Chen Company uses a two-column sales journal and a six-column cash receipts journal. For each of the following transactions, indicate (a) the journal, and (b) the columns in the journal that should be used in recording each transaction. (Enter answers in alphabetical order for the "Dr." column.) (b) Columns in the Journal Transactions (a) Journal Dr. Cr. Description 1. Received cash from sale of merchandise. Cash PaymentsSalesCash ReceiptsPurchasesGeneral Sales RevenueInventoryOther AccountsAccounts PayableAccounts ReceivableSales DiscountsSales ExpenseCost of Goods SoldCash InventoryOther AccountsCashCost of Goods SoldSales ExpenseSales DiscountsAccounts PayableSales RevenueAccounts Receivable (To record cash received) Accounts ReceivableCashOther AccountsAccounts PayableCost of Goods SoldInventorySales DiscountsSales RevenueSales Expense Sales RevenueCost of Goods SoldOther AccountsAccounts ReceivableSales DiscountsSales ExpenseCashInventoryAccounts Payable (To record sale of merchandise) 2. Sold merchandise on credit. GeneralPurchasesCash PaymentsSalesCash Receipts Sales DiscountsSales ExpenseInventoryCashSales RevenueCost of Goods SoldOther AccountsAccounts ReceivableAccounts Payable Sales DiscountsOther AccountsAccounts PayableCashInventoryAccounts ReceivableSales ExpenseCost of Goods SoldSales Revenue (To record sale of merchandise on credit) Sales DiscountsSales ExpenseCashAccounts ReceivableInventoryOther AccountsAccounts PayableSales RevenueCost of Goods Sold InventoryAccounts ReceivableSales ExpenseSales RevenueSales DiscountsOther AccountsAccounts PayableCashCost of Goods Sold (To record sale of merchandise) 3. Received a check from customer in payment of an invoice less a 2% discount. Cash ReceiptsPurchasesGeneralCash PaymentsSales Cost of Goods SoldOther AccountsAccounts ReceivableSales RevenueInventoryCashSales ExpenseSales DiscountsAccounts Payable Sales ExpenseCashOther AccountsSales RevenueAccounts ReceivableInventorySales DiscountsAccounts PayableCost of Goods Sold Sales DiscountsAccounts PayableSales ExpenseAccounts ReceivableOther AccountsCost of Goods SoldInventoryCashSales Revenue Sales ExpenseInventoryCost of Goods SoldOther AccountsAccounts ReceivableSales DiscountsAccounts PayableSales RevenueCash 4. Owner made an investment in the business. PurchasesGeneralCash ReceiptsSalesCash Payments Other AccountsSales DiscountsCashAccounts ReceivableSales ExpenseAccounts PayableInventoryCost of Goods SoldSales Revenue Sales DiscountsOther AccountsSales ExpenseAccounts ReceivableCost of Goods SoldSales RevenueCashAccounts PayableInventory
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Chen Company uses a two-column sales journal and a six-column cash receipts journal.
For each of the following transactions, indicate (a) the journal, and (b) the columns in the journal that should be used in recording each transaction. (Enter answers in alphabetical order for the "Dr." column.)
| (b) Columns in the Journal |
||||||||||
| Transactions | (a) Journal |
Dr. | Cr. | Description | ||||||
| 1. | Received cash from sale of merchandise. | Cash PaymentsSalesCash ReceiptsPurchasesGeneral | Sales RevenueInventoryOther AccountsAccounts PayableAccounts ReceivableSales DiscountsSales ExpenseCost of Goods SoldCash | InventoryOther AccountsCashCost of Goods SoldSales ExpenseSales DiscountsAccounts PayableSales RevenueAccounts Receivable | (To record cash received) | |||||
| Accounts ReceivableCashOther AccountsAccounts PayableCost of Goods SoldInventorySales DiscountsSales RevenueSales Expense | Sales RevenueCost of Goods SoldOther AccountsAccounts ReceivableSales DiscountsSales ExpenseCashInventoryAccounts Payable | (To record sale of merchandise) | ||||||||
| 2. | Sold merchandise on credit. | GeneralPurchasesCash PaymentsSalesCash Receipts | Sales DiscountsSales ExpenseInventoryCashSales RevenueCost of Goods SoldOther AccountsAccounts ReceivableAccounts Payable | Sales DiscountsOther AccountsAccounts PayableCashInventoryAccounts ReceivableSales ExpenseCost of Goods SoldSales Revenue | (To record sale of merchandise on credit) | |||||
| Sales DiscountsSales ExpenseCashAccounts ReceivableInventoryOther AccountsAccounts PayableSales RevenueCost of Goods Sold | InventoryAccounts ReceivableSales ExpenseSales RevenueSales DiscountsOther AccountsAccounts PayableCashCost of Goods Sold | (To record sale of merchandise) | ||||||||
| 3. | Received a check from customer in payment of an invoice less a 2% discount. | Cash ReceiptsPurchasesGeneralCash PaymentsSales | Cost of Goods SoldOther AccountsAccounts ReceivableSales RevenueInventoryCashSales ExpenseSales DiscountsAccounts Payable | Sales ExpenseCashOther AccountsSales RevenueAccounts ReceivableInventorySales DiscountsAccounts PayableCost of Goods Sold | ||||||
| Sales DiscountsAccounts PayableSales ExpenseAccounts ReceivableOther AccountsCost of Goods SoldInventoryCashSales Revenue | Sales ExpenseInventoryCost of Goods SoldOther AccountsAccounts ReceivableSales DiscountsAccounts PayableSales RevenueCash | |||||||||
| 4. | Owner made an investment in the business. | PurchasesGeneralCash ReceiptsSalesCash Payments | Other AccountsSales DiscountsCashAccounts ReceivableSales ExpenseAccounts PayableInventoryCost of Goods SoldSales Revenue | Sales DiscountsOther AccountsSales ExpenseAccounts ReceivableCost of Goods SoldSales RevenueCashAccounts PayableInventory |
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