Applialces. DistftVute copies'of Ffgure2.9, Combin d CasWournal, tolle class.
Use chalkboard or overhead projector and presenteach transactioneto the class. Analyze and e.
ss ea h transaction, thep c it in theC bined ash,Journal with We dents.vecoraingin e awn copies.
While recording the transa4onsfor the NorthStar Appliances, emphasize o the dilss theimportance of the following:
Analyze each transaction before recordingit!
In double entry bookfteping, debits mustequal credits. At least two accounts areaffected,ki
IIF
oath transaction.
PROBLEM lNOVDMBER TRANSACTfONS
Record the following ansactions in a Combined Cash Journal.
Nov. 1. Record begi in cash balance $1,700.00.1. Paid Central Mall Association $220.00 for November rent2. Cash sales $246.10 (Sales $230.00; Sales tax $16.10)3. Paid N.Y. Tele hone $31.90, Telephone service5. Cash sales $195.17 (Sales $182.40; :Sales Tax $12.77)6. Paid Andersen Electric Company invoice, $288.45, less 1% discount
(See Figure 2.3inLesson 2.)6. Payroll, net cash paid $202.25
Distribution for recording:--Salary expense. $245.30Federal income tax 22.90State income tax 5.80FICA tax 14.35
14
21
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6. Record employer's FICA tax expense $14.35.7. Cash sales $419.44 (Sales $392.00; Sales tax.$27.44)
10. Cash sales $289.97 (Sales $271.00; SalO5 tax $18.97)10. Received credit memoyandum for $21.60 from Skiff's Electric for a damaged
roaster oven'returnildi(for credit (Roaster oven was badly dalnaged whenreceived.) )
Paid'60-day $1,000.00.note due today with interest at 8% (g tes payable$1,000.00; Interest'expense $13.33; Cash cregt $1,013.33)Cast sales $205.44 (Sales $192:00; Sales tax $13.44J
13. Payroli, net tash paid° $202.25Distribution for recording:
Salary expense - $245.30Federal income tax -22.90
*State income tax 5.80FICA tax 14.35
13. Record employer s FICA tax expelAe $14.5..
14. Paid Diamond Electric invoice for $106.00 for merchandise purchased onaccount
14. Caih sales $271.78. (Sales $254.00; Sales tax $17.78)15. Purchased $176.00 ybrth of merchandise from Andersen ElectrieCompany
on adcolcif, terms 2,15, 1/30, nM7. e. North,-owner, made an additional investment in business of $1,200.0017. hash sales $3,18. sued check
18.
.a
sheet shows t
70 (Igales $310.00; Sales tax $21.70)replenish the-Petty cash fund. The Petty cash summaryfollowing diitribution:
Advertisi g expense $14.40Donations. 10.00POst 5.00Miscel aneous 11.00
Cash needed ,- 0 . $40.40PurChased.$268.00 woron account
of 'merchandise from Diamond Electric Company
20. Payroll, net cash paid 207.25Distribution for recordi g:
. Salary expense $245.00 4kir'Federal income "tax 22.90State income tax 5.80FICA tax 14.35
20. Record employer's FICA .ta4 expense $14.35.21. Cash sales $234.33 (Sales 219/00; Sales tax $15.33)23. Paid421.36 to local PRUDENT SHOPPER for 4-inch ad on special holiday
.sale. 25. Mr. North, owner, withdrew $500.00 cash.for personal use,.
Cashsales $175.48 (Sales $164.00; Sales tax $11.48)29. ,Paid Andersen Electric Company invoice $176.00 less 2% discount30. Prepare a caih proof from Combined Cash JourziL, Checlibook shows a cash
balance of $2,271.62. *
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LESSON 3JOURNALIZING, POSTING, AND TRIAL BALANCE'
Content Outl ne
I. Rcord the Trans-tions of Problem 1.
ntinued)
II. S arLze the CombinedCash Journal.
ILE. Open and'Post theGeneral Ledger.
A. Two-ColumnGeneral Ledger
1. Op ngG al
A
Teaching Suggestions and Techniques
Briefly review thefransactions recordedc.in theCahbined Cash Journal from pesson 2/. Finishjournalizing Problem 1 using the pattern ayreadyestablisIrd. Allow time for questions and'discussion:
ng the chalkboard Or overhead projector,demonstrate tife-procedure for footing and rulingthe Journgl.
EmphasIze the importance of accuracy in addingthe columns, proving the equality of the debitsand credits, and preparing a-cash proof. Thebalhnce of cash should agree with the balance inthe cheqkbook, which in urn iS reconciled to thebhnk st,tement.
'Refer to Igure 3.3k, Answer K y, Ccabined CashJournal for November, and Figure SAK Answer Key,Cash Proof, November 30..
Show a transparency of Figure,3.2, General Ledger.Review the purpose of the General Ledger and theoverall procedures for posting it.
Provide the students with copies of the blankdger Ge eral Ledger form (Figure 3.2). It
D monstrate the opening of the General Ledgerccounts, using Figure .3.1, Chart of Accounts,orth Star 6ppliances, which shows account balances.
Have students tet up their Ledger accounts.
Direct this process, at least for the first fewaccounts, then carefully supervise as the studentswork independently.
Demonstrate the posting procedure and have studentswork with their own Journal and Ledger accounts.Allow time for questions and discussion.
While working together, emphasize:
That the proper steps should be used intrantferring information from Journal toLedger.
2. Posting fOrNovember
a. Steps inposting
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23 4
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For example, in posting the total cash debit(1) Locate the Cash General Ledlger account#(2) Rec%rd,.n Ledger (debit side)
ament; t4,and posting referInce.(Use CJ for CdMbined Ca'sh Journ 1.)
(3) Record in the Journal at foot of cash.- debit column the record posting
refeience 101, wI h is the CashLedger account niIiber.
t,
b. Account to That thelcolumn heading in thegournal in-'be posted ,' dicates to which account each item iin that
coIumn.s Ould be posted. Also whetHei it islea deb' or a credit: V -
. V ,
Thatmost4olumns are posted,in total to the, Ledger account indicated.- But aligure in' the Geneiil Ledger debit or credi coAumn\requires that that amount be posted tci theeccount manual in the "Accoufit Title And'Explanation" column.
c. Importance of The all posting be done carefully andaccrately. .accuracy
3. Computing account Using the chalkboard'or overhead projectorbalances demonstrate the procedure for computing account
balances.\ Do not show computations in the Ledgeraccount but only small pencil footings. Show thebalance on the proper side of the account. (SeeFigure 3.4K, Answer Key, General Ledger, November.)
