ACC10008 Lecture Notes - Lecture 6: Subledger, General Ledger, Accounts Payable
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Narrative andInstructions | |||||||
Rockford Corporation is awholesale plumbing supply distributor. The corporation wasorganized | |||||||
in 1981, under the laws of theState of Illinois, with an authorized capitalization of 10,000shares | |||||||
of no-par common stock with astated value of $18 per share. The common stock is sold overthe | |||||||
the counter in the local area.You have been hired as of Thursday, December 25, 2014, to replacethe | |||||||
controller, who has resigned.As controller, you are responsible for the corporation'saccounting | |||||||
recrods, preparation of thefinancial statements, safeguarding the corporate assets, andproviding | |||||||
management with financialinformation to set prices and to monitor and controloperations. | |||||||
Rockford Corporation closesits books annually on December 31 but prepares financialstatements | |||||||
quarterly. Adjusting entriesare posted to the general ledger only at year-end; at the end ofthe | |||||||
first, second, and thirdquarter the adjustments are entered only on a work sheet, not inthe general | |||||||
ledger. Therefore, theadjusting entries to be recorded on December 31 are annualadjustments that | |||||||
you must journalize and thepost to the general ledger accounts before preparing thefinancial | |||||||
statements. | |||||||
Rockford Corporation maintainsa perpetual inventory system and takes a physical count eachyear | |||||||
to adjust the inventorycarrying amount. Purchases are recorded at the gross amount(discounts | |||||||
taken are recognized at thedate of payment) of the supplier's invoice, and the terms varywith | |||||||
each supplier. Sales onaccount are subject to terms of 1/10, n/30. Discounts are taken andgranted | |||||||
only when the terms are met.The cost of all inventory sold in December was 65% of the salesprice. | |||||||
The corporation uses thefollowing journals and ledgers: | |||||||
Journals | |||||||
1. A sales journal (S) - torecord sales of merchandise on account. | |||||||
2. A purchase journal (P)- torecord purchases of merchandise on account. | |||||||
3. A cash receipts journal(CR) - to record all cash receipts. | |||||||
4. A cash disbursementsjournal (CD) - to record all cash payments. | |||||||
5. A general journal (J) - torecord all transacitons that cannot be recorded in the otherjournals. | |||||||
Ledgers | |||||||
1. A general ledger | |||||||
2. An accounts receivablesubsidiary ledger. | |||||||
3. An accounts payablesubsidiary ledger. | |||||||
In recording salestransactions, each sale should be posted on the day of the saledirectly to the | |||||||
customer's account in thesubsidiary ledger, using the invoice number as the postingreference | |||||||
number in the subsidiaryaccount. Also, cash receipts from customers should be posted tothe | |||||||
subsidiary ledger on the daythey are received. The purchase order number should be used as | |||||||
the posting reference numberin the subsidiary ledger for purchases on account fromsuppliers. | |||||||
Purchases from suppliers andpayments to them should be posted daily. All other individualposting | |||||||
may be made weekly or at themonth-end. Account numbers should be used as posting reference | |||||||
numbers in the journals.Officers and office personnel are salaried employees and are paidmonthly | |||||||
on the last day of each month.The delivery truck drivers and warehouse employees are hourlywage | |||||||
employees and are paidbiweekly. Each biweekly pay period ends Friday. On the followingMonday | |||||||
you assistants provide youwith a payroll summary from which you prepare general journalentries | |||||||
to record the biweekly payrolland the employer's taxes on the payroll. The biweeklyemployees' | |||||||
paychecks are distributed onthe following day (Tuesday). | |||||||
The January 1, 2014, balancesappear in the general ledger accounts as well as the Noverber 30,2014, | |||||||
balances, for those accountswhose balances have changed. All transacitons affecting thenon- | |||||||
