1.
Prepare the given transactions in the cash receipts journal and verify the total column and rule the column and use the general journal to record the sales returns and allowances.
1.
Explanation of Solution
Cash Receipts Journal: It is a special book where only cash receipts transactions that are received from customers, merchandise sales and service made in cash and collection of accounts receivable are recorded.
The following are the some examples of transactions that would be recorded in the Other Accounts credit column of the cash receipts journal:
- • Cash received as interest on notes payable
- • Interest revenue received from debtors
- • Cash receipts from bank loans
- • Cash receipts for capital investments
Prepare the given transactions in the cash receipts journal and verify the total column and rule the column and use the general journal to record the sales returns and allowances:
Table (1)
Verification of total debit and credit column:
Working note 1:
Calculate the amount of cash on dated 7th December:
Working note 2:
Calculate the amount of bank credit card expense on dated 7th December:
Working note 3:
Calculate the amount of cash on dated 7th December:
Working note 4:
Calculate the amount of cash on dated 14th December:
Working note 5:
Calculate the amount of bank credit card expense on dated 14th December:
Working note 6:
Calculate the amount of cash on dated 14th December:
Working note 7:
Calculate the amount of cash on dated 21st December:
Use the general journal to record the sales returns and allowances:
General Journal: It is a book where all the monetary transactions are recorded in the form of journal entries on the date of their occurrence in a chronological order.
Transaction on December 11:
General Journal | ||||||
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | ||
20-- | ||||||
December | 11 | Sales Returns and Allowances | 401.1 | 60.00 | ||
Sales Tax Payable | 231 | 3.60 | ||||
Accounts Receivable, MA | 122/✓ | 63.60 | ||||
(To record the merchandise returned) |
Table (2)
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, MA 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 1:
Compute the sales tax payable amount.
Working note 2:
Compute the accounts receivable amount.
Transaction on December 21:
General Journal | ||||||
Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | ||
20-- | ||||||
December | 21 | Sales Returns and Allowances | 401.1 | 22.00 | ||
Sales Tax Payable | 231 | 1.32 | ||||
Accounts Receivable, A Manufacturing | 122/✓ | 23.32 | ||||
(To record the 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, A Manufacturing 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 1:
Compute the sales tax payable amount.
Working note 2:
Compute the accounts receivable amount;
2.
Post the prepared journal to the general ledger, and to the accounts receivable ledger.
2.
Explanation of Solution
Posting transactions: The process of transferring the journalized transactions into the accounts of the ledger is known as posting the transactions.
Post the prepared journals to the general ledger:
ACCOUNT Cash ACCOUNT NO. 101 | |||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20-- | |||||||
December | 1 | Balance | ✓ | 9,862.00 | |||
31 | CR10 | 17,292.36 | 27,154.36 |
Table (4)
ACCOUNT Accounts Receivable ACCOUNT NO. 122 | |||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20-- | |||||||
December | 1 | Balance | ✓ | 9,352.00 | |||
11 | J8 | 63.60 | 9,288.40 | ||||
21 | J8 | 23.32 | 9,265.08 | ||||
31 | CR10 | 5,732.00 | 3,533.08 |
Table (5)
ACCOUNT Sales Tax Payable ACCOUNT NO. 231 | |||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20-- | |||||||
December | 11 | J8 | 3.60 | 3.60 | |||
21 | J8 | 1.32 | 4.92 | ||||
31 | CR10 | 657.60 | 652.68 |
Table (6)
ACCOUNT Sales ACCOUNT NO. 401 | |||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20-- | |||||||
December | 31 | CR10 | 10,960.00 | 10,960.00 |
Table (7)
ACCOUNT Sales Returns and Allowances ACCOUNT NO. 401.1 | |||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20-- | |||||||
December | 11 | J8 | 60.00 | 60.00 | |||
21 | J8 | 22.00 | 82.00 |
Table (8)
ACCOUNT Bank Credit Card Expense ACCOUNT NO. 513 | |||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20-- | |||||||
December | 31 | CR10 | 57.24 | 57.24 |
Table (9)
Post the journals to the accounts receivable ledger.
