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Ludmilka [50]
3 years ago
13

Lena Holden began a professional practice on June 1 and plans to prepare financial statements at the end of each month. During J

une, Holden (the owner) completed these transactions
a. Owner invested $60,000 cash in the company along with equipment that had a $15,000 market value in exchange for its common stock.
b. The company paid $1,500 cash for rent of office space for the month.
c. The company purchased $10,000 of additional equipment on credit (payment due within 30 days).
d. The company completed work for a client and immediately collected the $2,500 cash earned.
e. The company completed work for a client and sent a bill for $8,000 to be received within 30 days.
f. The company purchased additional equipment for $6,000 cash.
g. The company paid an assistant $3,000 cash as wages for the month.
h. The company collected $5,000 cash as a partial payment for the amount owed by the client in transaction e.

i. The company paid $10,000 cash to settle the liability created in transaction c.
j. The company paid $1,000 cash in dividends to the owner (sole shareholder.

Enter the impact of each transaction on individual items of the accounting equation.
Business
1 answer:
vlabodo [156]3 years ago
6 0

Answer:

ASSETS = LIABILITIES + EQUITY

75,000  =                  +  75,000

(1,500) =                  +  (1,500)

10,000  =    10,000  +

2,500  =                  +  2,500

8,000  =                  +  8,000

-          =                  +

(3,000) =                  +  (3,000)

 -          =                  +

(10,000) =  (10,000)         +

(1,000) =                  +  (1,000)

80,000  =     0           +  80,000

Explanation:

Accounting equation is the foundation of dual entry bookkeeping  system. It is also known as the balance sheet equation that shows the relationship between ASSSETS, LIABILITIES AND EQUITY. Total assets must be equal to total liabilities + Equity due to the dual entry system otherwise, it is an indication of descrepancy in during the recording.

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Fundamental analysis shows that stock in Cedar Valley Furniture Corporation has a price that exceeds its present value. Group of
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The income statement approach to estimating uncollectible accounts expense is used by Kerley Company. On February 28, the firm h
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Answer:

Feb 28.

  • Uncollectible accounts expense would amount to 1% of net credit sales made during February.  

Dr Bad Debt Expense $ 27,860

Cr Allowance for Uncollectible Accounts $ 27,860

  • On March 10, an accounts receivable from Kathy Black for $6,100 was determined to be uncollectible and written off.  

Dr Allowance for Uncollectible Accounts $ 6,100

Cr Accounts receivable $ 6,100

  • March 31, Black received an inheritance and immediately paid her past due account in full.  

Dr Accounts receivable $ 6,100

Cr Allowance for Uncollectible Accounts $ 6,100

 

Dr CASH $ 6,100

Cr Accounts receivable $ 6,100

Explanation:

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Dr Accounts receivable $ 437.000

Cr Allowance for Uncollectible Accounts $ 2.140

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Uncollectible accounts expense would amount to 1% of net credit sales made during February.  

Dr Bad Debt Expense $ 27.860

Cr Allowance for Uncollectible Accounts $ 27.860

On March 10, an accounts receivable from Kathy Black for $6,100 was determined to be uncollectible and written off.  

Dr Allowance for Uncollectible Accounts $ 6.100

Cr Accounts receivable $ 6.100

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Dr Accounts receivable $ 6.100

Cr Allowance for Uncollectible Accounts $ 6.100

 

Dr CASH $ 6.100

Cr Accounts receivable $ 6.100

 

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % estimated of accounts receivables as CREDIT.  

 

Bad accounts are those credits granted by the company and there is no possibility of being charged.  

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to cancel the unpaid invoice as uncollectible."  

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The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.  

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At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.  

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