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The chart of accounts of Henry Company includes the following selected accounts. 112 Account Receivable 120 Inventory 126 Supplies 157 Equipment 201 Account Payable 401
The chart of accounts of Henry Company includes the following selected accounts. 112 Account Receivable 120 Inventory 126 Supplies 157 Equipment 201 Account Payable 401 Sales Revenue 412 Sales Returns and Allowances 505 Cost of Goods Sold 610 Advertising Expense In May, the following selected transactions were completed. All purchases and sales were on account except as indicated. The cost of all merchandise sold was 60% of the sales price. Purchased merchandise from Berkman Company $7,000 May 2 3 Received bill from Fast Freight on Berkman purchase $350 5 Sales were made to Persinger Company $1,300, Fehr Bros. $3,300, and Mount Company $2,000 8 Purchased merchandise from Kayser Company $5,500 and Neufeld Company $2,000 10 Received credit on merchandise returned to Neufeld Company $250 15 Purchased supplies from Rabel's Supplies $600 16 Purchased merchandise from Berkman Company $3,100, and Kayser Company $3,200 17 Returned supplies to Rabel's Supplies, receiving credit $70. (Hint: Credit Supplies) 18 Received freight bills on May 16 purchases from Fast Freight $350 20 Returned merchandises to Berkman Company receiving credit $200 23 Made sales to Fehr Bros. $1,400 and to Mount Company $2,200 25 Received bill for advertising from Mock Advertising $620 26 Granted allowance to Mount Company for merchandise damaged in shipment $120 28 Purchased equipment from Rabel's Supplies $400 Requirements: a) Journalize the transactions above in a purchase journal, a sales journal. The purchases journal should have the following column headings: Date, Account Credited (Debited), Ref., Accounts Payable Cr., Inventory Dr., and Other Accounts Dr. b) Posts to both general ledger and subsidiary ledger accounts. (Assume that all accounts have zero beginning balances) c) Prove the agreement of the control and subsidiary accounts Note: Sales Return and Allowances - A contra revenue account that reports 1) merchandise returned by a customer, and 2) the allowances granted to a customer because the seller shipped improper or defective merchandise. This of course will reduce the seller's accounts receivable and is subtracted from sales (along with sales discounts) to arrive at net sales. Sales Return and Allowances is recorded in General Journal Multi-column purchases journal: PURCHASES JOURNAL Date Account Credited P1 Ref. Account Payable Cr. Inventory Supplies Other Accounts Dr. Dr. Dr. Account Ref Amount
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