P8-2B At December 31, 2013, Dustin Company reported this information on its balance sheet. Account receivable $960,000
Question:
P8-2B
At December 31, 2013, Dustin Company reported this information on its balance sheet.
Account receivable $960,000
Less: Allowance for doubtful accounts 78,000
During 2014, the company had the following transactions related to receivables.
- Sales on account $3,600,000
- Sales returns and allowances 150,000
- Collections of accounts receivable 3,100,000
- Write-offs of accounts receivable deemed uncollectible 92,000
- Recovery of bad debts previously written off as uncollectible 28,000
Instructions
- Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Omit cost of goods sold entries)
- Enter the January 1, 2014, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T-accounts), and determine the balances.
- Prepare the journal entry to record bad debt expense for 2014, assuming that aging the accounts receivable indicates that expected bad debts are $140,000.
- Compute the accounts receivable turnover and average collection period.
P8-6B
On January 1, 2014, Alter Company had Accounts Receivable $154,000, Notes Receivable of $12,000; and Allowance for Doubtful Accounts of $13,200. The note receivable is from Hartwig Company. It is a 4-month, 9% note dated December 31, 2013. Alter Company prepares financial statements annually. During the year, the following selected transactions occurred.
Jan. 5 sold $10,000 of merchandise to Flynn Company, terms n/15.
20 Accepted Flynn Company’s $10,000, 3-month, and 6% note for balance due.
Feb. 18 Sold $4,000 of merchandise to Mink Company and accepted Mink’s
$4,000, 6-month, 8% note for the amount due.
Apr. 20 Collected Flynn Company note in full.
30 Received payment in full from Hartwig Company on the amount due.
May 25 Accepted Creech Inc.’s $9,000, 6-month, 4% note in settlement of a past-
Due balance on account.
Aug. 18 Received payment in full from Mink Company on note due.
Sept. 1 sold $5,000 of merchandise to Glazer Company and accepted a $5,000, 6-
Month, 6% note for the amount due.
Instructions
Journalize the transactions. (Omit cost of goods sold entries)
P9-2B
At December 31, 2013, Tong Corporation reported these plants assets.
Land $4,000,000
Buildings $28,800,000
Less: Accumulated depreciation-buildings 11,520,000 17,280,000
Equipment 48,000,000
Less: Accumulated depreciation- equipment 5,000,000 43,000,000
Total plant assets $ 64,280,000
During 2014, the following selected cash transactions occurred.
Apr. 1 purchased land for $2,600,000
May 1 Sold equipment that cost $750,000 when purchased on January 1, 2009. The
Equipment was sold for $367, 000.
June 1 Sold land purchased on June 1, 2002, for $2,000,000. The land cost $800,000.
Sept. 1 Purchased equipment for $840,000.
Dec. 31 retired equipment that cost $470,000 when purchased on December 31, 2004. No
Salvage value was received.
Instructions
- Journalize the transactions. (Hint: you may wish to set up T-accounts, post beginning balance, and the post 2014 transactions.) Tong uses straight line straight-line depreciation for buildings and equipment is estimated to have a 10-year usedful like and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
- Record adjusting entries for depreciation for 2014.
- Prepare the plant assets section of Tong’s balance sheet at December 31, 2014.
P9-7B
In recent years Howard Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the deprecation method for each machine, and varous methods have been used. Information concerning the machines is summarize in the table below.
Machine | Acquired | Cost | Salvage Value | Useful life (in years) | Depreciation Method |
1 | July 1, 2012 | $68,000 | $5,000 | 7 | Straight-line |
2 | Apr. 1 ,2013 | 64,000 | 6,000 | 4 | Declining-balance |
3 | Sept. 1, 2013 | 84,000 | 4,000 | 8 | Units-of-activity |
For the declining-balance method, Howard Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 40,000. Actual hours of use in first 3 years were: 2013. 1,200; 2014, 6,400; and 2015, 7,000.
Instructions
- Compute the amount of accumulated depreciation on each machine at December 31, 2015.
If machine 2 was purchased on November 1 instead of April 1, what would be the depreciation expense for this machine in 2013? In 20
Accounting Tools for Business Decision Making
ISBN: 978-1118128169
5th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso