American Meter Company closes its books and prepares financial statements at the

Question

American Meter Company closes its books and prepares financial statements at the end of each month. American uses the perpetual inventory system. The company completed the following transactions during August, 2017:

Aug      1          Issued check no. 682 for August rent of $1,000

2. Issued check no. 683 to pay salaries of $1,240, which includes salary payable of $930 from July 31 (ignore payroll deductions).

2. Issued invoice no. 503 for sale on account to R. T. Loeb, $600. American’s cost of this merchandise was $190.

3. Purchased inventory on credit terms of 1/15, n/60 from Grant, Inc., $1,400

4. Received net amount of cash on account from Fullam Company, $2,156, within the discount period. The invoice, dated July 26 with terms of 2/10, net 30, was in the amount of $2,200.

4. Sold inventory for cash, $330 (cost, $104)

5. Received from Park-Hee, Inc. merchandise that had been sold earlier for $550 (cost, $174)

5. Issued check no. 684 to purchase supplies for cash, $780

6. Collected interest revenue of $1,100

7. Issued invoice no. 504 for sale on account to K. D. Skipper, $2,400 (cost, $759)

8. Issued check no. 685 to pay Federal Company $2,600 of the amount owed at July 31. This payment occurred after the discount period.

11. Issued check no. 686 to pay Grant, Inc. the net amount owed from August 3

12. Received cash from R. T. Loeb in full settlement of her account receivable from August 2

16. Issued check no. 687 to pay salary expense of $1,240

19. Received half the July 31 amount receivable from K. D. Skipper—after the end of the discount period

19. Purchased inventory for cash $850, issuing check no. 688

22. Purchased furniture on credit terms of 3/15, n/60 from Beaver Corporation, $510

23. Sold inventory on account to Fullam Company, issuing invoice no. 505 for $9,966 (cost, $3,152)

25. Issued check no. 689 to pay utilities, $432

26. Purchased supplies on credit terms 2/10, n/30 from Federal Company, $180

30. Returned damaged inventory to company from whom American made the cash purchase on August 19, receiving cash of $850

30. Granted a sales allowance of $175 to K. D. Skipper

31. Purchased inventory on credit terms 1/10, n/30 from Suncrest Supply, $8,330

31. Issued check no. 690 to Lester Mednick, owner of the business, for personal withdrawal, $1,700

The chart of accounts with account balances as of July 31, 2017 are as follows:

General Ledger

101      Cash                                        $ 8,650 401      Sales Revenue

            102      Accounts Receivable              19,560           402      Sales Discounts

            104      Interest Receivable                                         403      Sales Returns & Allowances

            105      Merchandise Inventory           41,800           410      Interest Revenue

            109      Supplies                                      2,150           501      Cost of Goods Sold

            117      Prepaid Insurance                      2,200           510      Salary Expense

            140      Note Receivable, Long-Term 11,000           513      Rent Expense

            160      Furniture                                  37,270           514      Depreciation Expense

            161      Accumulated Depreciation     10,550           516      Insurance Expense

            201      Accounts Payable                   13,410           517      Utilities Expense

            204      Salary Payable                              930           519      Supplies Expense

            207      Interest Payable                             320           523      Interest Expense

            220      Note Payable, Long-Term      42,000

            301      Lester Mednick, Capital          55,420

302 Lester Mednick, Withdrawals

400 Income Summary

Accounts Receivable Subsidiary Ledger:

Fullam Company,                   $3,200

R T. Loeb,                                         0

Park-Hee Inc.,                            7,590

K.D. Skipper,                              8,770

Accounts Payable Subsidiary Ledger:

                        Beaver Corporation                 $       0

                        Federal Company                   13,410

                        Grant, Inc,                                          0

Suncrest Supply                                0

Post daily to the general ledger. Also post to the accounts receivable subsidiary ledger and the accounts payable subsidiary ledger when appropriate. On August 31 post to the general ledger.

