Brief Exercise 2: Selected Transactions For Joel Berges

Brief Exercise 2 7selected Transactions For The Joel Berges Company Ar

Selected transactions for the Joel Berges Company are presented in journal form below. The task involves posting these transactions to T-accounts and determining each account’s ending balance. The transactions are as follows:

  • May 5: Billed for services performed—Accounts Receivable debit $4,100; Service Revenue credit $4,100.
  • May 12: Received cash in payment of account—Cash debit $2,400; Accounts Receivable credit $2,400.
  • May 15: Received cash for services performed—Cash debit $3,000; Service Revenue credit $3,000.

The assignment requires posting these transactions to the respective T-accounts: Cash, Accounts Receivable, and Service Revenue, and then calculating the ending balances for each account.

Paper For Above instruction

The objective of this exercise is to understand the process of recording transactions in T-accounts and determining their ending balances. This foundational accounting skill is essential for accurate financial reporting and analysis. By analyzing the transactions of the Joel Berges Company, we can consolidate a clear picture of how daily business activities influence account balances, which lays the groundwork for preparing financial statements and making informed managerial decisions.

Initially, the first transaction on May 5 involves billing clients for services rendered. The journal entry debits Accounts Receivable for $4,100 and credits Service Revenue for the same amount. This reflects an increase in assets (accounts receivable) and revenue generated by the company. When posting this to T-accounts, the Accounts Receivable T-account will be debited $4,100, and the Service Revenue T-account will be credited $4,100. The ending balance of Accounts Receivable after this entry is $4,100, and Service Revenue also shows an $4,100 credit balance, representing income earned.

On May 12, the company received cash payments from clients whose accounts were previously billed. The journal entry includes a debit to Cash of $2,400 and a credit to Accounts Receivable of $2,400. Posting this reduces Accounts Receivable, which had a balance of $4,100, by $2,400, leaving a remaining balance of $1,700. This transaction increases the Cash account by $2,400. The T-account for Cash now shows a debit balance of $2,400, indicating the inflow of cash. The Accounts Receivable T-account will be credited $2,400, reducing the receivable balance correspondingly.

The final transaction on May 15 indicates that the company received cash for services performed, with a journal entry debiting Cash $3,000 and crediting Service Revenue $3,000. Posting this increases the Cash balance to $5,400 ($2,400 from previous transaction + $3,000 from this one). The Service Revenue account also increases by $3,000, leading to a total credit balance of $7,100 ($4,100 + $3,000). This reflects additional income earned during the period and cash inflow.

In summary, the post-closing balances of the T-accounts are as follows: Cash has a balance of $5,400, Accounts Receivable has a balance of $1,700, and Service Revenue has a credit balance of $7,100. These balances succinctly illustrate the effects of the transactions on the company's liquidity, receivables, and income. Understanding how to accurately post transactions and determine ending balances is critical for effective financial management and reporting.

References

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  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial Accounting, IFRS Edition (3rd ed.). Wiley.
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