Question

ABC, Inc. reported the following transactions for March 2022. Mar. 1 The business received $7,000 cash and issued common stock to stockholders. Mar. 2 Paid the first month's rent of $500. Mar. 3 Purchased equipment by paying $2,000 cash and executing a note payable for $6,000. Mar. 4 Purchased office supplies for $700 cash. Mar. 5 Billed a client for $12,000 of design services completed. Mar. 6 Received $9,000 on account for the services previously recorded.

a) Journalize the transactions and record T-accounts
b) What is the balance in Accounts Receivable?

Answer 1

The Acme Bank scenario involves adjusting the balance sheet after an open market purchase by the Fed. Reserves would increase by the amount of bonds sold, affecting the capacity of loans offered. For ABC, Inc.'s transactions, the balance in Accounts Receivable would be $3,000 after considering the billed and received amounts.

Step-by-step explanation:

A student asked how to journalize transactions and find the balance in Accounts Receivable for ABC, Inc. based on several transactions in March 2022. Also, the question includes a scenario about Acme Bank and the effects of a Federal Reserve open market purchase. However, there seems to be a mix-up in the questions provided, but focusing on the Acme Bank scenario, the balance sheet of Acme Bank would reflect an increase in reserves (due to the sale of bonds to the Fed) and a potential increase in loans as those reserves are converted to new loans.

For Acme Bank, after selling $10 million in Treasury bonds to the Fed, the transaction would increase reserves by $10 million. If Acme Bank lends out this amount, loans will increase by $10 million. The complete changes in the balance sheet are not provided, considering the mix-up in the provided background information. Regarding the ABC, Inc. transactions, these would be recorded in separate journal entries and would affect various accounts, including cash, common stock, equipment, notes payable, office supplies, and accounts receivable.

The balance in Accounts Receivable for ABC, Inc. after the transactions would be calculated by subtracting the amount received from the amount billed to the client. In this case, it would be $12,000 (billed) - $9,000 (received) = $3,000.