Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 4

Acorn Industries completes these transactions during July of the current year (the terms of all its credit sales are 2/10, n/30).

Required
1. Prepare a sales journal like that in Exhibit 7.5 and a cash receipts journal like that in Exhibit 7.7. Number both journals as page 3. Then review the transactions of Acorn Industries and enter those transactions that should be journalized in the sales journal and those that should be journalized in the cash receipts journal. Ignore any transactions that should be journalized in a purchases journal, a cash disbursements journal, or a general journal.
2. Open the following general ledger accounts: Cash; Accounts Receivable; Inventory; Long-Term Notes Payable; R. Acorn, Capital; Sales; Sales Discounts; and Cost of Goods Sold. Enter the June 30 balances for Cash ($100,000), Inventory ($200,000), Long-Term Notes Payable ($200,000), and R. Acorn, Capital ($100,000). Also open accounts receivable subsidiary ledger accounts for Kim Nettle, Ashton Moore, and Ruth Blake.
3. Verify that amounts that should be posted as individual amounts from the journals have been posted. (Such items are immediately posted.) Foot and crossfoot the journals and make the month-end postings.
4. Prepare a trial balance of the general ledger accounts opened as required for part 2; then prove the accuracy of the subsidiary ledger by preparing a schedule of accounts receivable.
Analysis Component
5. Assume that the total for the schedule of accounts receivable does not equal the balance of the controlling account in the general ledger. Describe steps you would take to discover the error(s).
Reference: Exhibit 7.5

Exhibit 7.7