Accounting Practice: Journal Entries and Ledger Balancing
Accounting Exercise No. 4
Use the following data to develop the journal, ledgers, and tax balance.
Transaction Data
- 01-Dec: Sebastian Errate initiates activities by providing $2,600,000 in cash, a computer assessed for $560,000, furniture and chairs for $650,000, and a van for $3,890,000.
- 02-Dec: Open a current account in the bank and make an initial deposit of $2,000,000.
- 03-Dec: Buy a used refrigerator for $300,000 (including VAT) and a desk for $600,000 (plus VAT), paying by check No. 1.
- 05-Dec: Buy merchandise on credit for $1,750,000 for 90 days net.
- 07-Dec: Pay electricity and water bills in cash for $150,000.
- 08-Dec: Sell goods for cash to Henry Pinera (Fact 0001) for $1,450,000 gross; the total amount is deposited the next day at the bank.
- 09-Dec: Purchase of merchandise by check, 30 days, to Bachelt Errate No. 1 (Fact 4560), net amount $460,000.
- 16-Dec: Sell goods for $4,000,000 gross, 60% cash and 40% credit.
- 18-Dec: Pay wages with a check for $150,000.
- 31-Dec: The cost of goods sold amounted to $1,900,000 and accounted for VAT payable.
Journal Entries (April 2008)
| Date | Account | Debit | Credit |
|---|---|---|---|
| 01 | Cash / Computer / Furniture / Vehicles / Capital | $2,600,000 / $560,000 / $650,000 / $3,890,000 | $7,700,000 |
| 02 | Bank / Cash | $2,000,000 | $2,000,000 |
| 03 | Machinery / Furniture / VAT Credit / Bank | $252,101 / $600,000 / $161,899 | $1,014,000 |
| 05 | Merchandise / VAT Credit / Suppliers | $1,750,000 / $332,500 | $2,082,500 |
| 07 | Overhead / Cash | $150,000 | $150,000 |
| 08 | Cash / VAT Debit / Sales | $1,450,000 | $231,513 / $1,218,487 |
| 09 | Bank / Cash | $1,450,000 | $1,450,000 |
| 09 | Merchandise / VAT Credit / Bank | $460,000 / $87,400 | $547,400 |
| 16 | Cash / Customer / VAT Debit / Sales | $2,400,000 / $1,600,000 | $638,655 / $3,361,345 |
| 18 | Wages / Bank | $150,000 | $150,000 |
| 31 | Cost of Sales / Merchandise | $1,900,000 | $1,900,000 |
| 31 | VAT Debit / VAT Credit | $581,799 | $581,799 |