Guardian Security Services was established on January 15 to provide security services.The services provided during the remainder of the month are as follows:Jan. 18. Issued Invoice No. 1 to Murphy Co. for $490 on account.20. Issued Invoice No. 2 to Qwik-Mart Co. for $340 on account.24. Issued Invoice No. 3 to Hopkins Co. for $750 on account.27. Issued Invoice No. 4 to Carson Co. for $680 on account.28. Issued Invoice No. 5 to Amber Waves Co. for $120 on account.28. Provided security services, $100, to Qwik-Mart Co. in exchange for supplies.30. Issued Invoice No. 6 to Qwik-Mart Co. for $200 on account.31. Issued Invoice No. 7 to Hopkins Co. for $295 on account.Instructions1. Journalize the transactions for January, using a single-column revenue journal and a two-column general journal. Post to the following customer accounts in the accounts receivable ledger and insert the balance immediately after recording each entry: Amber Waves Co.; Carson Co.; Hopkins Co.; Murphy Co.; Qwik-Mart Co.2. Post the revenue journal to the following accounts in the general ledger, inserting the account balances only after the last postings:12 Accounts Receivable14 Supplies41 Fees Earned3. a. What is the sum of the balances of the customer accounts in the subsidiary ledger at January 31?b. What is the balance of the accounts receivable controlling account at January 31?4. Assume Guardian Security Services began using a computerized accounting system to record the sales transactions on February 1. What are some of the benefits of the computerized system over the manual system?

Question
Asked Dec 9, 2019
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Guardian Security Services was established on January 15 to provide security services.
The services provided during the remainder of the month are as follows:
Jan. 18. Issued Invoice No. 1 to Murphy Co. for $490 on account.
20. Issued Invoice No. 2 to Qwik-Mart Co. for $340 on account.
24. Issued Invoice No. 3 to Hopkins Co. for $750 on account.
27. Issued Invoice No. 4 to Carson Co. for $680 on account.
28. Issued Invoice No. 5 to Amber Waves Co. for $120 on account.
28. Provided security services, $100, to Qwik-Mart Co. in exchange for supplies.
30. Issued Invoice No. 6 to Qwik-Mart Co. for $200 on account.
31. Issued Invoice No. 7 to Hopkins Co. for $295 on account.

Instructions

1. Journalize the transactions for January, using a single-column revenue journal and a two-column general journal. Post to the following customer accounts in the accounts receivable ledger and insert the balance immediately after recording each entry: Amber Waves Co.; Carson Co.; Hopkins Co.; Murphy Co.; Qwik-Mart Co.
2. Post the revenue journal to the following accounts in the general ledger, inserting the account balances only after the last postings:
12 Accounts Receivable
14 Supplies
41 Fees Earned
3. a. What is the sum of the balances of the customer accounts in the subsidiary ledger at January 31?
b. What is the balance of the accounts receivable controlling account at January 31?
4. Assume Guardian Security Services began using a computerized accounting system to record the sales transactions on February 1. What are some of the benefits of the computerized system over the manual system?

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Expert Answer

Step 1

General Journal

 

It is a chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount. It has two columns i.e. Debit column and Credit column.

 

Special Journal

 

Special journal records a single kind of transactions that occurs frequently. For example: Revenue Journal is a special journal which records all revenue earned on account.

 

General ledger

 

It is the primary ledger, which contains all balance sheet and income statement accounts. For example: Cash Account, Equipment Accounts, and Rent Accounts etc.

 

Subsidiary ledger

 

A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called subsidiary ledger. For example: Accounts Receivable subsidiary ledger or customer ledger.

 

Controlling Account

 

Each subsidiary ledger is represented in the general ledger by a summarizing account, called a controlling account. For example: Accounts Receivable Subsidiary ledger is represented in Accounts Receivable ledger.

Step 2

Record the transactions in General journal, Revenue journal, Accounts Receivable subsidiary ledger, and General ledger.

 

The following table shows the revenue journal of SL Centers.

The above transactions were transacted on account. Hence, they were posted in revenue journal.

Supplies are assets for the business; it increases the assets of the business. So debit supplies. Fees earned are component of owners’ equity and it increases it. So credit fees earned.

The following table shows the general journal of G S Services.

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Name: A W CO. Revenue Journal Post Date Items Debit Credit Balance Ref. Accounts Receivable Dr. Post Invoice Accounts Date No. Debited Ref Fees Earned Cr. Jan 28 R1 170 120 M Co. Jan. 18 490 QM Co. Table (3) 20 340 НСо. 24 3 750 Name: C CO. C Co. 27 680 Post A W Co. QM Co. 28 120 Date Items Debit Credit Balance Ref. 30 200 Jan 27 R1 680 680 НСо. 31 295 2.875 (12) (41) Table (4) 31 Name: M CO. Post Table (1) Balance Date Items Debit Credit Ref. General Journal 490 Jan 18 R1 490 Post Ref. Debit Date Description 25 Supplies Credit Table (5) Name: H Co Post Ref. Debit Jan 100 Fees Earned 100 Date Items Credit Balance Jan 24 750 750 Table (2) 31 295 1,045 Table (6)

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Step 3

The above transactions were transacted on account. Hence they are posted in the account receivable subsidiary of A W Co., C Co., M Co., H Co. and Q M Co.

The general ledger records the summary of the subsidiary ledger accounts. So 2,875 from revenue journal are recorded in the general ledger.

The general ledger records the...

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Name: Q M Co. Post Ref. Debit Date Items Credit Balance Jan 20 340 340 30 200 540 Table (7) General Ledger Account: Account Receivable Balance Post Credit Debit Credit Debit Date Items Ref. Jan 31 R1 2,875 2,875 Table (8) Account: Supplies Balance Items Post Ref. Debit Date Credit Debit Credit 100 Jan 28 J1 100 Account: Fees Earned Balance Credit Debit Items Post Ref. Date Credit Debit Jan 28 J1 100 100 2,875 31 R1 2,875 Table (10)

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