Wise Company completes these transactions during April of the current year journals ledgers receivable_Answer

Wise Company completes these transactions during April of the current year journals ledgers receivable_Answer

Problem 7-1A
Special journals, subsidiary ledgers, and schedule of accounts receivable—perpetual

Wise Company completes these transactions during April of the current year (the terms of all its credit
sales are 2y10, ny30).
Apr. 2 Purchased $13,300 of merchandise on credit from Negi Company, invoice dated April 2, terms 2y10, ny60.
3 Sold merchandise on credit to Brooke Sledd, Invoice No. 760, for $3,000 (cost is $2,000).
3 Purchased $1,380 of office supplies on credit from Madison, Inc. Invoice dated April 2, terms ny10 EOM.
4 Issued Check No. 587 to U.S. View for advertising expense, $999.
5 Sold merchandise on credit to Paul Kohr, Invoice No. 761, for $8,000 (cost is $6,500).
6 Received an $85 credit memorandum from Madison, Inc., for the return of some of the office supplies received on April 3.
9 Purchased $11,125 of store equipment on credit from Ned’s Supply, invoice dated April 9, terms ny10 EOM.
11 Sold merchandise on credit to Amy Nilson, Invoice No 762, for $9,500 (cost is $7,000).
12 Issued Check No. 588 to Negi Company in payment of its April 2 invoice, less the discount.
13 Received payment from Brooke Sledd for the April 3 sale, less the discount.
13 Sold $4,100 of merchandise on credit to Brooke Sledd (cost is $2,600), Invoice No. 763.
14 Received payment from Paul Kohr for the April 5 sale, less the discount.
16 Issued Check No. 589, payable to Payroll, in payment of sales salaries expense for the first half
of the month, $9,750. Cashed the check and paid employees.
16 Cash sales for the first half of the month are $50,840 (cost is $33,880). (Cash sales are recorded
daily from cash register data but are recorded only twice in this problem to reduce repetitive
entries.)
17 Purchased $12,750 of merchandise on credit from Price Company, invoice dated April 17, terms
2y10, ny30.
18 Borrowed $50,000 cash from First State Bank by signing a long-term note payable.
20 Received payment from Amy Nilson for the April 11 sale, less the discount.
20 Purchased $730 of store supplies on credit from Ned’s Supply, invoice dated April 19, terms
ny10 EOM.
23 Received a $400 credit memorandum from Price Company for the return of defective merchandise
received on April 17.
23 Received payment from Brooke Sledd for the April 13 sale, less the discount.
25 Purchased $10,375 of merchandise on credit from Negi Company, invoice dated April 24, terms
2y10, ny60.
26 Issued Check No. 590 to Price Company in payment of its April 17 invoice, less the return and
the discount.
27 Sold $3,070 of merchandise on credit to Paul Kohr, Invoice No. 764 (cost is $2,420).
27 Sold $5,700 of merchandise on credit to Amy Nilson, Invoice No. 765 (cost is $3,305).
30 Issued Check No. 591, payable to Payroll, in payment of the sales salaries expense for the last
half of the month, $9,750.
30 Cash sales for the last half of the month are $70,975 (cost is $55,900).
Required
1. Prepare a sales journal like that in Exhibit 7.5 and a cash receipts journal like that in Exhibit 7.7. Number
both journal pages as page 3. Then review the transactions of Wise Company and enter those that
should be journalized in the sales journal and those that should be journalized in the cash receipts
journal. Ignore any transactions that should be journalized in a purchases journal, a cash disbursements
journal, or a general journal.
2. Open the following general ledger accounts: Cash, Accounts Receivable, Inventory, Long-Term
Notes Payable, B. Wise, Capital, Sales, Sales Discounts, and Cost of Goods Sold. Enter the March 31
balances for Cash ($85,000), Inventory ($125,000), Long-Term Notes Payable ($110,000), and
B. Wise, Capital ($100,000). Also open accounts receivable subsidiary ledger accounts for Paul
Kohr, Brooke Sledd, and Amy Nilson.
3. Verify that amounts that should be posted as individual amounts from the journals have been posted.
(Such items are immediately posted.) Foot and crossfoot the journals and make the month-end
postings.
4. Prepare a trial balance of the general ledger and prove the accuracy of the subsidiary ledger by
preparing a schedule of accounts receivable.
Analysis Component
5. Assume that the total for the schedule of Accounts Receivable does not equal the balance of the
controlling account in the general ledger. Describe steps you would take to discover the error(s).

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