Explanation / Answer

Cash                     101 Accounts Receivable        102 Interest Receivable          104 Be. Bal 8650 Aug.1 1000 Beg. Bal 19560 Aug.31 2200 Aug.4 2156 Aug.2 930 Aug.31 9966 Aug.31 630 Aug.4 330 Aug.2 310 Aug.31 630 Aug.31 550 Aug.6 1100 Aug.5 780 Aug.31 2400 Aug.31 4510 Aug.12 617 Aug.8 2600 Aug.19 4335 Aug.11 1386 32556 7890 Aug.30 850 Aug.16 1240 End bal 24666 Aug.19 850 Aug.25 432 Aug.31 1700 18038 11228 End bal 6810 Inventory                     105 Supplies                          109 Prepaid Insurance               117 Beg bal 41800 Aug.2 190 Beg. Bal 2150 Beg. Bal 2200 Aug.3 1400 Aug.4 104 Aug.5 780 2200 Aug.5 174 Aug.7 759 Aug.26 180 End bal 2200 Aug.19 850 Aug.11 14 3110 0 Aug.31 8330 Aug.23 3152 End bal 3110 Aug.30 850 52554 5069 End bal 47485 Notes Receivable Long Term               140 Furniture                     160 Accumulated Depreciation             161 Beg. Bal 11000 Beg. Bal 37270 Beg. Bal 10550 11000 Aug.22 510 10550 End bal 11000 37780 End bal 10550 End bal 37780 Accounts Payable                 201 Salary Payable                 204 Interest Payable                 207 Aug.31 2600 Beg bal. 13410 Aug.2 930 Beg. Bal 930 Beg. Bal 320 Aug.31 1400 Aug.31 180 930 930 320 Aug.31 1400 End bal 0 End bal 320 Aug.31 8330 Aug.31 510 4000 23830 End bal 19830 Notes Payable Long Term              220 Laster Mednick Capital            301 Laster Mednick Withdrawl            302 Beg. Bal 42000 Beg. Bal 55420 Aug.31 1700 42000 55420 1700 End bal 42000 End bal 55420 End bal 1700 Sales revenue                    401 Sales Discounts                     402 Sales Retirn & Allowances       403 Aug.2 630 Aug.4 44 Aug.5 550 Aug.4 330 Aug.12 13 Aug.30 175 Aug.7 2400 Total 57 Total 725 Aug.23 9966 Total 13326 Interest Revenue                    410 Cost of Goods Sold                501 Salary Expenses                  510 Aug.6 1100 Aug.2 190 Aug.5 174 Aug.2 310 Total 1100 Aug.4 104 Aug.16 1240 Aug.7 759 Total 1550 Aug.23 3152 4205 174 End bal 4031 Rent Expenses                     513 Depreciation Expenses                      514 Insurance Expenses                      516 Aug.1 1000 Total 1000 Utilities Expenses                         517 Supplies Expenses               519 Interest Expenses                   523 Aug.25 432 Total 432 Accounts Receivable Subsidiary Ledger Fullam Company R T Loeb Park- Hee Inc Beg bal 3200 Aug.4 2200 Beg. Bal 0 Aug.12 630 Beg. Bal 7590 Aug.5 550 Aug.23 9966 Aug.2 630 7590 550 13166 2200 630 630 End bal 7040 End bal 10966 End bal 0 K D Skipper Beg bal 8770 Aug.19 4335 Aug.7 2400 Aug.30 175 11170 4510 End bal 6660 Accounts Payable Subsidiary Ledger Beaver Corp Federal Company Grant, Inc Beg. Bal 0 Aug.8 2600 Beg. Bal 13410 Aug.11 1400 Beg. Bal 0 Aug.22 510 Aug.26 180 Aug.3 1400 0 510 2600 13590 1400 1400 End bal 510 End bal 10990 End bal 0 Suncrest Supply Beg. Bal 0 Aug.31 8330 0 8330 End bal 8330

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