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., $6,750.
Apr. 5.		Received cash from Mendez Co. for the balance owed on its account.
Apr. 6.		Issued Invoice No. 794 to Pinecrest Co., $2,430.
Apr. 13.		Issued Invoice No. 795 to Shilo Co., $3,620.
		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., $7,570. 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., $9,960.
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, $17,000. 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	$15,470
12	Accounts Receivable	18,840
14	Notes Receivable	8,200
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	✔
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.	$10,830
Ohr Co.	-
Pinecrest Co.	8,010
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

SALES JOURNAL
Date	Account	Invoice	Accounts	Cost of goods
	Debited	Number	Receivable Dr	Sold Dr
			Sales Cr	Inventory Cr
Apr.2	Ohr.Co.	793	6750
Apr.6	Pinecrest Co.	794	2430
Apr.13	Shilo Co.	795	3620
Apr.16	Pinecrest Co.	796	7570
Apr.22	Mendez.Co.	797	9960
Total			30330	0

Cash Receipts Journal
Date	Account	Cash Dr	Cash	Accounts	Sales Cr	Other	Cost of goods
	Credited		Discount Dr	Receivable Cr		Account Cr	sold Dr
							Inventory Cr
Apr.5	Mendez.Co.	10830		10830
Apr.15	Pinecrest Co.	8010		8010
Apr.19	Ohr Co.	6750		6750
Apr.20	Pinecrest Co.	2430		2430
Apr.30	Fee Earned	17000				17000
	Total	45020	0	28020	0	17000	0

General Journal
Date	Account	Debit	Credit
Apr.25	Note Receivable	2750
	Accounts Receivable		2750
	(Note received from Shilo Co.)

Cash
Date	Debit	Credit	Balance
			Debit	Credit
Apr.1			15470
Apr.5	10830		26300
Apr.15	8010		34310
Apr.19	6750		41060
Apr.20	2430		43490
Apr.30	17000		60490
			60490
			60490
			60490
			45020
Note Receivable
Date	Debit	Credit	Balance
			Debit	Credit
Apr.1			8200
Apr.25	2750		10950
			10950
Fee Earned
Date	Debit	Credit	Balance
			Debit	Credit
Apr.30		17000	17000
			17000
			17000

6. Sum of the customer balances is $18,400.

Yes. The sum agrees with the balance in receivables control Account.

7. No. Automated system will not omit postings to a controlling account.