•
Once an order is generated, indi creates a customized garment and ships it to the customer for free
within 4 weeks.
•
All orders come with a Perfect Fit Promise and Worry-Free Shopping Guarantee, which promises fit
adjustments until 100% satisfaction or customer’s money back.
11. The credit card company.
ACCOUNTING FOR SALES AND ACCOUNTS RECEIVABLE
CHAPTER 7
Students should recognize that technology is an important factor in the success of a merchant like
indieDenim. As a direct merchant, indieDenim customers shop directly with them — from home or office,
by phone, mail, fax or Web. They ship directly to their customers. Their direct merchant method of doing
business makes shopping simpler, faster and more convenient.
Fast Facts
Chapter Opener: Thinking Critically
Discussion Questions (c ontinued)
12
EXERCISE 7.2
EXERCISE 7.3
PAGE
Fee charged by banks to retailers for the privilege of allowing their customers to use bank credit
SALES JOURNAL
SALES
CREDIT
CUSTOMER’S
NAME
POST.
REF.
ACCOUNTS
RECEIVABL
E DEBIT
SALES
TAX
PAYABLE
DATE
SALES
SLIP
NO.
18
EXERCISE 7.4
PAGE
POST.
REF.
1 2013 1
2 June 5 6 0 0
00
2
3 4 8
00
3
4 6 4 8
00
4
5 5
3. $150 − $30 = $120
Sales Tax Payable
Accepted a return of defective merchandise,
Accounts Receivable/Tiffany Monroe
15
GENERAL JOURNAL
DEBIT
CREDIT
DATE
DESCRIPTION
Sales Returns and Allowances
EXERCISE 7.7
EXERCISE 7.8
PAGE
POST.
REF.
1
2013 1
EXERCISE 7.9
2 1 1 5 00
2 8 3 00
7 5 6 00
DEBIT
January 31, 2013
Schedule of Accounts Receivable
GENERAL JOURNAL
DATE
DESCRIPTION
Cheryl Amos
Edward Cooke
Neal Fitzgerald
The Jean Barn
CREDIT
EXERCISE 7.10
ACCOUNT Accounts Receivable
ACCOUNT NO.
2013
Mar. 1 Balance ✔1
1
8
8
00
14 J42
3
2
4
00
8
6
4
00
22 J42
1
0
8
00
7
5
6
00
ACCOUNT Sales Tax Payable
ACCOUNT NO.
2013
Mar. 14 J42 2 4
00
2
4
00
22 J42 8
00
3
2
00
BALANCE
DEBIT
CREDIT
231
BALANCE
DEBIT
111
DEBIT
CREDIT
CREDIT
DEBIT
DATE
DESCRIPTION
POST
. REF.
DATE
DESCRIPTION
POST
. REF.
CREDIT
GENERAL LEDGER
EXERCISE 7.10 (continued)
NAME Sadie Palmer TERMS
POST
.
PROBLEM 7.1A
Page
SALES
SLIP
NO.
CUSTOMER’S
NAME
POST
.
REF.
1 ### 1
2 July 1 501 Perry Martin
9
7
2
00
7
2
00
9
0
0
00
2
3 6 502 Cindy Han 2
3
4
9
00
1
7
4
00
2
1
7
5
00
3
4 # 503 Richard Slocomb 2
5
3
8
00
1
8
8
00
2
3
5
0
00
4
ACCOUNTS
RECEIVABLE
DEBIT
SALES
TAX
PAYABLE
SALES
CREDIT
DATE
SALES JOURNAL
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
n/30
8
ACCOUNT Accounts Receivable ACCOUNT NO.
###
July 1 Balance ✔# 5 0 0
00
31 S8 10 96200 # 4 6 2
00
ACCOUNT Sales Tax Payable ACCOUNT NO.
DATE
DESCRIPTION
PROBLEM 7.1A (continued)
POST.
REF.