Pro de a copy of a Trial Balance form for eachstudent. Briefly review the purpose of a trialbalance and how it is prepared.p
Show how to prepare a Trial Balance fez. NorthStar Appliances for November,with studentsworking individually.on their own materials. (SeeFigure 3.6K, Answer Key, Trial Balance, November30.)
Prepare the Trial °Balance.
Answer questions. Now allow-time for questions and discussion.
Lesson 4 provides transactions for December onwhich students should work independently tojournalize, post, and take a trial balance.
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LESSON 4JOURNALIZING,11CISTING, AND TRIAL BALANCE (continued)
,Content Outline
I. Reviewlglublem 1.4,1
.
Problem 2, DeTkansactio s
er
/-
A. Jou lize.
B. Post to GeneialLedger.
C. Prepare TrialBalance.
A
Teaching Suggestions.and TechniquesSr
This lesson is a reinforcement of journalizing,posting, and preparing a trial balance. The studentsare to work independently. 0
Review the work finished for November ttansactionsin Problem 1. 'pint out tothe studentsithat theirtrial balance dr,Noiremper 30 must,be in.4_alancesince Probleml; -December transactions, will beposted using that Illanci as a bise.
Distribute copies of the Combined1. Cash Journalform (Figure 2.9) and have the students journalizeDecember transactions, Also give.them copies ofProblem 2, December Transactions, which appearsat the end of this lesson.
0Have students work independently with a minimdm of .assistance. But you should supervise theactivity and make suggestions Where appropriate.
When the,students.at*finished, check the'iesultsagainst Figure 4:114, Answer Key, Combined CashJournal, December Transactions. Discuss with.'yclass and tnswer questions.
Briefly review the posting procedure'used forNovember traniactions.,_
Have students post their December Journal entries,to_their General Ledger accounts and computethe account balances. Check the results againstFigure 4.2K-, Ans er Key, General Ledger.
Note: You may p efer to have students prepare aTrial Balance first and then check it against'theanswer key.
Review the Trial Balance. Distribute copies of aTrial Balance fork and have the students preparea Trial Balance for December 31.
WhentheyLare'finished, check-the,results against ----Figure 4.3K,°Answer KO, Trial Balande, December31.
2 5
18 JO.
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o.
D. Review.the Decemberentries
J. Timing of,theoperations
0
DiscuSs with the students the work completed forDecember for North Star Appliandels. point outthat most Stall businesses will have a periodicroutinb of journalizing, posting to the ledger,and>preparing'a Trial Balance.
Joutnalizing is done either daily or 24Vinsactions occur. '
Posting is usually done at least once a month...It.is helpful la post individual items frotGeneral Ledger debit and credit columns duringthe month to keep accounts'sUrrent.
A Ttial Balance is us9ally.prepsired ionthlyto give the bookkeeper a periodic checkon, the equality, of debrts and credits in theGeneral Ledger. ' .
' PROBLEM 2DECEMBER TRANSACT6N8
Record the following transactions Pn a Combined Cash Journal.
Dec. 1. f Beginning cash balance $2,271.621. Paid Central Mall Association $220.00 for DeCember rent
Paid N.Y. TeleOhone $34.30, telephone service. sh sales $230.05 (Sales $215.00; Sales tax $15.05)
.3. Purchased $449,00 worthof merchandise from Andersen Electric Compan, oh account; terms 2/15, 1/30; n/60 .
74. Cashtsales $205.44 (Sales $192.00; Sales tax $13.44)4; keceived a credit memorandum for $10.90 fro* Diamond Electric for
broken electric iron returned for creditCash sales $220.42 (Sales $206.00; Sales tax $14.42)
a
Payroll, net cash paid $202.25Distribution for recording:
Salary expenseFederal income taxState income tax
$245.3022.905.80
PICA tax 14.357.' Record employer's FICA tax expense $14.35.8. CaSh sales$310.30 (Sales $290.00; Sales tax $20.30)9. Paid Diamond Electric Company invoice $268.00, less.$10.90 per credit
memorandut10. Paid $23.00 to local PRUDENT SHOPPER for a 4-inch ad on special holiday
sale11. Mr. North,owner, withdrew $500.00 cash for personal use.12. Cash sal $331.70 (Sales $310.00; Sales tax $21.70)'
2 6
19 ,
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14. Replenished petty dash fund. The petty cash summary sheet shows the?allowing distribution:
Advertising expente $ 8.00-Donations 15.00PoStage 7.80,Miscetlaneous"
V12.00'
Cash needed fTETITpayrolf,-net-capi paid $202.25Distribution for recording:
Salary-expert/se $245.30Federal income tax 22.90State
Vincome tax 5.80
FICA tax 14.3515. Record employer's FICA tax expense $14.35.15. Cash sales $353.10 (Sales $330.00; Sales tax $23.10)16. Paid Andersen Electric Company invoice $449.00, less 2% discount A,
18. Paid $44.80 to Utility Electric Co. for electrical service for 2-mathperiod /-
23. Cath sales'$434.47 (Sales $406400; Sales tax $28.42)28. Paid/Skiff Electric invoice for $310.00, less 1% diicount for merChandise
purchased-on account30. Cash sales $171.20 (Sales $160.00; Sales tax $11.20)31. Prepare a cash proof from Combined Casb Journal. V Checkbook shows a cash
balance of $2,354.83.
2 7
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LESSON 5EIGHT-COLUMN WORKSHEET, AND PREPARING FINANCIAL STATEMENTS
Content Outline
I. Review of Problem 2
II. The 8-Column Worksheet
Introduce theWorksheet-
B. Prepare a Worksheet.
1. Fill in headings.
-2. Enter'JrialBalance.
III. Adjustments on the *Worksheet
A. Adjustments need
teaching.Suggestions and Techniques
Briefly.review the independent work from Lesson 4,December transactions for North Star Appliances.
Show a transpatency.of Figure 5.1, 8-Column Work-sheet., Distribute copies-of this worksheet to theclass and discuss its purpose. Emphasize that:
It is a bookkeepers' tool, prepared from GeneralLedger balances for end-of-accounting-periodanalysis and adjustments. It is prepared inpencil and is not part of the formal finaljalpapers.
A step-4.-step process must be followed in pre-paring it.
When completed, it is a good basis for pre-paring financial statements and journalizingadjusting.and closing entries.
Working with the,class, demonstrate the prepara-tion of an 8-Column Worksheet for North Star Ap-pliances for the year ended December 31, 19 ..(See,Figure 5.2K, Answer Key, 8-Column WorkAeet,December 31,
,
Fill in main heading and the column headings.Point out that each pair of columns (Trial Balance,for example) has a debit column-and a credit column.
