Acme Inc. recognized the following transactions during their first year of business ### Transactions1. **Provided services on account for $120,000, terms net 30.**2. **Payments totaling $80,000 are received from customers on account.**3. **At year end, Acme Inc. estimates their future uncollectible account expense to be 1.5% of sales.**4. **Acme Inc. determines a receivable of $500 is uncollectible and writes it off.**### Accounting LedgerBelow is the ledger detailing the changes in assets and stockholders' equity based on the above transactions:| **Assets** | | | | **Stockholders' Equity** | | ||---|---|---|---|---|---|---|| | **Accounts** | **Allow. For** | | | | || | **Receivable** | **Doubtful Accts.** | | | | || **Cash** | | | **=** | **C. Stock** | **Ret. Earn.** | **R, E** || **Beg** | 15,000 | 500 | – | 7,500 | 8,000 | || **1. Provided services on account (120,000)** | | | | | | || **2. Payments received (80,000)** | | | | | | || **3. Future uncollectible account expense (1.5% of sales)** | | | | | | || **4. Write-off uncollectible receivable (500)** | | | | | | || **End** | | | | | | |### Explanation of Accounts and Transactions1. **Assets** - **Cash:** Reflects the actual money Acme Inc. has on hand. - **Accounts Receivable:** Represents the amount of money owed to Acme Inc. by its customers for services provided on credit. - **Allow. For Doubtful Accounts:** An estimate of the portion of accounts receivable that is expected to be uncollectible.2. **Stockholders' Equity** - **C. Stock:** Common Stock; represents the invested capital from shareholders. - **Ret. Earn.:** Retained Earnings; the cumulative amount of profit kept in the company after distributions to shareholders. - **R, E:** Represents Revenues and Expenses affecting the earnings of the company.### Graph and Diagram ExplanationThe ledger

Accounting Equation -Accounting Equation is calculated using the followings equation -Assets =…

Transactions 1) Provided services on account for $120,000, terms net 30; 2) Payments totalling $80,000 are received from customers on account; 3) At year end, Acme Inc. estimates their future uncollectible account expense to be 1.5% of sales; 4) Acme Inc. determines a receivable of $500 is uncollectible and writes it off: Beg 1) 2) 3) 4) End Cash 15,000 Assets Accounts Allow. For Receivable Doubtful Accts. 500 Stockholders' Equity C. Stock 7,500 Ret. Earn. R,E 8,000

Transactions 1) Provided services on account for $120,000, terms net 30; 2) Payments totalling $80,000 are received from customers on account; 3) At year end, Acme Inc. estimates their future uncollectible account expense to be 1.5% of sales; 4) Acme Inc. determines a receivable of $500 is uncollectible and writes it off: Beg 1) 2) 3) 4) End Cash 15,000 Assets Accounts Allow. For Receivable Doubtful Accts. 500 Stockholders' Equity C. Stock 7,500 Ret. Earn. R,E 8,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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