Reference no: EM132713386

Questions -

Part 1 - Prepare journal entries to record the following transactions completed by meskel company during the year 20 X 2.

September-1- Received a Birr 10,000.00, 12%, 60-day note from yasin Co. as full settlement of his open account.

October 20- sold merchandise on account to Heaven Co. for Birr 25,000.00 by receiving a 90-days, 10% note.

October 31- Received full payment from Yasin co. for note received on September 1.

December 31- Record the adjusting entry required for a accrued interest arised from October 20 transaction. (Assume that the Accounting period ends on December-31-)

Part 2 - Nezreth cosmetics Co. is undecided about which base to use in estimating uncollectible accounts. On December 31,20X2, the balance in account Receivable was Birr 800,000.00 and net credit sales amounted to Birr 1,500,000.00 during 20X2. An aging analysis of the account receivable indicated that Birr 12,000.00 in account are expected to be uncollectible. Past experience has shown that about ½ of 1% of net credit sales eventually are uncollectible.

Prepare the adjusting entries to record estimated bad debts expense using the

1) Percentage of sales basis, and

2) The percentage of receivable basis under each of the following independent assumptions.

a) Allowance for Doubtful Accounts has a credit balance of birr 2,500 before adjustment.

b) Allowance for Doubtful accounts has a debit balance of Birr 600 before adjustment

Part 3 - Lasta Co. uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions.

January 02- sold merchandise to Nile Co. for Birr 30,000.00, term n/15.

February 15- Received Birr 20,000.00 form Nile Co. on account.

April 20- Write-off as uncollectible the remaining balance of Nile Co. account when the business declared bankruptcy.

June 1- Unexpectedly received a check for Birr 6,000.00 from Nile Co.