Concept explainers
Journalize the difference between cash count and cash reported on cash register.
Explanation of Solution
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
Journalize the difference between cash count and cash reported on cash register.
Transaction on July 28:
Date | Account Titles and Explanations | Post. Ref. | Debit ($) | Credit ($) | ||
July | 28 | Cash | 893.50 | |||
Cash Short and Over | 1.70 | |||||
Income from Services | 895.20 | |||||
(Record cash shortage in the revenue earned) |
Table (1)
Description:
- Cash is asset account. Since the cash collected from sales revenue is recorded, the asset value increased. So, debit the cash account with $893.50.
- Cash Short and Over is an income statement (expense or revenue) account. The increase (overage) is credited and recorded as Revenue, and decrease (shortage) is debited and recorded as Expense. Hence, debit Cash Short and Over account with $1.70 indicating an expense.
- Income from Services is a revenue account. Revenues increase the stockholders’ equity value. So, credit Income from Services account with $895.20, indicating an increase in stockholders’ equity.
Working Note:
Compute the cash short and over amount.
Transaction on July 29:
Date | Account Titles and Explanations | Post. Ref. | Debit ($) | Credit ($) | ||
July | 29 | Cash | 975.80 | |||
Cash Short and Over | 1.60 | |||||
Income from Services | 977.40 | |||||
(Record cash shortage in the revenue earned) |
Table (2)
Description:
- Cash is asset account. Since the cash collected from sales revenue is recorded, the asset value increased. So, debit the cash account with $975.80.
- Cash Short and Over is an income statement (expense or revenue) account. The increase (overage) is credited and recorded as Revenue, and decrease (shortage) is debited and recorded as Expense. Hence, debit Cash Short and Over account with $1.60 indicating an expense.
- Income from Services is a revenue account. Revenues increase the stockholders’ equity value. So, credit Income from Services account with $977.40, indicating an increase in stockholders’ equity.
Working Note:
Compute the cash short and over amount.
Transaction on July 30:
Date | Account Titles and Explanations | Post. Ref. | Debit ($) | Credit ($) | ||
July | 30 | Cash | 886.60 | |||
Income from Services | 884.50 | |||||
Cash Short and Over | 2.10 | |||||
(Record cash overage in the revenue earned) |
Table (1)
Description:
- Cash is asset account. Since the cash collected from sales revenue is recorded, the asset value increased. So, debit the cash account with $886.60.
- Cash Short and Over is an income statement (expense or revenue) account. The increase (overage) is credited and recorded as Revenue, and decrease (shortage) is debited and recorded as Expense. Hence, credit Cash Short and Over account with $2.10 indicating a revenue.
- Income from Services is a revenue account. Revenues increase the stockholders’ equity value. So, credit Income from Services account with $884.50, indicating an increase in stockholders’ equity.
Working Note:
Compute the cash short and over amount.
Transaction on July 31:
Date | Account Titles and Explanations | Post. Ref. | Debit ($) | Credit ($) | ||
July | 31 | Cash | 1,024.40 | |||
Cash Short and Over | 2.85 | |||||
Income from Services | 1,027.25 | |||||
(Record cash shortage in the revenue earned) |
Table (1)
Description:
- Cash is asset account. Since the cash collected from sales revenue is recorded, the asset value increased. So, debit the cash account with $1,024.40.
- Cash Short and Over is an income statement (expense or revenue) account. The increase (overage) is credited and recorded as Revenue, and decrease (shortage) is debited and recorded as Expense. Hence, debit Cash Short and Over account with $2.85 indicating an expense.
- Income from Services is a revenue account. Revenues increase the stockholders’ equity value. So, credit Income from Services account with $1,027.25, indicating an increase in stockholders’ equity.
Working Note:
Compute the cash short and over amount.
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Chapter 6 Solutions
College Accounting (Book Only): A Career Approach
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