accounting question:

Question

Cash flow statement reported the folowing cash receipts and cash payments (The amount in brackets) for the year ended august 31, 2014:

YEAR ENDED AUGUST 31, 2014:

cash flows from operating activities:

cash receipts from customers - $827,500
Interested recieved- $2,300

cash flows from investing activities:

Loans made on notes receivable - ($13,750)
Collection of loans on notes receivable-
$27,500

Balance sheet one year earlier-at august 31, 3013- reported accounts receivable of $93,750 and notes receivable of $20,750. Credit sales for the year ended August 31,2014 totalled $860,000 and the company collects all of its accounts receivable because uncollectibles rarely occur.

They need a loan, and the manager is preparing the companys balance sheet at august 31, 2014. To complete the balance sheet, the owner needs to know the balances of accounts receivable and notes receivable at august 31, 2014. Supply the needed information; T-accounts are helpful.

Answer 1

John:

 

Hello. The basic process that I suggested is creating the journal entries  for the year ended 8/31/14 and then posting the journal entries to the t-accounts which start with the 8/31/13 beginning balances. Note the question is only focused on accounts receivable and notes receivable, so the interest received, which is recorded to separate accounts (interest receivable and interest revenue) is not applicable.

 

1

XX/XX/14

Dr. Accounts Receivable $860,000
Cr. Sales Revenue $860,000  

2

XX/XX/14

Dr. Cash $827,500
Cr. Accounts Receivable $827,500

3

XX/XX/14

Dr. Notes Receivable $13,750
Cr. Cash $13,750

4

XX/XX/14

Dr. Cash $27,500
Cr. Notes Receivable $27,500   

 

Accounts Receivable
8/31/13 Dr. $93,750
1 XX/XX/14 Dr. $860,000
2 XX/XX/14 Cr. $827,500
8/31/14 Dr. $126,250

Notes Receivable
8/31/13 Dr. $20,750
3 XX/XX/14 Dr. $13,750
4 XX/XX/14 Cr. $27,500
8/31/14 Dr. $7,000

 

Let me know if you have any questions.

 

Regards,

 

Brian