AquaFresh Water Testing Service was established on April 16. AquaFresh uses field equipment and field supplies (chemicals and other supplies) to analyze water for unsafe contaminants in streams, lakes, and ponds. Transactions related to purchases and cash payments during the remainder of April are as follows:
Apr.
16. Issued Check No. 1 in payment of rent for the remainder of April, $3,500.
16. Purchased field supplies on account from Hydro Supply Co., $5,340.
16. Purchased field equipment on account from Pure Equipment Co., $21,450.
17. Purchased office supplies on account from Best Office Supply Co., $510.
19. Issued Check No. 2 in payment of field supplies, $3,340, and office supplies, $400.
Post the journals to the accounts payable subsidiary ledger.
23. Purchased office supplies on account from Best Office Supply Co., $660.
23. Issued Check No. 3 to purchase land, $140,000.
24. Issued Check No. 4 to Hydro Supply Co. in payment of April 16 invoice, $5,340.
26. Issued Check No. 5 to Pure Equipment Co. in payment of April 16 invoice, $21,450.
Post the journals to the accounts payable subsidiary ledger.
30. Acquired land in exchange for field equipment having a cost of $12,000.
30. Purchased field supplies on account from Hydro Supply Co., $7,650.
30. Issued Check No. 6 to Best Office Supply Co. in payment of April 17 invoice, $510.
30. Purchased the following from Pure Equipment Co. on account: field supplies, $1,340, and field equipment, $4,700.
30. Issued Check No. 7 in payment of salaries, $29,400.
Post the journals to the accounts payable subsidiary ledger.
Instructions
1. Journalize the transactions for April. Use a purchases journal and a cash payments journal, similar to those illustrated in this chapter, and a two-column general journal. Use debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the following partial chart of accounts:
11 Cash
19 Land
14 Field Supplies
21 Accounts Payable
15 Office Supplies
61 Salary Expense
17 Field Equipment
71 Rent Expense
At the points indicated in the narrative of transactions, post to the following accounts in the accounts payable subsidiary ledger:
Best Office Supply Co.
Hydro Supply Co.
Pure Equipment Co.
2. Post the individual entries (Other Accounts columns of the purchases journal and the cash payments journal and both columns of the general journal) to the appropriate general ledger accounts.
3. Total each of the columns of the purchases journal and the cash payments journal and post the appropriate totals to the general ledger. (Because the problem does not include transactions related to cash receipts, the cash account in the ledger will have a credit balance.)
4. Prepare a schedule of the accounts payable creditor balances.
5. Why might AquaFresh consider using a subsidiary ledger for the field equipment?
Answer:
1., 2., and 3.
Page 1
169 5,340 5,340
169 21,450 Field Equipment 17 21,450
179 510 510
239 660 660
309 7,650 7,650
309 6,040 1,340 Field Equipment 17 4,700
3041,650 14,330 1,17026,150
(21) (14) (15)(9)
Page 1
Apr. 16 1 Rent Expense 713,500
19 2 Field Supplies 143,340
Office Supplies 15400
23 3 Land 19 140,000
24 4 Hydro Supply Co. 5,340 5,340
26 5 Pure Equip. Co. 21,450 21,450
30 6 Best Office Supply Co. 510 510
30 7 Salary Expense 61 29,400
3027,300 203,940
(21) (11)
1. and 2.
Page 1
Apr. 30 Land19 12,000
Field Equipment 17 12,000
1.
Post.
Item Ref. Debit Credit Balance
Apr. 17 P1 510 510
23 P1 660 1,170
30 CP1 510 660
Post.
Item Ref. Debit Credit Balance
Apr. 16 P1 5,340 5,340
24 CP1 5,340 —
30 P1 7,650 7,650
Post.
Item Ref. Debit Credit Balance
Apr. 16 P1 21,450 21,450
26 CP1 21,450 —
30 P1 6,040 6,040
2. and 3.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
30 CP1 203,940 203,940
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
19 CP1 3,340 3,340
30 P1 14,330 17,670
Account No. 15
Post.
Item Ref. Debit Credit Debit Credit
19 CP1 400 400
30 P1 1,170 1,570
Account No. 17
Post.
Item Ref. Debit Credit Debit Credit
16 P1 21,450 21,450
30 P1 4,700 26,150
30 J1 12,000 14,150
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
23 CP1 140,000 140,000
30 J1 12,000 152,000
Item Ref. Debit Credit Debit Credit
30 P1 41,650 41,650
30 CP1 27,30014,350
Item Ref. Debit Credit Debit Credit
30 CP1 29,400 29,400
Item Ref. Debit Credit Debit Credit
16 CP1 3,500 3,500
4.
Best Office Supply Co. $ 660
Hydro Supply Co.7,650
Pure Equipment Co.6,040
Total accounts payable*$14,350
* The total of the schedule of accounts payable is equal to the balance of the accounts
payable control account.
5. A subsidiary ledger for the field equipment would allow the company to track
each piece of equipment with respect to cost, location, useful life, and other
data. Such information would be useful for safeguarding equipment and
determining depreciation.