Question

The Cheesecake Factory Incorporated​ (NASDAQ: CAKE​) operates two bakeries in the United States where it makes over 70 desserts for its own restaurants. In​ addition, the Cheesecake Factory bakeries sell selected desserts to a variety of foodservice operators and​ retailers, including Sam's Club​, Walmart​, Target​, BJ's Wholesale Club​, and Barnes & Noble Cafés. The Cheesecake Factory has accounts receivable on its financial statements. The primary source of its accounts receivable is its sales to bakery customers.

** There is no financial statement to reference**

1. When The Cheesecake Factory ships an order to BJ's Wholesale Club on​ account, The Cheesecake Factory​'s total assets would​ (ignore the cost of sales journal entry for this​ question):

a. increase

b. stay the same

c. decrease

d. unable to determine with the information provided

2. When The Cheesecake Factory ships an order to BJ's Wholesale Club on​ account, The Cheesecake Factory​'s total liabilities would​ (ignore the cost of sales journal entry for this​ question):

a. increase

b. stay the same

c. decrease

d. unable to determine with the information provided

3. When The Cheesecake Factory ships an order to BJ's Wholesale Club on​ account, The Cheesecake Factory​'s total equity would​ (ignore the cost of sales journal entry for this​ question):

a. increase

b. stay the same

c. decrease

d. unable to determine with the information provided

4. When The Cheesecake Factory receives payment for an order it shipped to a wholesale customer last​ month, The Cheesecake Factory​'s total assets​ would:

a. increase

b. stay the same

c. decrease

d. unable to determine with the information provided

Answer 1

S. No.	Particulars	Why Debited/Credited	Impact on Accounting Equation	Answer
1	Accounts Receivable a/c …. Dr	Debit the receiver	Increases Assets	a. Total assets would increase
	To Sales a/c	Credit all incomes and gains : Sales is an income/revenue for us, hence credited	Increases Shareholders Equity (Increases profit)
	(Being sales to BJ's wholesale club on account recorded)
2	Accounts Receivable a/c …. Dr	Debit the receiver of goods	Increases Assets	b. Total liabilities would stay the same
	To Sales a/c	Credit all incomes and gains : Sales is an income/revenue for us, hence credited	Increases Shareholders Equity (Increases profit)
	(Being sales to BJ's wholesale club on account recorded)
3	Accounts Receivable a/c …. Dr	Debit the receiver of goods	Increases Assets
	To Sales a/c	Credit all incomes and gains : Sales is an income/revenue for us, hence credited	Increases Shareholders Equity (Increases profit)	a. Total equity would increase
	(Being sales to BJ's wholesale club on account recorded)
4	Cash a/c …............. Dr	Debit what comes in : We have received cash, hence debited	Increases Assets	b. Total assets would stay the same
	To Accounts Receivable	Credit the giver	Decreased Assets