CREDIT
231
DEBIT
CREDIT
GENERAL LEDGER
111
BALANCE
DEBIT
PROBLEM 7.2A
PAGE
1 2013 1
2Feb. 1 1615 4 9 0 3 20 3 6 3 20 4 5 4 0 00 2
3 5 1616 2 2 6 8 00 1 6 8 00 2 1 0 0 00 3
4 9 1617 6 8 0 4 00 5 0 4 00 6 3 0 0 00 4
5 17 1618 10 0 4 4 00 7 4 4 00 9 3 0 0 00 5
6 23 1619 3 6 7 2 00 2 7 2 00 3 4 0 0 00 6
7 27 1620 4 2 9 3 00 3 1 8 00 3 9 7 5 00 7
8 28 1621 1 9 4 4 00 1 4 4 00 1 8 0 0 00 8
9 28 1622 3 9 4 2 00 2 9 2 00 3 6 5 0 00 9
10 28 37 8 7 0 20 2 8 0 5 20
#
35 0 6 5 00 10
11 ( 1 1 1 ) ( 2 3 1 ) ( 4 0 1 ) 11
12 12
SALES
SLIP
NO.
POST.
REF.
ACCOUNTS
RECEIVABL
E DEBIT
Ann Brown
Mimi Yuki
Domingo Salas
Jose Saucedo
Alan Baker
DATE
Jacqueline Moore
Totals
SALES JOURNAL
SALES
TAX
PAYABLE
CREDIT
CUSTOMER’S NAME
Hazel Tran
Sun Yoo
8
SALES
CREDIT
PROBLEM 7.2A (continued)
ACCOUNT Accounts Receivable ACCOUNT NO.
2013
Feb. 1Balance ✔15 6 3 6 00
11 J24 7 5 6 00 14 8 8 0 00
25 J24 4 3 2 00 14 4 4 8 00
28 S8 37 8 7 0 20 52 3 1 8 20
ACCOUNT Sales Tax Payable ACCOUNT NO.
2013
Feb. 1Balance ✔7 1 7 0 00
111
DATE
BALANCE
DEBIT
CREDIT
DESCRIPTION
POST.
REF.
DEBIT
CREDIT
231
CREDIT
BALANCE
DEBIT
CREDIT
DATE
DESCRIPTION
POST.
REF.
DEBIT
GENERAL LEDGER
PROBLEM 7.2A (continued)
PROBLEM 7.3A
PAGE 6
1 2013 1
2 Nov. 1 1001 Pauline Judge ✔1 6 2 0 00 1 2 0 00 1 5 0 0 00 2
Month Ended February 28, 2013
Armik's Furniture
DATE
SALES
SLIP
NO.
CUSTOMER’S
NAME
POST.
REF.
ACCOUNTS
RECEIVABLE
DEBIT
SALES TAX
PAYABLE
CREDIT
SALES
CREDIT
SALES JOURNAL
Income Statement (Partial)
PROBLEM 7.3A (continued)
PAGE
1 2013 1
2 Nov. 17 1 5 0 00 2
3 1 2 00 3
Accounts Receivable/Lisa Morgan 4
5 Accepted return of broken glass, 5
6 Credit Memo 102; original sale made on 6
7 Sales Slip 1004, November 10 7
8 8
9 25 3 5 0 00 9
231
111
451
451
1
6
2
DATE
CREDIT
✔
00
DESCRIPTION
Sales Returns and Allowances
Sales Tax Payable
4
Sales Returns and Allowances
16
GENERAL JOURNAL
DEBIT
POST.
REF.
1
PROBLEM 7.3A (continued)
ACCOUNT Sales Tax Payable ACCOUNT NO.
2013
Nov. 17 J16 1 2 00 1 2 00
25 J16 2 8 00 4 0 00
30 S6 1 1 3 2 00 1 0 9 2 00
ACCOUNT Sales ACCOUNT NO.
2013
Nov. 30 S6 14 1 5 0 00 14 1 5 0 00
DATE
DEBIT
CREDIT
DESCRIPTION
GENERAL LEDGER
BALANCE
DEBIT
CREDIT
CREDIT
DESCRIPTION
DATE
231
401
POST.
