College accounting, chapters 1-9
College accounting, chapters 1-9
23rd Edition
ISBN: 9781337794787
Author: HEINTZ, James A.
Publisher: Cengage Learning,
Question
Book Icon
Chapter 12, Problem 7SPA

1.

To determine

Prepare the given transactions in the cash receipts journal and verify the total column and rule the column and use the general journal to record the sales returns and allowances.

1.

Expert Solution
Check Mark

Explanation of Solution

Cash Receipts Journal:  It is a special book where only cash receipts transactions that are received from customers, merchandise sales and service made in cash and collection of accounts receivable are recorded.

The following are the some examples of transactions that would be recorded in the Other Accounts credit column of the cash receipts journal:

  • • Cash received as interest on notes payable
  • • Interest revenue received from debtors
  • • Cash receipts from bank loans
  • • Cash receipts for capital investments

Prepare the given transactions in the cash receipts journal and verify the total column and rule the column and use the general journal to record the sales returns and allowances:

College accounting, chapters 1-9, Chapter 12, Problem 7SPA

Table (1)

Verification of total debit and credit column:

Total Debit     = Total Credit($17,292.36+$57.24)=($5,732.00+$10,960.00+$657.60)=$17,349.6=$17,349.6 

Working note 1:

Calculate the amount of cash on dated 7th December:

Cash(debit)on dated 7thDecember}=(Cash sales + 6% on sales tax)=[$3,160+(6%×$3,160)]=[$3,160+$189.60]=$3,349.60

Working note 2:

Calculate the amount of bank credit card expense on dated 7th December:

Bank credit card expense on dated 7thDecember}=[(Sales + 6% on sales tax)×Credit card fee %]=[$1,000+(6%×$1,000)]×3%=[$1,000+$60]×3%=$31.80

Working note 3:

Calculate the amount of cash on dated 7th December:

Cash(debit)on dated 7thDecember}=[(Cash sales + 6% on sales tax)Bank credit card expense]=[$1,000+(6%×$1,000)$31.80]=[$1,000+$60$31.80]=$1,028.20

Working note 4:

Calculate the amount of cash on dated 14th December:

Cash(debit)on dated 14thDecember}=(Cash sales + 6% on sales tax)=[$2,800+(6%×$2,800)]=[$2,800+$168]=$2,968

Working note 5:

Calculate the amount of bank credit card expense on dated 14th December:

Bank credit card expense on dated 14thDecember}=[(Sales + 6% on sales tax)×Credit card fee %]=[$800+(6%×$800)]×3%=[$800+$48]×3%=$25.44

Working note 6:

Calculate the amount of cash on dated 14th December:

Cash(debit)on dated 14thDecember}=[(Cash sales + 6% on sales tax)Bank credit card expense]=[$800+(6%×$800)$25.44]=[$800+$48$25.44]=$822.56

Working note 7:

Calculate the amount of cash on dated 21st December:

Cash(debit)on dated 21stDecember}=(Cash sales + 6% on sales tax)=[$3,200+(6%×$3,200)]=[$3,200+$192]=$3,392

Use the general journal to record the sales returns and allowances:

General Journal: It is a book where all the monetary transactions are recorded in the form of journal entries on the date of their occurrence in a chronological order.

Transaction on December 11:

General Journal
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
December11Sales Returns and Allowances401.160.00 
  Sales Tax Payable2313.60 
   Accounts Receivable, MA122/✓ 63.60
  (To record the merchandise returned)   

Table (2)

Description:

  • ■ Sales Returns and Allowances is a contra-revenue account, and contra-revenue accounts decrease the equity value, and a decrease in equity is debited.
  • ■ Sales Tax Payable is a liability account. Since the payable decreased due to returns, the liability decreased, and a decrease in liability is debited.
  • ■ Accounts Receivable, MA is an asset account. Since inventory is returned, amount to be received has decreased, asset account is decreased, and a decrease in asset is credited.

Working note 1:

Compute the sales tax payable amount.

Sales tax payable = Sales returns×Sales tax percentage= $60×6%= $3.60

Working note 2:

Compute the accounts receivable amount.

Accounts receivable, MA = Sales returns+Sales tax payable= $60.00+$3.60= $63.60

Transaction on December 21:

General Journal
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
December21Sales Returns and Allowances401.122.00 
  Sales Tax Payable2311.32 
   Accounts Receivable, A Manufacturing122/✓ 23.32
  (To record the merchandise returned)   

Table (3)

Description:

  • ■ Sales Returns and Allowances is a contra-revenue account, and contra-revenue accounts decrease the equity value, and a decrease in equity is debited.
  • ■ Sales Tax Payable is a liability account. Since the payable decreased due to returns, the liability decreased, and a decrease in liability is debited.
  • ■ Accounts Receivable, A Manufacturing is an asset account. Since inventory is returned, amount to be received has decreased, asset account is decreased, and a decrease in asset is credited.

Working note 1:

Compute the sales tax payable amount.

Sales tax payable = Sales returns×Sales tax percentage= $22×6%= $1.32

Working note 2:

Compute the accounts receivable amount;

Accounts receivable, A Manufacturing} = Sales returns+Sales tax payable= $22.00+$1.32= $23.32

2.

