Selected transactions follow for Discovery Sports Ltd. during the company's first month of business. The company uses a perpetual inventory system.
Feb. 2 Sold $1,140 of merchandise to Andrew Noren on account, terms n/30. The goods had cost Discovery $765.
4 Andrew Noren returned for credit $140 of the merchandise purchased on February 2. The goods had cost Discovery $85 and they were returned to inventory.
5 Sold $760 of merchandise to Dong Corporation on account, terms 2/10, n/30. The goods had cost Discovery $490.
8 Sold $842 of merchandise to Michael Collins for cash. The goods had cost Discovery $622.
10 Sold $920 of merchandise to Rafik Kurji, who paid with a credit card. The goods had cost Discovery $680.
14 Dong Corporation paid its account in full.
17 Andrew Noren purchased an additional $696 of merchandise on account, terms n/30. The goods had cost Discovery $410.
22 Sold $1,738 of merchandise to Batstone Corporation, terms 2/10, n/30. The goods had cost Discovery $1,105.
28 Andrew Noren paid $1,000 on account.
Instructions
(a) Prepare the journal entries to record each of the above transactions.
(b) Set up T accounts for the Accounts Receivable general ledger (control) account and for the accounts receivable subsidiary ledger accounts. Post the journal entries to these accounts.
(c) Prepare a list of customers and the balances of their accounts from the subsidiary ledger. Prove that the total of the subsidiary ledger balances is equal to the control account balance.