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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

The following transactions were completed by Nelson’s Boutique, a retailer, during July. Terms of sales on account are 2/10, n/30, FOB shipping point.

July 3    Received cash from J. Smith in payment of June 29 invoice of $350, less cash discount.

6    Issued Ck. No. 1718, $742.50, to Designer, Inc., for invoice. no. 2256, recorded previously for $750, less cash discount of $7.50.

July 9    Sold merchandise in the amount of $250 on a credit card. Sales tax on this sale is 6%. The credit card fee the bank deducted for this transaction is $5.

10    Issued Ck. No. 1719, $764.40, to Smart Style, Inc., for invoice no. 1825, recorded previously on account for $780. A trade discount of 25% was applied at the time of purchase, and Smart Style, Inc.’s credit terms are 2/10, n/30.

12    Received $180 cash in payment of June 20 invoice from R. Matthews. No cash discount applied.

18    Received $1,575 cash in payment of a $1,500 note receivable and interest of $75.

21    Voided Ck. No. 1720 due to error.

25    Received and paid utility bill, $152; Ck. No. 1721, payable to City Utilities Company.

31    Paid wages recorded previously for the month, $2,586, Ck. No. 1722.

Required

  1. 1. Journalize the transactions for July in the cash receipts journal, the general journal (for the transaction on July 9th), or the cash payments journal as appropriate. Assume the periodic inventory method is used.
  2. 2. If you are using Working Papers, total and rule the journals. Prove the equality of debit and credit totals.

1.

To determine

Journalize the transactions using the types of journals under periodic method.

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.

Cash payments journal is the special journal entry used to record all the transactions that cash goes out or decreases in the cash account. In the cash payment journal the transactions which are credit the cash must be recorded. This cash payment journal may be used for a service or merchandising business.

General journal is a record of financial transaction. The transactions are recorded in the journal prior to posting them to the accounts in the general ledger.

Periodic inventory system: The method or system of recording the transactions related to inventory occasionally or periodically are referred to as periodic inventory system.

Record the transactions of cash receipts journal.

    CASH RECEIPTS JOURNAL    PAGE________

2.

To determine

Show the cash receipts and payments equality of debit and credit totals.

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