Reference no: EM132824960

Selected transactions follow for Discovery Sports Ltd. during the company's first month of business. The company expects a return rate of 8% and uses a perpetual inventory system.

1. Feb. 2 Sold $1,140 of merchandise to Andrew Noren on account, terms n/30. The goods had cost Discovery $765.
2. Feb 4 Andrew Noren returned for credit $90 of the merchandise purchased on February 2. The goods had cost Discovery $60 and they were returned to inventory.
3. Feb 5 Sold $760 of merchandise to Dong Corporation on account, terms n/30. The goods had cost Discovery $490.
4. Feb 8 Sold $842 of merchandise to Michael Collins for cash. The goods had cost Discovery $622.
5. Feb 10 Sold $920 of merchandise to Rafik Kurji account, terms n/30. The goods had cost Discovery $680.
6. Feb 22 Dong Corporation paid its account in full.
7. Feb 24 Andrew Noren purchased an additional $696 of merchandise on account, terms n/30. The goods had cost Discovery $410.
8. Feb 27 Sold $1,738 of merchandise to Batstone Corporation, terms n/30. The goods had cost Discovery $1,105.
9. Feb 28 Andrew Noren paid $1,000 on account.

Problem (a) Set up T accounts for the Accounts Receivable general ledger (control) account and for the accounts receivable subsidiary ledger accounts. Post the journal entries to these accounts.

Problem (b) Prepare a list of customers and the balances of their accounts from the subsidiary ledger. Prove that the total of the subsidiary ledger balances is equal to the control account balance.