of C₁: The Dec. 51, 2015 balance sheet Receivable of $400, 000 and a credit bo Doubtful Accounts of $ 52,000. Duris transactions occurred: sales on Accou returns & allowances $50,000; collec- $1,250,000; accounts written off off accounts of $6,000 were collect (a) Tournalize the 2016 transaction (b) If the company uses the percen= estimate bad debt exp. & anticipates uncollectible, what is the adjusting (c) If the uses the percent & determines estimate bad debt company exp. are expected to be 8% accounts of adjusting entry at Dec. 31, 2016 ?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![C1: The Dec. 31, 2015 balance sheet
8400,
Receivable of
of Barone Company had Accounts
,000 and a credit balance in Allowance for
Doubtful Accounts of $ 52,000. During 2016, the following
transactions occurred: sales on Account $1,500,000; sales
returns & allowances $50,000; collections from customers
$1,250,000; accounts written off $36,000; previously written
off accounts of $6,000 were collected
(a) Journalize the 2016 transactions
(b) If the company uses the percentage of sales basis to
estimate bad debt exp. & anticipates 3°% of net sales to be
uncollectible, what is the adjusting entrig at Dec 31, 2016?
(c) If the
uses the percentage of receivables basis to
& determines that uncollectible accounts
accounts receivable, what is the
exp.
8°/
are expected to be 8⁰%.
of
adjusting entry at Dec. 31, 2016 ?
Answer
company
estimate bad debt](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F19a2c966-07e6-4097-a4d1-d552cc4ad7ce%2F0e8bed74-eb68-4244-9503-eab0675dd3c2%2Fhn5otgr_processed.jpeg&w=3840&q=75)
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