Li Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Journalize the following transactions that should be recorded in the cash receipts journal.May 1C. Li, the owner, contributed $10,000 cash to the company.May 7The company purchased $6,000 of merchandise on credit from Gomez, terms n/30.May 9The company sold merchandise costing $650 to E. James for $750 on credit, terms n/10.May 15The company borrowed $3,500 cash by signing a note payable to the bank.May 18The company received $750 cash from E. James in payment of the May 9 purchase.May 24The company sold merchandise costing $400 to B. Cox for $450 cash.

The objective of the question is to journalize the transactions that should be recorded in the cash receipts journal for Li Company. The cash receipts journal is used to record all transactions where cash is received by the company.First, we need to identify the transactions that involve cash receipts. In this case, these are the transactions on May 1, May 18, and May 24.On May 1, C. Li, the owner, contributed $10,000 cash to the company. This is a cash receipt, so it should be recorded in the cash receipts journal. The entry would be: Debit Cash $10,000, Credit Owner's Capital $10,000. This entry reflects the increase in the company's cash and the corresponding increase in the owner's equity in the company.On May 18, the company received $750 cash from E. James in payment of the May 9 purchase. This is also a cash receipt, so it should be recorded in the cash receipts journal. The entry would be: Debit Cash $750, Credit Accounts Receivable $750. This entry reflects the increase in the company's cash and the corresponding decrease in the company's accounts receivable.On May 24, the company sold merchandise costing $400 to B. Cox for $450 cash. This is a cash receipt, so it should be recorded in the cash receipts journal. The entry would be: Debit Cash $450, Credit Sales $450. This entry reflects the increase in the company's cash and the corresponding increase in the company's sales revenue.The transactions on May 7 (purchase of merchandise on credit), May 9 (sale of merchandise on credit), and May 15 (borrowing of cash) do not involve cash receipts, so they should not be recorded in the cash receipts journal.In summary, the transactions that should be recorded in the cash receipts journal for Li Company are the owner's contribution of cash on May 1, the receipt of cash from E. James on May 18, and the cash sale to B. Cox on May 24. The entries in the cash receipts journal reflect the increases in the company's cash from these transactions.

Answered: Li Company uses a sales journal,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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May 1	C. Li, the owner, contributed $10,000 cash to the company.
May 7	The company purchased $6,000 of merchandise on credit from Gomez, terms n/30.
May 9	The company sold merchandise costing $650 to E. James for $750 on credit, terms n/10.
May 15	The company borrowed $3,500 cash by signing a note payable to the bank.
May 18	The company received $750 cash from E. James in payment of the May 9 purchase.
May 24	The company sold merchandise costing $400 to B. Cox for $450 cash.