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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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Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers

Transactions related to revenue and cash receipts completed by Albany Architects Co. during the period November 2–30, 2016, are as follows:

Nov. 2. Issued Invoice No. 793 to Ohr Co., $5,650.

5. Received cash from Mendez Co. for the balance owed on its account.

6. Issued Invoice No. 794 to Rahal Co., $2,450.

13. Issued Invoice No. 795 to Shilo Co., $3,980.

Post revenue and collections to the accounts receivable subsidiary ledger.

15. Received cash from Rahal Co. for the balance owed on November 1.

16. Issued Invoice No. 796 to Rahal Co., $6,500.

Post revenue and collections to the accounts receivable subsidiary ledger.

19. Received cash from Ohr Co. for the balance due on invoice of November 2.

20. Received cash from Rahal Co. for balance due on invoice of November 6.

22. Issued Invoice No. 797 to Mendez Co., $8,040.

25. Received $3,000 note receivable in partial settlement of the balance due on the Shilo Co. account.

30. Recorded cash fees earned, $13,270.

Post revenue and collections to the accounts receivable subsidiary ledger.

Instructions

1. Insert the following balances in the general ledger as of November 1:

Chapter 5, Problem 5.2APR, Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers Transactions , example  1

2. Insert the following balances in the accounts receivable subsidiary ledger as of November 1:

Chapter 5, Problem 5.2APR, Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers Transactions , example  2

3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees. Insert a check mark (✓) in the Post. Ref. column when recording cash fees.

4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for November. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer’s account before recording a cash receipt.

5. Total each of the columns of the special journals, and post the individual entries and totals to the general ledger. Insert account balances after the last posting.

6. Determine that the sum of the customer balances agrees with the accounts receivable controlling account in the general ledger.

7. Why would an automated system omit postings to a controlling account as performed in step 5 for Accounts Receivable?

1. and 5.

To determine

General Ledger

General ledger refers to the ledger that records all the transactions of the business related to the company’s assets, liabilities, owners’ equities, revenues and expenses. Each subsidiary ledger is represented in the general ledger by summarizing the account.

Accounts receivable subsidiary ledger:

Account receivable subsidiary ledger is the ledger which is used to post the customer transaction in one particular ledger account. It helps the business for locate the error in the customer ledger balance. After all transactions are posted, the balances in the accounts receivable subsidiary ledger should be totaled, and compare with the balance in the general ledger of accounts receivable. If both the balance does not agree, the error has been located and corrected.

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).

To prepare: The general ledger for given accounts.

Explanation

Prepare the general ledger for given accounts as follows:

Account:         Cash                                                              Account no. 11
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2016            
NOV 1
  • Balance
✓       11,350  
  30   CR36 37,600   48,950  

Table (1)

Account:    Accounts Receivable                                             Account no. 12
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2016            
NOV 1
  • Balance
✓       16,230  
  25   J1   3,000 13,230  
  30   R40 26,620   39,850  
  30   CR36   24,330 15,520  

Table (2)

Account:    Notes Receivable                                                   Account no. 14
Date Item Post...

2. and 4.

To determine

To prepare: The accounts receivable subsidiary ledger for given customers.

3.

To determine

To Prepare: A single column revenue journal and cash receipt journal.

6.

To determine

To prepare: The accounts receivable customers balance, and verify that the total agrees with the ending balance of accounts receivable control account.

7.

To determine

To discuss: The reason of an automated system omit to posting a controlling accounting system.

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