current accounts from January1, 2014, through Noverber 30, 2014, with explanations, appearin | |||||||
these accounts to facilitatethe preparation of the statement of cash flows. | |||||||
Subsidiary ledger accountbalances as of Noverber 30, 2014, are as follows: | |||||||
Accounts Receivable | Acct No | Amount | |||||
Boecker Builders | 117 | 62,920 | |||||
The Potts Company | 122 | 46,300 | |||||
Swanson BrothersContruction | 133 | 22,590 | |||||
A & B Hardware | 143 | - | |||||
Trudy's Plumbing | 155 | 15,500 | |||||
Coconino Contractors Inc | 160 | 28,700 | |||||
Rankin Plumbing Corp | 166 | 74,350 | |||||
Beverly's BuildingProducts | 175 | 13,600 | |||||
Bilder Construction Co | 180 | 48,900 | |||||
Iwanaga Plumbing andHeating | 190 | 5,800 | |||||
Total | 318,660 | ||||||
Accounts Payable | Acct No | Amount | |||||
Phoenix Plastics | 14 | 19,280 | |||||
Business Basics Inc | 16 | - | |||||
Edward's PlumbingSuppliers | 18 | 20,050 | |||||
DeKalb Transport | 20 | - | |||||
Oxenford Copperworks | 35 | 28,700 | |||||
Smith Pipe Co | 39 | 37,700 | |||||
Ron & Rod's PlumbingProducts | 44 | 14,850 | |||||
Khatan Steel Corp | 57 | 12,000 | |||||
Total | 132,580 | ||||||
The transactions throughDecember 23 have already been recorded by the former controller.You | |||||||
are to begin your work byentering the transaction of December 25 for the payment of cashto | |||||||
repurchase stock. | |||||||
Dec-14 | |||||||
S | M | T | W | T | F | S | |
1 | 2 | 3 | 4 | 5 | 6 | ||
7 | 8 | 9 | 10 | 11 | 12 | 13 | |
14 | 15 | 16 | 17 | 18 | 19 | 20 | |
21 | 22 | 23 | 24 | 25 | 26 | 27 | |
28 | 29 | 30 | 31 | ||||
December Transactions | |||||||
December | |||||||
1 | Received a check in the amount of $22,364 fromSwanson Brothers Contruction in full | ||||||
payment of invoice No. 1120 dated Novermber 26 inthe amount of $22,590. | |||||||
1 | Sold sewer and drainage pipe to Beverly's BuildingProducts on account, invoice No. 1201 | ||||||
for $28850. | |||||||
2 | Purchased copper tubing and fittings from Edward'sPlumbing Supplies Inc. on account, | ||||||
purchase order No. 315 for $32660, terms n/60. | |||||||
2 | Issued check No. 1580 for $28,700 to OxenfordCopperworks in settlement of the | ||||||
balance owned on purchase order No. 280. | |||||||
3 | A court notice indicates that Iwanaga Plumbing andHeating is bankrupt and payment | ||||||
of its account improbable; the president orders theaccount to be written off as a | |||||||
bad debt (invoice No. 780). | |||||||
3 | Sold bathroom fixtures to Bilder Construction Co onaccount, invoice No. 1202 for | ||||||
$47,700.00 | |||||||
4 | Received a check in the amount of $45,374 from thePotts Co in full payment of invoice | ||||||
No. 1128 dated November 27 for $46,300. | |||||||
4 | Sold plumbing supplies and plastic pipe to CoconinoContractors Inc. on account, invoice | ||||||
No. 1203 for $12,300. | |||||||
4 | Issued check No. 1581 for $720 to Standard Oil Co,in payment of gas, oil, and truck repair | ||||||
from Tierney's Standard Service. | |||||||
5 | Issued check No. 1582 for $11,880 to Khatan SteelCorp. in full settlement of purchase order | ||||||
No. 312 for $12,000. | |||||||
5 | Issued check No. 1583 for $12,054 to PhoenixPlastics in full payment of Phoenix's invoice | ||||||
dated November 28 in the amount of $12,300, forpurchase order No. 313, terms 2/10, n/30. | |||||||
5 | Received a check in the amount of $72,863 fromRankin Plumbing Corp. in full payment | ||||||
of invoice No. 1129 dated November 28 for$74,350. | |||||||
8 | Sold cast pipe to Trudy's Plumbing on account,invoice No. 1204 for $26,300. | ||||||
8 | Received a check in the amount of $28,700 fromCoconion Contractors, Inc. in full payment | ||||||
of invoice No. 1091 dated October 20. | |||||||
8 | Purchased bathroom fixtures from Phoenix Plastics,on account, purchcase order No. 316 | ||||||
for $56,800 terms 1/10, n/30. | |||||||
8 | Received a check in the amount of $29,600 fromBoecker Builders in partial payment of | ||||||
balance outstanding covering invoice Nos. 1050 and1071. | |||||||
