Accounting for Advanced Accruals
6.3.1 Journal entries, T-accounts, and financial statements for Illustration #2
General journal, T-accounts, and financial statements for this accounting period are presented below.
Illustration 6-13: Journal entries for illustration #2 about bad debt expense
| Event No |
Account titles |
Debit |
Credit |
1 |
Allowance for Doubtful Accounts |
150 |
|
|
Accounts Receivable |
|
150 |
2 |
Accounts Receivable |
2,000 |
|
|
Training Revenue |
|
2,000 |
3a |
Accounts Receivable |
30 |
|
|
Allowance for Doubtful Accounts |
|
30 |
3b |
Cash |
30 |
|
|
Accounts Receivable |
|
30 |
4 |
Bad Debts Expense |
4 |
|
|
Allowance for Doubtful Accounts |
|
4 |
Closing |
Service Revenue |
2,000 |
|
entry |
Bad Debts Expense |
|
4 |
|
Retained Earnings |
|
1,996 |
Illustration 6-14: T-accounts for illustration #2 about bad debt expense
| Assets |
= |
Liabilities |
+ |
Equity |
||
| Cash |
|
0 |
|
Retained Earnings |
||
| Beg. 1,800 |
|
|
|
|
|
Beg. 2,800 |
| (3b) 30 |
|
|
|
|
|
(cl.) 1,996 |
| Bal. 1,830 |
|
|
|
|
|
Bal. 4,796 |
|
|
|
|
|
|
||
| Accounts Receivable |
|
|
|
Services Revenue |
||
| Beg. 1,200 |
|
|
|
|
|
Beg. 0 |
| (2) 2,000 |
(1) 150 |
|
|
(cl.) 2,000 |
(2) 2,000 |
|
| (3a) 30 |
(3b) 30 |
|
|
|
|
Bal. 0 |
| Bal. 3,050 |
|
|
|
|
|
|
|
|
|
|
|
Bad Debts Expense |
||
| Allowance for Doubtful |
|
|
|
Beg. 0 |
|
|
| Accounts |
|
|
|
(4) 4 |
(cl.) 4 |
|
|
|
Beg. 200 |
|
|
|
Bal. 0 |
|
| (1) 150 |
(3a) 30 |
|
|
|
|
|
|
|
(4) 4 |
|
|
|
|
|
|
|
Bal. 84 |
|
|
|
|
|
Illustration 6-15: Financial statements for illustration #2 in the horizontal model
Financial Statements for 20X8 |
|||||
| Income Statement |
Balance Sheet |
Statement of Cash Flows |
|||
|
|
|
|
|
|
|
| Service Revenue |
2,000 |
Assets |
|
Operating Activities: |
|
| Bad Debt Expense |
(4) |
Cash |
1,830 |
Cash Receipts |
30 |
|
|
|
Accounts Receivable |
3,050 |
|
|
| Net Income |
1,996 |
Less: Allowance |
(84) |
Investing Activities: |
0 |
|
|
|
Net Realizable Value |
2,996 |
Financing Activities: |
0 |
|
|
|
Total Assets |
4,796 |
|
|
|
|
|
|
|
Net Change in Cash |
30 |
|
|
|
Equity |
|
|
|
|
|
|
Retained Earnings |
4,796 |
Beginning Cash Balance |
1,800 |
|
|
|
|
|
Ending Cash Balance |
1,830 |
|
|
|
|
|
|
Page 5 of 9
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