NAME MA | ||||||
ADDRESS 233 W 11th Avenue, D, Mi 59500-1154 | ||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance ($) | |
20-- | ||||||
December | 1 | Balance | ✓ | 2,480.00 | ||
1 | CR10 | 1,360.00 | 1,120.00 | |||
11 | J8 | 63.60 | 1,056.40 |
Table (10)
NAME A Manufacturing | ||||||
ADDRESS 284 W 88 Street, D, Mi 59522-1168 | ||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance ($) | |
20-- | ||||||
December | 1 | Balance | ✓ | 982.00 | ||
2 | CR10 | 382.00 | 600.00 | |||
21 | J8 | 23.32 | 576.68 |
Table (11)
NAME JG | ||||||
ADDRESS P.O. Box 864, D, Mi 59552-0864 | ||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance ($) | |
20-- | ||||||
December | 1 | Balance | ✓ | 880.00 | ||
8 | CR10 | 880.00 | 0 |
Table (12)
NAME TW | ||||||
ADDRESS 100 N w S Street., D, Mi 59210-1337 | ||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance ($) | |
20-- | ||||||
December | 1 | Balance | ✓ | 1,810.00 | ||
20 | CR10 | 1,110.00 | 700.00 |
Table (13)
NAME RC | ||||||
ADDRESS 11312 Fourteenth Avenue South, D, Mi 59221-1142 | ||||||
Date | Item | Post. Ref. | Debit ($) | Credit ($) | Balance ($) | |
20-- | ||||||
December | 1 | Balance | ✓ | 3,200.00 | ||
24 | CR10 | 2,000.00 | 1,200.00 |
Table (14)
Want to see more full solutions like this?
Chapter 12 Solutions
CENGAGENOWV2 FOR HEINTZ/PARRY'S COLLEGE
- American Signs allows customers to pay with their Jones credit card and cash. Jones charges American Signs a 3.5% service fee for each credit sale using its card. Credit sales for the month of June total $328,430, where 40% of those sales were made using the Jones credit card. Based on this information, what will be the total in Credit Card Expense at the end of June?arrow_forwardAccounts Receivable Balance XYZ Corp sells widgets to consumers for $20 each. Its beginning accounts receivable balance was $24,975, and it sold 12,376 widgets throughout the year. The total cash collections for the year amounted to $217,750. Required: Calculate the ending accounts receivable balance.arrow_forwardCurrent Attempt in Progress Manuel Company had cash sales of $86,800 (including taxes) for the month of June. Sales are subject to 8.50% sales tax. Prepare the entry to record the sales. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Creditarrow_forward
- the cash receipts journal. Total and rule the sales journal. Ignore sales taxes. Use the journal format provided below in entering the following transactions it Oct. 1 Collected from Ali Go P12,000 payment on account. 8 Cash sales for the week, P60,000. 10 Gino Pavone made a P12,000 payment on account. 15 Collected from Melissa Perez P71,400 payment on account. 17 Cash sales for the week, P52,000. 19 Owner invested additional cash into the business, P45,000. 25 Collected from Sue Lee P17,200 on account. 30 A bank loan is approved and release to the company, P70,000. ANSWER SHEET CASH RECEIPTS JOURNAL Pagel Debit Credits Date O.R. 2020 Description Accounts Other No. Cash Sales Receivable Accounts 1. 1.arrow_forwardMay 13: Paid the invoice of April 14. Date Description Debit Credit May 13 May 17: Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240. Date Description Debit Credit May 17 June 2: Received a 60-day, 8% note for $180,000 on the Ryanair account. Date Description Debit Credit June 2arrow_forwardAnswer all Questions. Ch.5-1arrow_forward
- Show the entry to be made by Cooley Grocery Store for the March 25 cash register reading showing sales of $10,000 and sales taxes of $600. Mar. 25 Cash Analyze, Journalize and Report Current Liabilities 10,600 Sales Revenue Sales Taxes Payable (To record daily sales and sales taxes) When the taxes are remitted to the state taxing agency the Sales Taxes Payable account is decreased (debited) and Cash is decreased (credited). Describe unearned entry when the prepayment is received (before revenue is earned) Describe entry when the revenue is earned. 10,000 600arrow_forwardMay 13: Paid the invoice of April 14. Date Description Debit Credit May 13 May 17: Received cash from daily cash sales for $21,200. The amount indicated by the cash register was $21,240. Date Description Debit Credit May 17 June 2: Received a 60-day, 8% note for $180,000 on the Ryanair account. Date Description Debit Credit June 2 Aug. 1: Received amount owed on June 2 note, plus interest at the maturity date. Date Description Debit Credit Aug. 1arrow_forwardOn March 4, Micro Sales makes $4,850 in sales on bank credit cards that charge a 2.5% service charge. Funds are deposited net of credit card expenses into Micro Sales' bank account at the end of the business day. Journalize the sales and recognition of expense as a single journal entry.arrow_forward
- The College Store accepts MasterCard for payments of purchases made by students. The credit card drafts are deposited directly in a bank account. MasterCard charges a 1.55% collection fee. Credit card drafts totalling $10,000 are deposited during August. What increases when recording the sales and deposits? accounts receivable by $9,854 service charge expense by $155 sales by $ 9,854 cash by $10,000arrow_forwardBrown Distributors has the following transactions related to notes receivable during the last two months of the year. Dec. 1 Loaned $18,000 cash to K. Perry on a 1-year, 5% note. 16 Sold goods to L. Bryan, receiving a $4,800, 60-day, 7% note. 31 Accrued interest revenue on all notes receivable. D Journalize the transactions for Brown Distributors. Omit cost of goods sold entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Creditarrow_forwardcan I get some help with this questionarrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubPfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning