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Transactions and T Accounts

The following selected transactions were completed during July of the current year:

1. Billed customers for fees earned, [tex]\$112,700[/tex].
2. Purchased supplies on account, [tex]\$4,500[/tex].
3. Received cash from customers on account, [tex]\$88,220[/tex].
4. Paid creditors on account, [tex]\$3,100[/tex].

a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. If an amount box does not require an entry, leave it blank.

(1)
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
\text{Accounts Receivable} & \$112,700 \\
\text{Fees Earned} & \$112,700 \\
\hline
\end{array}
\][/tex]

(2)
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
\text{Supplies} & \$4,500 \\
\text{Accounts Payable} & \$4,500 \\
\hline
\end{array}
\][/tex]

(3)
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
\text{Cash} & \$88,220 \\
\text{Accounts Receivable} & \$88,220 \\
\hline
\end{array}
\][/tex]

(4)
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
\text{Accounts Payable} & \$3,100 \\
\text{Cash} & \$3,100 \\
\hline
\end{array}
\][/tex]

b. Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. For each amount posted in the accounts, select the appropriate number to identify the transaction.

Cash
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
(3) & \$88,220 \\
(4) & \$3,100 \\
\hline
\end{array}
\][/tex]

Accounts Receivable
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
(1) & \$112,700 \\
(3) & \$88,220 \\
\hline
\end{array}
\][/tex]

Supplies
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
(2) & \$4,500 \\
\hline
\end{array}
\][/tex]

Accounts Payable
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
(2) & \$4,500 \\
(4) & \$3,100 \\
\hline
\end{array}
\][/tex]

Fees Earned
[tex]\[
\begin{array}{|c|c|}
\hline
\text{Debit} & \text{Credit} \\
\hline
(1) & \$112,700 \\
\hline
\end{array}
\][/tex]



Answer :

GinnyAnswer
Sure, let's break down the solution step by step for each transaction and then prepare the journal entries. After that, we'll post these entries to the relevant T accounts.

### Part (a): Journalizing Transactions

1. Billed customers for fees earned, \[tex]$112,700: - Debit: Accounts Receivable - Credit: Fees Earned 2. Purchased supplies on account, \$[/tex]4,500:
- Debit: Supplies
- Credit: Accounts Payable

3. Received cash from customers on account, \[tex]$88,220: - Debit: Cash - Credit: Accounts Receivable 4. Paid creditors on account, \$[/tex]3,100:
- Debit: Accounts Payable
- Credit: Cash

### Journal Entries

1. | Date | Account | Debit | Credit |
|------------|-----------------------|-------------|-------------|
| (1) | Accounts Receivable | \[tex]$112,700 | | | | Fees Earned | | \$[/tex]112,700 |

2. | Date | Account | Debit | Credit |
|------------|-----------------------|-------------|-------------|
| (2) | Supplies | \[tex]$4,500 | | | | Accounts Payable | | \$[/tex]4,500 |

3. | Date | Account | Debit | Credit |
|------------|-----------------------|-------------|-------------|
| (3) | Cash | \[tex]$88,220 | | | | Accounts Receivable | | \$[/tex]88,220 |

4. | Date | Account | Debit | Credit |
|------------|-----------------------|-------------|-------------|
| (4) | Accounts Payable | \[tex]$3,100 | | | | Cash | | \$[/tex]3,100 |

### Part (b): Posting to T Accounts

Let's now post these journal entries to the T accounts.

1. Cash:
- (3) Debit \[tex]$88,220 - (4) Credit \$[/tex]3,100

```
Cash
------------
Debit | Credit
88,220 | 3,100
(3) | (4)
```

2. Supplies:
- (2) Debit \[tex]$4,500 ``` Supplies ------------ Debit | Credit 4,500 | (2) | ``` 3. Accounts Receivable: - (1) Debit \$[/tex]112,700
- (3) Credit \[tex]$88,220 ``` Accounts Receivable ------------ Debit | Credit 112,700 | 88,220 (1) | (3) ``` 4. Accounts Payable: - (4) Debit \$[/tex]3,100
- (2) Credit \[tex]$4,500 ``` Accounts Payable ------------ Debit | Credit 3,100 | 4,500 (4) | (2) ``` 5. Fees Earned: - (1) Credit \$[/tex]112,700

```
Fees Earned
------------
Debit | Credit
|112,700
| (1)
```

### Summary

These entries ensure that each transaction's effects on the financial statements are properly recorded. The journal entries correctly capture the debits and credits, while the T accounts show how these entries affect the specific accounts over time.

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