REF.
DEBIT
POST.
REF.
DEBIT
CREDIT
BALANCE
PROBLEM 7.3A (continued)
NAME Charles Brown TERMS
DESCRIPTION
POST.
REF.
2013
Nov. 6 Sales Slip 1003 S6 7 5 6 00 7 5 6 00
NAME Janet Hutchinson TERMS
DESCRIPTION
POST.
REF.
CREDIT
BALANCE
n/30
n/30
CREDIT
DEBIT
BALANCE
DATE
DEBIT
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
DATE
PROBLEM 7.3A (continued)
NAME Henry Okafor TERMS
DESCRIPTION
POST.
REF.
2013
Nov. 27 Sales Slip 1007 S6 6 4 8 00 6 4 8 00
NAME Dorothy Watts TERMS
POST.
DEBIT
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
CREDIT
n/30
n/30
BALANCE
DATE
PROBLEM 7.3A (continued)
Euline Brock 4 1 0 4 00
Charles Brown 7 5 6 00
Janet Hutchinson 2 2 6 8 00
PROBLEM 7.4A
PAGE
INVOICE
NO.
POST.
REF.
1 2013 1
2 Jan. 3 1081 ✔5 0 0 00 2
3 8 1082 ✔7 7 5 00 3
ACCOUNTS
RECEIVABLE
DR./ SALES CR.
CUSTOMER’S NAME
7
Carter Garden Supply
SALES JOURNAL
The Dining Elegance China Shop
Schedule of Accounts Receivable
November 30, 2013
Thomas Florist
DATE
PROBLEM 7.4A (continued)
PAGE
1 ### 1
2
Jan. # 5 0 00 2
3
4 4
5 5
6 6
7 7
8
# 1 5 0 00
8
# #
# #
00
1
Sales Returns and Allowances
on Invoice 1083, January 9
5
0
✔
3
9
00
9
451
111
Accounts Receivable/Thomasville Flower Shop
Accounts Receivable/Thomas Florist
0
DEBIT
POST.
REF.
✔
DESCRIPTION
5
Accepted returns of damaged merchandise,
Credit Memo 101; original sale made
Sales Returns and Allowances
GENERAL JOURNAL
11
451
111
CREDIT
DATE
Gave allowance for damaged merchandise,
Credit Memo 102; original sale made Sales
PROBLEM 7.4A (continued)
ACCOUNT
ACCOUNT NO.
2013
Jan. 15 J11 5 0 00 5 0 00
31 J11 1 5 0 00 2 0 0 00
NAME Applegate Nursery TERMS
POST.
GENERAL LEDGER
BALANCE
Sales Returns and Allowances
451
CREDIT
DATE
DESCRIPTION
POST.
REF.
n/45
CREDIT
DEBIT
DEBIT
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
PROBLEM 7.4A (continued)
NAME Moore’s Flower Shop TERMS
DESCRIPTION
POST.
REF.
2013
Jan. 10 Invoice 1084 S7 53000 53000
25 Invoice 1087 S7 42700 95700
NAME Thomas Florist TERMS
POST.
BALANCE
n/45
n/45
DATE
DEBIT
CREDIT
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
PROBLEM 7.4A (continued)
Applegate Nursery 6 8 0 00
Carter Garden Supply 7 7 5 00
PROBLEM 7.1B
PAGE
12013 1
2 June 1 201 Fatima Fakih 1 1 3 4 00 8 4 00 105000 2
Special Occasions Flower Shop
Schedule of Accounts Receivable
January 31, 2013
DATE
SALES
SLIP
NO.
8
CUSTOMER’S
NAME
POST.
REF.
SALES
CREDIT
SALES TAX
PAYABLE
CREDIT
ACCOUNTS
RECEIVABL
E DEBIT
SALES JOURNAL
PROBLEM 7.1B (continued)
ACCOUNT Accounts Receivable ACCOUNT NO.
