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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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SOLUTION TO EXERCISE F-1

Jan. 1 The account started the period with a beginning balance of $17,000. This balance was the result of unpaid purchases from the prior period.
Jan. 3 A posting of $22,000 from page 17 of the purchases journal (P17) indicates that purchases of $22,000 were made on credit.
Jan. 8 A posting of $13,000 from page 18 of the purchases journal (P18) indicates that purchases of $13,000 were made on credit.
Jan. 9 A posting of $17,000 from page 25 of the cash payments journal (CP25) indicates that a cash payment of $17,000 was made to Kitchen Plastics on account.
Jan. 11 A debit posting of $5,000 from page 5 of the general journal (G5) probably stems from a purchase return or allowance.
Jan. 17 A posting of $30,000 from page 28 of the cash payments journal (CP28) indicates that a cash payment of $30,000 was made to the vendor on account.

TIP: Think about the normal balance of an account payable—credit balance. Think about common reasons for increases (credits) and for decreases (debits). Identify the source of each posting by the abbreviation in the Ref. column. The transactions being posted should then be fairly evident.

TIP: In addition to having subsidiary ledgers for accounts receivable and accounts payable, it is not uncommon for a business to also use control accounts and subsidiary ledgers for other accounts such as inventory (when a perpetual system is used), equipment, and selling and administrative expenses.

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