Question

In May, Rec Rooms, Inc., collected $8,000 owed by customers for services performed in April. Show the effect of this collection on the accounting equation. If there is no effect, select "O No Effect." A. 8,000 Cash; (8,000) Accounts Receivable B. 8,000 Accounts Receivable; (8,000) Cash C. 8,000 Accounts Payable A Assets D. O No Effect Liabilities E. (8,000) Accounts Receivable Shareholders' Equity F. 8,000 Cash G. 8,000 Cash; (8,000) Accounts Payable H. 8,000 Accounts Receivable

Answer 1

As Per the Information Provided , there is collection of $8000 which is owed by customers for service performed in April month. It results increase of Cash and decrease of Accounts Receivables by $8000. The Journal Entry for the same is as follows Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ $ 8,000.00 Cash Accounts Receivable (To record collection of receivables) 8,000.00 Here from the above transaction both Cash account and Accounts Receivable Account are Assets especially current assets. There is no impact on Liabilities or Shareholders' Equity. And here there is only increase of one asset and decrease of another asset. So, the Answer is as follows Assets Liabilities Shareholders' Equity A. $8000 Cash; ($8000) Accounts Receivable D. O No Effect D. O No Effect