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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Identify postings from special journals

Pinnacle Consulting Company makes most of its sales and purchases on credit. It uses the five journals described in this chapter (revenue, cash receipts, purchases, cash payments, and general). Identify the journal most likely used in recording the postings for selected transactions indicated by letter in the T accounts, as follows:

Chapter 5, Problem 5.20EX, Identify postings from special journals Pinnacle Consulting Company makes most of its sales and

To determine

Special journal:

Special journal refers to the journal that is used to record a single kind of transaction which occurs frequently. It is one of the methods in manual system that is used to processing the financial transactions more efficiently.

Revenue journal:

Revenue journal refers to the journal that is used to record the fees earned on account. In the revenue journal, all revenue transactions are recorded only when the business performed service to customer on account (credit).

Cash receipts journal:

Cash receipts journal refers to the journal that is used to record the all transaction which is involve the cash receipts. For example, the business received cash from customer (service performed in cash).

Purchase journal:

Purchase journal refers to the journal that is used to record all purchases on account. In the purchase journal, all purchase transactions are recorded only when the business purchased the goods on account. For example, the business purchased cleaning supplies on account.

Cash payments journal:

Cash payments journal refers to the journal that is used to record the all transaction which is involve the cash payments. For example, the business paid cash to employees (salary paid to employees).

General journal:

General journal is the journal that is used to record all adjusting and closing entries at the end of the particular accounting period. In simple, the transactions which are not recorded in the special journal that transactions are recorded in the general journal.

To identify: The types of journal from the given T-account of P Consulting Company.

Explanation

(a) Cash receipt journal:

The business records all cash receipts in the cash receipt journal. In this case, the business received cash from customer, because $10,940 is debited in the cash account, and credited in the account receivable account. Hence, (a) is cash receipt journal.

(b) Cash payment journal:

The business records all cash payments in the cash payment journal. In this case, the business paid cash to creditors, because $6,500 is credited in the cash account, and debited in the accounts payable account. Hence (b) is cash payment journal.

 (c) Revenue journal:

In the revenue journal, the business records all revenue transaction only when the service performed on account. In this case, the P Consulting Company performed service on account, because $11,790 is debited in the accounts receivable account, and credited in the fees earned account...

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