Question

Transactions and T Accounts

The following selected transactions were completed during July of the current year:

1. Billed customers for fees earned, $42,500.
2. Purchased supplies on account, $1,830.
3. Received cash from customers on account, $39,950.
4. Paid creditors on account, $1,110.

a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. If an amount box does not require an entry, leave it blank. (1) (2) (3) (4) b. 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 transaction. Cash 1 Accounts Payable Supplies Fees Earned Accounts Receivable C. Assume that the unadjusted trial balance on July 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?

Answer 1

a.

1	Account Titles	Debit	Credit
	Accounts Receivable	42500
	Fees Earned		42500
2	Supplies	1830
	Accounts Payable		1830
3	Cash	39950
	Accounts Receivable		39950
4	Accounts Payable	1110
	Cash		1110

b.

Fees Earned
		1	42500

Cash
3	39950	4	1110

Accounts Payable
4	1110	2	1830

Accounts Receivable
1	42500	3	39950

Supplies
2	1830

c. 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 occured.