Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $14. At the start of January 2018, VGC's Income statement accounts had zero balances and Its balance sheet account balances were as follows: Cash $1,738,e00 188,e00 15,200 921,808 508,e00 1,798, e00 153,e00 163,e00 124, e00 2,900, e00 1,812, 288 Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (due 2025) Connon Stock Retained Earnings In addition to the above accounts, VGC's chart of accounts Includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month: a. Recelved $66,750 cash from customers on 1/1 for subscriptions that had already been earned in 2017. b. Purchased 10 new computer servers for $36,400 on 1/2: pald $15,700 cash and signed a three-year note for the remalnder owed. c. Pald $11,700 for an Internet advertisement run on 1/3. d. On January 4. purchased and recelved $5.400 of supplies on account. e. Recelved $210.000 cash on 1/5 from customers for service revenue earned in January. f Paid $5.400 cash to a supplier on January 6. g. On January 7, sold 1.700 subscriptions at $14 each for services provided during January. Half was collected in cash and half was sold on account. h. Pald $350,000 in wages to employees on 1/30 for work done in January. 1 On January 31, recelved an electric and gas utility bill for $6.210 for January utility services. The bill will be paid in February. Prepare an unadjusted trial balance as of January 31, 2018. VANI SHING GAMES CORPORATION Unadjusted Trial Balance Account Name Debit Credit Cash Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (long-term) Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Advertising Expense Utities Expense Total
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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