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, $35,700.
2. Purchased supplies on account, $2,000.
3. Received cash from customers on account, $26,150.
4. Paid creditors on accounts, $800.

a. Journalize the above 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 the credit balance mean an error has occurred?

Answer:
a.
 (1) Accounts Receivable.......................................... 35,700
 Fees Earned ................................................... 35,700
 (2) Supplies............................................................... 2,000
 Accounts Payable.......................................... 2,000
 (3) Cash..................................................................... 26,150
 Accounts Receivable .................................... 26,150
 (4) Accounts Payable............................................... 800
 Cash................................................................ 800

b.  Note: First value is a debit. For Accounts with only one entry, they're using their normal balances.

Cash 

(3) 26,150  (4) 800 

Accounts Payable 

(4) 800 (2) 2,000 

Supplies 

(2) 2,000     

Fees Earned 

(1) 35,700 

Accounts Receivable 

(1) 35,700 (3) 26,150

c. No. A credit balance in Accounts Receivable could occur if a customer over 

paid his or her account. Regardless, the credit balance should be investigated 

to verify that an error has not occurred.