Reference no: EM131776000

Question 1 - Determine bad debts expense; prepare the adjusting entry for bad debts expense.

Month of Sale	Balance, March 31
March	$60,000
February	17,600
January	8,500
Prior to January	7,000
	$93,100

Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is as follows.

Age of accounts	Estimated Percentage Uncollectible
1-30 days	2.0%
31-60 days	5.0%
61-90 days	30.0%
Over 90 days	50.0%

Instructions -

(a) Determine the total estimated uncollectibles.

(b) Prepare the adjusting entry at March 31 to record bad debts expense.

Question 2 - Journalize write-off and recovery

At December 31, 2009, Braddock Company had a balance of $15,000 in the Allowance for Doubtful Accounts. During 2010, Braddock wrote off accounts totaling $13,000. One of those accounts ($1,800) was later collected. At December 31, 2010, an aging schedule indicated that the balance in the Allowance for Doubtful Accounts should be $19,000.

Instructions - Prepare journal entries to record the 2010 transactions of Braddock Company.

Question 3 - Journalize percentage of sales basis, write-off, and recovery

On December 31, 2010, Jarnigan Co. estimated that 2% of its net sales of $400,000 will become uncollectible. The company recorded this amount as an addition to Allowance for Doubtful Accounts. On May 11, 2011, Jarnigan Co. determined that Terry Frye's account was un-collectible and wrote off $1,100. On June 12, 2011, Frye paid the amount previously written off.

Instructions - Prepare the journal entries on December 31, 2010, May 11, 2011, and June 12, 2011.

Question 4 - Journalize entries for the sale of accounts receivable

Presented below are two independent situations.

(a) On March 3, Cornwell Appliances sells $680,000 of its receivables to Marsh Factors Inc. Marsh Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the entry on Cornwell Appliances' books to record the sale of the receivables.

(b) On May 10, Dale Company sold merchandise for $3,500 and accepted the customer's America Bank MasterCard. America Bank charges a 4% service charge for credit card sales. Prepare the entry on Dale Company's books to record the sale of merchandise.

Question 5 - Journalize entries for credit card sales

Presented below are two independent situations.

(a) On April 2, Nancy Hansel uses her J. C. Penney Company credit card to purchase merchandise from a J. C. Penney store for $1,500. On May 1, Hansel is billed for the $1,500 amount due. Hansel pays $700 on the balance due on May 3. On June 1, Hansel receives a bill for the amount due, including interest at 1.0% per month on the unpaid balance as of May 3. Prepare the entries on J. C. Penney Co.'s books related to the transactions that occurred on April 2, May 3, and June 1.

(b) On July 4, Kimble's Restaurant accepts a Visa card for a $200 dinner bill. Visa charges a 3% service fee. Prepare the entry on Kimble's books related to this transaction.

Question 6 - Journalize credit card sales, and indicate the statement presentation of financing charges and service charge expense

Topeka Stores accepts both its own and national credit cards. During the year the fol-lowing selected summary transactions occurred.

Jan. 15 Made Topeka credit card sales totaling $18,000. (There were no balances prior to January 15.)

Jan. 20 Made Visa credit card sales (service charge fee 2%) totaling $4,300.

Feb. 10 Collected $10,000 on Topeka credit card sales.

Feb. 15 Added finance charges of 1 % to Topeka credit card balance.