Accounts Payable
Accounts Receivable
Accumulated Depreciation—Office Equipment
Accumulated Depreciation—Store Equipment
Advertising Expense
Cash
Cost of Merchandise Sold
Delivery Expense
Depreciation Expense—Office Equipment
Depreciation Expense—Store Equipment
Income Summary
Insurance Expense
Interest Expense
Kailey Garner, Capital
Kailey Garner, Drawing
Land
Merchandise Inventory
Miscellaneous Administrative Expense
Miscellaneous Selling Expense
Notes Payable
Office Equipment
Office Salaries Expense
Office Supplies
Office Supplies Expense
Prepaid Insurance
Rent Expense
Salaries Payable
Sales
Sales Discounts
Sales Returns and Allowances
Sales Salaries Expense
Store Equipment
Store Supplies
Store Supplies Expense
Construct a chart of accounts, assigning account numbers and arranging the accounts in balance sheet and income statement order, as illustrated in Exhibit 7. Each account number is three digits: the first digit is to indicate the major classification (1 for assets, and so on); the second digit is to indicate the subclassification (11 for current assets, and so on); and the third digit is to identify the specific account (110 for Cash, 112 for Accounts Receivable, 114 for Merchandise Inventory, 115 for Store Supplies, and so on).
Answer:
Balance Sheet Accounts Income Statement Accounts
100 Assets 400 Revenues
110 Cash 410 Sales
112 Accounts Receivable 411 Sales Returns and
114 Merchandise Inventory Allowances
115 Store Supplies 412 Sales Discounts
116 Office Supplies 500 Expenses
117 Prepaid Insurance 510 Cost of Merchandise Sold
120 Land 520 Sales Salaries Expense
123 Store Equipment 521 Advertising Expense
124 Accumulated Depreciation— 522 Depreciation Expense—
Store Equipment Store Equipment
125 Office Equipment 523 Store Supplies Expense
126 Accumulated Depreciation— 524 Delivery Expense
Office Equipment 529 Miscellaneous Selling
200 Liabilities Expense
210 Accounts Payable 530 Office Salaries Expense
211 Salaries Payable 531 Rent Expense
212 Notes Payable 532 Depreciation Expense—
300 Owner’s Equity Office Equipment
310 Kailey Garner, Capital 533 Insurance Expense
311 Kailey Garner, Drawing 534 Office Supplies Expense
312 Income Summary 539 Miscellaneous
Administrative Expense
600 Other Expense
610 Interest Expense
Note: The order and number of some of the accounts within subclassifications is
somewhat arbitrary, as in accounts 115–117, accounts 520–524, and accounts
530–534. For example, in a new business, the order of magnitude expense
account balances often cannot be determined in advance. The magnitude may
also vary from period to period.