Reference no: EM132875555
Problem - Revenue and cash receipts journals - Essential Paris, Inc. has $2,290 in the December 1 balance of the accounts receivable account consisting of $940 from Chrystal Co. and $1,350 from Venus Co. Transactions related to revenue and cash receipts completed by Essential Paris, Inc. during the month of December 2012 are as follows:
Dec. 3. Issued Invoice No. 622 for services provided to Palace Corp., $1,920.
Dec. 5. Received cash from Chrystal Co., on account, for $940.
Dec. 8. Issued Invoice No. 623 for services provided to Sunstream Aviation Inc., $3,450.
Dec. 12. Received cash from Venus Co., on account, for $1,350.
Dec. 18. Issued Invoice No. 624 for services provided to Amex Services Inc., $2,600.
Dec. 23. Received cash from Palace Corp. for Invoice No. 622.
Dec. 28. Issued Invoice No. 625 to Venus Co., on account, for $2,190.
Dec. 30. Received cash from Boston Co. for invoice of August 2.
Required -
a. Prepare a single-column revenue journal and a cash receipts journal to record these transactions. Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. Place a check mark in the Post. Ref. column to indicate when the accounts receivable subsidiary ledger should be posted.
b. Prepare a listing of the accounts receivable subsidiary ledger account balances and verify that the total of the accounts receivable subsidiary ledger equals the balance of the accounts receivable account on December 31, 2012.
c. Why does Essential Paris use a subsidiary ledger for accounts receivable?