MODULE 3 ASSIGNMENT

PART 1: DEBT LAB

Directions: Please complete the journal entries for each question below.

1.Joe's Auto sells car parts to mechanics and consumers. In October Joe had sold $1,000 worth of car parts to Mechanic Smith. Mechanic Smith tells Joe in January that he will not be able to pay for the products he had purchased. Joe has to write off Mechanic Smith's receivable. Joe uses the direct write-off method and writes off Mechanic Smith's receivable on January 15, 2011. Please write out the journal entry for this transaction.

Date

Account Name

Debit

Credit

2.Dan's Dairy Farm uses the allowance method for bad debt. Dan's Dairy Farm has $100,000 in sales in January 2011. If Dan's uses the percent of sales method to determine his bad debt, and the historical rate for written off sales is 2%, then write out the journal entry that will shows Dan's estimated bad debt. Date this Journal Entry January 31th.

Date

Account Name

Debit

Credit

3.Patty's Dairy Farm also uses the allowance method for bad debt, but Patty uses the percent of receivables method to determine her allowance. In January 2011, Patty's balance in accounts receivable was $50,000. If her historical uncollectible receivables percentage is 5%, then write out the journal entry Patty should record to adjust her allowance. Date this Journal Entry January 31th.

Date

Account Name

Debit

Credit

PART 2: INVENTORY JOURNAL ENTRIES

Directions: The following transactions are for the Hughes Company who sells equipment. Please use the perpetual method to account for inventory costing. Prepare the journal entries for the above transactions.

1.March 1st- Purchased 40 units at $60 a unit(paid cash)

Date

Acct. Name & Transaction Description

Debit

Credit

3/1

2.April 1st- Sold 20 units at $150 on credit.

Date

Acct. Name & Transaction Description

Debit

Credit

4/1

3.April 15th - Collected the cash from the credit sale on April 1st.

Date

Acct. Name & Transaction Description

Debit

Credit

4/15