The following are the classes of transactions and the titles of the journals used for Phillips Equipment

Question:

The following are the classes of transactions and the titles of the journals used for Phillips Equipment Rental Co. Ltd.

Classes of transactions Titles of journals

Purchases returns.................................................Cash receipts journal

Rental revenue..................................................Cash payments journal

Write-off of bad debts...............................................Purchases journal

Purchases of goods and services (except payroll).................Revenue journal

Rental allowances.......................................................Payroll journal

Adjusting entries (for payroll) .................................Adjustments journal

Payroll service and payments

Cash payments (except payroll)

Cash receipts

REQUIRED

a. Identify one financial statement balance that is likely to be affected by each of the nine classes of transactions.

b. For each class of transactions, identify the journal that is likely to be used to record the transactions.

c. Identify the transaction cycle that is likely to be affected by each of the nine classes of transactions.

d. Explain how total rental revenue, as cited on the financial statements of Phillips Equipment Rental Co. Ltd, is accumulated in journals and summarised on the financial statements. Assume that there are several adjusting entries for rental revenue at the balance sheet date.

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