Discuss the below in detail:
Q: The following are the classes of transactions and the titles of the journals used for Phillips Equipment Rental Co.
Classes of Transactions:
Purchases Returns
Rental revenue
Charge-off of uncollectible accounts
Acquisition of goods and services (except payroll)
Rental allowances
Adjusting entries (for payroll)
Payroll service and payments
Cash disbursements (except payroll)
Cash receipts
Title of Journals:
Cash receipts journal
Cash disbursements journal
Acquisitions journal
Revenue journal
Payroll journal
Adjustments journal
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., is accumulated in journals and is summarized on the financial statements. Assume that there are several adjusting entries for rental revenue at the balance sheet date.