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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Preston Company sells candy wholesale, primarily to vending machine operators. Terms of sales on account are 2/10, n/30, FOB shipping point. The following transactions involving cash receipts and sales of merchandise took place in May of this year:

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Required

  1. 1. Journalize the transactions for May in the cash receipts journal and the sales journal. Assume the periodic inventory method is used.
  2. 2. If you are using Working Papers, total and rule the journals and prove the equality of the debit and credit totals.

1.

To determine

Prepare journal entry in cash receipts journal and sales journal.

Explanation

Cash receipts journal: Cash receipts journal contains all transactions in which cash is received, or increased. When a cash receipts journal is used, all transactions in which cash is debited must be recorded in it. It may be used for a service as well as a merchandising business.

Sales journal is a special accounting journal and it is also a prime entry book used to keep track of the sales. The sales journal is used to record the credit sales.

Entries in cash receipts journal and sales journal

Table (1)

Table (2)

Working note a:

Calculate the sales discount for Mr...

2.

To determine

Show the equality of debit and credit totals.

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