Problem 7-5A
Selected accounts from the chart of accounts of Fornelli Co. are shown below.
|
101
|
|
Cash
|
|
306
|
|
Owner’s Drawings
|
|
112
|
|
Accounts Receivable
|
|
401
|
|
Sales Revenue
|
|
120
|
|
Inventory
|
|
414
|
|
Sales Discounts
|
|
126
|
|
Supplies
|
|
505
|
|
Cost of Goods Sold
|
|
131
|
|
Prepaid Rent
|
|
631
|
|
Supplies Expense
|
|
201
|
|
Accounts Payable
|
|
729
|
|
Rent Expense
|
|
301
|
|
Owner’s Capital
|
|
|
|
|
Presented below are the purchases and cash payments journals for Fornelli Co. for its first month of operations.
|
PURCHASES JOURNAL
|
| |
|
|
P1
|
|
Date
|
Account Credited
|
Ref
|
Inventory Dr.
Accounts Payable Cr.
|
|
July 4
|
N. Alvarado
|
|
7,183
|
|
5
|
F. Rees
|
|
8,300
|
|
11
|
J. Gallup
|
|
6,484
|
|
13
|
C. Werly
|
|
14,800
|
|
20
|
M. Mangus
|
|
7,835
|
| |
|
|
44,602
|
|
CASH PAYMENTS JOURNAL
|
| |
|
|
|
|
|
CP1
|
|
Date
|
Account Debited
|
Ref
|
Other Accounts
Dr.
|
Accounts Payable
Dr.
|
Inventory
Cr.
|
Cash
Cr.
|
|
July 4
|
Supplies
|
|
698
|
|
|
698
|
|
10
|
F. Rees
|
|
|
8,300
|
83
|
8,217
|
|
11
|
Prepaid Rent
|
|
6,104
|
|
|
6,104
|
|
15
|
N. Alvarado
|
|
|
7,183
|
|
7,183
|
|
19
|
Owner’s Drawings
|
|
2,519
|
|
|
2,519
|
|
21
|
C. Werly
|
|
|
14,800
|
148
|
14,652
|
| |
|
|
9,321
|
30,283
|
231
|
39,373
|
In addition, the following transactions have not been journalized for July. The cost of all merchandise sold was 65% of the sales price.
July 1 The founder, N. Fornelli, invests $74,700 in cash.
6 Sell merchandise on account to Dow Co. $6,200 terms 1/10, n/30
7 Make cash sales totaling $7,500.
8 Sell merchandise on account to S. Goebel $5,200, terms 1/10, n/30.
10 Sell merchandise on account to W. Leiss $5,800, terms 1/10, n/30.
13 Receive payment in full from S. Goebel.
16 Receive payment in full from W. Leiss.
20 Receive payment in full from Dow Co.
21 Sell merchandise on account to H. Kenney $5,600, terms 1/10, n/30.
29 Returned damaged goods to N. Alvarado and received cash refund of $345.
Post the individual entries and totals to the general ledger.
|
Cash
|
|
|
|
No. 101
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
 July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CP1
|
|
|
|
|
Accounts Receivable
|
|
|
|
No. 112
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
S1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
Inventory
|
|
|
|
No. 102
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
P1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CP1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
S1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
Supplies
|
|
|
|
No. 127
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CP1
|
|
|
|
|
Prepaid Rent
|
|
|
|
No. 131
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CP1
|
|
|
|
|
Accounts Payable
|
|
|
|
No. 201
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
P1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CP1
|
|
|
|
|
Owner’s Capital
|
|
|
|
No. 301
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
Owner’s Drawings
|
|
|
|
No. 306
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CP1
|
|
|
|
|
Sales Revenue
|
|
|
|
No. 401
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
S1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
Sales Discounts
|
|
|
|
No. 414
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
|
Cost of Goods Sold
|
|
|
|
No. 505
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
S1
|
|
|
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
|
CR1
|
|
|
|
Prepare a trial balance at July 31, 2014.
|
FORNELLI CO.
