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., $6,730.
Apr. 5.		Received cash from Mendez Co. for the balance owed on its account.
Apr. 6.		Issued Invoice No. 794 to Pinecrest Co., $2,420.
Apr. 13.		Issued Invoice No. 795 to Shilo Co., $3,610.
		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., $7,540. 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., $9,930.
Apr. 25.		Received $2,750 note receivable in partial settlement of the balance due on the Shilo Co. account.
Apr. 30.		Received cash from fees earned, $16,950. 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	$15,260
12	Accounts Receivable	18,580
14	Notes Receivable	8,090
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 Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, 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.	$10,680
Ohr Co.	-
Pinecrest Co.	7,900
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 Cash Receipts begins with “R”. For example journal/ Cash Receipts/ Cash Receipts, 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.
			✔
			✔
			✔
			✔
			✔
				() ()

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 step 5 for Accounts Receivable?

Answer 1

Cash
					Balance
Date		Item	Debit	Credit	Debit	Credit
2014
Apr	1	Balance			15,260
	30		44,680		59,940
Accounts receivable
					Balance
Date		Item	Debit	Credit	Debit	Credit
2014
Apr	1	Balance			18,580
	25			2,750	15,830
	30		30,230		46,060
	30			27,730	18,330
Notes receivable
					Balance
Date		Item	Debit	Credit	Debit	Credit
2014
Apr	1	Balance			8,090
	25		2,750		10,840
Fees earned
					Balance
Date		Item	Debit	Credit	Debit	Credit
2014
Apr	30			30,230		24,350
	30			16,950		41,300

Mendez co.
Date		Item	Debit	Credit	Balance
2014
Apr	1	Balance			10,680
	5			10,680	0
	22		9,930		9,930
Ohr co.
Date		Item	Debit	Credit	Balance
2014
Apr	2		6,730		6,730
	19			6,730	0
Pinecrest co.
Date		Item	Debit	Credit	Balance
2014
Apr	1	Balance			7,900
	6		2,420		10,320
	15			7,900	2,420
	16		7,540		9,960
	20			2,420	7,540
Shilo Co.
Date		Item	Debit	Credit	Balance
2014
Apr	13		3,610		3,610
	25			2,750	860

Revenue journal
		Invoice No.			Accounts Rec. Dr. Fees Earned Cr.
Date			Account Debited
2014
Apr	2	793	Ohr Co.		6,730
	6	794	Pinecrest Co.		2,420
	13	795	Shilo Co.		3,610
	16	796	Pinecrest Co.		7,540
	22	797	Mendez Co.		9,930
	30				30,230
Cash receipts journal
				Fees Earned Cr.	Accts. Rec. Cr.
						Cash Dr.
Date		Account Credited
2014
Apr	5	Mendez Co.			10,680	10,680
	15	Pinecrest Co.			7,900	7,900
	19	Ohr Co.			6,730	6,730
	20	Pinecrest Co.			2,420	2,420
	30	Fees Earned		16,950		16,950
	30			16,950	27,730	44,680

General Journal
Date		Description	Debit	Credit
2014
Apr	25	Notes Receivable	2,750
		Accounts Receivable—Shilo Co.		2,750
6. The sum of the customer balances is in agreement with the controlling account. Both have balances of
							Accounts Receivable	18,330
							Mendez co.	9,930
							Ohr co.	0
							Pinecrest co.	7,540
							Shilo Co.	860
		total	18330
7	In automated system sales entries are posted directly to
	general journal therefore no need to post summary totals