9 | The payroll summary for the biweekly pay periodended Friday, December 5 contained the | ||||||
follwing information: | |||||||
Delivery and warehouse wages | 4,860 | ||||||
FICA taxes withheld | 410 | ||||||
Federal income taxes withheld | 900 | ||||||
State income taxes withheld | 190 | ||||||
Net pay | 3,360 | ||||||
Employer's payroll taxes: | |||||||
FICA tax | 410 | ||||||
Federal unemployment tax | - | ||||||
State unemployment tax | - | ||||||
Issued check No. 1584 for the amount of the net payand deposited it in the payroll bank | |||||||
account. Individual payroll checks were thenpreppared for distributions to the biweekly | |||||||
emplyees on Tuesday, December 9, 2014. | |||||||
9 | Issued check No. 1585 for $650 to Scooter Gordonfor lettering and sign painting on some | ||||||
delivery trucks. | |||||||
9 | Issued check No. 1586 for $6,980 to PhoenixPlastics, in payment of Phoenix's invoice dated | ||||||
November 12 in the amount of $6,980, our purchaseorder No. 299. | |||||||
10 | Issued check No. 1587 for $37,323 to Smith Pipe Coin full payment of their invoice dated | ||||||
November 28, terms 1/15, n/30, our purchase orderNo. 314. | |||||||
10 | Received a check in the amount of $15,500 fromTrudy's Plumbing in full settlement of | ||||||
invoice No. 1106 dated November 7. | |||||||
10 | Sold pipe, fixtures, and accessories to Trudy'sPlumbing on account, invoice No. 1205 for | ||||||
$26,850.00 | |||||||
11 | Sold pumbing supplies and copper tubing to ThePotts Company on account, invoice No. | ||||||
1206 for $31,450. | |||||||
11 | Received a check in the amount of $33,320 fromBoecker Builders in full payment of invoice | ||||||
No. 1071. | |||||||
11 | Cash sales to date totaled $10,232. | ||||||
12 | Received a check in the amount of $25,774 fromTrudy's Plumbing in payment of inoivce | ||||||
No. 1204. | |||||||
12 | Sold plumbing fixtures and supplies to BoeckerBuilders, on account, invoice No. 1207 | ||||||
for $24,730. | |||||||
15 | The Potts Co returned defective copper tubing thatis purchased on December 11. A credit | ||||||
memo in the amount of $5680 is issued relative toinvoice No. 1206. The copper tubing | |||||||
had a cost of $3692. | |||||||
15 | The defective copper tubing is returned to Edward'sPlumbing supplies, Inc. along with | ||||||
a debit memo in the amount of $3692 in reduction ofpurchase order No. 315. | |||||||
15 | Issud check No. 1588 for $599 in payment ofNovember telephone bill to Northern | ||||||
Illinois Communications. | |||||||
16 | Issued check No. 1589 in the amount of $12,360 inpayment of federal withholding taxes, | ||||||
$10,573, and FICA taxes, $1787, payable on Novembersalaries and wages; The check is | |||||||
remitted to the Winnebago County Bank as thedepository. | |||||||
16 | Issued check No. 1590 for $56,232 to PhoenixPlastics, Inc, in payment of purchase order | ||||||
No. 316. | |||||||
17 | The president informs you that Bilder ConstructionCo agrees to convert the $48900 | ||||||
overdue account receivable (invoice No. 1120) to a8% note due six months from today. | |||||||
17 | Purchased plumbing materials from Smith PipeCompany on account, purcase order No. | ||||||
317 for $,51,120 terms 1/15, n/60. | |||||||
17 | Sold drain tile, plastic pipe, and copper tubing toA & B Hardware on account, invoice No. | ||||||
1208 for $7,340. | |||||||
18 | Sold fixtures and materials to CoconinoContractors, Inc. on account, invoice No. 1209 for | ||||||
$44,530. | |||||||
18 | An invoice in the amount of $1,021 was receivedfrom S. White Trucking Company for | ||||||
freight on purchase order No. 317 and paid byissuing check No. 1591. | |||||||
18 | Received a check in the amount of $26,582 fromTrudy's Plumbing in payment of invoice | ||||||
No. 1205. | |||||||
19 | Purchased office supplies from the Pen & Pad,issuing check No. 1592 in the amount of | ||||||
$1,460. (Note: Debit asset account). | |||||||
19 | Purchased a new Faith computer for $5600 fromBusiness Basics, Inc, purchase order | ||||||
No, 318, paying $600 down through check No. 1593with the balance due in thirty days | |||||||
(n/30). The computer has an estmated life of 4years with a salvage value of $2200. | |||||||
