EX 2-9 Transactions and T accounts

The following selected transactions were completed during August of the current year:

1. Billed customers for fees earned, $73,900.

2. Purchased supplies on account, $1,960.

3. Received cash from customers on account, $62,770.

4. Paid creditors on account, $820.

a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted.

b. Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transactions.

c. Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?

Answer:

a. (1) (2) (3)  (4)  Accounts Receivable 73,900 Fees Earned 73,900 

Supplies 1,960 Accounts Payable 1,960 

Cash 62,770 Accounts Receivable 62,770 

Accounts Payable 820 Cash 820 b. Cash Accounts Payable (3) 62,770 (4) 820 (4) 820 (2) 1,960  Supplies (2) 1,960 (1) 73,900 Accounts Receivable (1) 73,900 (3) 62,770 

c. No, an error may not have necessarily occurred. A credit balance 

in Accounts Receivable could occur if a customer overpaid his or 

her account. Regardless, the credit balance should be investigated to 

verify that an error has not occurred.