Question

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

Transactions
Aug.	1	Billed customers for fees earned, $74,050.
	4	Purchased supplies on account, $1,970.
	8	Received cash from customers on account, $62,770.
	11	Paid creditors on account, $800.

	Required:
A.	Journalize these transactions in a two-column journal. Refer to the T-Accounts for exact wording of account titles.
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 date.
C.	Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean that an error has occurred?

Answer 1

Solution A:

Journal Entries
Date	Account title and explanation	Debit	Credit
01-Aug	Accounts receivable Dr	$74,050
	To Fees Earned		$74,050
	(To record fees earned)
04-Aug	Supplies Dr	$1,970
	To Accounts Payable		$1,970
	(To record supplies purchased)
08-Aug	Cash Dr	$62,770
	To Accounts Receivable		$62,770
	(To record Cash Received from Customers)
11-Aug	Accounts Payable Dr	$800
	To Cash		$800
	(To record cash paid to creditors)

Solution B:

Cash
08-Aug	$62,770	11-Aug	$800

Supplies
04-Aug	$1,970

Accounts receivable
01-Aug	$74,050	08-Aug	$62,770

Accounts Payable
11-Aug	$800	04-Aug	$1,970

Fees Earned
		01-Aug	$74,050

Solution C:

In this question accounts receivable balance has a debit balance remaining. Therefore Credit balance of accounts receivable in unadjusted Trial balance mean that an error has occurred.