ABC corporation’s fiscal year ends December 31.The following information refers to the whole transactions about ABC during 2013:
1.17 Sold merchandise to B Company for $200,000, and B was given a 20% trade
discount. The terms of sale were 2/10, n/30. ABC Corporation use Gross Method. 1.26 B paid the money in full.
4.15 Sold inventory to C Company with price $400,000. And received a interest-bearing
note with 8% interest rate, and the payment was due on Jan.15, 2014. 5.8 Accounts receivable of $25,000 were written off with allowance method. 7.15 Discounted the $400,000 note at a Bank, with discount rate 12 %.
9.22 Sold merchandise in credit to D Company for $150,000, and the cost is 90,000. 12.31 The debit balance of accounts receivable was 300,000 in the beginning of 2013.
Allowance for uncollectible accounts had credit balance of 30,000 the beginning of the year, and ABC corporation estimated bad debt percentage 8% of accounts receivable in the end of 2013. Required:
(a) Prepare the journal entry for each transaction.
(b) Prepare the year-end adjusting entry for bad debt expense. 1.17 Accounts recicevable 160,000 Sales revenue 160,000 1.26 Cash 156800
Sales discount 3200
Acounts recicevable 160,000 4.15 Note recicevable 400,000 Sales revenue 400,000
5.8 Allowance for uncollectible account 25,000 Acounts recicevable 25,000 7.15 Interest recicevable 8,000 Interest revenue 8,000
Cash 398560 Loss on sale of note recicevable 9440 Note recicevable 400,000
Interest recicevable 8,000 9.22 Accounts recicevable 150,000 Sales revenue 150,000 Cost of goods sold 90,000
Inventory 90,000 12.31 425,000*8%=34000
34，000+25,000-30,000=29,000 Bad debt expense 29,000
Allowance for uncollectible account 29,000
二、On May 12, 2011, Falwell Computing sold five computers to Computing Plus for $10,000, subject to
terms 3/10, n30. Falwell uses the net method of accounting for sales discounts.
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Required:
1. Prepare the journal entry to record the sale.
2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2011.
3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2011.
三. Beethoven Music Company started business in March, 2011. Sales for its first year were $400,000. Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars. Industry statistics suggest that 10% of the merchandise sold to customers will be returned. Beethoven estimated its sales returns based on the industry average. During the year, customers returned $30,000 in sales. Beethoven uses a perpetual inventory system. Required:
Prepare summary journal entries to record (1) sales, (2) sales returns, and (3) the year-end adjusting entry for estimated sales returns.
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四. During Bricker Company's first year of operations, credit sales totaled $200,000 and collections on credit sales totaled $145,000. Bricker estimates that $1,000 of its ending accounts receivable balance will not be collected. By year-end, Bricker had written off $330 of specific accounts as uncollectible. Required:
1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable.
五. A summary of Klugman Company's December 31, 2011, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
The allowance for uncollectible accounts had a balance of $1,400 on January 1, 2011. During the year, bad debts of $750 were written off. Required:
Prepare all journal entries for 2011 with respect to bad debts and the allowance for uncollectible accounts.
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六. On December 31, 2010, Central Freight reported an allowance for uncollectible accounts of $15,300. During 2011, Central wrote off $17,000 in accounts receivable. Included in the write-off was Roskoff Corp.'s account in the amount of $750. Roskoff subsequently paid this balance. At December 31, 2011, an analysis of the accounts receivable aging schedule indicated the need for an allowance for uncollectible accounts of $14,900. Required:
Prepare all implied journal entries relative to bad debt expense and the allowance for uncollectible accounts.
七. On December 1, 2011, General Mole borrowed $400,000 at 12% interest and pledged $500,000 in accounts receivable as collateral. Additionally, General Mole was charged a finance fee equal to 1% of the accounts receivable assigned. At the end of December, $300,000 of the assigned receivables were collected and remitted to the lender along with accrued interest. Required:
Prepare journal entries to record the borrowing, the assignment of receivables, the collection on the receivables, and the recognition of interest expense.
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八. On February 1, 2011, Stealth Trucks sold a diesel rig to Kansas Transports for $250,000, receiving a $50,000 down payment and a 12-month, 10% note for the balance. Principal and interest are due at maturity and the 10% interest rate reflected the market rate of interest at the time of sale. On August 1, 2011, Kansas Transports discounted the note without recourse at the First South Bank at 12% interest. Required:
Prepare all required journal entries at August 1 to recognize interest revenue and the discounting of the note.
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