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

• Identify one financial statement balance that is likely to be affected by each of the nine classes of transactions
• For each class of transactions, identify the journal that is likely to be used to record the transactions.
• Identify the transaction cycle that is likely to be affected by each of the nine classes of transactions
• Explain how total rental revenue, as cited on the financial statements of Phillips equipment Rental Co. Ltd, is accumulated in journals and summarized on the financial statements. Assume that there are several adjusting entries for rental revenue at the balance sheet date.