Reference no: EM131220304
On January 1 of the current year, Slaton, inc. had the following accounts on its books:
Accounts Receivable $120,000 (debit)
Allowance for Uncollectible Accounts 4,000 (credit) CHAPTER 8
During this year, credit sales were $600,000 and collections on account were $580,000.
Required:
a. Prepare general journal entries for the following transactions that occurred during the year:
(1) Wrote off L. Baxter's account, $3,400.
(2) Wrote off N. Vale's account, $1,200.
(3) N. Vale, who is in bankruptcy, paid $400 in final settlement of the account written off in transaction (2). This amount is not included in the $580,000 collections.
(4) On December 31, estimated the year's bad debts expense at 1% of credit sales.
b. Show how Accounts Receivable and the Allowance for Uncollectible Accounts would appear on the year-end balance sheet.
2. Ginger Pastries buys a specialty table saw for her metal fabrication business on January 1, 2013.
a. The machine cost $60,000 and is expected to be used for five years.
b. At the end of the five years it is expected that the machine can be sold for $4,000.
c. Compute the depreciation expense for the third year (2015) using both:
i. straight-line.
ii. double-declining-balance depreciation methods.
3. Schuler Company had machinery that had originally cost $82,000. The machinery was three years old and had been depreciated using the double-declining-balance method, over a five-year useful life with a residual value of $6,000. Answer each of the following independent questions:
Required:
a. If the company sold the machinery for $35,000, prepare a journal entry to record the sale.
b. If the company sold the machinery for $16,000, prepare a journal entry to record the sale.
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