The English Garden Shop is a retail store that sells garden equipment, furniture, and supplies. Its credit

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The English Garden Shop is a retail store that sells garden equipment, furniture, and supplies. Its credit purchases and purchases returns and allowances for July are listed on the next page. The general ledger accounts used to record these transactions are also provided. The balance shown is for the beginning of July 2016.

INSTRUCTIONS

PART I

1. Open the general ledger accounts and enter the balance of Accounts Payable for July 1.

2. Record the transactions in a three-column purchases journal and in a general journal. Use 8 as the page number for the purchases journal and 20 as the page number for the general journal.

3. Post the entries from the general journal to the proper general ledger accounts.

4. Total, prove, and rule the purchases journal as of July 31.

5. Post the column totals from the purchases journal to the proper general ledger accounts.

6. Compute the net delivered cost of the firm's purchases for the month of July.

GENERAL LEDGER ACCOUNTS

205............ Accounts Payable, $35,980 Cr....... 502......... Freight In

501............ Purchases............................... 503......... Purchases Returns and Allowances

DATE............ TRANSACTIONS

July 1 Purchased lawn mowers for $9,310 plus a freight charge of $259 from Brown Corporation, Invoice 1011, dated June 26, net due and payable in 60 days.

5 Purchased outdoor chairs and tables for $4,470 plus a freight charge of $562 from Brooks Garden Furniture Company, Invoice 639, dated July 2, net due and payable in 45 days.

9 Purchased grass seed for $1,590 from Lawn and Gardens Supply, Invoice 8164, dated July 5; the terms are 30 days net.

16 Received Credit Memorandum 110 for $700 from Brooks Garden Furniture Company; the amount is an allowance for scratches on some of the chairs and tables originally purchased on Invoice 639, dated July 2.

19 Purchased fertilizer for $1,300 plus a freight charge of $266 from Lawn and Gardens Supply, Invoice 9050, dated July 15; the terms are 30 days net.

21 Purchased hoses from Cameron Rubber Company for $3,780 plus a freight charge of $234, Invoice 1785, dated July 17; terms are 1/15, n/60.

28 Received Credit Memorandum 223 for $530 from Cameron Rubber Company for damaged hoses that were returned; the goods were purchased on Invoice 1785, dated July 17.

31 Purchased lawn sprinkler systems for $10,410 plus a freight charge of $288 from Wilson Industrial Products, Invoice 8985, dated July 26; the terms are 2/10, n/30.

INSTRUCTIONS

PART II

1. Set up an accounts payable subsidiary ledger for The English Garden Shop. Open an account for each of the creditors listed below and enter the balances as of July 1.

2. Post the individual entries from the purchases journal and the general journal prepared in Part I.

3. Prepare a schedule of accounts payable for July 31, 2016.

4. Check the total of the schedule of accounts payable against the balance of the Accounts Payable account in the general ledger. The two amounts should be equal.

....................................................Creditors

Name................................................ Terms.............. Balance

Brooks Garden Furniture Company................ n/45............... $11,220

Brown Corporation................................... n/60................. 18,220

Cameron Rubber Company......................... 1/15, n/60

Lawn and Gardens Supply.......................... n/30.................. 6,540

Wilson Industrial Products........................... 2/10, n/30

Analyze:

What total freight charges were posted to the general ledger for the month of July?

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
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Related Book For  book-img-for-question

College Accounting Chapters 1-30

ISBN: 978-0077862398

14th edition

Authors: John Price, M. David Haddock, Michael Farina

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