NOTE 1: Accounts Receivables
Receivables are carried at original invoice amounts. Receivables are written off when deemed uncollectible.
Receivables consist of the following at December 31,2009
Billed clients € 191.600
Receipt of receivables € -170.405
Uncollectable receivables € -2.995
NOTE 2: Accounts Pre-payment
The company has considered accommodation rent,insurance, software update fees, telephone and utilities expenses as part of this account.
Accommodation rent is paid in advance quarterly.
Insurance is purchased for 2 years and pay in advance for€3600, although one-month insurance expense of €150 is treated. At the end of the year, this pre-payment insurance raises up to €1800 which will be expended during the following five months.
Annual updatefee of software is paid in advance. Expense of this update is split throughout the year every month. However, as the license is bought on June, at the end of the year there is a total pre-payment of€866 for the following five month next year.
Prepayment expenses were made for telephone and utility expenses in order to properly allocate the costs the referring month. Thus, there pre-payments wereneutralized after receipt of the actual invoiced amount.
NOTE 3: Accounts payable
The company purchases some goods and services such as office supplies, telephone and utilities services from otherservices. These transactions are made on credit with cash payments made after the goods and services have been provided.
The company decides to have office supplies stocks to €600. Therefore, atthe beginning of each month, the amount expended during previous month is restocked.
Once the telephone bill or utilities is received, the company recognized the expenses but postpone thepayment to the following month.
NOTE 4: Capital in excess of par value
Company received excess for the value of €20000 cash, from a new stockholder over par value of the stock issued. In return...
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