A Trial,Balance_has already been prepared forDecember 31.. Point out that if a Worksheet is used,the bookkeeper prbbokly would not prepare a sepa-rate Trial Balance bnt.would enter it directly onthe Worksheet from the ledger accounts.
Working with the class,enter the trial balance onthe Worksheet. Add the columns to be sure debitsequal credits.
Adjustments needed for North Star Appliances forDecember 31, 19 are as follows:
Physical count and pricing of the merchandiseon hand shows a balance of $8,§40.00 inmerchandise inventory.
Value of prepaid insurance that has expiredis $174.00.
2821
I.
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B. The concept ofjusting ledgeraccounts
Physical count and pricing of store suppliesshows a total of $140.00 worth on hand.
. Depreciation expense on store fixtures andequipment is $260.00.
DisCusi with the class the concppt.of adjustingcertain ledger accounts to show-true balaRces.
Uie chalkboard or the overhead 1:Projector andpresent each adjustment to the class. Analyz6- ,and discuss each adjustment, then enter it in theAdjustments column on the Worksheet. The st9dentsshould be,making entries on their own Workshpett.
s
C. Adjustment of The first adjustment,,the Metchandise InventoryMerchanOse Inven- accountoiust shqw the new balance of $8,640.00,tory ';c't-'' We suggest the two-entry method for adjusting:
(A) remove the old balance, (B) record the newbalance. '
1. Starting balance Start with the balance sbown on the Trial Balance,-.:,. as illustrated in the T-account form:
f
Merchandise Inventorybal. 8,350.00
I
,
0
The other account involved in the adjustment isthe Profit and Loss Summary Account:
Profit and Loss Summary
(no balance on TrialBalance)
2. First adjusting The first adjusting entry will remove the oZdentry balanceIrueerchandise Inventory account:
t
Merchandise InventoryIbal. 8,350.00 (A) 8,350.60
Profit and Loss Summary(A)
Adjusting entry (A)Debit: Profit and Loss Summary $8,350.00
Credit: Merchandise Inventory $8,350.00
:-3. Second adjust- MP second entry will record the'new balance in the
ing entry Merchandise Inventory account:
,
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29
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4. Balance afteradjustments
/D. Adjustment of PrepInsurance
Merchandise Inventorybal. 8,350.00 (A) 8,350.00
1
(B) 8,640.00
Profit and Loss SummaryI(A) 8,350.00 (B) 8,640.00
Adjusting Entry (B)Debit: 'Merchandise Inventory $8,640.00
\ Credit: Profit and LossSummary $8,640.00
0.0
After the adjustment, Merchandise Inventory showsa debit balance of $8,640.00, the new amount.
Point out that each adjustment entered on theWorksheet has i capital letter to identify thedebit adjustment with the credit adjustment.
e (C) adjusibent is td the Prepaid Insuranceaccount and the insurance accounts.
Usini T-accounts show the balance as listed on theTrial BalanCe:
Pr aid Insurancebal. 3 0.00
1. Starting balance
2. Adjusting entry ,
r
Insurance Expense.
-$174.00 of the prepaid insurance has expired--that amount of the prepaid premium applies to this-accounting-period. Therefore, that amount i-irecorded as
/an expense of this accounting period.
1
Discuss in full, using a specific example, to besure the students unders6nd how expired insurance
tcomputed.
The entry to record the expired insurance for NorthStar Appliances is:
Prepaid Insurance
1
bal. 360.00 (C) 174.00
3 0
23
Insurance Expensi(C)
-
A,Adjusting glary t) -
% DOW Insurance Expense $174.00Credit Prepaid-Insurance $174.00 ,
3. Balance after Afteradj stment, the Prepaid Insurance accountadjustment shows a)lalance of.$186.00 and Inibrance Expense
a balance of/174.00.' q4 '
E. Adjustment of Store The (D)adjustmWnt toncerns the/Store Supplies
Supplies aecouneand the expense account,IStore Suppliess ,
Expense. ,9' d - i
-
1. Starting balance ,The balances in T-account form-as shown on theJ Trial Balancelare:
Store S 'ii, lies
bal. 285.
4
2. Adjusting entry
F. Adjustment fordepreciation
c.:
Store Supplies- Expense
The balance of store supplies on hand as ofDecember 31, 19 is $140.00, which means $145.00worth of store supplies were used during theaccounting period. The $145.00 would be theexpense for the period for store supplies.
The adjustment entry to record this expense is:
Store Sup liesbal. 285.00 (D) 145,00
- Store Sup lies_Expense(D) 145.00
Adjusting Entry (D)Debit: Store Suppliet Expense $145.00
Credit: Store Supplies $145.00
'The last,Adjustment is for depreciation. Discuss
the concept of depreciation using a specificexample.
Depreciation is the (E) adjustment and in4(ilvesAccumulated Depreciation-Store Fixtures andEquipment account and the Depreciation Expense
account.
24
-
1. Starting-balances
2.
Balances of these account's as listed on theTrial Bal4nce shown In T-account form are:
_Accumulated Depreciation--Store Fixtures and Equipment
bal. 1,300.00
Depreciation Expense
;Ohe depreciation adjustment of $260.00 representsthe estimated decrease in the value of the storefixtures and equipment that is to be recorded asan expense for this accounting period.
Adjusting entry The entry to record this expense is:
Accumulated Depreciation--Store Fixtures and Equipment
bal. 1,300.00(E) 260.00
Depreciation Expense(E) 260.00
Adjusting Entry (E)Debit: Depreciation Expense $260.00
Credit: Accumulated Depreciation--Store Fixtures and Equip.'$260.00
3. Baltnce after The new balance in Accumulated Depreciation account_
If time permits, discuss with the class thesignificance of the asset account, Store Fixturesand Equipment, and the minus asset account,Accumulated Depreciation.
After the last adjustment is entered on the Mork-sheet, add the adjustments columns'to be surethe debits equal the credits, and make doublelines where needed.
G. Extend amounts.toIncome Statementcolumns and BalanceSheet columns.
Demonstrate-how each item is extended from theTrial Balance (combined with the adjustments) toeither the Income Statement columns or the BalanceSheet columns according to the classification ofthe account.
3 2
25
-
1. Example
2. Demonstrate onMerchandiseInventory.
H. Compute net profit(or loss) and finishthe Worksheet.
1. Total'thecolumns. '
1.4. Determine thenet profit.
3. Entei the netprofit.
IV. Preparation of FinancialStatements
A. 'Balance Sheet
B. Income Statement
C. Summary
For example, for the cash account, de$2,354.83 (no adjustmen9., the amountto.the Balance Sheet debit column.
