1. Ahmed was recently hired as the chief financial officer for XYZ Corporation. At the time Ahmed was hired, the company had just completed the accounting cycle for the year ending December 31, 2017. Ahmed began his new job by reviewing the following information about sales and receivables activity during the year:

Beginning accounts receivable	R.O 1,500,000
Beginning allowance for uncollectible	40,000
Sales on account	6,000,000
Collections on account	4,800,000
Sales discounts	68,000
Accounts written-off	33,000
Additions to allowance for uncollectible accounts	59,320

1. Based on his review, Ahmed prepared some handwritten notes in journal entry form summarizing the above sales, collections, discounts, write-offs, and additions to the allowance. he wanted to compare his entries to what had been recorded by the company. How should his summary entries appear?
2. After completing his review, Ahmed concluded that, as of the end of 2018, the company should provide an Allowance for Uncollectible Accounts at the end-of-year balance equal to 3% of total gross receivables. Prepare summary journal entries for 2018 to capture the following information and to update the allowance account from its beginning-of-year balance (see part (a) to determine the beginning balance).

Sales on account	6,600,000
Collections on account	5,900,000
Sales discounts	88,000
Accounts written-off	53,000

2. On January 1, 2011, XYZ Construction acquired a small excavator for $85,000. This device had a 4-year service life to XYZ, at which time it is expected that the equipment will be sold for a $10,000 salvage value.

XYZ uses the double-declining balance depreciation method.

(a) Prepare a schedule showing annual depreciation expense, accumulated depreciation, and related calculations for each year.

(b) Show how the asset and related accumulated depreciation would appear on a balance sheet at December 31, 2013.

(c) Prepare journal entries to record the asset's acquisition, annual depreciation for each year, and the asset's eventual sale for $10,000.

Answer rating: 100% (QA)

a Account Description Debit Credit 1 Trade Receivables 600000000 To Sales 600000000 Being sales Reco... View the full answer