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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 Sterling Engineering Services during the period June 2–30, 2016, are as follows:

June 2. Issued Invoice No. 717 to Yee Co., $1,430.

3. Received cash from Auto-Flex Co. for the balance owed on its account.

7. Issued Invoice No. 718 to Cooper Development Co., $670.

10. Issued Invoice No. 719 to Ridge Communities, $2,840.

Post revenue and collections to the accounts receivable subsidiary ledger.

14. Received cash from Cooper Development Co. for the balance owed on June 1.

16. Issued Invoice No. 720 to Cooper Development Co., $400.

Post revenue and collections to the accounts receivable subsidiary ledger.

18. Received cash from Yee Co. for the balance due on invoice of June 2.

20. Received cash from Cooper Development Co. for invoice of June 7.

23. Issued Invoice No. 721 to Auto-Flex Co., $860.

30. Recorded cash fees earned, $4,520.

30. Received office equipment of $1,800 in partial settlement of balance due on the Ridge Communities account.

Post revenue and collections to the accounts receivable subsidiary ledger.

Instructions

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

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

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

Auto-Flex Co. $1,670
Cooper Development Co. 980
Ridge Communities
Yee Co.

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 (P) 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 June. 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 the post the individual entries and total to the general ledger. Insert account balances after the last posting.

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

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

1. and 5.

To determine

General Ledger

The 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.

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 to 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 the account. In the revenue journal, all revenue transactions are recorded only when the business performed service to the customer on the account (credit).

Cash receipts journal

Cash receipts journal refers to the journal that is used to record all transaction which involves the cash receipts. For example, the business received cash from the 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 ($)
             
June 1
  • Balance
✓       18,340  
  30   CR36 9,270   27,610  

Table (1)

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

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
             
June 1
  • Balance
✓       2,650  
  30   J1   1,800 850  
  30   R40 6,200   7,050  
  30   CR36   4,750 2,300  

Table (2)

Account:    Office equipment                                                   Account no. 18
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 for an automated system omit to post a controlling accounting system.

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