Happy Tails Inc. has a September 1, 20Y4, accounts payable balance of $620, which consists of $320 due Labradore Inc. and $300 due Meow Mart Inc. Transactions related to purchases and cash payments completed by Happy Tails Inc. during the month of September 20Y4 are as follows:
Sept.
4. Purchased pet supplies from Best Friend Supplies Inc. on account, $295.
6. Issued Check No. 345 to Labradore Inc. in payment of account, $320.
13. Purchased pet supplies from Poodle Pals Inc. on account, $790.
18. Issued Check No. 346 to Meow Mart Inc. in payment of account, $300.
19. Purchased office equipment from Office Helper Inc. on account, $2,510.
23. Issued Check No. 347 to Best Friend Supplies Inc. in payment of account from purchase made on September 4.
27. Purchased pet supplies from Meow Mart Inc. on account, $450.
30. Issued Check No. 348 to Jennings Inc. for cleaning expenses, $80.
a. Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those used in the text. Place a check mark (✓) in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Happy Tails Inc. uses the following accounts:
Cash 11
Pet Supplies 14
Office Equipment 18
Accounts Payable 21
Cleaning Expense 54
b. Prepare a listing of accounts payable creditor balances on September 30, 20Y4. Verify that the total of the accounts payable creditor balances equals the balance of the accounts payable controlling account on September 30, 20Y4.
c. Why does Happy Tails Inc. use a subsidiary ledger for accounts payable?
Answer:
a.
20Y4
Sept. 49
139
19918 2,510
279
302,510
Page 22
20Y4
Sept. 6 345 Labradore Inc. 9 320
18 346 Meow Mart Inc. 9 300
23 347 Best Friend Supplies Inc. 9 295
30 348 Cleaning Expense 5480
30995
(11)
b.
Meow Mart Inc.$ 450
Poodle Pals Inc.790
Office Helper Inc. 2,510
Total accounts payable$3,750
The total of the creditor accounts on September 30, 20Y4, $3,750, equals the
balance of the accounts payable controlling account, shown as follows:
Sept. 30 915 Sept. 1 Bal.
c. Happy Tails Inc. uses a subsidiary ledger for accounts payable to track its credit
purchases and payments to the individual supplier. This is needed so that it knows
how much it owes to each individual supplier. Without the subsidiary ledger, Happy
Tails Inc. would have difficulty accurately paying suppliers for the amount owed in a
timely manner.