Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

SOLUTION TO EXERCISE F-3

Approach and Explanation: Briefly describe the columns typically found in each of the special journals listed. Match them up with the postings in this exercise. The remainder of the postings has to come from the general journal (items 9, 12, 14, 16, 19, and 20).

TIP: Keep in mind that posting to a given account describes one-half of the dual effect of one transaction. For example, a posting “Debits to Advertising Expense” describes an increase in advertising expense. The most common transaction increasing advertising expense is the payment for advertising services. All cash payments are recorded in the cash payments journal. Therefore, the most common source of the posting of debits to the Advertising Expense account is the cash payments journal. For a second example, a posting “Credits to Interest Revenue” describes an increase in interest revenue. Although the Interest Revenue account can be increased at the end of a period because of an adjusting entry in the general journal to record accrued interest (revenue that has been earned but not received), the most common reason for having an increase in Interest Revenue is the collection of interest during a ...