Transactions and Journal Entries Are Shown Below $\$ 45,000$ In the Business

question 22

Essay

Transactions and journal entries are shown below.Read the transaction and determine if the correct journal entry
has been made.If a correction is necessary,use the ruling method to make the correction.
a Bert Hollis, the owner, invested $\$ 45,000$ in the business.

$\begin{array}{ll}\text { Cash } & 45,000 \\\text { Bert Hollis, Drawing } && 45,000\end{array}$

b. Hollis paid the monthly rent of $\$ 1,275$ .

$\begin{array}{ll}\text { Cash } & 1,275 \\\text { Rent Expense } && 1,275\end{array}$

c. Hollis paid cash to Union Electric for monthly utilities, $\$ 250$ .

$\begin{array}{llr} \text { Utilities Expense } &250 \\ \text {Accounts Payable } &&250\\\end{array}$

d. Hollis made payment on account for office supplies purchased previously, $\$ 100$ .

$\begin{array}{llr} \text { Office Supplies } &100\\ \text { Accounts Payable } &&100\\\end{array}$

e. A customer made a payment on account, $\$ 1,100$ .
$\begin{array}{ll}\text { Accounts Receivable } & 1,100 \\\text { Service Fees } && 1,100 \end{array}$

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Definitions:

Obsolescence

The process of losing value or utility, often due to technological advancements, changes in consumer preferences, or wear and tear.

Quality of Receivables

An assessment of the likelihood that the amounts owed to a business by its debtors will be collected.

Likelihood of Collection

An assessment of the probability that accounts receivable or other debts will be successfully collected from debtors.

Factoring Fee

A charge assessed by a factoring company for providing cash advances to businesses by purchasing their accounts receivable at a discount.