Question

Record transactions using journal entries: Suppose Mask, Inc. identified the following transactions during January 2018:

1/1/18: Purchased inventory worth $11,300 on account.

1/3/18: Sold inventory, which originally cost $2,750, for $3,180 on account to customers.

1/15/18: Paid $5,000 cash to suppliers from transaction a.

1/20/18: Received $1,700 cash payment from customers in transaction b.

1/31/18: Paid $2,250 cash for January wages.

Record all of the above transactions using journal entries (HINT: there will be two separate entries to record for transaction b.). I have completed transaction a. for you as an example. Assume Mask, Inc, uses the following accounts: Cash, A/R, Inventory, A/P, Sales Revenue, Cost of Goods Sold (COGS), Wages Expense.

1/1/18                                                       DEBIT             CREDIT

            Inventory                                             $11,300

                        Accounts Payable (A/P)                                  $11,300

            To record purchase of inventory on account.

T-accounts: Below is the T-account for Accounts Receivable (A/R) for She’s A Star, Ltd.:

                                                   Accounts Receivable (A/R)

                    Beginning balance $135,000

                              (transaction 1) $21,800           $12,500 (transaction 2)

                                                                        $XX,XXX (transaction 3)

                      Ending balance      $126,560

What is the missing value $XX,XXX for transaction 3?

Give one example of a transaction that would have resulted in the posting of transaction 1 to the A/R account.

Give one example of a transaction that would have resulted in the posting of transaction 2 to the A/R account.

Answer 1

JOURNAL ENTRIES

DATE	PARTICULARS	DEBIT	CREDIT
1/1/18	Inventory	$11300
	Accounts payable		$11300
	To record purchases on account
1/3/18	Accounts receivable	$3180
	Cost of goods sold	$2750
	Revenue		$3180
	Inventory		$2750
	To record sale of inventory on account
1/15/18	Accounts payable	$5000
	Cash		$5000
	To record cash paid to suppliers
1/20/18	Cash	$1700
	Account receivable		$1700
	To record cash received from customers
1/31/18	Wages	$2250
	Cash		$2250
	To record cash paid for wages

Account receivable account

Particulars	DEBIT	Particulars	CREDIT
Beginning balance	$ 135000	Transaction 2	$ 12500
Transaction 1	$ 21800	Transaction 3	$ 17740
	$ 156800		$ 156800

Missing value transaction 3 = $17740

Example for transaction 1 = Sales on account to customers

Example for transaction 2 = Received cash from customers for credit sales