KBC Decorating Co. will now begin to use 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 a Sales Journal (page SJ1) with these headings: Date, Account Dr., Invoice No., Terms, Folio, Accounts Receivable Dr., SalesPaint & Supplies Cr., SalesWallpaper Cr., GST Payable Cr., and PST Payable Cr.

Set up a Purchase Journal (page PJ1) with these headings: Invoice Date, Account Cr., Invoice No., Terms, Folio, Accounts Payable Cr., PurchasesPaint & Supplies Dr., PurchasesWallpaper Dr., GST-ITC Dr., and Other Accounts Dr. (with subheadings of Account Dr., Folio, and Amount).

Set up a Cash Receipts Journal with these headings: Date, Account Cr., Memo, Folio, Accounts Receivable Cr., Sales Discounts Dr., SalesPaint & Supplies Cr., Sales Wallpaper Cr., GST Payable Cr., PST Payable Cr., General Ledger Cr., and Bank Dr.

Set up a Cash Payments Journal with these headings: Date, Account Dr., Memo, Folio, Accounts Payable Dr., Purchase Discounts Cr., GST-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 its 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.

20

Feb.1 Paid the rent for February, $2,500 plus GST. Issued Cheque #14. (Continue numbering the cheques sequentially. All payments will be by cheque unless stated otherwise.)

2 Paid the telephone bill for January service, $145 plus GST and PST.

3 Paid the electricity bill for January service, $160 plus GST and PST.

4 Sold paint and supplies to Beavis & Sons, $375 plus taxes. 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 the account is always up to date.)

4 Paid the heating (gas) bill for January, $480 plus taxes.

7 Bought from Major Office Supplies, on terms n/30, on their Invoice #122 dated February 5, office supplies worth $240 and warehouse supplies worth $210. Add both taxes to these a mounts. (Since our Purchase Journal does not have special columns for office and warehouse supplies,

two lines will be needed in the Other Accounts column.) Be sure to post

immediately to this supplier's to keep the account up to date.

7 Cash sales this week: paint and supplies, $2,400, and wallpaper, $800. Add taxes as usual.

8 Received Invoice #87 dated February 5 from Reynolds Paper Co. for the purchase of wallpaper, $2,600 plus GST. Terms are n/30.

10 Sold on account to Jay-Mar Co., paint and supplies, $550 plus taxes.Terms n/30. Sales Invoice #2. (Continue numbering sales invoices sequentially.)

10 Sold on account to Day son & Son, wallpaper, $800 plus taxes. Terms n/30.

12 Sold on account to S. Miller, paint and supplies, $300, and wallpaper, $300; plus taxes. Terms n/30.

14 Cash sales this week: paint and supplies, $2,200, and wallpaper, $1,200. Add taxes as usual.

15 Bought an insurance policy on the building and contents, $840 plus PST (exempt from GST). Paid by cheque. (Insurance Prepaid)

20 Remitted the provincial sales tax to the government. The balance in the PST Payable account at the end of January was $1,640. The provincial government allows us to keep 5% of this tax amount ($1,640 x 5% = $82). Record this two-line entry in the Cash Payments Journal: On the first line, charge PST Payable for $1,640 in the General Ledger column. On the second line, charge PST Commission Revenue for $82, also in the General Ledger column. This commission, however, is to be deducted from the tax owing, so it must be entered in brackets. Next, calculate the difference between the two amounts to find the amount to be remitted to the government ($1,640-$82 = $1,558), and enter this amount in the Bank column on the same line as the commission.

21 Cash sales this week: paint and supplies, $1,600, and wallpaper, $800. Add taxes as usual.

25 Bought additional wallpaper from Reynolds Paper on their Invoice #98 dated February 24, terms n/30; $1,000 plus GST.

28 Cash sales this week: paint and supplies, $1,400, and wallpaper, $900. Add taxes as usual.

28 Paid for gas and oil for our own truck used for occasional deliveries of goods to some of our cash customers, $82.49 (including $3.65 GST).

At Month End:

(a) Total, balance, and rule the special journals.

(b) The PST Commission Revenue account does not exist in the ledger accounts available with the textbook. Therefore, select a sheet of ledger accounts normally used for practice exercises (code L). Enter the account name, PST Commission Revenue, and the account number, #410, Sheet #1. Insert this page in the Revenue section of the General Ledger. Also, this account may be entered on the Trial Balance temporarily on line 407 by crossing out Bad Debt Recoveries.

(c) Post all entries to the ledger accounts 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.

(d) 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 Pay able is equal to the balance in the Accounts Payable Control account.