Identification of Accounting Transactions
Which of the following transactions or events should be recorded in the firm”s accounting records? Explain your answer.
a. Cash is received from a sale previously made on credit.
b. A year after obtaining a bank loan, a business owes the bank interest charges.
These charges remain unpaid at the end of the year.
c. A professional baseball player, hitting .425, expects a bonus under his incentive contract for leading the league in hitting for the season. The bonus was “pegged”at $1,000 for every point that he exceeded the batting target of .375. How much should the baseball player record in his checkbook at the end of the season?
d. An employer and a labor union sign a new collective bargaining agreement.
e. An item of factory equipment is removed from service. The item has a book value of $10,000. It is determined that the equipment is worthless.