The following transactions were completed by Hammond Auto Supply during January,

Question

The following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow.

Jan. 2 Issued Ck. No. 6981 for monthly rent, $775.

2 J. Hammond, the owner, invested an additional $3,500 in the business.

4 Bought merchandise on account from Valencia and Company, invoice no. A691, $2,930; terms 2/10, n/30; dated January 2.

4 Received check from Vega Appliance for $980 in payment of $1,000 invoice less discount.

4 Sold merchandise on account to L. Paul, invoice no. 6483, $850.

6 Received check from Petty, Inc., $637, in payment of $650 invoice less discount.

7 Issued Ck. No. 6982, $588, to Fischer and Son, in payment of invoice no. C1272 for $600 less discount.

Jan. 7 Bought supplies on account from Doyle Office Supply, invoice no. 1906B, $108; terms net 30 days.

7 Sold merchandise on account to Ellison and Clay, invoice no. 6484, $787.

9 Issued credit memo no. 43 to L. Paul, $54, for merchandise returned.

11 Cash sales for January 1 through January 10, $4,863.20.

11 Issued Ck. No. 6983, $2,871.40, to Valencia and Company, in payment of $2,930 invoice less discount.

14 Sold merchandise on account to Vega Appliance, invoice no. 6485, $2,050.

18 Bought merchandise on account from Costa Products, invoice no. 7281D, $4,854; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to the invoice, $147 (total $5,001).

21 Issued Ck. No. 6984, $194, to M. Miller for miscellaneous expenses not recorded previously.

21 Cash sales for January 11 through January 20, $4,591.

23 Issued Ck. No. 6985 to Forbes Freight, $96, for freight charges on merchandise purchased on January 4.

23 Received credit memo no. 163, $376, from Costa Products for merchandise returned.

29 Sold merchandise on account to Bruce Supply, invoice no. 6486, $1,835.

31 Cash sales for January 21 through January 31, $4,428. 31 Issued Ck. No. 6986, $53, to M. Miller for miscellaneous expenses not recorded previously.

31 Recorded payroll entry from the payroll register: total salaries, $6,200; employees’ federal income tax withheld, $872; FICA taxes withheld, $350.30.

31 Recorded the payroll taxes: FICA taxes, $474.30; state unemployment tax, $334.80; federal unemployment tax, $49.60.

31 Issued Ck. No. 6987, $4,977.70, for salaries for the month.

31 J. Hammond, the owner, withdrew $1,000 for personal use, Ck. No. 6988.

111 Cash 311 J. Hammond, Capital

113 Accounts Receivable    312 J. Hammond, Drawing

114 Merchandise Inventories

115 Supplies    412 Sales Returns and Allowances

116 Prepaid Insurance    413 Sales Discounts

121 Equipment 511 Purchases

212 Accounts Payable 512 Purchases Returns and Allowances

215 Salaries Payable 513 Purchases Discounts

216 Employees’ Federal Income Tax Payable        514 Freight In

217 FICA Taxes Payable 621 Salary Expense

218 State Unemployment Tax Payable 622 Payroll Tax Expense

219 Federal Unemployment Tax Payable 631 Miscellaneous Expense

Required

1. Post daily all entries involving customer accounts to the accounts receivable ledger.

2. Post daily all entries involving creditor accounts to the accounts payable ledger.

3. Post daily the general journal entries to the general ledger. Write the owner’s name in the Capital and Drawing accounts.

4. Prepare a trial balance.

5. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?

Explanation / Answer

Journal Ledger Dr Cr 1 Jan-02 Rent a/c Dr 600 TO Bank A.c 600 2 Bank A/c 3500 To Capital A/c 3500 3 Jan-02 Purchase A/c Dr 2930 TO Valencia and Company 2930 4 Bank A/c Dr 980 Dioscount A/c 20 To Vega Appliance 1000 5 L Paul a/c 650 To sales 650 6 Fisher and sons ac DR 600 TO Bank 588 TO Discount rec 12 7 Jan-07 Purchase a/c Dr 108 To Doyle Office Supply 108 8 Ellision and clay Dr 787 To sales 787 9 Sales ac Dr 650 TO L Paul A/c 650 10 Jan 1 to 10 Cash A/c Dr 863.2 TO sales 863.2 11 Valencia and Company 2930 TO Bank 2871.4 To Discount rec 58.6 12 Vega Appliance 2050 To sales 2050 13 Jan-16 Purchase A/c Dr 4854 Freight Exp 147 To Costa Products 4854 14 Misc Exp Dr 194 To Bank 194 15 Jan 1 to 20 Cash Ac Dr 4591 To sales 4591 16 Feright Exp A/c 96 TO bank 96 16 Costa Products 376 To Purchase 376 17 Bruce Supply 1835 To sales 1835 18 Jan 21 to 30 Cash A.c 4428 To sales 4428 19 Misc Exp 53 To Bank 53 20 Salary exp 6200 To salary payble 4978 To TDS Withheld 872 To FICA Tax withheld 350 21 FICA Tax 474.3 State unemployment tax 334.8 Fedrel unemployment tax 49.6 To Taxes payble 858.7 22 Salary payble 4977.7 To bank 4977.7 23 Capital 1000 To Bank 1000

Trial Balance Dr Cr A/c Rent a/c 600 capital A/c 2500 Purchase ac/ 8268 Valancia company 0 Discount exp 20 Vega Appliaane 1050 0 L Paul 0 Sales 14554.2 Fisher and sons 600 Discount rec 70.6 Doyle office supply 108 Ellision and clay 787 Feight 243 Costa Produts 5377 MISC Exp 247 Bruce supply 1835 Salary exp 6200 Salary payble 0.3 TDS witheld 872 FICA Withheld 350 FICA Tax 474.3 State unemployment tax 334.8 Fedrel unemployment tax 49.6 taxes payble 858.7 Cash A/c 9882.2 Bank A/c -5900.1 24690.8 24690.8

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