Ferrara Company completes these transactions and events during March of the current year (terms of all credit sales are 2/10, n/30):

Mar. 1 Received $66,600 of merchandise and an invoice dated March 1, terms 2/15, n/30, from Jerry Corp.

2 Sold merchandise on credit to N. Newman, Invoice No. 854, for $28,400 (cost is $14,400).

3 Purchased $1,960 of office supplies on credit from Elaine Company, invoice dated March 3, terms n/10 EOM.

3 Sold merchandise on credit to D. George, Invoice No. 855, for $22,000 (cost is $12,200).

6 Borrowed $138,000 cash by giving Big Bank a long-term note payable.

9 Purchased $56,100 of office equipment on credit from Susan Supply, invoice dated March 9, terms n/10 EOM.

10 Sold merchandise on credit to Lew Cifer, Invoice No. 856, for $13,320 (cost is $3,880).

12 Received payment from N. Newman for the March 2 sale less the discount.

13 Sent Jerry Corp Check No. 416 in payment of the March 1 invoice less the discount.

13 Received payment from D. George for the March 3 sale less the discount.

14 Received $55,600 of merchandise and an invoice dated March 13, terms 2/10, n/30, from the PTK Company.

15 Issued Check No. 417, payable to Payroll, in payment of sales salaries for the first half of the month, $31,000. Cashed the check and paid the employees.

15 Cash sales for the first half of the month are $71,340 (cost is $34,040). (Cash sales are recorded daily, but are recorded only twice here to reduce repetitive entries.)

16 Purchased $2,120 of store supplies on credit from Elaine Company, invoice dated March 16, terms n/10 EOM.

17 Received a $5,560 credit memorandum from PTK Company for unsatisfactory merchandise received on March 14 and returned for credit.

19 Received a $860 credit memorandum from Susan Supply for office equipment received on March 9 and returned for credit. 20 Received payment from Lew Cifer for the sale of March 10 less the discount.

23 Issued Check No. 418 to PTK Company in payment of the invoice of March 13 less the return and the discount.

27 Sold merchandise on credit to Lew Cifer, Invoice No. 857, for $22,200 (cost is $8,440).

28 Sold merchandise on credit to D. George, Invoice No. 858, for $11,100 (cost is $8,880).

31 Issued Check No. 419, payable to Payroll, in payment of sales salaries for the last half of the month, $31,000. Cashed the check and paid the employees.

31 Cash sales for the last half of the month are $45,600 (cost is $21,800).

31 Verify that amounts impacting customer and creditor accounts were posted, and that any amounts that should have beed posted as individual amounts to the general ledger accounts were posted. Foot and crossfoot the journals and make the month-end postings.

Required

1. Open the following general ledger accounts: Cash; Accounts Receivable; Inventory (March 1 beg. bal. is $50,000); Office Supplies; Store Supplies; Office Equipment; Accounts Payable; Long-Term Notes Payable; W. Ferrara, Capital (March 1 beg. bal. is $50,000); Sales; Sales Discounts; Cost of Goods Sold; and Sales Salaries Expense. Open the following accounts receivable ledger accounts: Lew Cifer, N. Newman, and D. George. Open the following accounts payable ledger accounts: Elaine Company, Jerry Corp., Susan Supply, and PTK Company.

2. Enter these transactions in a sales journal, a purchases journa, a cash receipts journal, a cash disbursements journal , or a general journal.

3. Post to the general ledger at the end of the month.

4. Prepare a trial balance of the general ledger and prove the accuracy of the subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.

Blank workbook pages are attached below to show how the account transactions should be recorded.

296 Name Chapter 7 Problem 7-1A or 7-1B Parts 1 and 2 Cost of Good Sold Dr. Inventory Cr Sales Cr. Number PR Date Account Debited Page 2 Cash Receipts Journal Cost of Other Goods Sales Accts. Cash Disc. Rec. Sales Accts. Sold Dr. Account Date credited Explanation PR Dr. Dr. Cr. Cre Cre nv, Cr