2013
June 1 Balance ✔73 0 0 0 00
30 S8 918000 82 1 8 0 00
ACCOUNT Sales Tax Payable ACCOUNT NO.
BALANCE
DEBIT
GENERAL LEDGER
111
231
CREDIT
CREDIT
DATE
DESCRIPTION
POST.
REF.
DEBIT
PROBLEM 7.2B
PAGE
1 2013 1
2June 1 1601 Kenya Jackson 2 7 2 7 00 2 0 2 00 2 5 2 5 00 2
3 5 1602 Carmen Cruz 1 6 2 0 00 1 2 0 00 1 5 0 0 00 3
4 9 1603 Lu Chang 6 5 0 7 00 4 8 2 00 6 0 2 5 00 4
5 17 1604 Rick Jones 4 3 2 0 00 3 2 0 00 4 0 0 0 00 5
6 23 1605 Demitri Brown 2 5 9 2 00 1 9 2 00 2 4 0 0 00 6
7 27 1606 Paul Rivera 2 7 8 1 00 2 0 6 00 2 5 7 5 00 7
8 29 1607 Rosie Seltz 1 2 4 2 00 9 2 00 1 1 5 0 00 8
9 30 1608 Jim Mayor 3 3 4 8 00 2 4 8 00 3 1 0 0 00 9
10 30 Totals 25 1 3 7 00 1 8 6 2 00 23 2 7 5 00 10
11 ( 1 1 1 ) ( 2 3 1 ) ( 4 0 1 ) 11
12 12
PAGE
1 2013 1
SALES TAX
PAYABLE
CREDIT
SALES
CREDIT
POST.
REF.
DATE
SALES
SLIP
NO.
CUSTOMER’S
NAME
POST.
REF.
CREDIT
DEBIT
DESCRIPTION
9
26
SALES JOURNAL
GENERAL JOURNAL
ACCOUNTS
RECEIVABLE
DEBIT
DATE
PROBLEM 7.2B (continued)
ACCOUNT Accounts Receivable ACCOUNT NO.
2013
June 1 Balance ✔24 1 5 0 00
11 J26 5 4 0 00 23 6 1 0 00
25 J26 2 7 0 00 23 3 4 0 00
30 S9 25 1 3 7 00 48 4 7 7 00
ACCOUNT Sales Tax Payable ACCOUNT NO.
2013
June 1 Balance ✔4 5 1 5 00
DESCRIPTION
POST.
REF.
DEBIT
CREDIT
CREDIT
BALANCE
BALANCE
DATE
CREDIT
DEBIT
DEBIT
DATE
DESCRIPTION
POST.
REF.
GENERAL LEDGER
111
231
CREDIT
DEBIT
PROBLEM 7.2B (continued)
PROBLEM 7.3B
PAGE
1 2013 1
2 Feb. 3 201 Ronald Brown ✔5 4 00 4 00 5 0 00 2
3 4 202 Ken Hamlett ✔2 1 6 00 1 6 00 2 0 0 00 3
4 5 203 Vickie Neal ✔3 2 4 00 2 4 00 3 0 0 00 4
6
SALES TAX
PAYABLE
CREDIT
DATE
SALES
SLIP
NO.
CUSTOMER’S
NAME
The Furniture Lot
Income Statement (Partial)
June 30, 2013
SALES
CREDIT
Revenue
ACCOUNTS
RECEIVABL
E DEBIT
POST.
REF.
SALES JOURNAL
PROBLEM 7.3B (continued)
PAGE
1 2013 1
2 Feb. 9 5 0 00 2
3 4 00 3
5 Accepted return of incomplete gift pack, 5
6 Credit Memo 101; original sale made on 6
7
Sales Slip 203, February 5
7
8 8
9 13 5 0 00 9
00
5
4
4
Sales Returns and Allowances
451
111
231
4
16
CREDIT
GENERAL JOURNAL
DATE
Sales Returns and Allowances
DEBIT
POST.
REF.