Trial Balance
July 31, 2014
|
| |
Debit
|
Credit
|
|
|
$
|
$
|
| |
$
|
$
|
Determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
|
Accounts receivable balance
|
|
$
|
| |
|
|
|
Subsidiary accounts balance
|
|
|
|
S. BeautyH. KenneyAbi Co.W. Pitts
|
|
$
|
| |
|
|
|
Accounts payable balance
|
|
$
|
| |
|
|
|
Subsidiary accounts balance
|
|
|
|
M. MangusN. FieldingJ. GallupF. ReesC. Werly
|
|
$
|
|
C. WerlyF. ReesM. MangusJ. GallupN. Fielding
|
|
|
| |
|
$
|
The following adjustments at the end of July are necessary.
|
(1)
|
|
A count of supplies indicates that $198 is still on hand.
|
|
(2)
|
|
Recognize rent expense for July, $465.
|
Prepare the necessary entries in the general journal. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
|
1.
|
|
|
|
|
2.
|
|
|
|
Post the entries to the general ledger.
|
Cash
|
|
|
|
No. 101
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
|
CR1
|
99,635
|
|
99,635
|
|
July 31
|
|
CP1
|
|
39,373
|
60,262
|
|
Accounts Receivable
|
|
|
|
No. 112
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
|
S1
|
22,800
|
|
22,800
|
|
July 31
|
|
CR1
|
|
17,200
|
5,600
|
|
Inventory
|
|
|
|
No. 120
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
|
P1
|
44,602
|
|
44,602
|
|
July 29
|
|
CR1
|
|
345
|
44,257
|
|
July 31
|
|
CP1
|
|
231
|
44,026
|
|
July 31
|
|
S1
|
|
14,820
|
29,206
|
|
July 31
|
|
CR1
|
|
4,875
|
24,331
|
|
Supplies
|
|
|
|
No. 127
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 4
|
|
CP1
|
698
|
|
698
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
Adjusting Entry
|
G1
|
|
|
|
|
Prepaid Rent
|
|
|
|
No. 131
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 11
|
|
CP1
|
6,104
|
|
6,104
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
Adjusting Entry
|
G1
|
|
|
|
|
Accounts Payable
|
|
|
|
No. 201
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
|
P1
|
|
44,602
|
44,602
|
|
July 31
|
|
CP1
|
30,283
|
|
14,319
|
|
Owner’s Capital
|
|
|
|
No. 301
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1
|
|
CR1
|
|
74,700
|
74,700
|
|
Owner’s Drawings
|
|
|
|
No. 306
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 19
|
|
J1
|
2,519
|
|
2,519
|
|
Sales Revenue
|
|
|
|
No. 401
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
|
S1
|
|
22,800
|
22,800
|
|
July 31
|
|
CR1
|
|
7,500
|
30,300
|
|
Sales Discounts
|
|
|
|
No. 414
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
Balance
|
CR1
|
110
|
|
110
|
|
Cost of Goods Sold
|
|
|
|
No. 505
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 31
|
|
S1
|
14,820
|
|
14,820
|
|
July 31
|
|
CR1
|
4,875
|
|
19,695
|
|
Supplies Expense
|
|
|
|
No. 631
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
Adjusting Entry
|
G1
|
|
|
|
|
Rent Expense
|
|
|
|
No. 729
|
|
Date
|
Explanation
|
Ref
|
Debit
|
Credit
|
Balance
|
|
July 1July 4July 5July 6July 7July 8July 10July 11July 13July 15July 16July 19July 20July 21July 29July 31
|
Adjusting Entry
|
G1
|
|
|
|
Prepare an adjusted trial balance at July 31, 2014.
|
FORNELLI CO.
Adjusted Trial Balance
July 31, 2014
|
| |
Debit
|
Credit
|
|
|
$
|
$
|
| |
$
|
$
|