16E Recording credit sales and colle... [FREE SOLUTION]

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Chapter 8: 16E (page 432)

Recording credit sales and collections
Steller Corporation had the following transactions in June:
Jun .1
Sold merchandise inventory on account to Carter Company, $1,575.
6
Sold merchandise inventory for cash, $550
12
Received cash from Carter Company in full settlement of its accounts receivable
20
Sold merchandise inventory on account to Iris Company, $765
22
Sold merchandise inventory on account to Driver Company, $230
28
Received cash from Iris Company in partial settlement of its accounts receivable, $300
Requirements
1. Journalize the transactions. Ignore Cost of Goods Sold. Omit explanations.
2. Post the transactions to the general ledger and the accounts receivable subsidiary
ledger. Assume all beginning balances are $0.
3. Verify the ending balance in the control Accounts Receivable equals the sum of the
balances in the subsidiary ledger.

Short Answer

Expert verified

(1) The journal entries are recorded in Step 2.

(2) The ledgers are shown in Step 2.

(3)The balance of the control account is $ 695.

Step by step solution

Definition of accounts receivables

An accounts receivable means the amount that is outstanding from the customers鈥� end for the goods sold on credit.

Journal entry of transactions

Date	Particulars	Debit	Credit
June 1	Accounts Receivables鈥擟arter	$1,575
	Sales Revenue		$1,575
	(Being sold goods on account)

June 6	Cash	$550
	Sales Revenue		$550
	(Being goods sold on cash)

June 12	Cash	$1,575
	Accounts Receivable鈥擟arter		$1,575
	(Being cash received from the accounts receivable)

June 20	Accounts Receivable鈥擨ris	$765
	Sales Revenue		$765
	(Being goods sold on account)

June 22	Accounts Receivable鈥擠river	$230
	Sales Revenue		$230
	(Being goods sold on account)

June 28	Cash	$300
	Accounts Receivable鈥擨ris		$300
	(Being cash received from the accounts receivable)

Preparation of subsidiary ledger

Sales Revenue
Date	Particulars	Amount	Date	Particulars	Amount
			June 1	Accounts Receivable鈥擟arter	$1,575
			June 6	Cash	$550
			June 20	Accounts Receivable鈥擨ris	$765
			June 22	Accounts Receivable鈥擠river	$230
				Balance	$3,120

Cash
Date	Particulars	Amount	Date	Particulars	Amount
June 6	Sales Revenue	$550
June 12	Accounts receivable鈥擟arter	$1,575
June 28	Accounts receivable鈥擨ris	$300
	Balance	$2,425

Accounts Receivables鈥擟arter
Date	Particulars	Amount	Date	Particulars	Amount
June 1	Sales Revenue	$1,575	June 12	Cash	$1,575
	Balance	$0

Accounts Receivables鈥擨ris
Date	Particulars	Amount	Date	Particulars	Amount
June 20	Sales Revenue	$765	June 28	Cash	$300
	Balance.	$465

Accounts Receivables鈥擠river
Date	Particulars	Amount	Date	Particulars	Amount
June 22	Sales Revenue	$230
	Balance	$230

Control account for accounts receivable

Date	Amount	Date	Amount
June 1	$1,575
June 20	$765	$1,575	June 12
June 22	$230	$300	June 28
End. Balance	$695

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2018
Jul. 1	Loaned \(16,000 cash to Bud Shyne on a one-year, 8% note.
Sep. 6	Sold goods to Lawn Pro, receiving a 90-day, 6% note for \)11,000. Ignore Cost of Goods Sold.
30	Made a single entry to accrue interest revenue on both notes.
?	Collected the maturity value of the Lawn Pro note.
2019
Jul. 1	Collected the maturity value of the Shyne note.

Apr. 15	Provided consulting services to Bob Jones and billed the customer \(1,500.
18	Provided consulting services to Samantha Cruise and billed the customer \)865.
25	Received \(750 cash from Jones.
28	Provided consulting services to Regan Taylor and billed the customer \)625.
28	Received \(865 cash from Cruise.
30	Received \)1,375 cash, \(750 from Jones and \)625 from Taylor

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Short Answer

Step by step solution

Definition of accounts receivables

Journal entry of transactions

Preparation of subsidiary ledger

Control account for accounts receivable

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Jun .1	Sold merchandise inventory on account to Carter Company, \(1,575.
6	Sold merchandise inventory for cash, \)550
12	Received cash from Carter Company in full settlement of its accounts receivable
20	Sold merchandise inventory on account to Iris Company, \(765
22	Sold merchandise inventory on account to Driver Company, \)230
28	Received cash from Iris Company in partial settlement of its accounts receivable, \(300