Question
Contemporary Appliance Center is a retail store that sells a variety of household appliances. Transactions involving purchases and cash payments for the firm during December
Contemporary Appliance Center is a retail store that sells a variety of household appliances. Transactions involving purchases and cash payments for the firm during December 2019 and the general ledger accounts used to record these transactions appear below.
INSTRUCTIONS
- Open the general ledger accounts and enter the balances in these accounts as of December 1, 2019.
- Record the transactions in a purchases journal, a cash payments journal, and a general journal. Use 12 as the page number for each of the special journals and 30 as the page number for the general journal.
- Post the entries from the general journal and from the Other Accounts Debit section of the cash payments journal to the proper accounts in the general ledger.
- Total, prove, and rule the special journals as of December 31, 2019.
- Post the column totals from the special journals to the general ledger accounts.
- Show how the firm's cost of purchases would be reported on its income statement for the month ended December 31, 2019.
GENERAL LEDGER ACCOUNTS
101 Cash $60,700 Dr.
131 Equipment 68,000 Dr.
201 Notes Payable
205 Accounts Payable 7,600 Cr.
501 Purchases
503 Purchases Returns and Allowances
504 Purchases Discounts
611 Rent Expense
614 Salaries Expense
617 Telephone Expense
DATE TRANSACTIONS
Dec. 1 Purchased merchandise for $6,600 from Alexis Products for Homes, Invoice 6559, dated November 28; the terms are 2/10, n/30.
2 Issued Check 1801 for $3,000 to pay the monthly rent.
4 Purchased new store equipment for $14,000 from Kesterson Company; issued a two-month promissory note with interest at 10 percent.
6 Issued Check 1802 for $6,468 to Alexis Products for Homes, a creditor, in payment of Invoice 6559, dated November 28 ($6,600), less a cash discount ($132).
10 Purchased merchandise for $9,200 from the Baxter Corporation, Invoice 5119, dated December 7; terms of 2/10, n/30.
13 Issued Check 1803 for $265 to pay the monthly telephone bill.
15 Issued Check 1804 for $9,016 to Baxter Corporation, a creditor, in payment of Invoice 5119, dated December 7 ($9,200), less a cash discount ($184).
18 Purchased merchandise for $12,400 from Household Appliance Center, Invoice 7238, dated December 16; terms of 3/10, n/30.
20 Purchased new store equipment for $6,000 from Safety Security Systems Inc., Invoice 536, dated December 17, net payable in 45 days.
21 Issued Check 1805 for $4,200 to Chain Lighting and Appliances, a creditor, in payment of Invoice 7813, dated November 23.
22 Purchased merchandise for $5,800 from Zale Corporation, Invoice 3161, dated December 19, net due in 30 days.
24 Issued Check 1806 for $12,028 to Household Appliance Center, a creditor, in payment of Invoice 7238, dated December 16 ($12,400), less a cash discount ($372).
28 Received Credit Memorandum 201 for $1,050 from Zale Corporation for damaged goods that were returned; the original purchase was made on Invoice 3161, dated December 19.
31 Issued Check 1807 for $6,500 to pay the monthly salaries of the employees.
Analyze: List the dates for transactions in December that would be categorized as expenses of the business.
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