Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume
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.
Question 6
On January 1, 2017, Carla Vista Co.'s accounting records contained these liability accounts.
Accounts Payable $43,400
Sales Taxes Payable 7,050
Unearned Service Revenue 19,900
During January, the following selected transactions occurred.
Jan. 1 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note.
5 Sold merchandise for cash totaling $6,360, which includes 6% sales taxes.
12 Performed services for customers who had made advance payments of $11,200. (Record Service Revenue.)
14 Paid state treasurer’s department for sales taxes collected in December 2016, $7,050.
20 Sold 590 units of a new product on credit at $50 per unit, plus 6% sales tax.
During January, the company’s employees earned wages of $73,800. Withholdings related to these wages were $5,646 for Social Security (FICA), $5,271 for federal income tax, and $1,581 for state income tax. The company owed no money related to these earnings for federal or state
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