BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

SALES AND CASH RECEIPTS TRANSACTIONS Sourk Distributors is a retail business. The following sales, returns, and cash receipts occurred during March 20--. There is an 8% sales tax. Beginning general ledger account balances were Cash, $9,586; and Accounts Receivable, $1,016. Beginning customer account balances included Whitaker Group, $1,016.

images

REQUIRED

  1. 1. Record the transactions starting on page 7 of a general journal.
  2. 2. Post from the journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.

1.

To determine

Journalize the transactions related to sales and cash receipt transactions.

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the transactions related to sales and cash receipt transactions.

 Transaction on March 1:

Page: 7
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
March1Accounts Receivable, Corporation D122/✓1,836 
   Sales401 1,700
   Sales Tax Payable231 136
  (Record credit sale)   

Table (1)

Description:

  • Accounts Receivable, Corporation D is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Working Note 1:

Compute sales tax payable amount.

Sales tax payable = Sales×Sales tax percentage= $1,700×8%= $136

Working Note 2:

Compute accounts receivable amount (Refer to Working Note 1 for value of sales tax payable).

Accounts receivable, Corporation D} = Sales+Sales tax payable= $1,700+$136= $1,836

Transaction on March 3:

Page: 7
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
March3Accounts Receivable, Incorporation K122/✓2,365.20 
   Sales401 2,190.00
   Sales Tax Payable231 175.20
  (Record credit sale)   

Table (2)

Description:

  • Accounts Receivable, Incorporation K is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Working Note 3:

Compute sales tax payable amount.

Sales tax payable = Sales×Sales tax percentage= $2,190×8%= $175.20

Working Note 4:

Compute accounts receivable amount (Refer to Working Note 3 for value of sales tax payable).

Accounts receivable, Incorporation K} = Sales+Sales tax payable= $2,190.00+$175.20= $2,365.20                

Transaction on March 5:

Page: 7
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
March5Sales Returns and Allowances401.140.00 
  Sales Tax Payable2313.20 
   Accounts Receivable, Corporation D122/✓ 43.20
  (Record merchandise returned)   

Table (3)

Description:

  • Sales Returns and Allowances is a contra-revenue account, and contra-revenue accounts decrease the equity value, and a decrease in equity is debited.
  • Sales Tax Payable is a liability account. Since the payable decreased due to returns, the liability decreased, and a decrease in liability is debited.
  • Accounts Receivable, Corporation D is an asset account. Since inventory is returned, amount to be received has decreased, asset account is decreased, and a decrease in asset is credited.

Working Note 5:

Compute sales tax payable amount.

Sales tax payable = Sales returns×Sales tax percentage= $40×8%= $3.20

Working Note 6:

Compute accounts receivable amount (Refer to Working Note 5 for value of sales tax payable).

Accounts receivable, Corporation D} = Sales returns+Sales tax payable= $40.00+$3.20= $43.20

Transaction on March 7:

Page: 7
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
March 7Cash1013,391.20 
   Sales401 3,140.00
   Sales Tax Payable231 251.20
  (Record cash sales)   

Table (4)

Description:

  • Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Working Note 7:

Compute sales tax payable amount.

Sales tax payable = Sales×Sales tax percentage= $3,140×8%= $251.20

Working Note 8:

Compute cash amount (Refer to Working Note 7 for value of sales tax payable).

Cash = Sales+Sales tax payable= $3,140.00+$251.20= $3,391.20

Transaction on March 10:

Page: 7
DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
March 10Cash1011,792.80 
   Accounts Receivable, Corporation D122/✓ 1,792.80
  (Record cash received for sales on account)   

Table (5)

Description:

  • Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • Accounts Receivable, Corporation D is an asset account. Since amount to be received has decreased, asset account decreased, and a decrease in asset is credited.

Working Note 9:

Compute accounts receivable value (Refer to Working Notes 2 and 6 for both the values).

Accounts receivable, Corporation D}  = (Accounts receivable debit value–Accounts receivable credit value)= $1,836.00–$43.20= $1,792.80

Transaction on March 11:

Page: 7
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
March11Accounts Receivable, Bakery E122/✓1,328.40 
   Sales401 1,230.00
   Sales Tax Payable231 98.40
  (Record credit sale)   

Table (6)

Description:

  • Accounts Receivable, Bakery E is an asset account. Since sales is made on account, the receivables increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Working Note 10:

Compute sales tax payable amount.

Sales tax payable = Sales×Sales tax percentage= $1,230×8%= $98.40

Working Note 11:

Compute accounts receivable amount (Refer to Working Note 10 for value of sales tax payable).

Accounts receivable, Bakery E} = Sales+Sales tax payable= $1,230.00+$98.40= $1,320.40

Transaction on March 13:

Page: 7
DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
March 13Cash1012,365.20 
   Accounts Receivable, Incorporation K122/✓ 2,365.20
  (Record cash received for sales on account)   

Table (7)

Note: Refer to Working Note 4 for value and computation of the accounts receivable value.

Description:

  • Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • Accounts Receivable, Incorporation K is an asset account. Since amount to be received has decreased, asset account decreased, and a decrease in asset is credited.

Transaction on March 14:

Page: 7
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
March 14Cash1014,428 
   Sales401 4,100
   Sales Tax Payable231 328
  (Record cash sales)   

Table (8)

Description:

  • Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • Sales is a revenue account. Since revenues and gains increase equity, equity value is increased, and an increase in equity is credited.
  • Sales Tax Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited

2.

To determine

Post the journalized entries into the accounts of the general ledger, and the customer accounts in accounts receivable ledger.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is management?

Foundations of Business (MindTap Course List)

SECURITY MARKET LINE You plan to invest in the Kish Hedge Fund, which has total capital of 500 million invested...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)