Principles of Accounting 2 Chapter 1: Accounting Information System

1. "The only place where success comes before workis in dictionary"Vidal Sassoon

2. Results

3. Principles Of Accounting (2) Chapter 1 Accounting Information System Mohamed Mahmoud mmahmoud@eelu.edu.eg Tel: (+202) 33318449

4. Objectives : Summary of Accounting Cycle Describe the nature of a subsidiary ledger. Uses of special journals in journalizing. 3.1 Sales Journal3.2 Purchases Journal3.3 Cash Receipts Journal 3.4 Cash payment Journal

5. 1. Summary of the Accounting Cycle 1. Analyze business transactions 2. Journalize the transactions 9. Prepare a post-closing trial balance 8. Journalize and post closing entries 3. Post to ledger accounts 7. Prepare financial statements 4. Prepare a trial balance 6. Prepare an adjusted trial balance 5. Journalize and post adjusting entries

6. 2. Subsidiary Ledger Two common subsidiary ledgers are: Accounts receivable (customers’) Accounts payable (creditors’)

7. 3. Special Journal

8. 3. Special Journal (continued) 3.1 Sales Journal

9. 3. Special Journal (continued) 3.2 Purchases Journal

10. 3. Special Journal (continued) 3.3 Cash Receipts Journal

11. 3. Special Journal (continued) 3.4 Cash Payment Journal

12. Exercises

13. Exercise 1 On December 1, the accounts receivable control account balance in the general ledger of the Titus Company was $9,000. The accounts receivable subsidiary ledger contained the following detailed customer balances: Abel $1,500, Dole $2,100, Fabb $2,600, and Hall $2,800. The following information is available from the company's special journals for the month of December: Cash Receipts Journal: Cash received from Fabb $1,900, from Abel $1,600, from Reese $1,700, and from Dole $1,800. Sales Journal: Sales to Reese $4,300, to Fabb $1,700, to Abel $2,300, and to Hall $2,400. Additionally, Fabb returned defective merchandise for credit for $900. Abel returned defective merchandise for $600 which he had purchased for cash.

14. Exercise 1 (continued) Requirements:- Using T-accounts for Accounts Receivable Control and the detail customer accounts, post the activity for the month of December. Reconcile the accounts receivable control account.

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17. Exercise 2 Goren Company uses a single-column purchases journal, a cash payments journal, and a general journal to record transactions with its suppliers and others. Record the following transactions in the appropriate journals. Transactions:- Oct. 5 Purchased merchandise on account for $20,000 from Hendry Company. Terms: 2/10, n/30; FOB shipping point. Oct. 6 Paid $7,200 to Federated Insurance Company for a two-year fire insurance policy. Oct. 8 Purchased store supplies on account for $700 from Flint Supply Company. Terms: 2/10, n/30. Oct. 11 Purchased merchandise on account for $14,000 from Adler Corporation. Terms: 2/10, n/30; FOB shipping point.

18. Exercise 2 (continued) Oct. 13 Granted a reduction of $3,000 to Adler Corporation for merchandise purchased on October 11 and returned because of damage Oct. 15 Paid Hendry Company for merchandise purchased on October 5, less discount. Oct. 16 Purchased merchandise for $8,000 cash from Clifford Company. Oct. 21 Paid Adler Corporation for merchandise purchased on October 11, less merchandise returned on October 13, less discount. Oct. 25 Purchased merchandise on account for $22,000 from Eaton Company. Terms: 2/10, n/30; FOB shipping point. Oct. 31 Purchased office equipment for $30,000 cash from Pate Office Supply Company.

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