Do each item individually and systemfirst item with an adjustment is theInventory account. Demonstrate fullybalance is determined and extended toSheet debit column.
t balanceis extended
ically. Theerchandisehow the.newthe Balance
Working with the class, demonstrate theof the Worksheet.
completion
Total the Income Statement columns and the BalanceSheetoollimns. Examine the IncOme Statement columntotals. Is the credit total ($75,527.88) greaterthan the debit total ($63,338.84)?, Since it is,there is a net profit for the period. Income is
greater than expense.
Subtract the lesser amount fr.= the greater amountand the difference ($12,189.04) is the net profit/for the period. The difference between the twoBalance Sheet column totals should be the sameamount as the net profit ($12,189.04).
Enter the net profit, bring down the final totals,and double rule the Worksheet. .Point out that thenet prOfit'(or loss).figure is used as a balancingfigure.
.Using the completed Workheet, Figure 5.2K, preparea . Balance, _Sheet Sox .NoxA_Star. APPling.e.4December 31, 19 . (See Figure 5.3K.)
Uiing the completed Worksheet, Figure 5.2K, preparean Income Statement for North Star Appliances for
the year ended December 31, 19 . (See Figure
.5.4K.)
Point.out to.the class that the net profit figureon the Income Statement is also shown in the
Owner's Equity section of the Balance Sheet.
Allow time for questions and dis_cussion of,the workcompleted to date.
26
33
-
LESSON 6ADJUSTING AND CLOSING THE GENERAL LEDGER, ANPREPARING THE POST-CLOSING-TRIAL BALANCE
Content Outline
I. Review of Worksheet
I . Adjusting and ClosingEntriesA. Adjusting entries
1. Journalizing
-er.rw
2. Posting toLedger
B. Closing entries1. Resydts of
clfsing entries
'
0
TeachingSuggestions-and References-- AW
Briefly review the Worksheet that was completedin Lesson S. Remind the students that Oefinancial statements were prepared from tbi Work-sheet and that the id4formation on the Worksheetwill be used to journalize the adjusting andclosing entries.
.Distribute copies of the Combined Cash Journal.(Figure 2.9) to _the class. Review the adjust-ments that were made on the Worksheet for NorthStar Appliances and the manner in which eachadjustment is keyed.
'Working with the class, demonstrate the journal-izing of the adjusting entries starting withad*stment (A). (See Figure 6.1K.)
After the edjusting entries are journalized, postthem to the General Ledger accounts.
Have the students compute the account balancesfor the accounts involved with adjustments. 'Makesure that each balance agrees with the balanceshown on the financial statements and/or the ex-tended balance on the Worksheet.
Discuss with the class the putpose of closingentries. As a result of closing entries, threethings are'accomplished:
Income accounts are closed (in balance).Expense accounts are closed (in balance).
, Net profit (or loss) is transferred to thecapital section (in agreement with the
2. Closing entries To close the Gener al Ledger for North Star Appli-needed ances, make four closing entries (Figure 6.1K):
Transfer income to Profit and Loss Summaryaccount.
Transfer expenses to'Profit and Loss Summaryaccount.
Transfer net profit (or loss) from Profit andLoss Summary account to the Drawing account.transfer the net increase (or decrease) from 4'the Drawing account to the permanent Capitalaccount.
4
3 4
27
-
A.
3. JournAizing Demonstrate the journalizing of'the clbsingentries, working from the Worksheet. The concept-can be_clearly)illustrated first in T-accounts ,
before actuall,k journalizing.
I
4. Posti to Ledger Have the students post the closing entries tomtheir General ledger accounts. When the postingis completed, Wave them compute account balances4to be sure_tbe temporary accounts are in7alance, °that ls, closed.
-
C. Balancing andr,ruling Briefly review the classification of accounts inthe General Ledger the Ledger. Point out that the permanent accounts
accounts (Balance Sheet accounts) are balanced and ruled,but a balance is also shown for the beginning ofthe new accounting period. The tempdrary accounts(income and expense &ccounts.)' are closed (withoutbalances) to start the new accounting period.
.Demonstrate balancing and ruling the GeneralLedger for North Star Appliahces. (See Figure6.2K.)
Distribute a Trial' Balande form and-have the stu-dents prepare a Post-Closing Trial Balance (Figure6.3K). Make sure debits equal credits in theLedger after the closing procedures.
Review the accounting cycle, emphasizing that itis repeated each accounting period. Allow timefor questions and iscussion of the work completed.
6
10
D. Post- Closing Trial
Balance ;
;. ;`.
.
.
PRACTICAL PROBLEM
Content Outline Teaching Suggestions and Techniques
I.' . Purpose of Application In Lesson 1 we recommend that a published practiceset be used at the end of this course. This willprovide the students with experience in using therelated business papers upon which transactions arebased. Several commercially published practicesets are suggested in Lesson 1.
A. Alternateapplication
If you prefer, you can use the supplemental practiceproblem (SNO SHACK, Appendix B) in place of apublished practice set. This supplementalproblem includes transactions for December plus
3528.
-
the closing for the end of the year. It alsoincludes forms (which_ can be duplicated) apans er keys for the problem.
We es imate that four-class-sessions would anapprop iate amount of time to devote to comp etingeither a practice set or the supplemental' prblem.-
II. Procedure In usinpeither a practice set or the supplem ntalproblem, we recommend that you do the followin(In the statements belol, we will assume. you hachosen to use the practice set.)
A. First do the prac- Do the practice set yourself ,before you aisign it :tice set yourself. to the students. As you do it, notice: '
What the student will need to work the practiceset
The type of entries which miglI ;give the studentproblems -The time required to complete the'set
B. Review the materials, Review the practice set with the studen beforewith the students. they work it to emphasize:
Type of business involvedTask the student is confronted withTime schedule to be followed
C. Provide checkfigures.
Provide check figures at key points. For example:Journal totals, Trial Balance totals, net profit(or loss) figures, etc.
D. Make your 'completed Make your completed practice set available as anet available.' answer key while the students are doing their sets.
III. Summary Review with the students the bookkeeping cycle andthe role Of the bobkl'eeper 'and/Or 'a6cOuntant inthe small business environment.
