Accounts Receivable

Question 1

Impact of credit sales/fees on the accounting equation

Answer 1

Example:
Fees of repair service for $4950 inc. GST

Assets:
- Accounts receivable increases $4950
Liabilities:
- GST payable increases $450
Owner’s equity:
- Revenue/sales increases $4500

Question 2

Impact of a receipt from an account receivable

Answer 2

Example:
Receipt of $2000 from an account receivable

Assets:
- Bank increases $2000
- Accounts receivable decreases $2000
Liabilities:
- N/E
Owner’s equity:
- N/E

Question 3

Formula for determining accounts receivable balance

Answer 3

Opening balance
+ Credit sales inc. GST
minus receipts from AR
= AR balance at the end