Happy Tails Inc. has a June 1 accounts payable balance of $600, which consists of $360 due Labradore Inc. and $240 due Meow Mart Inc

Happy Tails Inc. has a June 1 accounts payable balance of $600, which consists of $360 due Labradore Inc. and $240 due Meow Mart Inc. Transactions related to purchases and cash payments completed by Happy Tails Inc. during the month of June 2014 are as follows:

June 4. Purchased pet supplies from Best Friend Supplies Inc. on account, $255.
6. Issued Check No. 345 to Labradore Inc. in payment of account, $360.
13. Purchased pet supplies from Poodle Pals Inc., $710.
18. Issued Check No. 346 to Meow Mart Inc. in payment of account, $240.
19. Purchased office equipment from Office Helper Inc. on account, $2,670.
23. Issued Check No. 347 to Best Friend Supplies Inc. in payment of account from purchase made on June 4.
27. Purchased pet supplies from Meow Mart Inc. on account, $400.
30. Issued Check No. 348 to Jennings Inc. for cleaning expenses, $65.


a. Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those used in the text. Place a check mark () in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Happy Tails Inc. uses the following accounts:

Cash 11
Pet Supplies 14
Office Equipment 18
Accounts Payable 21
Cleaning Expense 54

b. Prepare a listing of accounts payable creditor balances on June 30, 2014. Verify that the total of the accounts payable creditor balances equals the balance of the accounts payable controlling account on June 30, 2014.

c. Why does Happy Tails Inc. use a subsidiary ledger for accounts payable?


Answer:

a.
PURCHASES JOURNAL Page 16
Date Account Credited
Post.
Ref.
Accounts
Payable
Cr.
Pet
Supplies
Dr.
Other
Accounts
Dr.
Post.
Ref. Amount
2014
June 4 Best Friend Supplies Inc. √ 255 255
13 Poodle Pals Inc. √ 710 710
19 Office Helper Inc. √ 2,670 Office Equipment 18 2,670
27 Meow Mart Inc. √ 400 400
30 4,035 1,365 2,670
(21) (14)
CASH PAYMENTS JOURNAL Page 22
Date
Ck.
No. Account Debited
Post.
Ref.
Other
Accounts
Dr.Q
Accounts
Payable
Dr.
Cash
Cr.
2014
June 6 345 Labradore Inc. √ 360 360
18 346 Meow Mart Inc. √ 240 240
23 347 Best Friend Supplies Inc. √ 255 255
30 348 Cleaning Expense 54 65 65
30 65 855 920
(21) (11)



b.
HAPPY TAILS INC.
Accounts Payable Creditor Balances
June 30, 2014
Meow Mart Inc. $ 400
Poodle Pals Inc. 710
Office Helper Inc. 2,670
Total creditor (supplier) accounts $3,780
The total of the creditor accounts on June 30, 2014, $3,780, equals the
balance of the accounts payable controlling account, shown as follows:
Accounts Payable
June 30 855 June 1 Bal.
30
Bal.
600
4,035
3,780
q



c. Happy Tails Inc. uses a subsidiary ledger for accounts payable to track its credit purchases and payments to the individual supplier. This is needed so that it knows how much it owes to each individual supplier. Without the subsidiary ledger, it would be difqficult for it to accurately pay suppliers for the amount owed in a timely manner.