Question

A sole proprietorship has the following transactions: The business receives $20,000 cash from the owner in exchange for capital. The business purchases $700 of office supplies on account. The business purchases $4,000 of furniture on account. The business performs services for various clients totaling $11,000 on account. The business pays $2,500 for salaries expense and $3,500 for rent expense. The business pays $700 to a supplier for the office supplies purchased earlier. The business collects $2,000 from one of its clients for services rendered earlier in the month. At the end of the month, all journal entries are posted to the ledger. Accounts Receivable will appear as which of the following? ОА. Bal. Accounts Receivable 2,000 11,000 9,000 Accounts Receivable 11,000 2,000 9,000 B. Bal C. Accounts Receivable 11,000 Bal. 11,000 D. Accounts Receivable 11,000 2,000 9,000 Bal. Click to select your answer.

Answer 1

Answer

(b) Account Receivable

To Revenue(Service)	11000	By Cash	2000
		By Bal C/d	9000(Bal. Fig.)
Total	11000	Total	11000

Reason For answer

Since question require only Entries related to Account Receivables therefore only Those entries are relevant .

therefore

1)the business receive $20000 cash from the owner in exchange of capital thus entry is related to capital account and not to account receivable.

2)business purchase $700 of office supplies on account ,this means business has purchased on acount so this entry is related to office supplies  and Account payable account and not to account receivable.

3)busniess purchased $4000 furniture on account ,this means business has purchased on acount so this entry is related to furniture a/c and Account payable account and not to account receivale account.

4)The business performed service totalling $11000 for various clients on account ,this entry is related to Account receivable account.Entry would be

Account receivable A/c ....DR $11000

To Revenue /Service performed A/c $11000

and in account this will be posted on Debit side

5)Business pay $2500 for salary expense and $3500 for rent expense.This has no relation to accounts recievable since it's a Expense entry.

6)Business pays $700 to supplier for office supplies purchased earlier, This is related to payment to accounts payable and no relation with account receivable.

7) Business collect $2000 from one of its clients ,this is related to account receivable account since this is Payment Received from Accounts receivables.entry would be

Cash A/c .......Dr $2000  

To Account receivable A/c $2000

This will be posted oncredit side of account Receivable A/c .

So out of all only 2 entries are related to Account receivable .i.e. $11000 on Debit Side and $2000 on credit side Therefore Balancing figure will be on credit side $9000($11000-$9000).

Like this

To Revenue(Service)(4)	11000	By Cash(7)	2000
		By Bal C/d	9000(Bal. Fig.)
	11000		11000

........................................................................................................................................................................................

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