Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 2

Purchases and cash payments journals; accounts payable subsidiary and general ledgers
West Texas Exploration Co. was established on October 15 to provide oil-drilling services. West Texas uses field equipment (rigs and pipe) and field supplies (drill bits and lubricants) in its operations. Transactions related to purchases and cash payments during the remainder of October are as follows:


Post the journals to the accounts payable subsidiary ledger.

Post the journals to the accounts payable subsidiary ledger.

Post the journals to the accounts payable subsidiary ledger.
Instructions
1. Journalize the transactions for October. Use a purchases journal and a cash payments journal similar to those illustrated in this chapter and a two-column general journal. Set debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the following partial chart of accounts:

At the points indicated in the narrative of transactions, post to the following subsidiary accounts in the accounts payable ledger:

2. Post the individual entries (Other Accounts columns of the purchases journal and the cash payments journal; both columns of the general journal) to the appropriate general ledger accounts.
3. Total each of the columns of the purchases journal and the cash payments journal, and post the appropriate totals to the general ledger. (Because the problem does not include transactions related to cash receipts, the cash account in the ledger will have a credit balance.)
4. Sum the balances of the accounts payable creditor balances.
5. Why might West Texas consider using a subsidiary ledger for the field equipment