Exercise 2-4 Effect of accounts receivable and accounts payable transactions on
ID: 2611971 • Letter: E
Question
Exercise 2-4 Effect of accounts receivable and accounts payable transactions on financial statements LO 2-1, 2-2 The following events apply to Brown and Birgin, a public accounting firm, for the 2014 accounting period: 1. Performed $94,500 of services for clients on account. 2. Performed $53,000 of services for cash. 3. Incurred $54,000 of other operating expenses on account. 4. Paid $21,500 cash to an employee for salary. 5. Collected $67,000 cash from accounts receivable. 6. Paid $37,000 cash on accounts payable. 7. Paid a $8,000 cash dividend to the stockholders. 8. Accrued salaries were $4,600 at the end of 2014.
Explanation / Answer
Effect of accounts receivable and accounts payable transactions on financial statements :
Transaction Effect on account receivable Effect on account payable 1. Performed $94,500 of services for clients on account. Increase No effect 2. Performed $53,000 of services for cash. No effect No effect 3. Incurred $54,000 of other operating expenses on account No effect Increase 4. Paid $21,500 cash to an employee for salary No effect No effect 5. Collected $67,000 cash from accounts receivable. Decrease No effect 6. Paid $37,000 cash on accounts payable No effect Decrease 7. Paid a $8,000 cash dividend to the stockholders. No effect No effect 8. Accrued salaries were $4,600 at the end of 2014. No effect No effectRelated Questions
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