Oct. 16. Issued Check No. 1 in payment of rent for the remainder of October, $7,000.
16. Purchased field equipment on account from Petro Services Inc., $32,600.
17. Purchased field supplies on account from Midland Supply Co., $9,780.
18. Issued Check No. 2 in payment of field supplies, $4,570, and office supplies, $650.
20. Purchased office supplies on account from A-One Office Supply Co., $1,320.
Post the journals to the accounts payable subsidiary ledger.
24. Issued Check No. 3 to Petro Services Inc., in payment of October 16 invoice.
Oct. 26. Issued Check No. 4 to Midland Supply Co. in payment of October 17 invoice.
28. Issued Check No. 5 to purchase land, $240,000.
28. Purchased office supplies on account from A-One Office Supply Co., $3,670.
Post the journals to the accounts payable subsidiary ledger.
30. Purchased the following from Petro Services Inc. on account: field supplies, $25,300 and office equipment, $5,500.
30. Issued Check No. 6 to A-One Office Supply Co. in payment of October 20 invoice.
30. Purchased field supplies on account from Midland Supply Co., $12,450.
31. Issued Check No. 7 in payment of salaries, $32,000.
31. Rented building for one year in exchange for field equipment having a cost of $15,000.
Post the journals to the accounts payable subsidiary ledger
Instructions
1. Journalize the transactions for October. Use a purchases journal and a cash payments journal, similar to those illustrated in this chapter, and a two-column general journal. Set debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the following partial chart of accounts:
11 Cash 18 Office Equipment
14 Field Supplies 19 Land
15 Office Supplies 21 Accounts Payable
16 Prepaid Rent 61 Salary Expense
17 Field Equipment 71 Rent Expense
At the points indicated in the narrative of transactions, post to the following subsidiary accounts in the accounts payable ledger:
A-One Office Supply Co.
Midland Supply Co.
Petro Services Inc
2. Post the individual entries (Other Accounts columns of the purchases journal and the cash payments journal; 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. Sum the balances of the accounts payable creditor balances.
5. Why might West Texas consider using a subsidiary ledger for the field equipment?
Answer:
1., 2., and 3.
PURCHASES JOURNAL Page 1
Date Account Credited
Post.
Ref.
Accounts
Payable
Cr.
Field
Supplies
Dr.
Office
Supplies
Dr.
Other
Accounts
Dr.
Post.
Ref. Amount
2014
Oct. 16 Petro Services Inc. √ 32,600 Field Equipment 17 32,600
17 Midland Supply Co. √ 9,780 9,780
20 A-One Office Supply Co. √ 1,320 1,320
28 A-One Office Supply Co. √ 3,670 3,670
30 Petro Services Inc. √ 30,800 25,300 Office Equipment 18 5,500
30 Midland Supply Co. √ 12,450 12,450
31 90,620 47,530 4,990 38,100
(21) (14) (15)
1. and 2.
JOURNAL Page 1
Date Description
Post.
Ref. Debit Credit
2014
Oct. 31 Prepaid Rent 16 15,000
Field Equipment 17 15,000
1., 2., and 3.
CASH PAYMENTS JOURNAL Page 1
Date
Ck.
No. Account Debited
Post.
Ref.
Other
Accounts
Dr.
Accounts
Payable
Dr.
Cash
Cr.
2014
Oct. 16 1 Rent Expense 71 7,000 7,000
18 2 Field Supplies 14 4,570 4,570
Office Supplies 15 650 650
24 3 Petro Services Inc. √ 32,600 32,600
26 4 Midland Supply Co. √ 9,780 9,780
28 5 Land 19 240,000 240,000
30 6 A-One Office Supply Co. √ 1,320 1,320
31 7 Salary Expense 61 32,000 32,000
31 284,220 43,700 327,920
(√) (21) (11)
1.
Name:
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
A-One Office Supply Co.
Date Item
Post.
Ref. Debit Credit Balance
2014
Oct. 20 P1 1,320 1,320
28 P1 3,670 4,990
30 CP1 1,320 3,670
Name: Midland Supply Co.
Date Item
Post.
Ref. Debit Credit Balance
2014
Oct. 17 P1 9,780 9,780
26 CP1 9,780 —
30 P1 12,450 12,450
Name: Petro Services Inc.
Date Item
Post.
Ref. Debit Credit Balance
2014
Oct. 16 P1 32,600 32,600
24 CP1 32,600 —
30 P1 30,800 30,800
2. and 3.
Account: Cash
GENERAL LEDGER
Account No. 11
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 31 CP1 327,920 327,920
Account: Field Supplies Account No. 14
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 18 CP1 4,570 4,570
31 P1 47,530 52,100
Account: Office Supplies Account No. 15
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 18 CP1 650 650
31 P1 4,990 5,640
Account: Prepaid Rent Account No. 16
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 31 J1 15,000 15,000
Account: Field Equipment Account No. 17
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 16 P1 32,600 32,600
31 J1 15,000 17,600
Account: Office Equipment Account No. 18
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 31 P1 5,500 5,500
Account: Land Account No. 19
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 28 CP1 240,000 240,000
Account: Accounts Payable Account No. 21
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 31 P1 90,620 90,620
31 CP1 43,700 46,920
Account: Salary Expense Account No. 61
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 31 CP1 32,000 32,000
Account: Rent Expense Account No. 71
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Oct. 16 CP1 7,000 7,000
4.
WEST TEXAS EXPLORATION CO.
Accounts Payable Creditor Balances
October 31, 2014
A-One Office Supply Co. $ 3,670
Midland Supply Co. 12,450
Petro Services Inc. 30,800
Total accounts payable* $46,920
* 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 individual piece of equipment with respect to cost, location, useful life,
and other data. Such information would be useful for safeguarding equipment
and determining depreciation.