BA $215$ Financial Accounting Chapter $8$ Exercises

Record the following transactions for Turnbull Company.

On August $4,$ Turnbull sold merchandise on account to Tabor Company for $$750,$ terms $\frac{2}{10},\frac{n}{30}.$

On August $7,$ Turnbull granted Tabor a sales allowance and reduced the cost of the merchandise by $$50$ because some of the goods were slightly damaged.

On August $12,$ Tabor paid the account in full.

At the end of $2017,$ Endrun Ltd$.$ has accounts receivable of $700,000$ and an allowance for doubtful accounts of $54,000.$ On January $24,2018,$ the company learns that its receivable from Marcello is not collectible, and management authorizes a write$-$off of $6,200.$

$($a$)$ Prepare the journal entry to record the write$-$off.

$($b$)$ What is the cash realizable value of the accounts receivable $(1)$ before the write$-$off and $(2)$ after the write$-$off?

$($c$)$ Assume on March $4,2018,$ Endrun Ltd$.$ receives payment of $6,200$ in full from Marcello. Prepare the journal entries to record this transaction $($collection of bad debt write$-$off$).$

Hamblin Co$.$ elects to use the percentage$-$of$-$sales basis in $2017$ to record bad debt expense. It estimates that $2\%$ of net credit sales will become uncollectible. Sales revenues are $$800,000$ for $2017,$ sales returns and allowances are $$38,000,$ and the allowance for doubtful accounts has a credit balance of $$9,000.$ Prepare the adjusting entry to record bad debt expense in $2017.$

Shenzhen Ltd$.$ uses the percentage$-$of$-$receivables basis to record bad debt expense. It estimates that $1\%$ of accounts receivable will become uncollectible. Shenzhen's ledger at the end of the current year shows Accounts Receivable of $$420,000.$

Instructions

a$.$ If Allowance for Doubtful Accounts has a credit balance of $$1,280$ in the trial balance and bad debts are expected to be $1\%$ of accounts receivable, journalize the adjusting entry for the end of the period.

b$.$ If Allowance for Doubtful Accounts has a debit balance of $$740$ in the trial balance and bad debts are expected to be $1\%$ of accounts receivable, journalize the adjusting entry for the end of the period.

Presented below are two independent transactions.

$($a$)$ Fiesta Restaurant accepted a Visa card in payment of a $175$ lunch bill. The bank charges a $4\%$ fee. What entry should Fiesta make?

$($b$)$ St$.$ Pierre AG sold its accounts receivable of $70,000$ to Newman Factors. What entry should St$.$ Pierre make, given a service charge of $3\%$ on the amount of receivables sold?

Compute interest and find the maturity date for the following notes. Record basic accounts receivable transactions.

$\backslash$table$[[,$Date of Note,Principal,,Interest Rate $(\%),$Terms$],[($a$),$June $10,80,000,,6\%,60$ days$],[($b$),$July $14,64,000,7\%,,90$ days$],[($c$),$April $27,12,000,4\%,75$ days,$]]$