RubyCpaMba-Wiley PLUS Brief Exercise 7

Brief Exercise 7-3

Benji Borke has prepared the following list of statements about accounting information systems.
Identify each statement as true or false.

1.		The accounting information system includes each of the steps of the accounting cycle, the documents that provide evidence of transactions that have occurred, and the accounting records.

2.		The benefits obtained from information provided by the accounting information system need not outweigh the cost of providing that information.

3.		Designers of accounting systems must consider the needs and knowledge of various users.

4.		If an accounting information system is cost-effective and provides useful output, it does not need to be flexible.

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Brief Exercise 7-5

Identify in what ledger (general or subsidiary) each of the following accounts is shown.

	Accounts	Ledger
(a)	Rent Expense

(b)	Accounts Receivable—Cabrera

(c)	Notes Payable

(d)	Accounts Payable—Pacheco

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Brief Exercise 7-6

Identify the journal in which each of the following transactions is recorded.

	Transactions	Journals
(a)	Cash sales

(b)	Owner withdrawal of cash

(c)	Cash purchase of land

(d)	Credit sales

(e)	Purchase of merchandise on account

(f)	Receipt of cash for services performed

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Brief Exercise 7-10

Rauch Computer Components Inc. uses a multi-column cash receipts journal.
Indicate which column(s) is/are posted only in total, only daily, or both in total and daily.

	Accounts	Column in Cash Journal Receipts
(a)	Accounts Receivable

(b)	Sales Discounts

(c)	Cash

(d)	Other Accounts

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Exercise 7-5 (Part level Submission)

Pennington Company has a balance in its Accounts Payable control account of $9,250 on January 1, 2014. The subsidiary ledger contains three accounts: Hale Company, balance $3,000; Janish Company, balance $1,875; and Valdez Company. During January, the following payable-related transactions occurred.

	Purchases	Payments	Returns
Hale Company	$6,750	$6,000	$ -0-
Janish Company	5,250	1,875	2,250
Valdez Company	6,375	6,750	-0-

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(a)

What is the January 1 balance in the Valdez Company subsidiary account?

Balance in the Valdez Company subsidiary account $

Exercise 7-7 (Part level Submission)

R. Santiago Co. uses special journals and a general journal. The following transactions occurred during May 2014.

May 1		R. Santiago invested $40,000 cash in the business.
		Sold merchandise to Lawrie Co. for $6,300 cash. The cost of the merchandise sold was $4,200.
		Purchased merchandise for $7,700 from J. Moskos using check no. 101.
14		Paid salary to H. Rivera $700 by issuing check no. 102.
16		Sold merchandise on account to K. Stanton for $900, terms n/30. The cost of the merchandise sold was $630.
22		A check of $9,000 is received from M. Mangini in full for invoice 101; no discount given.

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Exercise 7-7 (Part level Submission)

R. Santiago Co. uses special journals and a general journal. The following transactions occurred during May 2014.

May 1		R. Santiago invested $40,000 cash in the business.
		Sold merchandise to Lawrie Co. for $6,300 cash. The cost of the merchandise sold was $4,200.
		Purchased merchandise for $7,700 from J. Moskos using check no. 101.
14		Paid salary to H. Rivera $700 by issuing check no. 102.
16		Sold merchandise on account to K. Stanton for $900, terms n/30. The cost of the merchandise sold was $630.
22		A check of $9,000 is received from M. Mangini in full for invoice 101; no discount given.

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(a)

Prepare a multiple-column cash receipts journal and record the transactions for May that should be journalized. (Record entries in the order presented in the problem statement.)

R. SANTIAGO CO.
Cash Receipts Journal

CR1

Date

Account
Credited

Ref

Cash
Dr.

Sales
Discounts
Dr.

Accounts
Receivable
Cr.

Sales
Revenue
Cr.

Other
Accounts
Cr.

Cost of Goods Sold
Dr.
Inventory Cr.

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Exercise 7-14

Selected account balances for Hulse Company at January 1, 2014, are presented below.

Accounts Payable		$14,000
Accounts Receivable		22,000
Cash		17,000
Inventory		13,500

Hulse’s sales journal for January shows a total of $110,000 in the selling price column, and its one-column purchases journal for January shows a total of $77,000.
The column totals in Hulse’s cash receipts journal are: Cash Dr. $61,000; Sales Discounts Dr. $1,100; Accounts Receivable Cr. $45,000; Sales Revenue Cr. $6,000; and Other Accounts Cr. $11,100.
The column totals in Hulse's cash payments journal for January are: Cash Cr. $55,000; Inventory Cr. $1,000; Accounts Payable Dr. $46,000; and Other Accounts Dr. $10,000. Hulse’s total cost of goods sold for January is $63,600.
Accounts Payable, Accounts Receivable, Cash, Inventory, and Sales Revenue are not involved in the “Other Accounts” column in either the cash receipts or cash payments journal, and are not involved in any general journal entries.
Compute the January 31 balance for Hulse in the following accounts.

(a)	Accounts Payable	$
(b)	Accounts Receivable	$
(c)	Cash	$
(d)	Inventory	$
(e)	Sales Revenue	$