The following transactions are July activities of Bennett’s Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale. Bennett’sprovided to customers bowling merchandise inventory costing Bennett’s $680. (Consider only the effect on cost of goods sold [expense] here.) Bennett’spaid $500 on the electricity bill for June (recorded as an expense in June). Bennett’spaid $3,600 to employees for work in July. Bennett’spurchased $1,500 in insurance for coverage from August 1 to November 1. Bennett’spaid $700 to plumbers for repairing a broken pipe in the restrooms. Bennett’sreceived the July electricity bill for $900 to be paid in August. If expenses are not recognized in July, choose 'None' for the account affected. If expense is to be recognized in July, indicate the expense account title and amount.
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.
Here is the question:
The following transactions are July activities of Bennett’s Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale.
- Bennett’sprovided to customers bowling merchandise inventory costing Bennett’s $680. (Consider only the effect on cost of goods sold [expense] here.)
- Bennett’spaid $500 on the electricity bill for June (recorded as an expense in June).
- Bennett’spaid $3,600 to employees for work in July.
- Bennett’spurchased $1,500 in insurance for coverage from August 1 to November 1.
- Bennett’spaid $700 to plumbers for repairing a broken pipe in the restrooms.
- Bennett’sreceived the July electricity bill for $900 to be paid in August.
If expenses are not recognized in July, choose 'None' for the account affected. If expense is to be recognized in July, indicate the expense account title and amount.
See attach for my answer.
I got h and j wrong and I don't understand why. h is wrong, is it because of the covergae date not in July? but how do you record this purchase? For j, i now understand the answer is probably utilites expense. But if it's "to be paid in August", why it's not accounts payable?
Thank you.
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