Presented below and on page 348 are the purchases and cash payments journals for Richmond Co. for its first month of operations.

                

               

In addition, the following transactions have not been journalized for July. The cost of all merchandise sold was 65% of the sales price.

July   1  The founder, N. Richmond, invests $80,000 in cash.
          6  Sell merchandise on account to Abi Co. $6,200 terms 1/10, n/30.
          7  Make cash sales totaling $6,000.
          8  Sell merchandise on account to S. Beauty $3,600, terms 1/10, n/30.
        10  Sell merchandise on account to W. Pitts $4,900, terms 1/10, n/30.
        13  Receive payment in full from S. Beauty.
        16  Receive payment in full from W. Pitts.
        20  Receive payment in full from Abi Co.
        21  Sell merchandise on account to H. Prince $5,000, terms 1/10, n/30.
        29  Returned damaged goods to N. Fielding and received cash refund of $420.

Instructions
(a) Open the following accounts in the general ledger.

101  Cash
112  Accounts Receivable
120  Inventory
127  Supplies
131  Prepaid Rent
201  Accounts Payable
301  Owner’s Capital
306  Owner’s Drawings
401  Sales Revenue
414  Sales Discounts
505  Cost of Goods Sold
631  Supplies Expense
729  Rent Expense

  (b) Journalize the transactions that have not been journalized in the sales journal, the cash receipts journal (see Illustration 7-9), and the general journal.
  (c) Post to the accounts receivable and accounts payable subsidiary ledgers. Follow the sequence of transactions as shown in the problem.
  (d) Post the individual entries and totals to the general ledger.
  (e) Prepare a trial balance at July 31, 2012.
  (f) Determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
  (g) The following adjustments at the end of July are necessary.

(1) A count of supplies indicates that $140 is still on hand.
(2) Recognize rent expense for July, $500. Prepare the necessary entries in the general journal. Post the entries to the general ledger.

  (h) Prepare an adjusted trial balance at July 31, 2012.