Question

Revenue and cash receipts journals; accounts receivable subsidiary and general ledgers

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.
Apr. 5.		Received cash from Mendez Co. for the balance owed on its account.
Apr. 6.		Issued Invoice No. 794 to Pinecrest Co., $1,990.
Apr. 13.		Issued Invoice No. 795 to Shilo Co., $3,450.
		Post revenue and collections to the accounts receivable subsidiary ledger.
Apr. 15.		Received cash from Pinecrest Co. for the balance owed on April 1.
Apr. 16.		Issued Invoice No. 796 to Pinecrest Co., $5,500. Post revenue and collections to the accounts receivable subsidiary ledger.
Apr. 19.		Received cash from Ohr Co. for the balance due on invoice of April 2.
Apr. 20.		Received cash from Pinecrest Co. for balance due on invoice of April 6.
Apr. 22.		Issued Invoice No. 797 to Mendez Co., $7,470.
Apr. 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.

Required:

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	-

After completing the recording of the transactions in the journals in part 3, 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. When posting to the general ledger, post in chronological order. However, if there is more than one entry on the same date, be sure to post transactions from the revenue journal before posting transactions from the cash receipts journal.

If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Revenue Journal begins with “R”. For example journal/ Cash Receipts/ Revenue Journal, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

GENERAL LEDGER
Date	Item	Post. Ref.	Debit	Credit	Balance Dr.	Balance Cr.
Account: Cash # 11
Apr. 1	Balance	✔
Apr. 30
Account: Accounts Receivable # 12
Apr. 1	Balance	✔
Account: Notes Receivable # 14
Apr. 1	Balance	✔
Account: Fees Earned # 41

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.	-

After completing the recording of the transactions in the journals in part 3, post to the accounts receivable subsidiary ledger, in chronological order 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.

If an amount box does not require an entry, leave it blank. In CNOW, Journal pages begin with “J”, Cash Receipts begin with “CR” and Revenue Journal begins with “R”. For example journal/ Cash Receipts/ Revenue Journal, page 1/36/40 respectively. POST. REF. is simply J1, CR36, and R40.

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
Date	Item	Post. Ref.	Debit	Credit	Balance
Account: Mendez Co.
Apr. 1	Balance
Account: Ohr Co.
Account: Pinecrest Co.
Apr. 1	Balance	✔
Account: 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.

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.

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.
	fill in the blank 112		✔
	fill in the blank 116		✔
	fill in the blank 120		✔
	fill in the blank 124		✔
	fill in the blank 128		✔

CASH RECEIPTS JOURNAL					PAGE 36
Date	Account Credited	Post. Ref.	Fees Earned Cr.	Accts. Rec. Cr.	Cash Dr.
		✔
		✔
		✔
		✔
		✔

JOURNAL			PAGE 1
Date	Description	Post. Ref.		Debit	Credit
					6. What is the sum of the customer balances?

Does the sum of the customer balances agree with the accounts receivable controlling account in the general ledger?
   

7. Would an automated system omit postings to a controlling account as performed in part (5) for Accounts Receivable?

Answer 1

Answer :

1. and 5.

GENERAL LEDGER

Account: Cash      Account No. 11

Date	Item	Post. Ref.	Debit	Credit	Balance
Debit	Credit
Apr.	1	Balance	✓			11,350
	30		CR36	34,390		45,740

Account: Accounts Receivable Account No. 12

Date	Item	Post. Ref.	Debit	Credit	Balance
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: Notes Receivable Account No. 14

Date	Item	Post. Ref.	Debit	Credit	Balance
Debit	Credit
Apr.	1	Balance	✓			6,000
	25		J1	3,200		9,200

Account: Fees Earned   Account No. 41

Date	Item	Post. Ref.	Debit	Credit	Balance
Debit	Credit
Apr.	30		R40		23,090		23,090
	30		CR36		12,890		35,980

2. and 4.

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER

Name: Mendez Co.

Date	Item	Post. Ref.	Debit	Credit	Balance
Apr.	1	Balance	✓			8,710
	5		CR36		8,710	—
	22		R40	7,470		7,470

Name: Ohr Co.

Date	Item	Post. Ref.	Debit	Credit	Balance
Apr.	2		R40	4,680		4,680
	19		CR36		4,680	—

Name: Pinecrest Co.

Date	Item	Post. 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

Name: Shilo Co.

Date	Item	Post. Ref.	Debit	Credit	Balance
Apr.	13		R40	3,450		3,450
	25		J1		3,200	250

3., 4., and 5.

REVENUE JOURNAL Page 40

Date	Invoice No.	Account Debited	Post. Ref.	Accounts Rec. Dr. Fees Earned Cr.
Apr.	2	793	Ohr Co.	✓	4,680
	6	794	Pinecrest Co.	✓	1,990
	13	795	Shilo Co.	✓	3,450
	16	796	Pinecrest Co.	✓	5,500
	22	797	Mendez Co.	✓	7,470
	30				23,090
					(12) (41)

CASH RECEIPTS JOURNAL Page 36

Date	Account Credited	Post. Ref.	Fees Earned Cr.	Accts. Rec. Cr.	Cash Dr.
Apr.	5	Mendez Co.	✓		8,710	8,710
	15	Pinecrest Co.	✓		6,120	6,120
	19	Ohr Co.	✓		4,680	4,680
	20	Pinecrest Co.	✓		1,990	1,990
	30	Fees Earned		12,890		12,890
	30			12,890	21,500	34,390
				(41)	(12)	(11)

JOURNAL Page 1

Date	Description	Post. Ref.	Debit	Credit
Apr.	25	Notes Receivable	14	3,200
		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.