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Answer:
a. Journal Entries:
July 1 Debit Accounts receivable, $72,960
Credit Fees Earned $72,960
To record fees earned.
July 4 Debit Supplies $1,900
Credit Accounts payable $1,900
To record supplies purchased on account.
July 8 Debit Cash $65,960
Credit Accounts receivable $65,960
To record cash received from customers on account.
July 11 Debit Accounts payable $840
Credit Cash $840
To record payment to creditors on account.
Cash
Date Account Titles Debit Credit
July 8 Accounts receivable $65,960
July 11 Accounts payable $840
Supplies
Date Account Titles Debit Credit
July 4 Accounts payable $1,900
Accounts Receivable
Date Account Titles Debit Credit
July 1 Fees Earned $72,960
July 8 Cash $65,960
Accounts Payable
Date Account Titles Debit Credit
July 4 Supplies $1,900
July 11 Cash $840
Fees Earned
Date Account Titles Debit Credit
July 1 Accounts receivable $72,960
c. If the unadjusted trial balance on July 31 shows a credit balance for Accounts Receivable, it means that an error has occurred, unless the cash received from customers on account exceeds the debit balance on the Accounts receivable. This will mean that some customers paid in advance for services not yet rendered. This credit balance needs to be transferred to the Deferred Revenue account.
Explanation:
a) Data and Calculations:
July 1 Accounts receivable, $72,960 Fees Earned $72,960
July 4 Supplies $1,900 Accounts payable $1,900
July 8 Cash $65,960 Accounts receivable $65,960
July 11 Accounts payable $840 Cash $840