Q2SE - Horngren'S Financial And Managerial Accounting

Question

Recording credit sales and collections

Record the following transactions for Summer Consulting. Explanations are not required.

Apr. 15	Provided consulting services to Bob Jones and billed the customer \(1,500.
18	Provided consulting services to Samantha Cruise and billed the customer \)865.
25	Received \(750 cash from Jones.
28	Provided consulting services to Regan Taylor and billed the customer \)625.
28	Received \(865 cash from Cruise.
30	Received \)1,375 cash, \(750 from Jones and \)625 from Taylor

Step-by-Step Solution

Answer

The transaction for which the payment is made after some time of billing is called credit sales. 

Step 1: Explanation of Collection Period

The term collection period refers to the period of time allowed by a seller to its customers to make the payment of the transaction 

Step 2: Journalize the transactions for summer consulting

Date	Account and explanation	Debit	Credit
April 15	Accounts receivable – Bod Jones Service Revenue (Services performed on account)	$ 1,500	$ 1,500
April 18	Accounts receivable – Samantha Cruise Service Revenue (Services performed on account)	$ 865	$ 865
April 25	Cash     Accounts receivable – Bod Jones (Collected cash on account)	$ 750	$750
April 28	Accounts receivable – Regan Taylor Service Revenue (Services performed on account)	$625	$625
April 28	Cash     Accounts receivable – Cruise (Collected cash on account)	$865	$865
June 30	Cash     Accounts receivable – Regan Taylor    Accounts receivable – Cruise (Collected cash on account)	$1,375	$1,375