Question

Sigmund Company completed the following transactions:
2012
Jan. 9 Sold merchandise on account to Rex’s Supply, $1,300.
Jan. 15 Wrote off the account of Pete Reineke as uncollectible because of his death, $900.
Mar. 17 Received $550 from Roland Co., whose account had been written off in 2011.
The account was reinstated and the collection recorded.
Apr. 9 Received 20% of the $4,300 owed by Lane DiFelice. The remainder was written off as uncollectible.
June 15 The account for Mike’s Garage was reinstated for $1,400. The account was written off three years ago and collected in full today.
Oct. 18 Prepared a compound entry to write the following accounts off as uncollectible: Jim’s Diner, $260; Kross Auto, $400; Reed’s Hardware, $650.
Nov. 12 Sold merchandise on account to J. B. Rug, $1,800.
Dec. 31 Based on an aging of Accounts Receivable, it was estimated that $6,400 will be uncollectible out of a total of $180,000 in Accounts Receivable.
Dec. 31 Closed Bad Debts Expense to Income Summary.
From the preceding as well as the following additional data, complete a–c:


a. Journalize the transactions.
b. Post to Allowance for Doubtful Accounts, Income Summary, and Bad Debts Expense accounts as needed. (Be sure to record the beginning balance in the Allowance account in the working papers that accompany this text.)
c. Prepare a current assets section of the balance sheet. Ending balances needed: Cash, $13,000; Accounts Receivable, $180,000; Office Supplies, $2,120; Merchandise Inventory, $105,000; Prepaid Rent,$1,050.


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  • CreatedApril 24, 2014
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