18) Consider each of the following transactions Required Indicate how each trans

Question

18) Consider each of the following transactions Required Indicate how each transaction will affect the elements of the accounting equation by answering increase, decrease, or no effect. Assets Liablities Stockholder Equity a. The company uses the direct write-off method and writes off specific receivables that have been identified as uncollectible. b. The company uses the allowance method and records the Bad Debt Expense for the year in an adjusting entry c. The company receives a one-year promissory note from a customer in payment of his account because he needs additional time to pay d. The company receives a payment from a different customer on her account; the account had been previously written off as worthless. e. The company accrues interest earned on the note received in (c) in an adjusting entry

Explanation / Answer

Solution:

Effect of transaction on accounting equation Particulars Assets Liabilities Stockholder's Equity a. The company uses the direct write off method and writes off specific receivables that have been identified as uncollectible Decrease No Effect Decrease b. The company uses the allowance method and records the bad debts expense for the year in an adjusting entry Decrease No Effect Decrease c.The company receives a one year promissory note from customer in payment of his accounts because he needs additional time to pay No Effect No Effect No Effect d. The company receives a payment from a different customer on her account; the account had been previously written off as worthless Increase No Effect Increase e. The company accrues interest earned on the note received in © in an adjusting entry Increase No Effect Increase

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.