Brown Company (buyer) and Smith, Inc. (seller), engaged in the following transactions during January 2013:
Brown Company
DATE TRANSACTIONS
2013
Jan. 8 Issued Check 2101 for $1,960 on account to Smith, Inc., in payment of Invoice 1885 dated December 30, 2012, less cash discount of $40.
10 Purchased merchandise for $1,500 from Smith, Inc., Invoice 1920; terms 2/10, n/30.
15 Received Credit Memorandum 320 from Smith, Inc., for damaged merchandise totaling $100 that was returned; the goods were purchased on Invoice 1920, dated January 10.
19 Paid amount due to Smith, Inc., for Invoice 1920 of January 10, less the return of January 15 and less the cash discount, Check 2130.
30 Purchased merchandise for $3,200 from Smith, Inc., Invoice 1950; terms 2/10, n/30.
Smith, Inc.
DATE TRANSACTIONS
2013 Jan. 8 Received payment of $1,960 on account from Brown Company in payment of Invoice 1885 dated December 30, 2012, less cash discount of $40.
10 Sold merchandise for $1,500 on account to Brown Company, Invoice 1920, terms 2/10, n/30.
15 Issued Credit Memorandum 320 to Brown Company for damaged merchandise totaling $100 that was returned; the goods were purchased on Invoice 1920, dated January 10.
19 Received payment from Brown Company for Invoice 1920 of January 10, less the return of January 15 and less the cash discount.
30 Sold merchandise for $3,200 to Brown Company, Invoice 1950; terms 2/10, n/30.
INSTRUCTIONS
1. Open the accounts payable ledger account and accounts receivable ledger account indicated below for both Brown Company and Smith, Inc. Enter the balances as of January 1, 2013.
2. Journalize the transactions above in a general journal for both Brown Company and Smith, Inc.
Begin the journals for both companies with page 21.
3. Post the transactions to the appropriate accounts in the general ledger and the Accounts Payable subsidiary ledger for Brown Company.
4. Post the transactions to the appropriate accounts in the general ledger and the Accounts Receivable subsidiary ledger for Smith, Inc.
GENERAL LEDGER ACCOUNTS-BROWN COMPANY
201 Accounts Payable, $2,000 Or.
ACCOUNTS PAYABLE LEDGER ACCOUNT-BROWN COMPANY
Smith, Inc., $2,000
GENERAL LEDGER ACCOUNTS-SMITH, INC.
111 Accounts Receivable, $2,000 Dr.
ACCOUNTS RECEIUABLE LEDGER ACCOUNT-SMITH, INC.
Brown Company, $2,000
Analyze:
What is the balance of the accounts payable for Smith, Inc., in the Brown Company accounts payable subsidiary ledger? What is the balance of the accounts receivable for Brown Company in the Smith, Inc., accounts receivable subsidiary ledger?