Lasting Summer Inc. has $2,510 in the October 1 balance of the accounts receivable account consisting of $1,060 from Champion Co

Lasting Summer Inc. has $2,510 in the October 1 balance of the accounts receivable account consisting of $1,060 from Champion Co. and $1,450 from Wayfarer Co. Transactions related to revenue and cash receipts completed by Lasting Summer Inc. during the month of October 20Y5 are as follows:

Oct. 

3. Issued Invoice No. 622 for services provided to Palace Corp., $2,890.

5. Received cash from Champion Co., on account, for $1,060.

8. Issued Invoice No. 623 for services provided to Sunny Style Inc., $1,940.

12. Received cash from Wayfarer Co., on account, for $1,450.

18. Issued Invoice No. 624 for services provided to Amex Services Inc., $2,970.

23. Received cash from Palace Corp. for Invoice No. 622 of October 3.

28. Issued Invoice No. 625 to Wayfarer Co., on account, for $900.

30. Received cash from Rogers Co. for services provided, $120.

a. Prepare a single-column revenue journal and a cash receipts journal to record these transactions. Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. Place a check mark (✓) in the Post. Ref. column to indicate when the accounts receivable subsidiary ledger should be posted.

b. Prepare a listing of the accounts receivable customer balances and verify that the total of the accounts receivable customer balances equals the balance of the accounts receivable controlling account on October 31, 20Y5.

c. Why does Lasting Summer Inc. use a subsidiary ledger for accounts receivable?

Answer:

a.

 20Y5

 Oct. 3 622 Palace Corp.

8 623 Sunny Style Inc.

18 624 Amex Services Inc. 

28 625 Wayfarer Co. 

31

 20Y5

 Oct. 5 Champion Co.1,060

12 Wayfarer Co.1,450

23 Palace Corp.2,890

30 Fees Earned120

315,520

b.

Amex Services Inc.$2,970

Sunny Style Inc.1,940

Wayfarer Co.900

Total accounts receivable$5,810

The total of the customer accounts on October 31, 20Y5, $5,810, equals the 

balance of the accounts receivable controlling account, shown as follows:

Oct. 1 Bal. Oct.  31

31

31 Bal.

8,700

5,810

c. The accounts receivable subsidiary ledger is needed to track customer services 

provided on account and customer collections. Without the subsidiary ledger, 

Lasting Summer Inc. would not know who owes how much for 

services rendered. Furthermore, without the subsidiary ledger, it would be 

impossible to manage collections from individual customers.