The following selected transactions were completed during August of the current year: 1. Billed customers for fees earned, $73,900.

The following selected transactions were completed during August of the current year:

1. Billed customers for fees earned, $73,900.

2. Purchased supplies on account, $1,960.

3. Received cash from customers on account, $62,770.

4. Paid creditors on account, $820.

a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted.

b. Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transactions.

c.  Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean that an error has occurred?


Answer:


a. (1) Accounts Receivable73,900
Fees Earned73,900
(2) Supplies1,960
Accounts Payable1,960
(3) Cash62,770
Accounts Receivable62,770
(4) Accounts Payable820
Cash820
b.
(3) 62,770     (4) 820            (4) 820            (2) 1,960         
(2) 1,960       (1) 73,900       
(1) 73,900     (3) 62,770       
c. No. An error may not have necessarily occurred. A credit balance 
in Accounts Receivable could occur if a customer overpaid his or 
her account. Regardless, the credit balance should be investigated to 
verify that an error has not occurred.