Chloe has done the accounting through August 16, the first sixteen days of busin
ID: 2390649 • Letter: C
Question
Chloe has done the accounting through August 16, the first sixteen days of business for her company. She has given you her trial balance as of August 16, 2016 below.
Chloe’s Cleaning Services
UNADJUSTED TRIAL BALANCE
August 16, 2016
1
Cash
7,810.00
2
Accounts Receivable
4,575.00
3
Supplies
3,200.00
4
Equipment
7,500.00
5
Accumulated Depreciation-Equipment
6
Accounts Payable
3,450.00
7
Wages Payable
360.00
8
Chloe Sanderson, Capital
20,000.00
9
Chloe Sanderson, Drawing
10
Income Summary
11
Fees Earned
5,500.00
12
Wages Expense
3,600.00
13
Insurance Expense
100.00
14
Supplies Expense
1,300.00
15
Repairs Expense
250.00
16
Advertising Expense
550.00
17
Utilities Expense
350.00
18
Depreciation Expense-Equipment
19
Miscellaneous Expense
75.00
20
Totals
29,310.00
29,310.00
Chloe Sanderson, a friend of yours from business school, decided to be her own boss and start a business cleaning homes and offices after graduation. Although she was a general business major in college, she always enjoyed accounting; but she’s a little uncertain about what type of accounting system might be best for her fledgling business. She has already hired two employees to work for her, so she would like your help as soon as possible to set things up correctly.
Chloe already has three clients and two vendors, so she’d like to use two subsidiary ledgers: one for accounts receivable and one for accounts payable.
In addition, since would like to streamline her accounting by using four special journals she recalls from business school: a revenue journal, cash receipts journal, purchases journal, and cash payments journal.
Using what she remembers from business school, Chloe has prepared a list of accounting tasks for her business, and would like you to review it.
Determine whether each item should be on a given list. If so, select “Correct.” If not, select “Error,” choosing the correct list for the item.
Chloe has prepared the table below, showing the balances as of August 16 for her Accounts Receivable Subsidiary Ledger and Accounts Payable Subsidiary Ledger.
Accounts Receivable Subsidiary Ledger Balances
Accounts Payable Subsidiary Ledger Balances
You’ve received a list of the remaining August transactions from Chloe.
Review the transactions, and then complete the table to give Chloe instructions on how to enter the transactions in her accounting system, using the following abbreviations. The transactions should be entered without considering end-of-month posting of totals, adjusting entries, or closing entries..
Now that the remaining August transactions have been entered, Chloe feels confident enough to complete the end-of-month totals and posting.
Help Chloe finish her accounting for the month by calculating the amounts below.
ACCOUNT TITLE DEBIT CREDIT1
Cash
7,810.00
2
Accounts Receivable
4,575.00
3
Supplies
3,200.00
4
Equipment
7,500.00
5
Accumulated Depreciation-Equipment
6
Accounts Payable
3,450.00
7
Wages Payable
360.00
8
Chloe Sanderson, Capital
20,000.00
9
Chloe Sanderson, Drawing
10
Income Summary
11
Fees Earned
5,500.00
12
Wages Expense
3,600.00
13
Insurance Expense
100.00
14
Supplies Expense
1,300.00
15
Repairs Expense
250.00
16
Advertising Expense
550.00
17
Utilities Expense
350.00
18
Depreciation Expense-Equipment
19
Miscellaneous Expense
75.00
20
Totals
29,310.00
29,310.00
Explanation / Answer
On a Daily Basis Enter cash receipts in the Cash Receipts Journal Correct: Should be entered on a daily basis Enter invoices in the Revenue Journal Correct: Should be entered on a daily basis Post the total of the Cash Cr. column of the Cash Payments Journal to the cash general ledger account Cr. column Error : at the end of the month Post the total of the Accounts Receivable Cr. column of the Cash Receipts Journal to the accounts receivable general ledger account Cr. column Error : at the end of the month Post the total of the Accounts Receivable Dr. column of the Revenue Journal to the accounts receivable general ledger account Dr. column Error : at the end of the month On a Regular Basis Post Revenue Journal to Accounts Receivable Subsidiary Ledger customer accounts Correct: Post Purchases Journal to Accounts Payable Subsidiary Ledger creditor accounts Correct: At the End of the Month Enter cash payments in the Cash Payments Journal ERROR:on a daily basis Post the total of the Cash Dr. column of the Cash Receipts Journal to the cash general ledger account Dr. column Correct: Enter purchases on account in the Purchases Journal error : on a daily basis Post the total of the Accounts Payable Cr. column of the Purchases Journal to the accounts payable general ledger Cr. c Correct: Month Date Amount Transaction Journalize Post to Ledger Aug. 17 $1,500 Issued Invoice No. 405 to Functional Fitness Company R AR Aug. 19 $550 Paid Invoice No. 22 from Sudsy’s Laundry CP GL Aug. 22 $1,700 Ordered supplies from Cleaning Supplies Warehouse and received invoice P AP Aug. 23 $2,000 Received payment on account from Central Medical Offices, Inc. CR GL Aug. 31 $3,600 Paid wages to employees CP GL Account Balance as of August 31, 2016 Cash 3660 Accounts Receivable 6075 Accounts Payable 4600 Accounts Receivable Subsidiary Ledger for Central Medical Offices, Inc. 500 Accounts Receivable Subsidiary Ledger for Functional Fitness Company 2300 Accounts Receivable Subsidiary Ledger for Omega Multiplex Theater 1275 Accounts Payable Subsidiary Ledger for Cleaning Supplies Warehouse 4550 Accounts Payable Subsidiary Ledger for Sudsy’s Laundry 50 Wages Expense 0
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