16E - Horngren'S Financial And Managerial Accounting

Question

Recording credit sales and collections

Steller Corporation had the following transactions in June:

Jun .1	Sold merchandise inventory on account to Carter Company, \(1,575.
6	Sold merchandise inventory for cash, \)550
12	Received cash from Carter Company in full settlement of its accounts receivable
20	Sold merchandise inventory on account to Iris Company, \(765
22	Sold merchandise inventory on account to Driver Company, \)230
28	Received cash from Iris Company in partial settlement of its accounts receivable, \(300

 

Requirements

1. Journalize the transactions. Ignore Cost of Goods Sold. Omit explanations.

2. Post the transactions to the general ledger and the accounts receivable subsidiary 

ledger. Assume all beginning balances are \)0.

3. Verify the ending balance in the control Accounts Receivable equals the sum of the 

balances in the subsidiary ledger.

Step-by-Step Solution

Answer

(1) The journal entries are recorded in Step 2.

(2) The ledgers are shown in Step 2.

(3)The balance of the control account is $ 695.

Definition of accounts receivables

An accounts receivable means the amount that is outstanding from the customers’ end for the goods sold on credit.

Journal entry of transactions

Date	Particulars	Debit	Credit
June 1	Accounts Receivables—Carter	$1,575
	Sales Revenue		$1,575
	(Being sold goods on account)
June 6	Cash	$550
	Sales Revenue		$550
	(Being goods sold on cash)
June 12	Cash	$1,575
	Accounts Receivable—Carter		$1,575
	(Being cash received from the accounts receivable)
June 20	Accounts Receivable—Iris	$765
	Sales Revenue		$765
	(Being goods sold on account)
June 22	Accounts Receivable—Driver	$230
	Sales Revenue		$230
	(Being goods sold on account)
June 28	Cash	$300
	Accounts Receivable—Iris		$300
	(Being cash received from the accounts receivable)

Preparation of subsidiary ledger

Sales Revenue
Date	Particulars	Amount	Date	Particulars	Amount
			June 1	Accounts Receivable—Carter	$1,575
			June 6	Cash	$550
			June 20	Accounts Receivable—Iris	$765
			June 22	Accounts Receivable—Driver	$230
				Balance	$3,120

 

Cash
Date	Particulars	Amount	Date	Particulars	Amount
June 6	Sales Revenue	$550
June 12	Accounts receivable—Carter	$1,575
June 28	Accounts receivable—Iris	$300
	Balance	$2,425

 

Accounts Receivables—Carter
Date	Particulars	Amount	Date	Particulars	Amount
June 1	Sales Revenue	$1,575	June 12	Cash	$1,575
	Balance	$0

 

Accounts Receivables—Iris
Date	Particulars	Amount	Date	Particulars	Amount
June 20	Sales Revenue	$765	June 28	Cash	$300
	Balance.	$465

 

Accounts Receivables—Driver
Date	Particulars	Amount	Date	Particulars	Amount
June 22	Sales Revenue	$230
	Balance	$230

Control account for accounts receivable

Date	Amount	Date	Amount
June 1	$1,575
June 20	$765	$1,575	June 12
June 22	$230	$300	June 28
End. Balance	$695