Transactions related to revenue and cash receipts completed by Sterling Engineering Services during the period June 2–30 are as follows:
June
2. Issued Invoice No. 717 to Yee Co., $1,430.
3. Received cash from Auto-Flex Co. for the balance owed on its account.
7. Issued Invoice No. 718 to Cooper Development Co., $670.
10. Issued Invoice No. 719 to Ridge Communities, $2,840.
Post revenue and collections to the accounts receivable subsidiary ledger.
14. Received cash from Cooper Development Co. for the balance owed on June 1.
16. Issued Invoice No. 720 to Cooper Development Co., $400.
Post revenue and collections to the accounts receivable subsidiary ledger.
18. Received cash from Yee Co. for the balance due on invoice of June 2.
20. Received cash from Cooper Development Co. for invoice of June 7.
23. Issued Invoice No. 721 to Auto-Flex Co., $860.
30. Received cash from fees earned, $4,520.
30. Received office equipment of $1,800 in partial settlement of balance due on the Ridge Communities account.
Post revenue and collections to the accounts receivable subsidiary ledger.
Instructions
1. Insert the following balances in the general ledger as of June 1:
11 Cash $18,340
12 Accounts Receivable 2,650
18 Office Equipment 34,700
41 Fees Earned —
2. Insert the following balances in the accounts receivable subsidiary ledger as of June 1:
Auto-Flex Co. $1,670
Cooper Development Co. 980
Ridge Communities —
Yee 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 June. 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 accounts agrees with the accounts receivable controlling account in the general ledger.
7. Why would an automated system omit postings to a control account as performed in step 5 for Accounts Receivable?
Answer:
1. and 5.
Account No. 11
Post.
Item Ref. Debit Credit Debit Credit
June 1 Balance 18,340
30 CR36 9,270 27,610
Account No. 12
Post.
Item Ref. Debit Credit Debit Credit
June 1 Balance 2,650
30 J1 1,800 850
30 R40 6,200 7,050
30 CR36 4,750 2,300
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
June 1 Balance 34,700
30 J1 1,800 36,500
Account No. 41
Post.
Item Ref. Debit Credit Debit Credit
June 30 R40 6,200 6,200
30 CR36 4,520 10,720
2. and 4.
Post.
Item Ref. Debit Credit Balance
June 1 Balance 1,670
3 CR36 1,670 —
23 R40 860 860
Post.
Item Ref. Debit Credit Balance
June 1 Balance 980
7 R40 670 1,650
14 CR36 980 670
16 R40 400 1,070
20 CR36 670 400
Post.
Item Ref. Debit Credit Balance
June 10 R40 2,840 2,840
30J1 1,800 1,040
Post.
Item Ref. Debit Credit Balance
June 2 R40 1,430 1,430
18 CR36 1,430 —
3., 4., and 5.
2 717 Yee Co.
7 718 Cooper Development Co.
10 719 Ridge Communities
16 720 Cooper Development Co.
23 721 Auto-Flex Co.
30
3 Auto-Flex Co. 1,670
14 Cooper Development Co. 980
18 Yee Co. 1,430
20 Cooper Development Co. 670
30 Fees Earned4,520
309,270
30 Office Equipment 18
Accounts Receivable—Ridge
Communities 12/ 1,800
The subsidiary account for Ridge Communities must also be posted for an $1,800
credit.
6. The sum of the customer balances is in agreement with the controlling account.
Both have balances of $2,300 ($860 + $400 + $1,040).
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.