22 | Purchased bathroom and kitchen fixtures fromPhoenix Plastics, on account, purchase | ||||||
order No. 319 for $48,330, terms 1/10, n/30. | |||||||
22 | Received a bill from DeKalb Transport for $2580 forfreight costs incurred during the last 30 | ||||||
days, terms n/30. | |||||||
23 | The payroll summary for the biweekly pay periodended Friday, December 19 contained the | ||||||
follwing information: | |||||||
Delivery and warehouse wages | 5,770 | ||||||
FICA taxes withheld | 415 | ||||||
Federal income taxes withheld | 1,067 | ||||||
State income taxes withheld | 225 | ||||||
Net pay | 4,063 | ||||||
Employer's payroll taxes: | |||||||
FICA tax | 415 | ||||||
Federal unemployment tax | - | ||||||
State unemployment tax | - | ||||||
Issued check No. 1594 for the amount of the net payand deposited it in the payroll bank | |||||||
account. Individual payroll checks were thenprepared for distributions to the biweekly | |||||||
emplyees on Tuesday, December 23. | |||||||
NOTE: Transactions up to this point have beenrecorded. At this point you became | |||||||
controller and are responsible for recordign allfurther transactions. | |||||||
25 | The board of directors voted to purchase 2,500shares of its own stock from stockholder | ||||||
Dionne Schivone at $76 per share and issued checkNo. 1595 in payment. Stock repurchases | |||||||
are recorded at cost. Rockford is purchasing theseshares because Ms. Schivone had been | |||||||
a valuable employee. | |||||||
26 | The baord of directors declared a $1.25 per sharecash dividend payable on January 14 to | ||||||
shareholders of record by the end of the day ofDecember 26. | |||||||
26 | The president informs you that Beverly's BuildingProducts agrees to convert the $13,600 | ||||||
overdue accounts receivable (invoice No. 1119)balance to a 10% note due six months from | |||||||
today. | |||||||
29 | A half-acre parcel of land adjacent to the buildingis acquired in exchange for 750 shares | ||||||
of unissued common stock. The land has a fair valueof $58,400 and will be used | |||||||
immediately as an outside storage lot and parkinglot. | |||||||
29 | An invoice in the amount of $1,860 is received fromWayne McManus, lawyer, for legal | ||||||
services involved in the acquisition of theadjacent parcel of land; check No. 1596 is issued. | |||||||
29 | Sold pipe and plumbing materials to BoeckerBuilders on account, invoice No. 1210 for | ||||||
$44,280 | |||||||
30 | Issued check No. 1597 in the amount of $3,500 tothe Northern Star for adverstisement run in | ||||||
the home building supplement of December 13. | |||||||
30 | Issued check No. 1598 in the amount of $830 toStandard Oil Co. in payment of gas, oil, | ||||||
and truck repairs from Standard Oil Co. (useFreight-out). | |||||||
30 | Purchased copper and cast iron pipe from OxenfordCopperworks on account, purchase | ||||||
order No. 320 for $55,240, terms 1/10, n/30. | |||||||
30 | Check No. 1599 for $9,400 is issued to the bondsinking fund trustee, Chicago Trust Co., | ||||||
for deposit in the sinking fund. (Use OtherAssets). | |||||||
30 | Sold plumbing supplies to Swanson BrothersConstruction on account, invoice No. 1211 | ||||||
for $24,150. | |||||||
31 | Received a check for $24,730 from Boecker Buildersin payment of invoice No. 1207. | ||||||
31 | Issued check No. 1600 for $50,609 to Smith PipeCompany in payment of purchase order | ||||||
No. 317. | |||||||
31 | The custodian of the petty cash fund submits thefollowing receipts for reimbursement | ||||||
and reports a cash-on-hand count of $8. | |||||||
Postage stampls used (supplies) | $38 | ||||||
United Parcel (freight-out) | 23 | ||||||
C.O.D postage (freight costs) | 51 | ||||||
Christmas office decorations (Misc exp) | 30 | ||||||
Check No. 1601 is issued and cashed to reimbursethe fund. | |||||||
31 | Sold an electric truck-lift to Leila Stierman Co.for $2600 cash. The original cost was | ||||||
$7900 with salvage value of $900, a life of 10years, and accumulated depreciation | |||||||
recorded through 12/31/13 is $4,550. Thestraight-line method is used. (Note: the | |||||||
