Question

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

Transactions
Aug.	1	Billed customers for fees earned, $74,310.
	4	Purchased supplies on account, $2,000.
	8	Received cash from customers on account, $62,770.
	11	Paid creditors on account, $900.

	Required:
A.	Journalize these transactions in a two-column journal. Refer to the T-Accounts for exact wording of account titles.
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, select the appropriate date.
C.	Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean that an error has occurred?

Chart of Accounts

CHART OF ACCOUNTS

ch2Generic

General Ledger

	ASSETS
11	Cash
12	Supplies
22	Accounts Receivable

	LIABILITIES
21	Accounts Payable

	REVENUE
41	Fees Earned

	EXPENSES
51	Rent Expense
52	Office Salaries Expense
53	Automobile Expense
54	Supplies Expense
55	Miscellaneous Expense

Journal

A. Journalize these transactions in a two-column journal. Refer to the T-Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8

T Accounts

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, select the appropriate date.

Cash

Accounts Payable

Supplies

Fees Earned

Accounts Receivable

Final Question

C. Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable.

Does this credit balance mean that an error has occurred?

Yes

No

Answer 1

A.

B.

C.

No, credit balance for accounts receivable does not mean that an error has occured.