Description
Question 1: Recording Actual Bad Debts
On May 6, 2021, Alice Company determined that N.O. Money’s $6,200 account receivable was uncollectible. On September 14, 2021, the $6,200 cash was unexpectedly received on account from N.O. Money.
Required:
Give the general journal entries necessary to record the May 6 and September 14 transactions for Alice Company assuming Alice uses the direct-write off method of accounting for bad debts on the attached workpaper #1.
Give the general journal entries necessary to record the May 6 and September 14 transactions for Alice Company assuming Alice uses the allowance method of accounting for bad debts on the attached workpaper #1.
Question 2: Under the allowance method in Question 1, if the cash realizable value of the accounts receivable of Alice Company is $93,000 before the May 6 write-off, what is the cash realizable value of accounts receivable after the May 6 write-off?
Question 4: Recording estimated bad debts
Dinah Company uses the allowance method to account for bad debts. On December 31, 2021, the following information was available:
Net Sales $4,890,000
Accounts Receivable $995,000
Required:
In the attached Workpaper #2, give the adjusting general journal entry required on December 31, 2021 to record estimated bad debts assuming:
Bad debts are estimated at 3% of net sales; the unadjusted balance of the Allowance for Bad Debts account is $29,400 credit.
Bad debts are estimated at 3% of net sales; the unadjusted balance of the Allowance for Bad Debts account is $31,800 debit.
Bad debts are estimated at 15% of accounts receivable; the unadjusted balance of the Allowance for Bad Debts account is $29,400 credit.
Bad debts are estimated at 15% of accounts receivable; the unadjusted balance of the Allowance for Bad Debts account is $31,800 debit.
Question 6: Recording Plant Asset Disposals
Hatter Company purchased a truck costing $66,000. The truck was estimated to have an 11 year useful life and a zero salvage value. The straight-line depreciation method is used.
Required:
In the attached workpaper #3, give the general journal entry required to record the disposal of the truck in each of the following independent cases (Note: enter the case number in the Date column of the journal.)
The truck is discarded at the end of year 11.
The truck is discarded at the end of year 10.
The truck is sold for $32,600 cash at the end of year 6.
The truck is sold for $18,800 cash on July 1 of year 8.
The truck is exchanged for a new truck at the end of year 7. The old truck has a fair market value of $21,600 and Hatter Company pays $51,400 cash in the exchange, which is presumed to have commercial substance.
The truck is exchanged for a new truck at the end of year 7. The old truck has a fair market value of $28,300 and Hatter Company pays $44,700 cash in exchange, which is presumed to have commercial substance.
Question 7: Accounting for Notes Receivable and Notes Payable
On May 1, 2021, Tart Company borrowed $9,000 cash from Queen Corporation giving Queen a $9,000, 14%, 9-month note. Tart Company repaid the note on February 1, 2022.
Required:
- Give the general journal entries required to record the notes receivable transactions for Queen Corporation (the lender) for 2021 and 2022 in the attached workpaper #4. Queen Corporation prepares financial statements semi-annually on June 30 and December 31 of each year.
- Give the general journal entries required to record the notes payable transactions for Tart Company (the borrower) for 2021 and 2022 in the attached workpaper #4. Tart Company prepares financial statements annually on December 31 of each year.
Question 8: Accounting for Payroll
Dormouse Company had the following payroll information available for the week ending on February 21, 2021:
Gross Pay $72,000
Federal Income Tax Withholdings $10,800
State Income Tax Withholdings $4,320
FICA Tax Withholdings $5,510
Federal Unemployment Taxes $432
State Unemployment Taxes $2,160
In addition, the employees have $1,020 withheld for the company health insurance program.
Required:
In the attached workpaper #5, give the general journal entries required to (1) record the employee payroll and (2) record the employer payroll taxes.
Question 8: Accounting for Payroll
Dormouse Company had the following payroll information available for the week ending on February 21, 2021:
Gross Pay $72,000
Federal Income Tax Withholdings $10,800
State Income Tax Withholdings $4,320
FICA Tax Withholdings $5,510
Federal Unemployment Taxes $432
State Unemployment Taxes $2,160
In addition, the employees have $1,020 withheld for the company health insurance program.
Required:
In the attached workpaper #5, give the general journal entries required to (1) record the employee payroll and (2) record the employer payroll taxes.
Question 9: Duchess Company had the following expenditures related to the purchase of a machine:
Purchase Cost $8,300
Shipping Costs $240
Testing Costs $180
Installation Costs $400
Sales Taxes $660
Oils needed to lubricate the machine during operation $220
Annual inspection of the machine $140
When the machine is purchased, what total cost should be debited to the machine account? [ ]
Question 10: Wonderland Corporation purchased equipment costing $47,000. The equipment had a 6-year useful life and a salvage value of $5,000. Complete the following depreciation schedule using straight-line depreciation:
YearDepreciation ExpenseAccumulated DepreciationBook Value
1
23456
Give the adjusting general journal entry to record the depreciation at the end of the first year:
Account TitlesDRCRQ