In this chapter, you learned how to use special journals to record transactions and how to post from these special journals to the ledger accounts. KBC Decorating Co. will now begin using the following special journals: Sales Journal, Purchase Journal, Cash Receipts Journal, and Cash Payments Journal. The company also has ledger accounts for its regular customers (Accounts Receivable Ledger) and its suppliers (Accounts Payable Ledger). These ledger accounts are located immediately after the General Ledger accounts that you have already been using.

Set up the Sales Journal (page SJ1) with these headings: Date, Account Dr., Invoice No., Terms, Folio, Accounts Receivable Dr., Sales Paint & Supplies Cr., Sales Wallpaper Cr., and HST Payable Cr.

Set up the Purchase Journal (page PJ1) with these headings: Invoice Date, Account Cr., Invoice No., Terms, Folio, Accounts Payable Cr., Purchases Paint & Supplies Dr., Purchases Wallpaper Dr., HST-ITC Dr., and Other Accounts Dr. (with subheadings of Account Dr., Folio, and Amount).

Set up a Cash Receipts Journal (page CR1) with these headings: Date, Account Cr., Memo, Folio, Accounts Receivable Cr., Sales Discounts Dr., Sales Paint & Supplies Cr., Sales Wallpaper Cr., HST Payable Cr., General Ledger Cr., and Bank Dr.

Set up a Cash Payments Journal (page CP1) with these headings: Date, Account Dr., Memo, Folio, Accounts Payable Dr., Purchase Discounts Cr., HST-ITC Dr., General Ledger Dr., Bank Cr., and Cheque No. (All payments will be by cheque unless otherwise stated.)

Record each of the following transactions in the appropriate special journal. Be sure each transaction is recorded as a balanced entry. Post immediately any transaction affecting a customer's or a supplier's account.

20Feb.1Paid rent for February, $2,500 plus 13% HST. Issued Cheque #13. (Continue numbering cheques sequentially. All payments will be by cheque unless stated otherwise.)2Paid telephone bill for January service, $145 plus HST.3Paid electricity bill for January service, $160 plus HST.4Sold paint and supplies to Beavis & Sons, $375 plus HST. Terms net 30 days. Sales Invoice #1. (This is your first entry in the Sales Journal. Be sure to post immediately to the customer's account. This will ensure that the account is up to date.)4Paid heating (gas) bill for January, $480 plus HST.7Bought from Major Office Supplies, on terms n/30, on Invoice #122 dated February 5, office supplies worth $240, and warehouse supplies worth $210. Add HST. (This is the first entry in the Purchase Journal. Since this journal does not have special columns for office and warehouse supplies, two lines will be needed in the Other Accounts column. However, only one amount for HST is needed, and only one amount for Accounts Payable is needed.) Be sure to post immediately to this supplier's account to keep the account up to date.7Cash sales this week: paint and supplies, $2,400, and wallpaper, $800. Add HST.8Received Invoice #87 dated February 5 from Reynolds Paper Co. for purchase of wallpaper, $2,600 plus HST. Terms are n/30.10Sold on account to Jay-Mar Co., paint and supplies, $550 plus HST. Terms n/30. Sales Invoice #2. (Continue numbering sales invoices sequentially.)10Sold on account to Dayson & Son, wallpaper, $800 plus HST. Terms n/30.12Sold on account to S. Miller, paint and supplies, $300, and wallpaper, $300; plus HST. Terms n/30.14Cash sales this week: paint and supplies, $2,200, and wallpaper, $1,200. Add HST.15Bought insurance policy on building and contents, $840 (assume this insurance is tax exempt). Paid by cheque. (Insurance Prepaid)21Cash sales this week: paint and supplies, $1,600, and wallpaper, $800. Add HST.25Bought additional wallpaper from Reynolds Paper on Invoice #98 dated February 24, terms n/30; $1,000 plus HST.28Cash sales this week: paint and supplies, $1,400, and wallpaper, $900. Add HST.28Paid for gas and oil for the truck used for occasional deliveries of goods to customers, $82.49 (including $9.49 HST). Taxes on gasoline vary from province to province; therefore, for the purposes of this case study, HST will be applied as with other purchases of products and services.

AT MONTH-END

1.

Total, balance, and rule the special journals.

2.

Post all entries from the special journals as discussed in this chapter. Post the journals in this order: Purchase Journal, Sales Journal, Cash Receipts Journal, and Cash Payments Journal. By posting in this order, you may occasionally see the dates of transactions out of sequence. This is normal.

3.

Finally, prepare a trial balance on February 28, 20. Be sure to double-check that the total of the schedule of Accounts Receivable is equal to the balance in the Accounts Receivable Control account. As well, check to see that the total of the schedule of Accounts Payable is equal to the balance in the Accounts Payable Control account.