Explanation MEMO FROM: XYZ TO: ABC Dated: 1 st December, 2017 Re: Explaining and illustrating the recording process Dear Sir, As you know any business transaction need to be analyzed to know the nature of the transaction, and to identify the account to be debited, and credited for recording process, similarly the transactions occurred in March 15 for billing the customer, and paying the employees should also go through the process before it is being recorded in journal, and ledger account of the Company K. For first transaction of billing the customer for $6,000 for the home cleaning services, following process are followed; Basic Analysis: In this transaction Accounts receivable (asset) is increased, hence it should be debited for $6,000. Service revenue ( stockholders’ equity ) is also increased, and there by Stockholders’ equity is increased hence it should be credited for $6,000. Accounting Equation Analysis: { Accounts Receivable + ( Assets − $ 6 , 000 ) } = Liabilities + { Service revenue + ( Stockholders' Equity − $ 6 , 000 ) } Debit and Credit Analysis: In this transaction an asset (Accounts receivable) is increased, hence it should be debited $6,000, similarly the stockholders’ equity is increased hence it should be credited $6,000. Journal Entry : Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Mar.15 Accounts Receivable 6,000 Service Revenue 6,000 (To record the billing customers for service rendered on account) Posting: Accounts Receivable Mar.15 $6,000 Service Revenue Mar

Financial Accounting: Tools for Business Decision Making, 8th Edition

8th Edition

ISBN: 9781118953808

Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

Publisher: WILEY

See similar textbooks

Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

Videos

Question

Chapter 3, Problem 3.8EYCT

To determine

To Write: A memo that explains and illustrating the recording process

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 3, Problem 3.7EYCT

Chapter 3, Problem 3.9EYCT

Students have asked these similar questions

Can you help me solve this financial accounting question using valid financial accounting techniques?

Please explain the solution to this general accounting problem with accurate principles.

State the amount of discount available

Chapter 3 Solutions

Financial Accounting: Tools for Business Decision Making, 8th Edition

Ch. 3 - Prob. 1Q Ch. 3 - Can a business enter into a transaction that...Ch. 3 - Are the followingevents recorded in the accounting...Ch. 3 - Prob. 4Q Ch. 3 - Prob. 5Q Ch. 3 - Prob. 6Q Ch. 3 - Prob. 7Q Ch. 3 - Misty Reno, a beginning accounting student,...Ch. 3 - Prob. 9Q Ch. 3 - What is the normal balance for each of these...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Century 21 Accounting General Journal
Accounting
ISBN:9781337680059
Author:Gilbertson
Publisher:Cengage
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning