Survey Of Accounting
Survey Of Accounting
4th Edition
ISBN: 9780077862374
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 5, Problem 4E

a.

To determine

Show the effect of each transaction on the accounting equation.

a.

Expert Solution
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Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below.

Assets=Liabilities+Stockholders' equity

Show the effect of each transaction on the accounting equation for 2014:

Survey Of Accounting, Chapter 5, Problem 4E , additional homework tip  1

Table (1)

Show the effect of each transaction on the accounting equation for 2015:

Survey Of Accounting, Chapter 5, Problem 4E , additional homework tip  2

Table (2)

Working note 1: Calculate the Uncollectible accounts expenses for 2014:

Estimated Uncollectible accounts are 1% of the revenue on account. Revenue on account is $45,000.

Uncollectible account expense= (Revenue earned on account) × (Estimated rate of uncollectibles)=$45,000×1%=$450

Working note 2: Calculate the Uncollectible accounts expenses for 2015:

Estimated Uncollectible accounts are 1% of the revenue on account. Revenue on account is $65,000.

Uncollectible account expense= (Revenue earned on account) × (Estimated rate of uncollectibles)=$65,000×1%=$650

b. (1)

To determine

Ascertain the net income for 2014.

b. (1)

Expert Solution
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Explanation of Solution

Net income: Net income is the excess amount of revenue which arises after deducting all the expenses of a company. In simple terms, it is the difference between total revenue and total expenses of the company.

Ascertain the net income for 2014:

Net income = Service revenue earned on Account – Uncollectible accounts expense=$45,000$450=$44,550

Hence, the net income for 2014 is $44,550.

b. (2)

To determine

Ascertain the net cash flows from operating activities for 2014.

b. (2)

Expert Solution
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Explanation of Solution

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.

During 2014, cash collected from the customers is $32,000, and there is no cash payments made during the year, therefore the net cash flows from the operating activities are $32,000.

b. (3)

To determine

Ascertain the balance of accounts receivables at the end of 2014.

b. (3)

Expert Solution
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Explanation of Solution

Accounts receivable: Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

The Accounts receivable balance at the end of 2014 is $13,000 (Refer Table (1)).

b. (4)

To determine

Ascertain the net realizable value of accounts receivables at the end of 2014.

b. (4)

Expert Solution
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Explanation of Solution

Cash realizable value (net realizable value): Cash realizable value is the net amount of receivables which a business expects to collect from its debtors. Accounts receivable less allowance for doubtful accounts is represented as cash realizable value.

Ascertain the net realizable value of accounts receivables at the end of 2014:

Net realizable value=(Accounts receivable)(Uncollectible account expense)=$13,000$450=$12,550

Thus, the Net realizable value of accounts receivable at the end of the 2014 is $12,550.

c. (1)

To determine

Ascertain the net income for 2015.

c. (1)

Expert Solution
Check Mark

Explanation of Solution

Net income: Net income is the excess amount of revenue which arises after deducting all the expenses of a company. In simple terms, it is the difference between total revenue and total expenses of the company.

Ascertain the net income for 2015:

Net income = Service revenue earned on Account – Uncollectible accounts expense=$65,000$650=$64,350

Hence, the net income for 2015 is $64,350.

c. (2)

To determine

Ascertain the net cash flows from operating activities for 2015.

c. (2)

Expert Solution
Check Mark

Explanation of Solution

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.

During 2015, cash collected from the customers is $66,000, and there is no cash payments made during the year, therefore the net cash flows from the operating activities are $66,000.

c. (3)

To determine

Ascertain the balance of accounts receivables at the end of 2015.

c. (3)

Expert Solution
Check Mark

Explanation of Solution

Accounts receivable: Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

The Accounts receivable balance at the end of 2015 is $11,680 (Refer Table (2)).

c. (4)

To determine

Ascertain the net realizable value of accounts receivables at the end of 2015.

c. (4)

Expert Solution
Check Mark

Explanation of Solution

Cash realizable value (net realizable value): Cash realizable value is the net amount of receivables which a business expects to collect from its debtors. Accounts receivable less allowance for doubtful accounts is represented as cash realizable value.

Ascertain the net realizable value of accounts receivables at the end of 2015:

Net realizable value=(Accounts receivable)(Uncollectible account expense)=$11,680$780=$10,900

Thus, the Net realizable value of accounts receivable at the end of the 2015 is $10,900.

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Chapter 5 Solutions

Survey Of Accounting

Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - 14. What is an advantage of using the percent of...Ch. 5 - 15. What is aging of accounts receivable?Ch. 5 - Prob. 16QCh. 5 - Prob. 17QCh. 5 - Prob. 18QCh. 5 - 21. What is accrued interest?Ch. 5 - How does the accrual of interest revenue or...Ch. 5 - Prob. 21QCh. 5 - Prob. 22QCh. 5 - Prob. 23QCh. 5 - Prob. 24QCh. 5 - Prob. 25QCh. 5 - 26. What types of costs do businesses avoid when...Ch. 5 - 1. Name and describe the four cost flow methods...Ch. 5 - 2. What are some advantages and disadvantages of...Ch. 5 - Prob. 29QCh. 5 - Prob. 30QCh. 5 - 5. In an inflationary period, which inventory cost...Ch. 5 - 6. In an inflationary period, which inventory cost...Ch. 5 - 7. What is the difference between the flow of...Ch. 5 - Prob. 34QCh. 5 - Prob. 35QCh. 5 - Prob. 36QCh. 5 - Prob. 37QCh. 5 - Prob. 38QCh. 5 - Prob. 39QCh. 5 - Prob. 1ECh. 5 - Exercise 7-1A Analysis of financial statement...Ch. 5 - Prob. 3ECh. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Effect of recovering a receivable previously...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Prob. 10ECh. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Prob. 13ECh. 5 - Effect of credit card sales on financial...Ch. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Prob. 17ECh. 5 - Prob. 18ECh. 5 - Prob. 19ECh. 5 - Prob. 20ECh. 5 - Prob. 21ECh. 5 - Prob. 22ECh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 1ATCCh. 5 - Prob. 3ATCCh. 5 - Prob. 4ATCCh. 5 - Alonzo Saunders owns a small training services...
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