December 31, 2017, Laramie Imports Inc. reported this information on its balance sheet. Accounts receivable $647,000 Less: Allowance for doubtful accounts 41,000 During 2018, the company had the following summary transactions related to receivables and sales. Laramie uses the perpetual inventory system. 1. Sales on account amounted to $2,369,000. The cost of the inventory sold was $2,155,790. 2. Sales returns and allowances with a total sales price of $38,000 and a cost of $34,580 were restored to inventory. 3. Collections of accounts receivable were $2,079,000. 4. Write-offs of accounts receivable deemed uncollectible, $46,200. 5. Recovery of bad debts previously written off as uncollectible, $13,600. Prepare the journal entry to record bad debts expense for 2018, assuming that aging the accounts receivable indicates that estimated uncollectible accounts receivabl
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
At December 31, 2017, Laramie Imports Inc. reported this information on its
| $647,000 | ||
| Less: Allowance for doubtful accounts | 41,000 |
During 2018, the company had the following summary transactions related to receivables and sales. Laramie uses the perpetual inventory system.
| 1. | Sales on account amounted to $2,369,000. The cost of the inventory sold was $2,155,790. | |
| 2. | Sales returns and allowances with a total sales price of $38,000 and a cost of $34,580 were restored to inventory. | |
| 3. | Collections of accounts receivable were $2,079,000. | |
| 4. | Write-offs of accounts receivable deemed uncollectible, $46,200. | |
| 5. | Recovery of |
Prepare the
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Account Titles and Explanation
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Debit
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Credit
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For account titles and explanation pick out of this list
- Accounts Payable
- Accounts Receivable
Accumulated Depreciation - Buildings- Accumulated Depreciation - Equipment
- Advances to Employees
- Allowance for Doubtful Accounts
- Allowance for Doubtful Notes
- Bad Debts Expense
- Bank Charges Expense
- Bank Loan Payable
- Buildings
- Cash
- Common Shares
- Cost of Goods Sold
- Current Portion of Bank Loan Payable
- Depreciation Expense
- Equipment
- Held for Trading Investments
- Income Tax Expense
- Income Tax Payable
- Income Tax Receivable
- Insurance Expense
- Interest Expense
- Interest Payable
- Interest Receivable
- Interest Revenue
- Inventory
- Land
- No Entry
- Notes Payable
- Notes Receivable
- Prepaid Insurance
- Prepaid Rent
Retained Earnings - Salaries Expense
- Salaries Payable
- Sales
- Sales Discounts
- Sales Returns and Allowances
- Sales Tax Recoverable
- Supplies
- Unearned Revenue
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