Question

Ali Co. uses a sales journal, purchases journal ,Cash receipts journal,Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Journalize the following transactions that should be recorded in the cash receipts journal.

May 1 C. Li, the owner, contributed $12,000 cash to the company.
7 The company purchased $8,000 of merchandise on credit from Gomez, terms n/30.
9 The company sold merchandise costing $1,150 on credit to E. James for $1,250, terms n/10.
15 The company borrowed $8,500 cash by signing a note payable to the bank.
18 The company received $1,250 cash from E. James in payment of the May 9 purchase.
24 The company sold merchandise costing $900 to B. Cox for $950 cash.
Journalize the November transactions that should be recorded in the cash receipts journal assuming the perpetual inventory system is used.

Answer 1

Only those transactions that involve cash payments or cash receipts are recorded in the cash journal:

May 1, C. Li contributes cash tot he company

Dr Cash 12,000

Cr C. Li., capital 12,000

May 15, cash received from bank loan

Dr Cash 8,500

Cr Notes payable 8,500

May 18, collections from E. James

Dr Cash 1,250

Cr Accounts receivable 1,250

May 24, merchandise sold to B. Cox

Dr Cash 950

Cr Sales revenue 950

Dr Cost of goods sold 900

Cr Inventory 900

The May 7 and May 9 transactions should be recorded in the sales journal but not in the cash journal since they involve accounts receivables. COGS from May 24 transaction should also be recorded in the cash journal because the sales were on cash.