Chapter 5 HW: 4

Purchases and Cash Payments Journals; Accounts Payable Subsidiary and General Ledgers

AquaFresh Water Testing Service was established on April 16. AquaFresh uses field equipment and field supplies (chemicals and other supplies) to analyze water for unsafe contaminants in streams, lakes, and ponds. Transactions related to purchases and cash payments during the remainder of April are as follows:

April 16.		Issued Check No. 1 in payment of rent for the remainder of April, $3,500.
April 16.		Purchased field supplies on account from Hydro Supply Co., $5,340.
April 16.		Purchased field equipment on account from Pure Equipment Co., $21,450.
April 17.		Purchased office supplies on account from Best Office Supply Co., $510.
April 19.		Issued Check No. 2 in payment of field supplies, $3,340, and office supplies, $400.
		Post the journals to the accounts payable subsidiary ledger.
April 23.		Purchased office supplies on account from Best Office Supply Co., $660.
April 23.		Issued Check No. 3 to purchase land, $140,000.
April 24.		Issued Check No. 4 to Hydro Supply Co. in payment of April 16 invoice, $5,340.
April 26.		Issued Check No. 5 to Pure Equipment Co. in payment of April 16 invoice, $21,450.
		Post the journals to the accounts payable subsidiary ledger.
April 30.		Acquired land in exchange for field equipment having a cost of $12,000.
April 30.		Purchased field supplies on account from Hydro Supply Co., $7,650.
April 30.		Issued Check No. 6 to Best Office Supply Co. in payment of April 17 invoice, $510.
April 30.		Purchased the following from Pure Equipment Co. on account: field supplies, $1,340, and field equipment, $4,700.
April 30.		Issued Check No. 7 in payment of salaries, $29,400.
		Post the journals to the accounts payable subsidiary ledger.

Required:

1. Journalize the transactions (in chronological order as presented in the data) for April. Use a purchases journal and a cash payments journal, and a two-column general journal. Use debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the following partial chart of accounts:

11	Cash	19	Land
14	Field Supplies	21	Accounts Payable
15	Office Supplies	61	Salary Expense
17	Field Equipment	71	Rent Expense

At the points indicated in the narrative of transactions, post to the following accounts in chronological order in the accounts payable subsidiary ledger:

Best Office Supply Co.

Hydro Supply Co.

Pure Equipment Co.

For those boxes in which no entry is required, leave the box blank. If no other account is needed in the "Other Accounts Dr." column select "No Entry Required".

2. Post the individual entries in chronological order (Other Accounts columns of the purchases journal and the cash payments journal and both columns of the general journal) to the appropriate general ledger accounts. Post to the subsidiary ledger in chronological order. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, post transactions from the purchases journal first, then the cash payments journal before posting from the general journal.

3. Total each of the columns of the purchases journal and the cash payments journal, and post the appropriate totals to the general ledger.

For those boxes in which no entry is required, leave the box blank.

Post transactions in chronological order. However, if there is more that one transaction on the same date, post from the purchases journal first, then from the cash payments journal before posting from the general journal. (Because the problem does not include transactions related to cash receipts, the cash account in the ledger will have a credit balance.)

4. Prepare a schedule of the accounts payable creditor balances.

5. All are reasons why AquaFresh might consider using a subsidiary ledger for the field equipment EXCEPT: (To track each piece of equipment individually, To safeguard the equipment, To secure lower pricing on equipment purchases, or To track depreciation on the equipment)

PURCHASES JOURNAL PAGE 1 Other Accounts Date Account Credited Post. Ref. Accounts Payable Cr. Field Supplies Office Supplies Dr. Dr. Post. Ref. Amount Dr. CASH PAYMENTS JOURNAL PAGE 1 Other Accounts Accounts Date Ck. No. Account Debited Post. Ref. Cash Cr. Dr. Payable Dr. Total PAGE 1 JOURNAL Description Date Post. Ref. Debit Credit ACCOUNTS PAYABLE SUBSIDIARY LEDGER Date Item Post. Ref. Debit Credit Balance Account: Best Office Supply Co. Account: Hydro Supply Co. III III III Account: Pure Equipment Co. GENERAL LEDGER Balance Date Item Post. Ref. Debit Credit Dr. Cr. Account: Cash #11 Account: Field Supplies #14 Account: Office Supplies #15 Account: Field Equipment #17 II II III II II II II II III II III III II III II III II II II Account: Land #19 Account: Accounts Payable #21 Account: Salary Expense #61 Account: Rent Expense #71 AQUAFRESH WATER TESTING SERVICE Accounts Payable Creditor Balances April 30 $ Best Office Supply Co. Hydro Supply Co. Pure Equipment Co. Total accounts payable $