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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Revenue journal; accounts receivable subsidiary and general ledgers

Sage Learning Centers was established on July 20, 2016, to provide educational services. The services provided during the remainder of the month are as follows:

July 21. Issued Invoice No. 1 to J. Dunlop for $115 on account.

22. Issued Invoice No. 2 to K. Tisdale for $350 on account.

24. Issued Invoice No. 3 to T. Quinn for $85 on account.

25. Provided educational services, $300, to K. Tisdale in exchange for educational supplies.

27. Issued Invoice No. 4 to F. Mintz for $225 on account.

30. Issued Invoice No. 5 to D. Chase for $170 on account.

30. Issued Invoice No. 6 to K. Tisdale for $120 on account.

31. Issued Invoice No. 7 to T. Quinn for $105 on account.

Instructions

1. Journalize the transactions for July, 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: D. Chase; J. Dunlop; F. Mintz; T. Quinn; K. Tisdale.

2. Post the revenue journal and the general journal to the following accounts in the general ledger, inserting the account balances only after the last postings:

12 Accounts Receivable

13 Supplies

41 Fees Earned

3. a. What is the sum of the balances of the customer accounts in the subsidiary ledger at July 31?

b. What is the balance of the accounts receivable controlling account at July 31?

4. Assume Sage Learning Centers began using a computerized accounting system to record the sales transactions on August 1. What are some of the benefits of the computerized system over the manual system?

(1) and (2)

To determine

General Journal

The journal where the debit and credit entries of the accounting transactions are recorded in a chronological order are referred to as general journal.

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

This is a ledger in which individual balance of every account is recorded. This is an expansion of the general ledger. The subsidiary ledger records the individual balances and hence there is no need to record the individual balances in the general 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.

To record: The transactions in General journal, Revenue journal, Accounts Receivable subsidiary ledger, and General ledger.

Explanation

The following table shows the revenue journal of SL Centers.

Revenue Journal
Date Invoice No. Accounts Debited Post Ref.

Accounts Receivable Dr.

Fees Earned Cr.

2016
July 21 1 J D 115
22 2 K T 350
24 3 T Q 85
27 4 F M 225
30 5 D C 170
30 6 K T 120
31 7 T Q 105
 31 1170
(12) (41)

Table (1)

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

The following table shows the general journal of SL Centers.

General Journal

Date Description Post Ref. Debit Credit
2016
July 25 Supplies 300
     Fees Earned 300

Table (2)

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.

Accounts Receivable Subsidiary Ledger

Name:  D C

Date Items Post Ref. Debit Credit Balance
2016
July 30 R1 170 170

Table (3)

Name:  F M

Date Items Post Ref. Debit Credit Balance
2016
July 27 R1 225 225

Table (4)

Name:  J D

Date Items Post Ref. Debit Credit Balance
2016
July 21 R1 115 115

Table (5)

Name:  K T

Date Items Post Ref...

(3)a.

To determine

The sum of the balances of the customer accounts in the subsidiary ledger at 31st July.

b.

To determine

 The balance of the accounts receivable controlling account.

4.

To determine

To explain: The benefits of the computerized system over the manual system.

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