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. 

1. Sales on account                                                                     $3,600,000
2. Sales returns and allowances                                               150,000
3. Collections of accounts receivable                                          3,100,000
4. Write-offs of accounts receivable deemed uncollectible         92,000
5. Recovery of bad debts previously written off as uncollectible 28,000

Instructions

1. 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)
2. 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.
3. 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.
4. 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

1. 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.
2. Record adjusting entries for depreciation for 2014.
3. 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

1. 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

Answer rating: 100% (QA)

P82B At December 31 2013 Dustin Company reported this information on its balance sheet Account receivable 960000 Less Allowance for doubtful accounts 78000 During 2014 the company had the following tr... View the full answer