Chapter 5, Problem 5.6S

(Learning Objective 4: Account for accounts receivable) Perform the following accounting tasks for the receivables of Able and Bowman, a law firm, at December 31, 2018.

Requirements

  1.    Set up T-accounts for Cash, Accounts Receivable, and Service Revenue. Start with the beginning balances as follows: Cash $28,000: Accounts Receivable $103,000; and Service Revenue $0. Post the following 2018 transactions to the T-accounts:

  a.    Service revenue of $705,000, all on account

  b.    Collections on account $713,000

  2.    What are the ending balances of Cash, Accounts Receivable, and Service Revenue?