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Chapter 1: AB-17E (page 37)

Analyzing postings from the cash receipts journal

The cash receipts journal of Silver Plastics follows:

Cash Receipt Journal Page 7

Date

Account Credited

Post. Ref.

Cash DR

Accounts Receivable CR

Sales Revenue DR

Sales Discounts Forfeited CR

Other Accounts CR

Cost of Goods Sold DR

Merchandise Inventory CR

2018

Jan 2

Awesome, Corp.

(g)

830

810

20

9

King, Inc.

(h)

490

490

19

Note Receivable

(i)

4,480

4,000

Interest Revenue

(j)

480

30

J.T. Folk

(k)

330

320

10

31

4,230

4,230

3,500

Jan 31

Total

10,360

1,620

4,230

30

4,480

3,500

(a)

(c)

(d)

(b)

(e)

(f)

Silver’s general ledger includes the following selected accounts, along with theiraccount numbers:

Number Account

110 Cash

115 Accounts Receivable

118 Merchandise Inventory

125 Notes Receivable

510 Sales Revenue

512 Sales Discounts Forfeited

520 Interest Revenue

611 Cost of Goods Sold

Indicate whether each posting reference (a) through (k) should be a

• Check mark (✓) for a posting to a customer account in the accounts

receivablesubsidiary ledger.

• Account number for a posting to an account in the general ledger. If so, give

theaccount number.

• Letter (X) for an amount not posted.

Short Answer

Expert verified

Receivables transaction on Jan 2, 9, and 30 requires the checkmark.

The Other transaction on Jan 19 requires an account number.

No Transaction requires letter X.

Step by step solution

01

Posting reference with Checkmark (✓) for posting accounts receivables general ledger

Date

Account Credited

Post. Ref.

Cash DR

Accounts Receivable CR

Sales Revenue DR

Sales Discounts Forfeited CR

Other Accounts CR

Cost of Goods Sold DR

Merchandise Inventory CR

2018

Jan 2

Awesome, Corp.

(✓)

830

810

20

9

King, Inc.

(✓)

490

490

30

J.T. Folk

(k)

330

320

10

02

Posting reference with the account number for posting in the general ledger

Date

Account Credited

Post. Ref.

Cash DR

Accounts Receivable CR

Sales Revenue DR

Sales Discounts Forfeited CR

Other Accounts CR

Cost of Goods Sold DR

Merchandise Inventory CR

2018

19

Note Receivable

21

4,480

4,000

Interest Revenue

22

480

03

 Step 3: Posting reference with the letter (X) for the missing amount

There is no posting reference that requires the letter X.

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Most popular questions from this chapter

What is accounting?

Cosmo Thomas started a new business, Thomas Gymnastics, and completed the following transactions during December: Dec. 1 Received \(19,000 cash from Thomas in exchange for common stock. 2 Received \)3,800 cash from customers for services performed. 5 Paid \(300 cash for office supplies. 9 Performed services for a customer and billed the customer for services rendered, \)4,500. 10 Received \(150 invoice for utilities due in two weeks. 15 Paid for advertising in the local paper, \)350. 20 Paid utility invoice received on Dec. 10. 25 Collected cash in full from customer billed on Dec. 9. 28 Paid rent for the month, \(2,600. 28 Paid \)1,200 to assistant for wages. 30 Received \(1,600 cash from customers for services performed. 31 Cash dividends of \)3,000 were paid to stockholders. Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics using a format similar to Exhibit 1-6.

Let’s examine a case using Greg’s Tunes and Sal’s Silly Songs. It is now the end of the first year of operations, and the stockholders want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and no dividends were paid. The businesses throw together the data shown on the next page at year-end: \( 23,000 8,000 35,000 22,000 \) 10,000 6,000 44,000 9,000 Total Assets Common Stock Total Revenues Total Expenses Greg’s Tunes: Sal’s Silly Songs: Total Liabilities Common Stock Total Expenses Net Income To gain information for evaluating the businesses, the stockholders ask you several questions. For each answer, you must show your work to convince the stockholders that you know what you are talking about. Requirements 7. Which business looks better from a financial standpoint?

Canyon Canoe Company is a service-based company that rents canoes for use on local lakes and rivers. Amber and Zack Wilson graduated from college about 10 years ago. They both worked for one of the “Big Four” accounting firms and became CPAs. Because they both love the outdoors, they decided to begin a new business that will combine their love of outdoor activities with their business knowledge. Amber and Zack decide that they will create a new corporation, Canyon Canoe Company, or CCC for short. The business began operations on November 1, 2018. Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zack. 2 Signed a lease for a building and paid \)1,200 for the first month’s rent. 3 Purchased canoes for \(4,800 on account. 4 Purchased office supplies on account, \)750. 7 Earned \(1,400 cash for rental of canoes. 13 Paid \)1,500 cash for wages. 15 Paid \(50 dividends to stockholders. 16 Received a bill for \)150 for utilities. (Use separate payable account.) 20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.) 22 Rented canoes to Early Start Daycare on account, \)3,000. 26 Paid \(1,000 on account related to the November 3, 2018, purchase. 28 Received \)750 from Early Start Daycare for canoe rental on November 22, 2018. 30 Paid $100 dividends to stockholders. Requirements 4. Prepare the balance sheet as of November 30, 2018.

Using the accounting equation for transaction analysis and preparing financial statements Allen Shonton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018: Apr. 5 Shonton deposited \(75,000 in a new business bank account titled Allen Shonton, CPA. The business issued common stock to Shonton. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(9,500. 10 Consulted with tax client and received \)4,000 for services rendered. 11 Paid utilities, \(190. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)20,000. 18 Paid office rent, \(750. 25 Received amount due from client that was billed on April 12. 27 Paid full amount of accounts payable created on April 7. 30 Cash dividends of \)3,500 were paid to stockholders. Requirements 2. Prepare the following financial statements: a. Income statement.

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