EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL
EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL
23rd Edition
ISBN: 9780357421123
Author: HEINTZ
Publisher: Cengage Learning
Question
Book Icon
Chapter 12, Problem 7SPB

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:

EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL, Chapter 12, Problem 7SPB

Table (1)

Verification of total debit and credit column:

Total Debit     = Total Credit($15,174.85+$97.65)=($3,481.00+$11,230.00+$561.50)=$15,272.50=$15,272.5 

Working note 1:

Calculate the amount of cash on dated 5th January:

Cash(debit)on dated 5thJanuary}=(Cash sales + 5% on sales tax)=[$2,800+(5%×$2,800)]=[$2,800+$140]=$2,940

Working note 2:

Calculate the amount of bank credit card expense on dated 5th January:

Bank credit card expense on dated 5thJanuary}=[(Sales + 5% on sales tax)×Credit card fee %]=[$1,200+(5%×$1,200)]×3%=[$1,200+$60]×3%=$37.80

Working note 3:

Calculate the amount of cash on dated 5th January:

Cash(debit)on dated 5thJanuary}=[(Cash sales + 5% on sales tax)Bank credit card expense]=[$1,200+(5%×$1,200)$37.80]=[$1,200+$60$37.80]=$1,222

Working note 4:

Calculate the amount of cash on dated 12th January:

Cash(debit)on dated 12thJanuary}=(Cash sales + 5% on sales tax)=[$3,100+(5%×$3,100)]=[$3,100+$155]=$3,255

Working note 5:

Calculate the amount of bank credit card expense on dated 12th January:

Bank credit card expense on dated 12thJanuary}=[(Sales + 5% on sales tax)×Credit card fee %]=[$1,900+(5%×$1,900)]×3%=[$1,900+$95]×3%=$59.85

Working note 6:

Calculate the amount of cash on dated 12th January:

Cash(debit)on dated 12thJanuary}=[(Cash sales + 5% on sales tax)Bank credit card expense]=[$1,900+(5%×$1,900)$59.85]=[$1,900+$95$59.85]=$1,935.15

Working note 7:

Calculate the amount of cash on dated 19th January:

Cash(debit)on dated 19thJanuary}=(Cash sales + 5% on sales tax)=[$2,230+(5%×$2,230)]=[$2,230+$111.5]=$2,341.50

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 January 11:

General Journal
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
January11Sales Returns and Allowances401.140.00 
  Sales Tax Payable2312.00 
   Accounts Receivable, MA122/✓ 42.00
  (Record 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= $40×5%= $2

Working note 2:

Compute the accounts receivable amount.

Accounts receivable = Sales returns+Sales tax payable= $40.00+$2.00= $42.00

Transaction on January 18:

General Journal
DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
20--    
January21Sales Returns and Allowances401.131.00 
  Sales Tax Payable2311.55 
   Accounts Receivable, RZ122/✓ 32.55
  (Record 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, RZ 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= $31×5%= $1.55

Working note 2:

Compute the accounts receivable amount.

Accounts receivable, A Manufacturing} = Sales returns+Sales tax payable= $31.00+$1.55= $32.55

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--      
January1Balance  2,890.75 
 31 CR1015,174.85 18,065.60 

Table (4)

ACCOUNT    Accounts Receivable                                             ACCOUNT NO. 122
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
January1Balance  6,300.00 
 11 J8 42.006,258.00 
 21 J8 32.556,225.45 
 31 CR10 3,481.002,744.45 

Table (5)

ACCOUNT    Sales Tax Payable                                                 ACCOUNT NO. 231
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
January11 J82.00 2.00 
 21 J81.55 3.55 
 31 CR10 561.50 557.95

Table (6)

ACCOUNT    Sales                                                                         ACCOUNT NO. 401
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
January31 CR10 11,230.00 11,230.00

Table (7)

ACCOUNT    Sales Returns and Allowances                            ACCOUNT NO. 401.1
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
January11 J840.00 40.00 
 21 J831.00 71.00 

Table (8)

ACCOUNT    Bank Credit Card Expense                                     ACCOUNT NO. 513
DateItemPost. Ref.Debit ($)Credit ($)Balance
Debit ($)Credit ($)
20--      
January31 CR1097.65 97.65 

Table (9)

Post the journals to the accounts receivable ledger.

NAME          RB
ADDRESS  229 SE 65th Avenue, P, Or 97215-1451
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
January1Balance  1,400.00
 1 CR10 880.00520.00
 11 J8 42.00478.00

Table (10)

NAME          D Manufacturing
ADDRESS  447 6th Avenue, F Staff, AZ 86004-6842
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
January1Balance  318.00
 25 CR10 318.000

Table (11)

NAME          CH
Address 1462 N. S Blvd., Los Cruces, Nm 88012-7791
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--    815
January1Balance 271544
 3 CR10   

Table (12)

NAME          JS
ADDRESS   5997 Blackgold Lane, G, TX 76051-2366
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
January1Balance  1,481.00
 20 CR10 912.00569.00

Table (13)

NAME         RZ
ADDRESS  6881 S Drive, San D, CA 92127-8671
DateItemPost. Ref.Debit ($)Credit ($)Balance ($)
20--     
January1Balance  2,286.00
 15 CR10 1,100.001,186.00
 18 J8 32.551,153.45

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
Please answer the general accounting question not use ai
The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 2,300 units, the actual direct labor cost was $68,800 for 4,300 direct labor hours worked, the total direct labor variance is____?
The Leo Company had $600,000 of sales revenue. During the same accounting period the beginning and ending accounts receivable balances were $27,000 and $29,000, respectively. What amount of cash was collected from the customers during this period?

Chapter 12 Solutions

EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL

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
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Text book image
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub