Problem 7-5A (Part Level Submission) Selected accounts from the chart of accounts of Fornelli Co. are shown below. 101 Cash 306 Owner's Drawings 112 Accounts Receivable 401 Sales Revenue 120 Inventory 414 Sales Discounts 126 Supplies 505 Cost of Goods Sold 131 Prepaid Rent 631 Supplies Expense 201 Accounts Payable 729 Rent Expense 301 Owner's Capital Presented below are the purchases and cash payments journals for Fornelli Co. for its first month of operations. PURCHASES JOURNAL P1 Inventory Dr. Date Account Credited Ref. Accounts Payable Cr. July 4 N. Alva do 7,270 5 F. Rees 8,000 11 J. Gallup 5,680 13 C. Werly 15,100 20 M. Mangus 7,850 43,900 CASH PAYMENTS JOURNAL CP1 Other Accounts Accounts Payable Inventory Cash Date Account Debited Ref. Dr. Dr. Cr. Cr. July 4 Supplies 630 630 10 F. Rees 8,000 80 7,920 6,060 6,060 7,270 11 Prepaid Rent 15 N. Alvarado 19 Owner's Drawings 21 C. Werly 7,270 2,130 2,130 15,100 151 14,949 8,820 30,370 231 38,959 In addition, the following transactions have not been journalized for July. The cost of all merchandise sold was 65% of the sales price. July 1 The founder, N. Fornelli, invests $71,200 in cash. 6 Sell merchandise on account to Dow Co. $5,700 terms 1/10, n/30. 7 Make cash sales totaling $7,600. 8 Sell merchandise on account to S. Goebel $5,500, terms 1/10, n/30. 10 Sell merchandise on account to W. Leiss $5,900, terms 1/10, n/30. 13 Receive payment in full from S. Goebel. 16 Receive payment in full from W. Leiss. 20 Receive payment in full from Dow Co. 21 Sell merchandise on account to H. Kenney $5,000, terms 1/10, n/30. 29 Returned damaged goods to N. Alvarado and received cash refund of $340. (b) Your answer is correct. Journalize the transactions that have not been journalized in the sales journal and the cash receipts journal. (Record entries in the order displayed in the problem statement.) Sales Journal Date Account Debited Ref. S1 Accounts Receivable Dr. Cost of Goods Sold Dr. Sales Revenue Cr. Inventory Cr. M 5700 3705 July 6 Dow Co. July 8 S. Goebel 5500 3575 July 10 W. Leiss 5900 3835 July 21 H. Kenney 5000 3250 M 22100 14365 (112)(401) (505)(120) Cash Receipts Journal CR1 Cost of Goods Sold Dr. Inventory Cr. Date Account Credited Ref. Cash Dr. Sales Discounts Dr. Accounts Receivable Cr. Sales Revenue Cr. Other Accounts Cr. July 1 . Owner's Capital 301 71200 71200 July 7 7600 7600 4940 July 13 S. Goebel V 5445 55 5500 July 16 W. Leiss 5841 59 5900 | July 20 IT Dow Co. V 5700 5700 July 29 IT Inventory 120 340 340 96126 114 17100 7600 71540 4940 (101) (414) (112) (401) (505)(120) SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT LINK TO TEXT Your answer is correct. Post to the accounts receivable and accounts payable subsidiary ledgers. (Post entries in the order of entries presented in the previous part.) Accounts Receivable Subsidiary Ledger Dow Co. Date Explanation Ref. Debit Credit Balance July 6 S1 5700 5700 July 20 CR1 5700 H. Kenney Date Explanation Ref. Debit Credit Balance T July 21 S1 5000 5000 W. Leiss Date Explanation Ref. Debit Credit Balance July 10 S1 5900 5900 July 16 : CR1 5900 S. Goebel Date Explanation Ref. Debit Credit Balance July 8 S1 5500 5500 July 13, CR1 5500 Accounts Payable Subsidiary Ledger C. Werly Date Explanation Ref. Debit Credit Balance July 13 P1 15100 15100 July 21 : CP1 15100 F. Rees Explanation Ref. Debit Credit Balance Date July 5 . P1 8000 8000 July 10 CP1 8000 M. Mangus Date Explanation Ref. Debit Credit Balance T July 20 P1 7850 7850 N. Alvarado Date Explanation Ref. Debit Credit Balance 7270 July 4 - P1 7270 July 15 CP1 7270 J. Gallup Date Explanation Ref. Debit Credit Balance July 11 P1 5680 5680 SHOW LIST OCCOUNTS SHOW ANSWER (d) Your answer is correct. Post the individual entries and totals to the general ledger. (Post entries in the order of entries presented in the previous part.) Cash No. 101 Balance Date Explanation Ref. Debit Credit July 31 CR1 96126 96126 July 31 CP1 38959 57167 No. 112 Accounts Receivable Date Explanation Ref. Debit Credit Balance July 31 S1 22100 22100 July 31 CR1 17100 5000 No. 102 Inventory Date Explanation Ref. Debit Credit Balance July 31 P1 43900 43900 July 29 CR1 340 43560 July 31 CP1 231 43329 July 31 S1 14365 28964 July 31 CR1 4940 24024 No. 127 Supplies Date Explanation Ref. Debit Credit Balance July 4 CP1 630 630 131 Prepaid Rent Date Explanation Ref. Debit Credit Balance July 11 CP1 6060 6060 No. 201 Accounts Payable Date Explanation Ref. Debit Credit Balance July 31 P1 43900 43900 July 31 CP1 30370 13530 No. 301 Owner's Capital Date Explanation Ref. Debit Credit Balance July 1 CR1 71200 71200 No. 306 Owner's Drawings Date Explanation Ref. Debit Credit Balance July 19 CP1 21301 2130 No. 401 Sales Revenue Date Explanation Ref. Debit Credit Balance July 31 S1 22100 22100 July 31 CR1 7600 29700 Sales Discounts No. 414 Date Explanation Ref. Debit Credit Balance July 31 CR1 114 114 Cost of Goods Sold No. 505 Date Explanation Ref. Debit Credit Balance July 31 S1 14365 14365 July 31 CR1 4940 19305 SHOW LIST OF ACCOUNTS SHOW ANSWER (e) Your answer is correct. Prepare a trial balance at July 31, 2017. FORNELLI CO. Trial Balance July 31, 2017 Debit Credit Cash 57167 $ Accounts Receivable 5000 Inventory 24024 Supplies 630 Prepaid Rent 6060 Accounts Payable 13530 Owner's Capital 71200 Owner's Drawings 2130 Sales Revenue 29700 Sales Discounts 114 Cost of Goods Sold 19305 Totals 114430 114430 (f) Your answer is correct. Determine whether the subsidiary ledgers agree with the control accounts in the general ledger. Accounts receivable balance 5000 Subsidiary accounts balance H. Kenney 5000 Accounts payable balance 13530 Subsidiary accounts balance M. Mangus 7850 J. Gallup 5680 1 13530 SHOW LIST OF ACCOUNTS SHOW ANSWER (g) The following adjustments at the end of July are necessary. (1) (2) A count of supplies indicates that $150 is still on hand. Recognize rent expense for July, $460. Prepare the necessary entries in the general journal. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record supplies expense) (To record rent expense) Post the entries to the general ledger. Cash No. 101 Debit Credit Balance 96,126 96,126 38,959 57,167 No. 112 Debit Credit Balance 22,100 22,100 17,100 5,000 No. 120 Date Explanation Ref. July 31 CR1 July 31 CP1 Accounts Receivable Date Explanation Ref. July 31 S1 July 31 CR1 Inventory Date Explanation Ref. July 31 P1 July 29 CR1 July 31 CP1 July 31 S1 July 31 CR1 Supplies Date Explanation Ref. July 4 CP1 Debit Credit Balance 43,900 43,900 340 43,560 43,329 231 14,365 4,940 28,964 24,024 No. 127 Debit Credit Balance 630 630 July 31 Adjusting Entry G1 No. 131 Prepaid Rent Date Explanation Ref. July 11 CP1 Debit Credit Balance 6,060 6,060 July 31 Adjusting Entry G1 No. 201 Debit Balance Credit 43,900 43,900 30,370 13,530 No. 301 Debit Credit Balance 71,200 71,200 No. 306 Debit Credit Balance 2,130 2,130 No. 401 Accounts Payable Date Explanation Ref. July 31 P1 July 31 CP1 Owner's Capital Date Explanation Ref. July 1 CR1 Owner's Drawings Date Explanation Ref. July 19 CP1 Sales Revenue Date Explanation Ref. July 31 S1 July 31 CR1 Sales Discounts Date Explanation Ref. July 31 Balance CR1 Cost of Goods Sold Date Explanation Ref. July 31 S1 July 31 CR1 Supplies Expense Date Explanation Ref. Debit Balance Credit 22,100 7,600 22,100 29,700 No. 414 Debit Credit Balance 114 114 No. 505 Debit Credit Balance 14,365 14,365 19,305 4,940 No. 631 Debit Credit Balance July 31 Adjusting Entry G1 No. 729 Rent Expense Date Explanation Ref. Debit Credit Balance July 31 Adjusting Entry G1