Question 4:

Data for the High-Rise Construction Co. for the year ended 30 June 2022, are presented below:

If High-Rise Construction Co. estimates its bad debts at 1% per cent of net credit sales, what will be the journal entry for bad debt expense and allowance for doubtful accounts for the financial year ended 30 June 2022? Assume all sales returns were previously recorded as credit sales (I.e. cash was not received for these sales).

Question 5: PPE Straight Line and Double Declining Balance

Panko Inc. began a business on January 1, 2019. It purchased equipment for its factory on this date for $340,000. The equipment is expected to have an estimated useful life of four years with a residual value of $40,000. Pankos year-end is December 31.

Compute the depreciation for 2019, 2020, 2021, and 2022, and provide the year-end journal entries which Panko will record on December 31 for each of the years above, using the following two methods:

1. Straight-line method
2. Double declining balance method.

\begin{tabular}{ll} \hline Sales (credit) & $2500000 \\ Sales returns and allowances & 50000 \\ Accounts receivable (30 June 2022) & 640000 \\ Allowance for bad debts & \\ (Before adjustment at 30 June 2022) & 20000 \\ Estimated amount of uncollected accounts based on ageing analysis & 45000 \\ \hline \end{tabular}