ACC 358 Lecture Notes - Lecture 6: Double-Entry Bookkeeping System, Flickr

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indigolion532

18 May 2018

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A form for recording transactions in chronological order

journalizing

Recording transactions in a journal

entry

Information for each transaction recorded in a journal

double entry accounting

The recording of debit and credit parts of a transaction

source document

A business paper from which information is obtained for a journal entry

check

A business form ordering a bank to pay cash from a bank account

invoice

A form describing the goods or services sold, the quantity, the price, and the terms of sale

sales invoice

An invoice used as a source document for recording a sale on account

receipt

A business form giving written acknowledgement for cash received

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Record (journalize) transactions in the books) Doherty Tree Cellular, Inc.,
completed the following transactions during April 2012, its first month of operations:

Apr 1	Received $19,800 and issued common stock.
2	Purchased $200 of office supplies on account.
4	Paid $14,300 cash for land to use as a building site.
6	Performed service for customers and received cash of $2,600.
9	Paid $100 on accounts payable.
17	Performed service for UFax on account totaling $1,900.
23	Collected $100 from UFax on account.
30	Paid the following expenses: salary, $1,900; rent, $1,300.

1.Record the transactions in the journal of Doherty Tree Cellular, Inc. Key transactions by date and include an explanation for each entry.

CLASS, LETS TAKE RECORDING STEP 1 STEP FURTHER - THE TRIAL BALANCE

Now that we know what the accounting equation is and we have some experience with Journal Entries.

Letâs review the process and take the recording process one step further.

STEP 1) Analyze transaction: As an actual accountant, we determine if a transaction should be recorded by analyzing source documents.

For example: If the Company makes a sale; they will complete a sales document (or sales
tape is generated). If the Company purchases something a purchase invoice is forwarded to Accounting. There is a different type of source documents for different types of transactions.

Note: as an accountant a large part of the battle is making sure there is a source document for all transactions and that all departments capture and forward these documents to Accounting!

STEP 2) Accounting prepares journal entry: for each transaction based on GAAP. (Mostly using the constraints, assumptions, principles we've discussed: materiality, conservatism, matching, revenue recognition, etc).

The entry is entered into a Journal for those types of Transactions (There is a Sales Journal, A/P Journal for purchases, Payroll journal for payroll related entries, General Journal for misc. entries., etc.

Journal entries are made in the proper form, and include: date, description, indent of credit side of each entry.

STEP 3) The Journal entry is posted to General ledger; which includes all activity for all accounts.

However, the recording process is not over. Letâs talk about the trial balance. Please answer ALL however only post ONE question at a time to allow more to participate.

1) Why do we prepare it?

apricotox859

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. Post revenue and collections to the accounts receivablesubsidiary ledger.
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 the Shilo Co. account.
June 30.		Recorded cash fees earned, $18,460. Post revenue and collections to the accounts receivablesubsidiary ledger.

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. Ref.	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. Fees Earned Cr.
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?

yellowcaribou307

Utilizing the revenue journal below, journalize the following five transactions of Porshe Creations:

	(a)	On March 20, Porshe sells 25 cell phone covers to Xtreme at $4.50 per cover on invoice 887.
	(b)	On March 21, Porshe sells 5 cell phone covers to Sidekick for $7.50 per cover on invoice 908.
	(c)	On March 22, Porshe sells 18 cell phone covers to Rock-On at $4.25 per cover on invoice 938.
	(d)	On March 26, Porshe sells 200 cell phone covers to Micro at $3.75 each on invoice 959.
	(e)	On March 29, Porshe sells 6 cell phone covers to Charmers for $8.35 each on invoice 997.

â
Revenue Journal				Page 15
Date	Invoice No.	Account Debited	Post. Ref.	Accts. Rec. Dr. Sales Rev. Cr.

Utilizing the revenue journal below, journalize the following five transactions of Porshe Creations:

	(a)	On March 20, Porshe sells 25 cell phone covers to Xtreme at $4.50 per cover on invoice 887.
	(b)	On March 21, Porshe sells 5 cell phone covers to Sidekick for $7.50 per cover on invoice 908.
	(c)	On March 22, Porshe sells 18 cell phone covers to Rock-On at $4.25 per cover on invoice 938.
	(d)	On March 26, Porshe sells 200 cell phone covers to Micro at $3.75 each on invoice 959.
	(e)	On March 29, Porshe sells 6 cell phone covers to Charmers for $8.35 each on invoice 997.

Revenue Journal

Page 15

Date

Invoice
No.

Account Debited

Post.
Ref.

Accts. Rec. Dr.
Sales Rev. Cr.

-----------------

The following purchase transactions occurred during August for Backcountry Kayak Excursions.

Aug. 1	Purchased kevlar kayaks (equipment) for $5,600 on account from Gear Inc.
6	Purchased kayaks paddles (supplies) for $3,250 on account from Southland Company.
14	Purchased life vests (supplies) for $2,500 on account from Gear Inc.

Record these transactions in a purchase journal.

Purchases Journal
Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount

-----------------

If a two-column (all-purpose) general journal, a revenue journal, and a cash receipts journal are used, indicate the journal in which each of the following transactions should be recorded:

(a)	Investment of additional cash in the business by the owner
(b)	Rendering of services for cash
(c)	Rendering of services on account
(d)	Receipt of cash on account from a customer
(e)	Sale of office supplies for cash, at cost, to a neighboring business
(f)	Adjustment to record supplies used at the end of the year
(g)	Closing of drawing account at the end of the year

lavenderminnow570

ACC 358 Lecture Notes - Lecture 6: Double-Entry Bookkeeping System, Flickr

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