Question 1 During fiscal 2016, Plastics and Synthetic Resins Company recorded ca

Question

Question 1

During fiscal 2016, Plastics and Synthetic Resins Company recorded cash of $87,800 from customers for accounts receivable collections. Which of the following financial statement effects template entries captures this transaction?

                                      Balance Sheet Income Statement
     Cash Assets + Noncash Assets=Liabilities +Contributed +Earned    Revenues-Expenses=Net Income
Capital      Capital           

Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital           

+87,800                                                                             +87,800 +87,800 - = +87,800

    Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital             

+87,800           -87,800 (AR)

    Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital            

+87,800 (AR)                                             +87,800     +87,800 - = +87,800

    Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital            

-87,800           +87,800 (AR)                     

Question 2

1n its December 31, 2016 financial statements, Harley-Davidson reported the following (in millions):

Long-term Assets         Current Liabilities        Long-term Liabilities    Total
                                                                                                                   Liabilities           Equity
$6,036                                     $ 2,863                         $ 5,107                    $7,970           $1,920

At December 31, 2016, current assets amount to:

$2,863 million

$3,854 million

$7,970million

$5,519 million

Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital           

+87,800                                                                             +87,800 +87,800 - = +87,800

    Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital             

+87,800           -87,800 (AR)

    Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital            

+87,800 (AR)                                             +87,800     +87,800 - = +87,800

    Balance Sheet Income Statement
Cash Assets + Noncash Assets = Liabilities + Contributed + Earned Revenues - Expenses =Net Income
Capital Capital            

-87,800           +87,800 (AR)                     

Explanation / Answer

(1)

Cash of $87,800 was received from customers for accounts receivable collections. Hence it would have its effect on both cash balance and accounts receivable balance. Cash balance would increase hence it would be added to the cash, on the other hand, Accounts receivable balance would decrease and hence it would be subtracted from accounts receivable.

Hence correct option is (b)

(2)

Long term assets = $6,036

Current liabilities = $2,863

Long term liabilities = $5,107

Equity = $1,920

Assets = Liabilities + Equity

6,036 + Current assets = 2,863 + 5,107 + 1,920

Current assets = 9,890 - 6,036

= $3,854

Hence, correct option is (b)

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