J
36
29
-
APPENDIX AILLUSTRATIONS, FORMS, AND SOLUTIONS TO PROBLEMS
30
37
-
SLEEPY -TIME MOTEL
INCOME STATEMENT
For the month ended January 31, 19
Income from Sales:Sales
Operating Expenses:Advertising 163.00Electric 156.80FICA Tax 38.72Heat 265.00Insurance 300.00Linen Service 750.00Maintenance and Repairs 150.00Miscellaneous 19.00Office Supplies 38.00Salaries 710.00TV Repairs 63.00Taxes 139.50Telephone 123.40
Total Expenses
Net Income
Figure 1.1Income Statement
Sleepy-Time Motel
3831
$ 4,710.00
M#4
$ 1.793.58
-
SLEEPY-TIME MOTEL
BALANCE SHEET.As of January 31, 19
lea*
AssetsCash
$ 1,53o.00Petty Cash 50.00Prepaid Wsurance 1,600.00'Office r 200.00-Room-Maintenance Supplies 850.00Building $ 65,000.00
Less Accumulated Depreciation 23,400.00 41,600.00'Guest Room Furni,ture $ 18,000.00
Less Accumulated Depieciation 8,600.00 p,400.00Office Furniture and Equipmqnt $ 2,800.00
Less Accumulated DepreciafSlon 4,600.00 1,2po.00Motel Maintenance Equipment $ 2,600.00
Less Accumulated Depreciation 900.00 1 700.00
Total Assetsw $ 58 130.00
$ 600.00Accounts PayableFederal Income Taxes Payable 106.50State Income Taxes 'Payable 14.10FICA Tax Payable- 38.72Sales Tax Payable 329.70StateCounty
$ 188.40141.30
Mortgage Payable $ 18,000.00
Total Liabilities .$ 19,089.02
Net WorthK. George Hayes, Capital, January 1
. PI S8,447.40-Net .Profit. .for January $1i793.58.-Less, Drawings -1,200.00Net Increase to Capital 593.58K. George Hayes, Capital, January 31
Total Liabilities and Net Worth
,
4
39,040.98
$ 58 130.00
Figure 1:2Balance Sheet,
Sleepy-Time Motel
39
32-
-
'
SERVICE BUSIESS(Motel)
.COMPAtSON-- . TRADING-BUSINESS> (Appliance S'tore)'Cash Received.-
Room Rpntals (Patrons) Sale of Goods
7
Cash Paid Out
Cost of Goods for Resaleto Customers
Advertising AdvertisingElectric ElectricFICA Tax FICA TaxHeat Heat
,.Insurance InsuranceLinen Service rMaintenance and Refiairs -Maintsnancp and Repairs MiscellaneousMiscellaneous Office/Store SuppliesOffice Supplies Rent (if building isSalaries not owned)TV Repairs SalariesTaxes TelephoneTelephone
Figure 1.3Comparison of
Service Business and Trading Business
4 0
33
-
w:e.
NORTZURPFRIANCES.'
INCOME STATEMENT
For the month'ended January.31, 19
Income 'from Sales:Sales $ 6,339.00
Cost of Goods Sold:Merchandise Inventory, January 1 $ 4,350.00Purchases 3,084.00Goods 'Available for Sale $ 6,434.00Less: Merchandise Inventory, January 31 2,920.00Cost of Goods Sold 3,514.00
Gross Profit on Sales $ 2,825.00
Operating Expenses:
Advertising 23.50Electric 14.50FICA Tax 56.16Miscellaneous 12.00Office and Store Supplies 69.00Rent Expense 220.00Salaries 1,040.00Telephone 41.50
Total Expenses 1,476.0
Net Income $ 1 448.34
Figure 1.4Income Statement
North Star Appliances
4 1
34
-
1st OM STPA APPLIMCES .
LIST OF INVENTORY ITEMS
Household ItemsAlarm ClocksBlenders'
Can OpenersClock RadiosClocksCoffee PotsCrockpots"Electric IronsFrypansKnife SharpenersMixers
Counter-topHand
Steamer CookersTimersToaster OvensToastersVacuum Cleaners
Hobby ItemsDrillsHot Glue GunsSabre SawsSanders
_
Soldering Irons
Retail SuppliesCleaners
Coffee PotsElectric Steam Irons
DrillsWood BitoMetal Bits
Electrical Cords (Appliance)Glue Pacs'
Saw BladesSolderVacuum Cif:saner Bags
0
Figure 1.5List of Inventory ItemsNorth Star Appliances
4 2
35
-
item Numbei
Item Name'
NORTH STAR APPLIANCESINVENTORY CARD
74-P12
Diamond Toaster (2-slice), Coppertone
Number to be in Inventory Maximum: 10 Minimum: 4
Date,e2ptoo.s.
No Vernise4.0
2PeeentbWI
QUantityReceived
Figure 1.6Inventory Card
North Star Appliances
36
4 3
Uni t
CostWantiU
Stld Balance
/do
//, lr
s
-
Phone000-8823
Order
. Sold to
NORTH STAR APPLIANCES
Northland, N.Y.
No. Date
.
,
-
Quantity Description Amount
-
..
.
.,
_.
.
TAX
TOTAL
Figure 2.1Sales Ticket
37
4 4
-
DAILY SALES SHEET
dip
Quantity
NORTH STAR APPLJANCES
DescriptionItem
PriceSaleS 1Tax
TotalCash
TOTALS FOR DAY
Figure,2.2Daily Sales Sheet
4 5
38
-
INVOICE
ANDERSEN ELECTRICClearcity,Telephone
r---Sold
North Star Appliances
to.NorthlandNew York 12809
I--
COM'PANYNew York 12839(518) 234-2616
,,
.No.
.
,
.
.
.
.
.
Invoice DateOct. 8, 19
Terms2/15, 1/30, n/60
FOBShipping Point
Your Order No.1032
ViaDean Trucking
'441. 1.1,7
QUANTITY DESCRIPTION . I UlliT PRICE I AMOUNT
Blenders K43-10 , 16-.45- --$.-Toasters 74-P12 12.40Roaster Ovens R0631-4 .. 20.80
. ,
TOTAL
,
.
,
-
.1
.
. .
-.,
81:.25-----
124.0083.20
5
10
4
,
-
.
. ,
$ 288.45 '
v
Figure 2.3Purchase Invoice
39
4 6
-
BAL
BRO'T
101 FOR'
0
147
FOR a
0
TOTAL.
MIOUNT 7111S CHECK16.M...11...., BALANCE
North Star Appliances101
Northland, New York 12809
PayDOLL:ARA
TO THtONT411
OF
, THE FIRST NATIONAL BANK
NORTHLAND, NEW YORK
IT INNNIIMENT Ns CAECA TINOS IIMO IN &MOTOIN TULL PIMA? of Two /ALLOWING ACCOUNT
102
BAL
FOR' D
0g
0
TOTAL
North Star Appliances
Northland, New York 12809102
PayDOLLARS $
TO TIlOINDUIOF
MIOUNT THIS MUTHE TIRST NATIONAL BANK
NORTHLAND, NEW.YORNBALANCE
IT ANDOMICWINT INII Can NIh pAID IN ACCUITADIN TALL 1111141117 DP pc TALLOWINA ACCOUNT
k
TO
SAL
BRO'T
103 FOR'
t
y0
TOTAL.