company follows the practice of recording a halfyear's depreciation in the year of | |||||||
acquisition and a half year in the year ofdisposal.) First, bring the depreciation expense | |||||||
up to date in the general journal. Then journalizethe entire entry for the sale in the cash | |||||||
receipts journal. | |||||||
31 | Sold bathroom fixtures and plumbing supplies toTrudy's Plumbing on account, invoice | ||||||
No. 1212 for $56370. | |||||||
31 | Because for some time the petty cash fund has beensmaller than required for monthly | ||||||
expenditures, the fund is increased by $95 bycashing check No. 1602 and placing the | |||||||
money in the petty cash fund. | |||||||
31 | The payroll summary for the monthly paid employeesin submitted so that December | ||||||
checks can be distributed before the year-end; thedetails are as follows: | |||||||
Office and administrative salaries | $43,900 | ||||||
Federal income taxes withheld | 7,696 | ||||||
State income taxes withheld | 1,517 | ||||||
FICA taxes withheld | 3,120 | ||||||
Net pay | $31,567 | ||||||
Issued check No, 1603 for the amount of the net payand deposited it in the payroll bank | |||||||
account. Individual payroll checks were preparedfor distribution to all monthly employees | |||||||
by the end of the day. | |||||||
Employer's payroll taxes: | |||||||
FICA tax (all office and administrative) | $3,120 | ||||||
Federal unemployment tax | 0 | ||||||
State unemployment tax | 0 | ||||||
31 | Cash sale since December 12 total $42150. | ||||||
Instructions | |||||||
1 | Make the entries in the appropriate journal forDecember 25 through December 31. | ||||||
(adjusting entries are recorded in generaljournal) | |||||||
2 | Post any amounts to be posted as individual amountsfrom journals to the general ledger | ||||||
and update the receivable and payable subsidiaryledger accounts. | |||||||
(only a few entries are posted for Dec, e.g.,account receivable. Please post all other entries) | |||||||
3 | Foot and cross-foot the columnar journals andcomplete the month-end postings of all | ||||||
books of orginal entry. |
Now that you have reviewed information about Hi-Fi Way, you are ready to begin the first step in the accounting cycle, recording transactions. On this page of the practice set, you are asked to record transactions that occurred during the first week of June into the company's journals and post the appropriate entries to the ledger accounts. The following transactions occurred throughout the first week of June:
Week 1 | ||
Date | Transaction description | |
1 | Issued Check No. 570 for $8,400 to pay Realty Bites for two month's worth of rent in advance. | |
1 | Obtained a loan of $59,000 from ZNZ Bank at a simple interest rate of 6% per year. The first interest payment is due at the end of August 2017 and the principal of the loan is to be repaid on June 1, 2021. | |
3 | Made payment of $764 to Integer Energy for 3 months of electricity up to and including May 31, Check No. 571. | |
4 | Turbo Tech paid the full amount owing on their account. | |
4 | Paid sales staff wages of $13,224 for the week up to and including yesterday, Check No. 572. Note that $6,637 of this payment relates to the wages expense incurred during the last week of May. | |
5 | Paid the full amount owing to Big Telco, Check No. 573. | |
7 | Issued Check No. 574 to Office Supplies Warehouse for the purchase of $301 worth of office supplies. |
After completing this practice set page, you should know how to record basic transactions in the journals provided below and understand the posting process in the manual accounting system. Note that you will record the remaining June transactions in the following sections of this practice set.
Remember, one purpose of using special journals is to make the posting process more efficient by posting the total of most columns in the special journals after all of the transactions for the period have been recorded. However, some parts of a journal entry are still required to be posted on a daily basis. View the company's accounting policies and procedures for details of what is to be posted daily or monthly.
