The general ledger of Gibbs, Inc., includes the following accounts: Transactions in August that affected purchases and
Question:
The general ledger of Gibbs, Inc., includes the following accounts:
Transactions in August that affected purchases and cash disbursements were as follows:
Aug. 1 Purchased inventory on credit from Cowtown Co., \(\$ 3,900\). Terms were \(2 / 10 \mathrm{n} / 30\).
1 Paid monthly rent, debiting Rent Expense for \(\$ 2,000\).
5 Purchased supplies on credit terms of \(2 / 10 n / 30\) from Ross Supply, \(\$ 450\).
8 Paid electricity bill, \(\$ 588\).
9 Purchased furniture on account from A-1 Office Supply, \(\$ 4,100\). Payment terms were net 30 .
10 Returned the furniture to A-1 Office Supply. It was the wrong color.
11 Paid Cowtown Co. the amount owed on the purchase of August 1.
12 Purchased inventory on account from Wynne, Inc., \(\$ 4,400\). Terms were \(3 / 10 \mathrm{n} / 30\).
13 Purchased inventory for cash, \(\$ 655\).
14 Paid a semiannual insurance premium, debiting Prepaid Insurance, \$1,200.
15 Paid our account payable to Ross Supply, from August 5.
18 Paid gas and water bills, \(\$ 196\).
21 Purchased inventory on credit terms of \(1 / 10 \mathrm{n} / 45\) from Software, Inc., \(\$ 5,200\).
Aug. 21 Paid account payable to Wynne, Inc. from August 12.
22 Purchased supplies on account from Office Sales, Inc., \(\$ 274\). Terms were net 30 .
25 Returned to Software, Inc., \(\$ 1,200\) of the inventory purchased on August 21.
31 Paid Software, Inc., the net amount owed from August 21, less the return, on August 25.
\section*{Required}
1. Gibbs, Inc., records purchase returns in the general journal. Use the appropriate journal to record the above transactions in a purchases journal, a cash disbursements journal (omit the Check No. column), and a general journal.
2. Total each column of the special journals. Show that the total debits equal the total credits in each special journal.
3. Show how postings would be made from the journals by writing the account numbers and check marks in the appropriate places in the journals.
Step by Step Answer:
Financial Accounting
ISBN: 9780133118209
2nd Edition
Authors: Charles T. Horngren, Jr. Harrison, Walter T.