MIOUNT THIS CHECK
BALANCE
I
'THE FIRST NATIONAL BANK
NORTHLAND, NEW YORKs
North ,Star Appliances
Northland, New York 12809
19
Pay DOLLARS LITO THEL.
ly ViT0lgesdk7 rig; CHICO TIM PAID lo A009110ORDENIN TOLL PATIAIr SIT 74 /011.0TIINO 1091111
OF
103
Figure 2.4
Checkbook
-
Paid to
. For
Charge to
78,
PETTY CASH VOUCHER
Date 19
. t,!`.!;
I
P.
Approved Received by
Figure 2.5Petty Cash Voucher
41
4 9
-
s MI
1 1
I
§
. 1 ' I
1 .
I
#
. 1
,
I 1
i
I I :
s I I I
MI li
-
: I I
I
' 1
1
i
5
I II a
,
0 ,i
1
/ 4 /
I
I
M=II 4 I-1111MEMIIIINI
r.
11=11
1.I
.
MEMO"
1
A ' I
1
1
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1 ' 1
1
1
. 0 i I1
II 1111 IIIIIII
II
0
s
-
PER( CASH SIJMORY
To replenish'fundExpenditures from October 1 to October 15
Advertising Expense $ 6.50
Donations, Expense 8.00
Postage Expense 9.38
Store Supplies Expense 4.89
Miscellaneous Expense 7.12
Total Expenditures $ 35.89Cash on Hand 14.11
Total Petty Cash Fund $ 50.00
Figure 2.8KAnswer Key
Petty Cash Summary, October 15
5 4
44
-
Ill! Iri`I'' ilin''III ill riiiilitiliTt '1 1 , P1. PI 3 (111w
,,,,,,,,,,,,,,,,,,,,,,,,
11,111.1.11,1111
1,1111,1,1,11,,,,,ilitili,1":11,0 rola III
1 i11 A, Ili iiii,,,,,,,,,,,,,,,,i.,,,,iiii.,,,,,,,.0,,,,,,,,,,
11 1 ilrli 1 111.11,!,1111ill,',1, ii,,Illii Ill11:11:11:11:1111:1
1
iiIIIIIiii,111 1 1l'iliii:iiiiiiiiiii:riiiiiii.N'Ili 11:1111:11111,11,1:111111111111
i I. , ,,,,,,,,,t,,,,,,,,,,,,,,,,1
GENIRAL Wag cars ?MAUI y PURCH,DISC
16Old II 11 II I 11111111111111111111111111111011111
I I 1 III MI luilimmuuumiummumum
I1411111111 111111111111111111 111111111111
lira 1111111 mmillir1111111111111111111111111111II
11111h OWN
11111111111111;1111111111111111111 II
1111111111111
II
liii 111111111111111111111111111111111111111111iIhIHhIIIIIflhhiIIIlllIIhiIlIiIIiIlIiiIIliIuIflhhIIAhiIlIIIIIIiIiIIlNhIIIIIIIIflIhhIhIIIIIhUhlHhil
-
r-fre
-NORTH STARA:PUKES
CHART OF ACCOUNTS (Account Balances as-,
AccountAccount Title Number
of November 1, 19 ).
Account BalanceDebit Credit
Cash 101 $ 1,700.00 $Petty Cash 102 50.00Change Fund 103 50.00Merchandise Inventory' 111 8,350-00Prepaid Insurance 121 360.00
Store Supplies 131 285.00Store Fixtures and Equipment 141 8,800.00Accumulated Depreciation--Store
Fixtures and Equipment 141.1 $ 1,300.00Accounts Payable 201 810.00Notes Payable 202 1,000.00
Federal Income Tax Payable 211 91.60State Income Tax Payable. 212' 23.20FICA Tax Payable 213 57.40State Sales Tax Payable. 214, 472.00County Sales Tax Payable' 215 354.00
John G. North, Capital 301 13,500.00.John G. North, Drawingr 302 9,000.00
Income and Expense Summary 311 -Sales olv. 61,901.57Purchases 501 37,080.6e'
Purchases Returns and Allowances 502 272.00Purchases Discount 503 339.93Advertising Expense 511 854.80Depreciation Expense 512 -Donaticins Expense 513 110.00
Electric Expense 514 137.70FICA Tax Expense 515 57.40Insurance Expense 516 -Interest Expense 517 28.00Miscellaneous Expense 518 78.90
Postage Expense 519 56.00Rent Expense ,520 2,200.00Salary Expense 521 10,547.9YStore Supplies Expense 522Telephone Expense 523 376.00
5
Figure 3.1Chart of Accounts
North Star Appliances
5 I46
-
Annt.110.
Date ExplanationPOsi
Ref. Debit
Mr
Date EXplanationPoatRef. Cre
"NW
,
Figure 3.2General Ledger Form
NORTH STAR APPLIANCES
CASH PROOF, NOVEMBER,30,J9
Balante, November 1, 19 $ 1,700.00Plus Receipts for Month 3,569.41
$ 5,269.41Less Payments for Month . 2 997.79Balance, November 30, 19_ $ 2.271.62
Figure 3.3KAnswer Key
Cash Proof, November 30
5 8
47
-
IIIIIMIMIIIIIIIIIIIIIIIIIIIIIII111111111.IIIIIIII1111111111111111111111111111.4.141/9,11111
I '
.
triiiiriiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiirlillol It
MP, 411111071111101101111 111111 11111111111nringrIMINIUMMIMI Will m111111 IN MIN MI MMIliburin TiLl
INV 1Rim 1 i I, m 1 ,
1
1,1 I ! 1 1 moilummlepremim moilIIIIITHIllimitililluitinlit 1 ihm pill llpi milipilitl iii 1 I111111 11 I i 1 10 1 MillmigthiMmilMIIMMIIIIIIII ,.., Ii P1111911"11119111111
Mimi 0111111 111IMMINIMMIIIIMMIIMMffidel 1,0pi Ill MN
IMO illIlib A 1 ill Ipilunirapomilim 1101,tv, N i it piimpilimilmiummiumili IMMINOI
pop Ill piping ishdirinimmignig it Irit;MI NM inlmilifillim IINIUMMI MmIPUDIIII Mal IIIihnli
MilirligratilliiiiillihillailliTallaNIIIIIIIIjai II II 1_161 M il IMMIIIMIII I 1111 Ill 91 ilFIN' MU i1111 Ili litilliIIMIM11111011111111!111111111111 1l ADMIIIIMIleAll i milliumn in moimumum
i i 1111 141411 ilff II 111 ii 17R
I! iiiii 111111111111111111111111 'Iii. i m i NM MINIM II 1
1 I [1 11
1 I 11 1 91/111 11111 ilimiti RIF r., ', iiiii ti,iiii ill I i :,,,
. ,',
1111111111111111111111i1111111111memmilhannamirmsmnimmormrmintnmw r, II 7 I 11111En NMI
1 1 II I filitH1
1 II 111 1 11111 I II I
11111111111111111111111111111111M1M11111111111111111111MMIMMIMMIM
-
Cash 101Acct. No.