Instructions for week 1
1)Record all week 1 transactions in the relevant journals.
Note that special journals must be used where applicable. Any transaction that cannot be recorded in a special journal should be recorded in the general journal.
2)Post entries recorded in the journals to the appropriate ledger accounts according to the company's accounting policies and procedures.
Note that the relevant totals of the special journals will be posted to the general ledger accounts at the end of the month. You will enter this before you prepare the Bank Reconciliation Statement.
Remember to enter all answers to the nearest whole dollar. When calculating a discount, if a discount is not a whole number, round the discount to the nearest whole dollar. Then, to calculate the cash amount, subtract the discount from the original amount.
Additional instructions
Displaying selected accounting records:
To save space, not all accounting records (e.g. journals and ledgers) will be displayed on every page. However, on each page you can access all accounting records necessary to answer the questions on that page.
There are several tabs representing different views of the accounting records. The active tab by default is Show All, but you may also select to view just one particular accounting record by selecting the appropriate tab.
If you fill in any accounting records and change the view on the page by selecting a different tab, the information that you have entered will remain in that accounting record and be displayed whenever you can see that accounting record.
Before submitting your answers, we recommend that you click the Show All tab and check that all relevant accounting records have been completed. You are required to complete all relevant accounting records before pressing the Submit answers button. Once submitted, you will not be able to return to the page to re-enter or alter your answers.
Journals:
Each transaction recorded in a special journal must be entered in one line. In order to receive full points, you must not split up the relevant transaction into more than one line in the special journal.
For certain transactions in special journals, some accounting textbooks do not always require an account to be chosen under the column labeled Account. In this practice set you arerequired to select an account for each transaction in the special journals. Specifically, in all special journals, under the column labeled Account, you must select the correct account name for each transaction in order to receive full points. Note that for some transactions, this will mean that the account name selected will correspond to the heading of one of the columns in that special journal.
For each journal, in the Post Ref. column you will need to correctly type the account number of the account you are posting to. In particular, in special journals, some accounting textbooks do not always require a reference to be recorded in the Post Ref. column. In this practice set, in order to receive full points, every transaction entered in a special journal requires an entry in the Post Ref. column. Note that in the special journals, if the account name selected for a transaction corresponds to the heading of one of the columns in that special journal, the post ref is to be recorded as an X. This is because these transactions are not posted on a daily basis. In order to receive full points, you must record only the letter Xin the Post Ref. column for these transactions.
Note that in special journals, the Other Accounts column should not be used to record movements of inventory.
There may be entries in the general journal that require posting to both a control account and a subsidiary ledger. In these cases, after you have posted to both ledgers, you should enter the reference for both the general ledger account and the subsidiary ledger account in the Post Ref. column to indicate that you have posted to both accounts. For example, if the reference number for the control account is 110 and the reference number for the subsidiary ledger account is 110-1, you should type '110/110-1' into the Post Ref. column.
General journal entries do NOT require a description of the journal entries.
Ledgers:
When posting a transaction to a ledger account, under the Description column, please type the description of the transaction directly into the field. The exact wording does not matterfor grading purposes. For example, it does not matter in an electricity transaction if you type 'Paid for electricity' or 'Paid electricity bill'.
For each ledger, under the Ref. column, you need to select the correct journal from a list in the drop-down box provided in order to receive full points.
If the balance of a ledger account is zero you do not need to select a debit or credit from the drop-down box.
Each transaction posted to the subsidiary ledgers must be entered in one line. In order to receive full points, you must not split up the relevant transaction into more than one line in the subsidiary ledger.
Both journals and ledgers:
Most journals and ledgers will have blank rows left at the end of the page.
Some journals and ledgers may not require any entries.
When purchases and sales are recorded in special journals, changes in inventory must not be posted to the Merchandise Inventory account in the general ledger on a daily basis.
