ACCT B6001: Accounting 1 Financial Accounting: Complete Solutions to Problem Set 4 (2025/2026 Edition | Revenue Recognition, Receivables & Inventory Deep Dive for Exam Domination!)

B6001 – Accounting 1 – Financial Accounting


SOLUTION TO PROBLEM SET 4
See spreadsheet support for Q1 and Q3
Question 1. GIJoe

a. Balance Sheet for December 31, 2022
Assets Liabilities
Cash 400 Accounts payable 50
Accounts receivables 93 Advances from customers 40
Inventory 59 Wages payable 6
Loan to ABC 50 96
PP&E 200 Owner’s Equity
Accumulated depreciation (30) 170 Paid in capital 500
Retained earnings 176
Total Assets 772 Total Liabilities and Owner Equity 772

b. Journal entries:
1. dr. Depreciation expense 20
cr. Accumulated depreciation 20
2. dr. Insurance expense 25
cr. Cash 25
3. dr. Rent expense 24
dr. Prepaid rent 12
cr. Cash 36
4. dr. Accounts receivable 753
cr. Sales 753
5. dr. Cash 777
cr. Accounts receivable 777
6. dr. Advances from customers 40
dr. Accounts receivable 60
cr. Sales 100
7. dr. Inventory 555
cr. Accounts payable 555
8. dr. Accounts payable 444
cr. Cash 444
9. dr. Cost of goods sold 565
cr. Inventory 565
10a. dr. Wage expenses 48

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, cr. Wages payable 48
10b. dr. Wages payable 50
cr. Cash 50
11. dr. Cash 20
cr. Loan made to ABC 15
cr. Interest revenues 5
12. dr. Dividends (Retained earnings) 48
cr. Cash 48
13. No entry! Or accounting equations




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