.
Date ExplanationPostRef.
.
i)ebit Date ExplanationPostBed% Credi-
ji/30; i S.-c/a ;le .... so/ / Iroo nc. 74v. am es' A 147 7fC.-..f 3so 9V
2.z-7.0.41. 5 a-41, scl
Petty Ca
Date ExplanationPostRef.. Debit Date Explanation
PostRef. Credit
da nee r/
,
'
Acct. N
Date ExplanationPostRef. Debit Date Explanation
PostRef. Credit= i 23a /4 ,w se. 40/ SO Oc,
,
Merchandise Inventory 111
Date ExplanationPostRef. Debit _Date Explanation
BostRef.
4
Credit
Z.;;. / 80. id neA. .0' T33*, 00
\ ,Pre aid Insurance 121
Date ExplanationPostRef. Debit Date Explanation
PostRef. Credit
lq-Noir. / adetni...- io' 316e, ,c,c)
Figure 3.5K1Answer Key
General Ledger, November Transactions
CI
6 1
49
mot
-
Store Suppliesct. No 131Date EXPlanation
PostRef. Debit Date Explanation
PostRef. Credit
'At; i BAIA.no" I/ 2ir. S
Date Explanation
Store Fixtures and EquipmentPostRef. Debit Date EXplanation
Acct. No. 141PostRef. Credit
NodIr2 11.61 IP
S S 019
41.111Accumulated De reciation-- Store Fixtures and Equipment Acct. No. 141.1Date Explanation
FostRef. Debit ,Date Explanation
PostRef. Credit,9 --
A1eV. 1 B44.14 ....e.e.... V / 3e0 ce,
-
Date ExplanationPostRef., Debit ,-Date
ExplanationPostRef. Credit
iv-Moir ae el 5-9A0 gi. I. "Ra let n r e.. / giO ric3e
C.;:r YYY ee441.9.,, N. -Iry p..
- 0Notes Payable
Acc 202.Date Explanation
PostRef. Debit Date Explanation
PostRef. Credit
//41Vv fig"C S / ere) cc, Zr : 23" 1.r ner> 1/' 1 Cell Cleo
fi
Figure 3.5K2Answer Key
_General Ledger, November Transactions
62
50
-
Income Tax Pa able Acct. No. 211
Date E. a a io
.
PostR f
-
D-biPost;- i, a
rNo ii l 13a./41 rte1e-- V/ Il 6o_
68 70
,
State Income Tax Pa able 212
Date Explanation 'PostRef.
.
Debit_
Date.
ExplanationPostRef. 'Credit
.I 4Noll, I
..,... ,tfalknro -.?..4 ...74130 eir /7 oft,
go igo
_ I -
FICA T#x Payable ALCct. No. 213
Date ExplanationPostRef. Debit Date Explanation 4:Ref.
PostCredit
oilMeV / 11...1 race- V/ 5-7 Vo_
es- S6 /0
-^. State Sales Tax Pa able 214
Date ExplanationPost
.
Debit
_
Date
.
niplanationPostRef. Credit ,,Ref.
_. go-Nov. /
30A,./4 neg. fr/
e.S.
97zsl
000
,
County Sales Tax Payable 215Ac t. o.,
Date ExplanationPostRef. Debit Date Explanation
PostRef. Credit
JONW.
i/ no. gAO IP hIt 'cite. / 341 00-, 30 6 93
.43vac
Figure 3:5K3Answer Key_
General Ledger, November Transactions
51
-
John G. North Ca i
Date-Post
Exolanation Ref. Debit Dat ExplanationPostiter. Credi-
Noll' 1A
154(4 a. nr e.. 47 9f
ZS' es Yew p4=b9 .gbebt .0
John G. Not Drawin Atot, ND. 302
Date ExplanationPostRef. Debit Date
,
ExplanationPostRef. Credit
Income and Ex ense. Summar Acct. No. 311
Date, ExplanationPostRef. Debit Date Explanation
PostRef. Credit,
Sales 401
,
Date,
.
ExplanationPostRef,.- Debit Date Explanation
PostRef. Credit
,N1.1I, 73 ala rg- to- 6/9e/
2 21y
57ge
1. 30 C.doe / J- 97
Purc ase Ac t. No.
Date Explanation 'PostRef. Debit Date Explanation
PostRef. Credit
#9 -Ahi( I a .cr nr-r_. 40/ 37 03 o_be
_30 aff 99v pc.
.
Figure 3.514Answer Key
Geneill Ledger, November Transactions
52
64
-
Purchases Returns and Allowances 502
ICAte ExplanationPottRef. Debit Date Explanation
PostRefd*Credi
of..N I
ic as. 2!), a,A.13 40
,Purchases Discount Acct. No
Date
u-
ExplanationPostRef. Debit Date Explanation
PostRef.
-
Credit
337 Soiilo3c. C:e 6
3 44 14
i
Advertisin Ex ense Acct. No. 511
Date
I
ExplanationPostRef. Debit Date Explanation
PostRef. Credit
/ B I. Ioty,' I P_.. v/ gY1 So/1 cir / VD
,23 CS-
De reciation Ex ense 512
Datc D,.. anationPostRef._ Debit Date Explanation
Post;Ref. Credit
,
Donations Ex ense 4ct. No. 513
Date ExplanationPostRef. Debit Date
,
ExplanationPostRef.
,
Credit
NEAL r 1!)/JrLnee V. 1 I 0 clo )
1S 0.S.,
I 2 a: ec ..1
It.$)01
Figure 3.5K5Answer Key
General Ledger, November Transactions
65,
53
-
Electric Expense
Date ExplanationPostRef._
.
Debit
_
ExplanationPostRef. Credi
Accit. n P e2. VI 137 ie_pat
0
_ c
FICA Tax Ex ense 515
Date ExplanationPostRef. Debit Date EXplanation
PostRef. Credit
'040.; I Baia Iwo _._/ 3-1719 As. & -
0
0. qs
Insurance'Ex ense Acct. No. 516
Date Explanation,.PostRef. Debit Date Explanation,
PostRef.
