9. S era Mining is the defrendant in a S3 million lawsuit involving damage to th

Question

9. S era Mining is the defrendant in a S3 million lawsuit involving damage to the environment. Sierra's attorneys have advised th settlement will be $750 thousnad. e company that the outcome of the lawsuit is probable, and the likely AssetsLiabilities Equity Revenues Expenses Net Cash Income Harber Company collected a receivable due from a credit card transaction company; the credit card fee had previously been 1 o re cognized when the sale was recorded. Show the effect of collection of the receivable on Farber's financial statements. Cash Assets Liabilities Equity Revemues Expenses Net

Explanation / Answer

10. Given that farber company collected a receivable due from a credit card transaction company :-  

In this case accounts Receivable is an asset and it's realisation is recorded as
Cash A/c Dr.

To Accounts Receivable

Therefore in Farber Financial statement Assets side will reduce by reduction in accounts receivable but will increase by cash received.

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