Question

Transactions and T Accounts

The following selected transactions were completed during August of the current year: Billed customers for fees earned, $50,850. Purchased supplies on account, $2,190. Received cash from customers on account, $47,800. Paid creditors on account, $1,320.

a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions.

(1)
(2)
(3)
(4)

Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, select the appropriate number to identify the transactions.

Cash
(3)		(4)

Supplies

Accounts Receivable

Accounts Payable

Fees Earned

  Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?

Answer 1

Transactions and T Accounts Journal Enteries Trans. Particulars 1 Accounts Receivable a/c To Fees Earned (Customers billed) Dr. Debit in $ Credit in $ 50850 50850 2 Dr. 2190 Supplies a/c To Accounts Payable (Supplies on account) 2190 3 Dr. 47800 Cash a/c To Accounts Receivable (Cash from debtors) 47800 Dr. 1320 Accounts Payable a/c To Cash (Cash paid to creditors) 1320 No. A credit balance in Accounts Receivable could occur if a customer overpaid his or her account. Regardless, the credit balance should be investigated to verify that an error has not occurred. It can represent advance from client incorrectly credited to accounts receivable.

Accounts Receivable Cash 47800 Accounts Payable Bal. 1320 46480 47800 47800 Fees Earned Accounts Receivable 50850 Cash Bal. 50850 47800 3050 50850 50850 SU Fees Earned Accounts Receivable 50850 50850 Bal. 50850 Accounts Payable Supplies 2190 Bal. 2190 2190 2190 2190 Cash Bal. Accounts Payable 1320 Supplies 870 2190 2190