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Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124
Textbook Problem

The revenue journal for Sapling Consulting Inc. follows. The accounts receivable controlling account has a July 1, 20Y2, balance of $625 consisting of an amount due from Aladdin Co. There were no collections during July.

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  1. a. Prepare a T account for the accounts receivable customer accounts.
  2. b. Post the transactions from the revenue journal to the customer accounts and determine their ending balances.
  3. c. Prepare T accounts for the accounts receivable and fees earned accounts. Post control totals to the two accounts and determine the ending balances.
  4. d. Prepare a schedule of the customer account balances to verify the equality of the sum of the customer account balances and the accounts receivable controlling account balance.
  5. e. How might a computerized system differ from a revenue journal in recording revenue transactions?

(a) and (b)

To determine

Prepare T accounts for the accounts receivable customer accounts and determine their ending balances.

Explanation

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 the customer on account (credit).

T-account: T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability, stockholder’s equity, revenue, and expenditure items are recorded.

This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:

  1. (a) The title of the account
  2. (b) The left or debit side
  3. (c) The right or credit side

T accounts for the accounts receivable customer accounts are as follows:

A Co...

(c)

To determine

Prepare T accounts for accounts receivable and fees earned accounts and to determine the ending balances.

(d)

To determine

Prepare a schedule of customer account balances.

(e)

To determine

Explain the difference between the computerized system and revenue journal in recording the revenue transactions.

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