-
Credit
Int
Date_ ExplanationPoetRef. Debit
_
Date ExplanationPostRef. Credit
id,- ,
NOV i &act init.:1. y, 4nrpo ,
ti 13 ,33 .
Ilx-
.50. 30
,
Mis ellaneous Ex ense 518
Date ExplanationPostRef.
,
Debit Date ExplanationPost-
Ref.
-
Credit
Nali / nalicrLee V( li 90 ,Jg Clr I/ oo
19 go
. , /
.
Figdre 3.5K6Answer Key
Generalledger, November Transactions
66
54
-
Postage Expense
Date ExplanationPostRef.
104
Debit
SZ 00-Dat
e
ExplanationPosther. Credi-o
Nor, 1 Bola ace-,Soo
to 00
R nt E
Date ExplanationPostRef. Debit Date
,
ExplanationPoitRef. Credit
14 -Nc P7
o
. I Uz. ... I-o no
.,
Salary ExDense Acct. No. 521
Ddie ExplanationPoat
Ref1..
Debit Date ExplanationPost'
Ref. Credit/ iv 5'47 7o .'CT
,, ,./ 212 lb .
. .
Store Supplies Ex ense 522,
Date,
.
ExplanationPostRefs. Debit Date Explanation
PostRef. Credit
i,.
Tele hone Ex ense 4ct. No. 523
Date Explanation'PostRef. Debit Date Explanation
PostRef. Credit
Zi. 8 ..//* nag i/ 237L co .es' 34 go
. 10.7 to .
-
Figure5K7Answer Key
General Led§er, November Transactions
6 7
55
-
MI STAR APPLIANCES
Account Title
TRIAL BALANCENovember 30, 19
AccountNo. Debit Credit
*Cash 101 4 2,271.61Petty Cash 102 50.00'Change Fund 103 50.00Merchandise Inventory 111 8,350.00Prepaid Insurance, 121 360.00Store Supplies 131 285.00Store Fixtures and Equipment 141 8,800.00Accumulated Depreciation--Stord FixtureS
and Equipment 141.1 1,300.00Accounts Fayable 201 661.9tFederal Income Tax Payable 211 160.30St-ate Income Tax Payable 212 40.60FICA Tax Payable. 213 143.50State Sales Tax payable 214 560.58County, Sales Tax Payable 215 420.43 *-1John G. North, Capital 301John G. North, Drawing 302 9,500.00SaLes 401 64,115.97Purchases 501 37,524.00Purchases Returns and Allowances 502 293.60Purchases Discount 503 346.33Advertising Expense 511 890.56Donations ExpenseElectric Expense
513514
120.00.
137.70. .
FICA Tax Expense 515 100.45Interest Expense 517 41.33Misceilaneous Expense 518 89.90Postage Expense 519 61.00Rent Expense 520 , 2,420.00Salary Expense 521 11,283.80Telephone ExPense 523 40790
Totals
Figure 3.6K .Answer Key
Trial Balance, November 30
68
56
$ 82 743 26 _82343,26
-
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II ill 1111111111111 1111111
II
11
I I
I I I
I 1 I
M. III I 'mum
I
I I
-
Cash
Date ExplanationPostRef.
..._
,
Debit Date ExplanationPostPei'. Credi
I RAI /are /cS
/ 7or3561
rd19
Ilreuebee 3.1
C.1
CS.2 5,7R/73
79Vz
Asti
0Dec 01
2.,s-r,.,.....
sA ,.y. Y iCS'
3' 3 4.122 Stl .81, 4
Oa4:ia y
% ,,,, a
Date,
ExplanationPostRef. Debit Date Explanation
'Post
Ref. CreditAltlf I' .... ,oamore
L
, .
Chan e Fund Acct. No 103
Date
.....-
ExplaNtionPostRef. Debit Date Explanation
PostRef. Credit
1.3 dia. n re. V/ 51:2 pt,,
I
. - .ii
Merchandise Inventory
Date. Explanation w-Ref.Post
Debit Date ExplanationPostRef. Credit
We -v; t SA.14 /lc e. , g ...1, c...o t,e
Pre aid Insurance 121
Date ExplanationPostRef. Debit Date Explanation
'Post
Ref.
,
Credit'141;v 1
)
1
Figure 4.2K1Answer Key
General Ledger, December Transactions
58
-
ore Sutrnlies Acct. No. 131 c
Date ExplanationPost
Ref.e
Debit Date Explanation "(Post
Set.,
Credn --NcV I 13cacitiP- V/ '.5Ao.. T1rc2 . ..,'
'i-
.,
,
.
.
,. -
,--.
4 ,.
.
Store Fixtures and Equipment , Acct. No. 141
Date ExplanationPostRef. Debit
S Sae Co
Date EXplanationPostRef. Cred t,
4.
14
-4r
Accumulated DepreciationStore Fixtur s and E ui me t Acct. No. 141.1
Date ExplanationPostRef_... Debit Date Explanation
Askrule.
Post,Ise,
1/7
Credit
/ 3ct, no11:11 _I
4-
-
,
Figure 4.2K2Answer Key
General Ledger, December Transactions
7 2
59-
-
201
Date ExplanationPostRef Debit Date Explanation
PostFief. Credit
,9....-blot...1zM.
/vete /- es 921 be 30
_
b5.- Yvy 00,,aiDec p 44./.9.ar e:.,-- 1 it...bo4iyy ,,,p 0
/ YA. 9..±. i 7 i 3 00ir
Notes Pa able 202
Date ExplanationPostRef. Debit Date Explanation
PostRef. Credit
Iv( v ii. _ C 1 ir / 000 oo Nell /
,
Federal Income Tax Pa able Acct No. 211
Date ExplanationPostRef. Debit Date Explanation
PostRef. Credit
/9--A4v / BA 14r c P- V 9 / e
C:r GS 703.-.Dec N OS
141,e
it..Z..6. .:,
State Income Tax Pa able 212
Date_ ExplanationPostRef,, Debit Date Explanation
PostRef.
,
Credit
/36
84/etntP /C3'.
2317
2c,540
1Ye c 31A
li e
SZ 3.,
213
Date ExplanationPostRef. Debit Date
1 4 -Al eV /
Explanation
6 hi nc! r.-
PostRef.
VCredit
-5-7 90CS n le
Dec 31 0'..3.s7 y,,
Figure 4.2K3Answer Key
General Ledger, December Transactions
7 3
60
'Nbr
-
Dale E' -natio ef -teb 't -,
i''
Da 4° 7A. -.:A ..l'ost; I
-.
.
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