Royal Construction Company is a wholesale business. The transactions involving sales and cash receipts for the firm during August 2013 are listed below. The general ledger accounts used to record these transactions are listed below.
INSTRUCTIONS
1. Open the general ledger accounts and enter the balances as of August 1, 2013.
2. Record the transactions in a sales journal, a cash receipts journal, and a general journal. Use 10 as the page number for each of the special journals and 24 as the page number for the general journal.
3. Post the entries from the general journal to the proper general ledger accounts.
4. Total, prove, and rule the special journals as of August 31, 2013.
5. Post the column totals from the special journals to the proper general ledger accounts.
6. Prepare the heading and the Revenue section of the firm’s income statement for the month ended August 31, 2013.
GENERAL LEDGER ACCOUNTS
101 | Cash | $15,070 Dr. | 401 | Sales |
109 | Notes Receivable |
| 451 | Sales Returns and Allowances |
111 | Accounts Receivable | 22,507 Dr. | 452 | Sales Discounts |
DATE | TRANSACTIONS |
Aug. 1 | Received a check for $6,468 from Construction Supply Company in payment of Invoice 8277 dated July 21 ($6,600), less a cash discount ($132). |
2 | Sold merchandise for $19,450 to Jamison Builders; issued Invoice 2978 with terms of 2/10, n/30. |
4 | Accepted a three-month promissory note for $12,000 from Davis Custom Homes to settle its overdue account; the note has an interest rate of 12 percent. |
7 | Sold merchandise for $18,550 to Branch Construction Company; issued Invoice 2979 with terms of 2/10, n/30. |
11 | Collected $19,061 from Jamison Builders for Invoice 2978 dated August 2 ($19,450), less a cash discount ($389.00). |
14 | Sold merchandise for $7,050 in cash to a new customer who has not yet established credit. |
16 | Branch Construction Company sent a check for $18,179 in payment of Invoice 2979 dated August 7 ($18,550), less a cash discount ($371.00). |
22 | Sold merchandise for $6,850 to Contemporary Homes; issued Invoice 2980 with terms of 2/10, n/30. |
24 | Received a check for $6,000 from Garcia Homes Center to pay Invoice 2877, dated July 23. |
26 | Accepted a return of damaged merchandise from Contemporary Homes; issued Credit Memorandum 101 for $550; the original sale was made on Invoice 2980, dated August 22. |
31 | Sold merchandise for $17,440 to Denton County Builders; issued Invoice 2981 with terms of 2/10, n/30. |
Analyze: What total sales on account were made in August? Include sales returns and allowances in your computation.
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