Analyze the Effect of the Following Transactions on the Accounting

question 61

Essay

Analyze the effect of the following transactions on the accounting equation.(a)The company paid $725 to a vendor for supplies purchased previously on account.(b)The company performed $850 of services and billed the customer.(c)The company received a utility bill for $395 and will pay it next month.(d)The company paid dividends of $145.(e)The company paid $315 in salaries to its employees.(f)The company collected $730 of cash from its customers on account.​
Some of the possible effects of a transaction on the accounting equation are listed below:
(1)Assets, Dr.; Assets, Cr.(2)Assets, Dr.; Stockholders' Equity, Cr.(3)Assets, Dr.; Liabilities, Cr.(4)Assets, Dr.; Revenues, Cr.(5)Liabilities, Dr.; Assets, Cr.(6)Dividends, Dr.; Assets, Cr.(7)Expenses, Dr.; Assets, Cr.(8)Expenses, Dr.; Liabilities, Cr.​
Put the appropriate letter next to each transaction.

Execute journal entries for writing off uncollectible accounts, reinstating accounts, and recording bad debt expenses.

Compute the maturity value of promissory notes and understand how notes receivable and payable are accounted.

Recognize the operational use and financial reporting implications of interest-bearing and non-interest-bearing notes.

Analyze receivables to estimate uncollectible accounts.

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Definitions:

Proper Consideration

The legal requirement for contracts, entailing something of value being exchanged between parties.

Consideration

Something of value promised to another when making a contract that compels them to enter into the agreement; an essential element in the formation of a legally binding contract.

Promise

A declaration or assurance that one will do something or that a particular thing will happen, often forming the basis of a contract.

Requirements Contract

A contract in which one party agrees to supply as much of a product or service as the other party needs.