To determine

Post the prepared journal to the general ledger, and to the accounts receivable ledger.

2.

Expert Solution
Check Mark

Explanation of Solution

Posting transactions: The process of transferring the journalized transactions into the accounts of the ledger is known as posting the transactions.

Post the prepared journals to the general ledger:

ACCOUNT    Cash                                                                       ACCOUNT NO. 101
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
December1Balance  9,862.00 
 31 CR1017,292.36 27,154.36 

Table (4)

ACCOUNT    Accounts Receivable                                             ACCOUNT NO. 122
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
December1Balance  9,352.00 
 11 J8 63.609,288.40 
 21 J8 23.329,265.08 
 31 CR10 5,732.003,533.08 

Table (5)

ACCOUNT    Sales Tax Payable                                                 ACCOUNT NO. 231
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
December11 J83.60 3.60 
 21 J81.32 4.92 
 31 CR10 657.60 652.68

Table (6)

ACCOUNT    Sales                                                                         ACCOUNT NO. 401
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
December31 CR10 10,960.00 10,960.00

Table (7)

ACCOUNT    Sales Returns and Allowances                            ACCOUNT NO. 401.1
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
December11 J860.00 60.00 
 21 J822.00 82.00 

Table (8)

ACCOUNT    Bank Credit Card Expense                                     ACCOUNT NO. 513
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
December31 CR1057.24 57.24 

Table (9)

Post the journals to the accounts receivable ledger.

NAME          MA
ADDRESS  233 W 11th Avenue, D, Mi 59500-1154
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
December1Balance  2,480.00
 1 CR10 1,360.001,120.00
 11 J8 63.601,056.40

Table (10)

NAME          A Manufacturing
ADDRESS 284 W 88 Street, D, Mi 59522-1168
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
December1Balance  982.00
 2 CR10 382.00600.00
 21 J8 23.32576.68

Table (11)

NAME          JG
ADDRESS P.O. Box 864, D, Mi 59552-0864
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
December1Balance  880.00
 8 CR10 880.000

Table (12)

NAME          TW
ADDRESS   100 N w S Street., D, Mi 59210-1337
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
December1Balance  1,810.00
 20 CR10 1,110.00700.00

Table (13)

NAME          RC
ADDRESS 11312 Fourteenth Avenue South, D, Mi 59221-1142
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
December1Balance  3,200.00
 24 CR10 2,000.001,200.00

Table (14)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
None
Please given correct answer general accounting
General Account

Chapter 12 Solutions

College accounting, chapters 1-9

Ch. 12 - Prob. 1CECh. 12 - LO3 Enter the following transactions in a cash...Ch. 12 - LO4 Enter the following transaction in a purchases...Ch. 12 - Enter the following transactions in a cash...Ch. 12 - Prob. 1RQCh. 12 - List four items of information about each sale...Ch. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 11RQCh. 12 - What steps are followed in posting from the cash...Ch. 12 - What steps are followed in posting from the cash...Ch. 12 - RECORDING TRANSACTIONS IN THE PROPER JOURNAL...Ch. 12 - Prob. 2SEACh. 12 - JOURNALIZING CASH RECEIPTS Enter the following...Ch. 12 - JOURNALIZING PURCHASES TRANSACTIONS Enter the...Ch. 12 - Prob. 5SEACh. 12 - SALES JOURNAL Futi Ishanyan owns a retail business...Ch. 12 - Prob. 7SPACh. 12 - Prob. 8SPACh. 12 - PURCHASES JOURNAL J. B. Speck, owner of Specks...Ch. 12 - PURCHASES JOURNAL, GENERAL LEDGER, AND ACCOUNTS...Ch. 12 - Prob. 11SPACh. 12 - PURCHASES JOURNAL, CASH PAYMENTS JOURNAL, AND...Ch. 12 - RECORDING TRANSACTIONS IN THE PROPER JOURNAL...Ch. 12 - Prob. 2SEBCh. 12 - Prob. 3SEBCh. 12 - JOURNALIZING PURCHASES TRANSACTIONS Enter the...Ch. 12 - JOURNALIZING CASH PAYMENTS Sandcastles Northwest...Ch. 12 - SALES JOURNAL T. M. Maxwell owns a retail business...Ch. 12 - Prob. 7SPBCh. 12 - SALES JOURNAL, CASH RECEIPTS JOURNAL, AND GENERAL...Ch. 12 - PURCHASES JOURNAL Ann Benton, owner of Bentons...Ch. 12 - PURCHASES JOURNAL, GENERAL LEDGER, AND ACCOUNTS...Ch. 12 - Prob. 11SPBCh. 12 - PURCHASES JOURNAL, CASH PAYMENTS JOURNAL, AND...Ch. 12 - Prob. 1MYWCh. 12 - Judy Baresford, the store manager of Comfort...Ch. 12 - During the month of October 20--, The Pink Petal...Ch. 12 - Screpcap Co. had the following transactions during...
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Text book image
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Text book image
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Text book image
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning