The chart of accounts of Sabre Company includes the following selected accounts.
112 Accounts Receivable 401 Sales Revenue
120 Inventory 412 Sales Returns and Allowances
126 Supplies 505 Cost of Goods Sold
157 Equipment 610 Advertising Expense
201 Accounts Payable
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.
May 2 Purchased merchandise from Halpert Company $5,000.
3 Received freight bill from Fast Freight on Halpert purchase $250.
5 Sales were made to Krasinski Company $1,300, Coen Bros. $1,800, and Lucy Company $1,000.
8 Purchased merchandise from Beesly Company $5,400 and Fischer Company $3,000.
10 Received credit on merchandise returned to Fischer Company $350.
15 Purchased supplies from Jenna’s Supplies $600.
16 Purchased merchandise from Halpert Company $3,100, and Beesly Company $4,800.
17 Returned supplies to Jenna’s Supplies, receiving credit $70. (Hint: Credit Supplies.)
18 Received freight bills on May 16 purchases from Fast Freight $325.
20 Returned merchandise to Halpert Company receiving credit $200.
23 Made sales to Coen Bros. $1,600 and to Lucy Company $2,500.
25 Received bill for advertising from Ole Advertising $620.
26 Granted allowance to Lucy Company for merchandise damaged in shipment $140.
28 Purchased equipment from Jenna’s Supplies $400.
Instructions
(a) Journalize the transactions above in a purchases journal, a sales journal, and a general 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) Post to both the general and subsidiary ledger accounts. (Assume that all accounts have zero beginning balances.)
(c) Prove the agreement of the control and subsidiary accounts.