Reference no: EM132539403
Question -
Q1) At December 31, 2018 Johnson Co. reports the following results for its calendar year:
Cash Sales $2,800,000
Credit Sales 6,675,000
Total Sales 9,475,000
In addition, its unadjusted trial balance includes the following items:
Accounts Receivable: $1,300,000 debit
Allowance for Doubtful Accounts 15,000 debit
Required -
a) Record the adjusting entry for this company to recognize bad debts under each of the following scenarios:
a. Bad debts are estimated to be 2% of credit sales
b. Bad debts are estimated to be 1% of total sales
c. An aging analysis estimates that 3% of year end Accounts Receivable are uncollectible
b) There must be a T-Account showing what the ending balance in the Allowance for Doubtful Accounts is on 12/31 using the facts in part 1a.
c) There must be a T-Account showing what the ending balance in the Allowance for Doubtful Accounts is on 12/31 using the facts in part 1c.
Q2) Hector Co. installs a new machine in its factory at the beginning of the year costing $50,000. The machines useful is 5 years with a zero salvage value. The machine is expected to produce $400,000 units over its life. During its first year it produced 98,500 units.
a. Compute the depreciation for the first year using the straight-line method of depreciating, the units of production method of depreciating, and the double declining method of depreciating
b. Record the depreciation entry for the first year for each method at 12/31
3) Rose Co. owns a machine that cost $200,000 and has accumulated depreciation of $100,000. Prepare the entry to record the disposal of the machine on January 1 under each of the following independent situations:
a. Rose Co. sold the machine for $100,000
b. Rose Co. sold the machine for $85,000
c. Rose Co. sold the machine for $135,000.
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