DESCRIPTION
451
Sales Tax Payable
Accounts Receivable/Vickie Neal
✔
PROBLEM 7.3B (continued)
ACCOUNT Sales Tax Payable ACCOUNT NO.
2013
Feb. 9J16 4 00 4 00
13 J16 4 00 8 00
28 S6 25600 24800
ACCOUNT Sales ACCOUNT NO.
2013
Feb. 28 S6 320000 320000
DEBIT
BALANCE
CREDIT
CREDIT
DATE
DESCRIPTION
POST.
REF.
DATE
DESCRIPTION
POST.
REF.
DEBIT
GENERAL LEDGER
401
231
CREDIT
DEBIT
CREDIT
DEBIT
BALANCE
PROBLEM 7.3B (continued)
NAME Ronald Brown TERMS
DESCRIPTION
POST. REF.
2013
Feb. 3 Sales Slip 201 S6 5 4 00 5 4 00
14 Sales Slip 207 S6 2 1 6 00 2 7 0 00
NAME Gordon Edwards TERMS
DESCRIPTION
POST. REF.
2013
Feb. 10 Sales Slip 206 S6 1 6 2 00 1 6 2 00
NAME Luther Evans TERMS
n/30
n/30
BALANCE
DATE
DEBIT
CREDIT
CREDIT
DEBIT
BALANCE
DATE
n/30
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
PROBLEM 7.3B (continued)
NAME Ned Jones TERMS
DESCRIPTION
POST. REF.
2013
Feb. 20 Sales Slip 209 S6 1 0 8 00 1 0 8 00
NAME Vicki Neal TERMS
DESCRIPTION
POST. REF.
2013
Feb. 5 Sales Slip 203 S6 3 2 4 00 3 2 4 00
9 Credit Memo 101 J16 5 4 00 2 7 0 00
DATE
DEBIT
CREDIT
DATE
DEBIT
CREDIT
BALANCE
BALANCE
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
n/30
n/30
PROBLEM 7.3B (continued)
Special Elegance Gift Shop
5 4 0 00
2 7 0 00
1 6 2 00
4 3 2 00
PAGE
INVOICE
NO.
CUSTOMER’S NAME
POST.
REF.
11 (1 1
1/
4 01) #
12 #
Gordon Edwards
Luther Evans
Schedule of Accounts Receivable
February 28, 2013
Susan Anderson
Ronald Brown
DATE
ACCOUNTS
RECEIVABLE
DR./ SALES
SALES JOURNAL
PROBLEM 7.4B
5
PROBLEM 7.4B (continued)
PAGE
1 ### 1
2 Feb. # 1 0 0
00
2
1 0 0 00
4 4
5 5
6 6
7 7
8 # 7 5
00
8
7 5 00
# #
# #
# #
3
Accepted returns of damaged merchandise,
Accounts Receivable/DeSoto Flower Shop
Credit Memo 105; original sale made
9
on invoice 2208, February 27
Gave allowance for damaged merchandise,
Credit Memo 106; original sale made
9
CREDIT
DATE
DEBIT
POST.
REF.
DESCRIPTION
✔
451
111
111
✔
451
on invoice 2203, February 9
Accounts Receivable/Thompson Funeral Shop
Sales Returns and Allowances
3
Sales Returns and Allowances
16
GENERAL JOURNAL
PROBLEM 7.4B (continued)
ACCOUNT
Sales Returns and Allowances
ACCOUNT NO.
##
Feb.
# J10
1
0
0
00
1
0
0
00
# J10
7
5
00
1
7
5
00
NAME Denton Flower Shop
TERMS
DESCRIPTION
POS
T.
##
Feb.
# Invoice 2207 S5
4
5
0
00
4
5
0
00
NAME DeSoto Flower Shop
TERMS
BALANCE
CREDIT
CREDIT
DEBIT
DATE
DESCRIPTION
DATE
DEBIT
POS
T.
