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Recording Accounting Transactions for City Company

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2. Below are some typical transactions incurred by City Company. For each transaction, indicate whether it would normally be recorded in a cash Receipts journal (CR); cash payments journal (CP); sales journal (S); single-column purchases journal (P); or general journal (G). Please put your answer in the space provided next to each transaction:
a. Payment to creditors on account
b. Return of merchandise sold on credit
c. Collection on account from customers
d. Sale of land for cash
e. Sale of merchandise on account
f. Sale of merchandise for cash
g. Received credit for merchandise purchased on credit
h. Sales discount taken on goods sold
i. Payment of employee wages
j. Income summary closed to owner's capital
k. Depreciation on building
l. Purchase of office supplies for cash
m. Purchase of merchandise on account

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a. Payment to creditors on account - CP
b. Return of merchandise sold on credit - S
c. Collection on account from ...

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Problem #1

MixRecording Studios purchased $7,800 in electronic components from TechCom. MixRecording Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note?

A. $130
B. $7,800
C. $7,930
D. $8,050
E. $8,130
Problem # 2
Flora Accounting Services completed these transactions in February:
(a) Purchased office supplies on account, $300.
(b) Completed work for a client on credit, $500.
(c) Paid cash for the office supplies purchased in (a).
(d) Completed work for a client and received $800 cash.
(e) Received $500 cash for the work described in (b).
(f) Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.
Problem #3
. Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

13. Williams Company began business on May 1. They use the perpetual inventory method. The following transactions involving purchases and cash disbursements occurred during the first week of May.
(a.) Use the purchases journal and the cash disbursements journal to record these transactions.
(b.) Prepare a schedule of accounts payable. There were no accounts payable on May 1.
Problem # 4
At December 31 of the current year, a company reported the following:
Total sales for the current year: $780,000 includes $160,000 in cash sales.
Accounts receivable balance at Dec. 31, current year: $190,000.
Bad debts written off during the current year: $6,800.
Balance of Allowance for Doubtful Accounts at January 1, current year: $8,300.
Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal:
(a) 1.5% of credit sales.
(b) 5% of accounts receivable.

Problem # 5
On June 1, 2007, Martin Company signed a $25,000, 120-day, 6% note payable to cover a past due account payable.
(a) What is the total amount of interest to be paid on this note?
(b) Prepare Martin Company's general journal entry to record the issuance of the note payable.
(c) Prepare Martin Company's general journal entry to record the payment of the note on September 29, 2007.

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