Sweet Shop Co. is a chain of candy stores that has been in operation for the past ten years. Preparejournal entries for the following events, which occurred at the end of the most recent year. If theevent is not a transaction, write “no transaction.”a. Ordered and received $12,000 worth of cotton candy machines from Candy Makers Inc.,which Sweet Shop Co. will pay for in 45 days.b. Sent a check for $6,000 to Candy Makers Inc. for the cotton candy machines from (a).c. Received $400 from customers who bought candy on account in previous months.d. To help raise funds for store upgrades estimated to cost $20,000, Sweet Shop Co. issued 1,000common shares for $15 each to existing stockholders.e. Sweet Shop Co. bought ice cream trucks for $60,000 total, paying $10,000 cash and signing along-term note for $50,000.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Sweet Shop Co. is a chain of candy stores that has been in operation for the past ten years. Prepare
journal entries for the following events, which occurred at the end of the most recent year. If the
event is not a transaction, write “no transaction.”
a. Ordered and received $12,000 worth of cotton candy machines from Candy Makers Inc.,
which Sweet Shop Co. will pay for in 45 days.
b. Sent a check for $6,000 to Candy Makers Inc. for the cotton candy machines from (a).
c. Received $400 from customers who bought candy on account in previous months.
d. To help raise funds for store upgrades estimated to cost $20,000, Sweet Shop Co. issued 1,000
common shares for $15 each to existing stockholders.
e. Sweet Shop Co. bought ice cream trucks for $60,000 total, paying $10,000 cash and signing a
long-term note for $50,000.
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