Transactions related to revenue and cash receipts completed by Crowne Business Services Co. during the period April 2–30 are as follows:
Apr.
2. Issued Invoice No. 793 to Ohr Co., $4,680.
5. Received cash from Mendez Co. for the balance owed on its account.
6. Issued Invoice No. 794 to Pinecrest Co., $1,990.
13. Issued Invoice No. 795 to Shilo Co., $3,450.
Post revenue and collections to the accounts receivable subsidiary ledger.
15. Received cash from Pinecrest Co. for the balance owed on April 1.
16. Issued Invoice No. 796 to Pinecrest Co., $5,500. Post revenue and collections to the accounts receivable subsidiary ledger.
19. Received cash from Ohr Co. for the balance due on invoice of April 2.
20. Received cash from Pinecrest Co. for balance due on invoice of April 6.
22. Issued Invoice No. 797 to Mendez Co., $7,470.
25. Received $3,200 note receivable in partial settlement of the balance due on the Shilo Co. account.
Apr.
30. Received cash from fees earned, $12,890.
Post revenue and collections to the accounts receivable subsidiary ledger.
Instructions
1. Insert the following balances in the general ledger as of April 1:
11 Cash $11,350
12 Accounts Receivable 14,830
14 Notes Receivable 6,000
41 Fees Earned —
2. Insert the following balances in the accounts receivable subsidiary ledger as of April 1:
Mendez Co. $8,710
Ohr Co. —
Pinecrest Co. 6,120
Shilo Co. —
3. Prepare a single-column revenue journal (p. 40) and a cash receipts journal (p. 36). Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. The Fees Earned column is used to record cash fees. Insert a check mark (✓) in the Post. Ref. column when recording cash fees.
4. Using the two special journals and the two-column general journal (p. 1), journalize the transactions for April. Post to the accounts receivable subsidiary ledger, and insert the balances at the points indicated in the narrative of transactions. Determine the balance in the customer’s account before recording a cash receipt.
5. Total each of the columns of the special journals and post the individual entries and totals to the general ledger. Insert account balances after the last posting.
6. Determine that the sum of the customer balances agrees with the accounts receivable controlling account in the general ledger.
7. Why would an automated system omit postings to a controlling account as performed in step 5 for Accounts Receivable?
Answer:
1. and 5.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
Apr. 1 Balance 11,350
30 CR36 34,390 45,740
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
Apr. 1 Balance 14,830
25 J1 3,200 11,630
30 R40 23,090 34,720
30 CR36 21,500 13,220
Account No. 14
Post.
Item Ref. Debit Credit Debit Credit
Apr. 1 Balance 6,000
25 J1 3,200 9,200
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
Apr. 30 R40 23,090 23,090
30 CR36 12,890 35,980
2. and 4.
Post.
Item Ref. Debit Credit Balance
Apr. 1 Balance 8,710
5 CR36 8,710 —
22 R40 7,470 7,470
Post.
Item Ref. Debit Credit Balance
Apr. 2 R40 4,680 4,680
19 CR36 4,680 —
Post.
Item Ref. Debit Credit Balance
Apr. 1 Balance 6,120
6 R40 1,990 8,110
15 CR36 6,120 1,990
16 R40 5,500 7,490
20 CR36 1,990 5,500
Post.
Item Ref. Debit Credit Balance
Apr. 13 R40 3,450 3,450
25J1 3,200 250
3., 4., and 5.
Page 40
2 793 Ohr Co.
6 794 Pinecrest Co.
13 795 Shilo Co.
16 796 Pinecrest Co.
22 797 Mendez Co.
30
Page 36
5 Mendez Co. 8,710
15 Pinecrest Co. 6,120
19 Ohr Co. 4,680
20 Pinecrest Co. 1,990
30 Fees Earned12,890
3034,390
(11)
Page 1
25 Notes Receivable 14
Accounts Receivable—Shilo Co. 12/ 3,200
The subsidiary account of Shilo Co. must also be posted for a $3,000 credit.
6. The sum of the customer balances is in agreement with the controlling account.
Both have balances of $13,220 ($7,470 + $5,500 + $250).
7. In an automated system, individual sales transactions are posted automatically
to the general ledger at the time of the original transaction. Thus, there is no
need to post summary totals to the general ledger accounts. The accounts
receivable account reported on the balance sheet is often merely the sum of
the individual customer accounts.
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