GENERAL LEDGER
ACCOUNTS RECEIVABLE SUBSIDIA RY LEDGER
451
CREDIT
n/30
n/30
BALANCE
DEBIT
PROBLEM 7.4B (continued)
NAME Meadows Nursery TERMS
DESCRIPTION
POST.
REF.
2013
Feb. 8 Invoice 2202 S5 80000 80000
NAME Southwest Nursery TERMS
DESCRIPTION
POST.
REF.
2013
Feb. 22 Invoice 2206 S5 85000 85000
NAME Thompson Funeral Home TERMS
DESCRIPTION
POST.
REF.
2013
Feb. 3 Invoice 2201 S5 40000 40000
27 Invoice 2208 S5 750 00 1 1 5 0 00
28 Credit Memo 106 J10 7 5 00 1 0 7 5 00
45000
95000
135000
80000
85000
107500
547500
Balance of Accounts Receivable account:
Analyze: Damaged goods decreased net sales revenue by $175 and by 3% ($175 ÷ $5,650 = .03).
February 28, 2013
Denton Flower Shop
DeSoto Flower Shop
Lovelace Nursery
$5,475.00
Meadows Nursery
Southwest Nursery
Thompson Funeral Home
BALANCE
n/30
DATE
DEBIT
CREDIT
Total
The Vintage Nursery
Schedule of Accounts Receivable
DATE
DEBIT
CREDIT
DATE
DEBIT
CREDIT
BALANCE
BALANCE
n/30
n/30
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
CRITICAL THINKING PROBLEM 7.1
PAGE
SALES
SLIP
NO.
CUSTOMER’S NAME
POST.
REF.
12013 1
2 Aug. 1 1001 Bombay's Department Store ✔11 7 0 00 2
3 5 1002 Reader's Bookstore ✔14 8 5 00 3
4 9 1003 Super Game Center ✔5 2 0 00 4
514 1004
Little Annie's Toy Store ✔
15 8 0 00 5
622 1005 The Game Store ✔9 7 0 00 6
726 1006 Bombay's Department Store ✔14 4 0 00 7
830 1007 Pinkerton Toy Center ✔13 6 0 00 8
931 Total 85 4 5 00 9
10 (1 1 4 01) 10
11 11
PAGE
12013 1
2 Aug. 18 Sales Returns and Allowances 5 2 5
0
00 2
525000
4 4
5 5
6 6
7 7
CREDIT
111
DEBIT
451
POST.
REF.
✔
3
2
8
DATE
DESCRIPTION
Credit Memo 151; original sale made on
Invoice 1003, August 9
Accepted returns of damaged merchandise,
25
1/
GENERAL JOURNAL
SALES JOURNAL
DATE
ACCOUNTS
RECEIVABLE
DR./ SALES CR.
0
8
7
3
5
4
2
9
Accounts Receivable/Super Game Center
CRITICAL THINKING PROBLEM 7.1 (continued)
ACCOUNT Accounts Receivable ACCOUNT NO.
111
DEBIT
DEBIT
CREDIT
DATE
DESCRIPTION
BALANCE
CREDIT
POST.
REF.
GENERAL LEDGER
CRITICAL THINKING PROBLEM 7.1 (continued)
CRITICAL THINKING PROBLEM 7.1 (continued)
CRITICAL THINKING PROBLEM 7.1 (continued)
2.
3.
4.
An electronic scanner would prevent customers from being charged an incorrect price. Because the
The use of an electronic scanner should reduce unrecorded sales. Each item has to be passed over the
The computer can be programmed to alert the salesclerk by means of a code number or flashing sign on
the register/terminal display screen that a particular credit card number has been reported stolen. The
SOLUTIONS TO BUSINESS CONNECTIONS
8.
3. 14.4% ($77,349 - $66,176) ÷ $77,349 = 14.4 %.
Analyze Online:
Answers will vary depending on the year.
Teamwork:
Aid in extending credit, identify slow-paying customers.
Sales associate would not record a transaction. Louisa’s A/P clerk would process a purchase order for
SOLUTIONS TO PRACTICE TEST
Part A True-False