Transactions related to revenue and cash receipts completed byAspen Architects Co. during the period June 2â30, 2016, are asfollows:
June 2. | Issued Invoice No. 793 to Nickle Co., $7,330. | |
June 5. | Received cash from Mendez Co. for the balance owed on itsaccount. | |
June 6. | Issued Invoice No. 794 to Preston Co., $2,640. | |
June 13. | Issued Invoice No. 795 to Shilo Co., $3,930. | |
Post revenue and collections to the accounts receivablesubsidiary ledger. | ||
June 15. | Received cash from Preston Co. for the balance owed on June1. | |
June 16. | Issued Invoice No. 796 to Preston Co., $8,210. | |
June 19. | Received cash from Nickle Co. for the balance due on invoice ofJune 2. | |
June 20. | Received cash from Preston Co. for invoice of June 6. | |
June 22. | Issued Invoice No. 797 to Mendez Co., $10,820. | |
June 25. | Received $2,990 note receivable in partial settlement of thebalance due on | |
June 30. | Recorded cash fees earned, $18,460. |
Required:
1. Insert the following balances in the generalledger as of June 1:
11 | Cash | $16,240 |
12 | Accounts Receivable | 19,780 |
14 | Notes Receivable | 8,610 |
41 | Fees Earned | - |
After completing the recording of the transactions in thejournals in part 3, total each of the columns of the specialjournals, and post the individual entries and totals to the generalledger. Insert account balances after the last posting. Whenposting to the general ledger, post in chronological order.However, if there is more than one entry on the same date, be sureto post transactions from the revenue journal before postingtransactions from the cash receipts journal.
If an amount box does not require an entry, leave it blank.
GENERAL LEDGER | ||||||
Date | Item | Post. | Debit | Credit | Balance Dr. | Balance Cr. |
Account: Cash # 11 | ||||||
2016 | ||||||
June 1 | Balance | â | ||||
Account: Accounts Receivable # 12 | ||||||
2016 | ||||||
June 1 | Balance | â | ||||
Account: Notes Receivable # 14 | ||||||
2016 | ||||||
June 1 | Balance | â | ||||
Account: Fees Earned # 41 | ||||||
2016 | ||||||
2. Insert the following balances in theaccounts receivable subsidiary ledger as of June 1:
Mendez Co. | $11,370 |
Nickle Co. | - |
Preston Co. | 8,410 |
Shilo Co. | - |
After completing the recording of the transactions in thejournals in part 3, post to the accounts receivable subsidiaryledger in chronological order, and insert the balances at thepoints indicated in the narrative of transactions. Determine thebalance in the customer's account before recording a cash receipt.If an amount box does not require an entry, leave it blank.
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER | |||||
Date | Item | Post. Ref. | Debit | Credit | Balance |
Account: Mendez Co. | |||||
2016 | |||||
June 1 | Balance | â | |||
Account: Nickle Co. | |||||
2016 | |||||
Account: Preston Co. | |||||
2016 | |||||
June 1 | Balance | â | |||
Account: Shilo Co. | |||||
2016 | |||||
3. Prepare a single-column revenue journal (p.40) and a cash receipts journal (p. 36). Use the following columnheadings for the cash receipts journal: Fees Earned Cr., AccountsReceivable Cr., and Cash Dr. The Fees Earned column is used torecord cash fees.
4. Using the two special journals and thetwo-column general journal (p. 1), journalize the transactions inchronological order for June. Post to the accounts receivablesubsidiary ledger (in part 2), and insert the balances at thepoints indicated in the narrative of transactions. Determine thebalance in the customer's account before recording a cashreceipt.
5. Total each of the columns of the specialjournals, and post the individual entries and totals to the generalledger (in part 1). Insert account balances after the lastposting.
If an amount box does not require an entry, leave it blank.
REVENUE JOURNAL | PAGE 40 | |||
Date | Invoice No. | Account Debited | Post. Ref. | Accounts Rec. Dr. |
2016 | ||||
â | ||||
â | ||||
â | ||||
â | ||||
â | ||||
CASH RECEIPTS JOURNAL | PAGE 36 | ||||
Date | Account Credited | Post. Ref. | Fees Earned Cr. | Accts. Rec. Cr. | Cash Dr. |
2016 | |||||
â | |||||
â | |||||
â | |||||
â | |||||
â | |||||
JOURNAL | PAGE 1 | |||
Date | Description | Post Ref. | Debit | Credit |
2016 | ||||
6. What is the sum of the customerbalances?
$
Does the sum of the customer balances agree with the accountsreceivable controlling account in the general ledger?
7. Would an automated system omit postings to acontrolling account as performed in step 5 for AccountsReceivable?