At the beginning of Year 2, Oak Consulting had the following normal balances in its accounts: Account Balance Cash $ 27,800 Accounts receivable 18,400 Accounts payable 14,700 Common stock 16,900 Retained earnings 14,600 The following events apply to Oak Consulting for Year 2: Provided $72,900 of services on account. Incurred $2,900 of operating expenses on account. Collected $50,900 of accounts receivable. Paid $39,700 cash for salaries expense. Paid $15,840 cash as a partial payment on accounts payable. Paid a $9,000 cash dividend to the stockholders. c. Show the beginning balances and the transactions in a horizontal statements model.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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