Council Company Bad Debt Expanse Accounting Worksheet Exercise

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XngObbxvr

Business Finance

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The first sheet in the Excel Doc. is problem one. It's what is used to fill out sheet 2 of the Excel Doc. Problem one has to do with adjusting journal entries and the income statement plus the balance sheet. The third sheet is problem 2. It is about journal entries for allowances for bad debt.

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Problem #1: Victoria Company has the following account balance on December 31, 2016, prior to any adjustments: Debit Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Insurance Land Buildings Accumulated Deprec.-Buildings Equipment Accumulated Deprec.-Equipment Accounts Payable Notes Payable (due March 1, 2017) Unearned Rent Mortgage Payable (due January 1, 2018) Common Stock (2000 shares) Retained Earnings (January 1, 2016) Dividends Sales Revenue Cost of Goods Sold Salaries Expense Utilities Expense Office Supplies Expense Delivery Expense Other Expenses Totals Credit 1,900 4,700 60 8,700 600 4,100 38,000 11,500 10,700 3,100 4,300 1,400 1,200 7,300 10,000 18,075 1,300 49,355 27,185 4,080 2,000 770 1,275 980 106,290 106,290 Additional adjustment information: a. Depreciation on buildings, $1,100; on equipment, $600 b. Bad debts expense, $240 c. Interest accumulated but not paid: on note payable, $50; on mortgage payable, $530 (this interest is due during the next accounting period) d. Insurance expired, $175 e. Salaries accrued but not paid $370 f. Rent was collected in advance and the performance obligation is now satisfied, $800 g. Office supplies on hand at year-end, $230 (expensed when originally purchased earlier in the year) h. The income tax rate is 30% on current income and is payable in the first quarter of 2017 Required: 1. Transfer the account balances to a 10-column worksheet. (see tab below "Blank Worksheet") 2. Prepare adjusting entries and post to the worksheet. 3. Prepare the company's income statement, retained earnings statement and balance sheet. ank Worksheet") balance sheet. Account Title Unadj. Trial Balance Dr. Cr. Adjustments Dr. Cr. Adjusted Trial Bal. Dr. Cr. Income Statement Dr. Cr. Balance Sheet Dr. Cr. Problem #2: Council Company develops an aged schedule of accounts receivable at the end of each year. Customer Current Grey City Products Smokey Industries Bleak Enterprises Drifter Enterprises Denti Cosmetic Comp. Totals 1-30 Days Past Due 31-60 Days 61-90 Days Over 90 Days 168900 235800 130700 567000 34000 300 45780 500 200 320 82500 345000 366500 601300 46800 168900 427500 The company estimated an allowance for uncollectible accounts based on the following rules: Allowance Provided Aging Category Current 1-30 Days 31-60 Days 61-90 Days Over 90 Days 5% 9% 20% 55% 100% Council reported net credit sales of $20,000,000 for the current year. We present the company's ending balances of accounts receivable and the allowance for uncollectible accounts below: End. Bal. Accounts Receivable 1,651,000 Allowance for Uncollect. 94,800 Required: a. Compute the balance required in the allowance for uncollectible accounts. b. Prepare the journal entry to record the bad debt provision for the current year. c. Independent of your answer to part (b), prepare the journal entry to record the bad debt provision for the current year assuming that the allowance for uncollectible accounts had a $231,000 debit balance. d. Independent of your prior responses, prepare the journal entry to record the bad debt provision for the current year assuming that the company estimates its uncollectible accounts at 4% of net credit sales. e. Provide the necessary journal entry based on Council's credit management deciding to writeoff all accounts that were over 90 days past due in the following year. f. Prepare the journal entries required to record the subsequent recovery of the Smokey Industries' receivable if after the writeoffs recorded in part (e), Smokey Industries pays the entire balance due. Total 82500 559680 567500 270000 131320 1611000 s ending balances of Unadj. Balance ebit balance.
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Explanation & Answer

Attached.

Problem #1:
Victoria Company has the following account balance on December 31, 2016, prior to any adjustments:
Debit
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Inventory
Prepaid Insurance
Land
Buildings
Accumulated Deprec.-Buildings
Equipment
Accumulated Deprec.-Equipment
Accounts Payable
Notes Payable (due March 1, 2017)
Unearned Rent
Mortgage Payable (due January 1, 2018)
Common Stock (2000 shares)
Retained Earnings (January 1, 2016)
Dividends
Sales Revenue
Cost of Goods Sold
Salaries Expense
Utilities Expense
Office Supplies Expense
Delivery Expense
Other Expenses

Totals

Credit

1,900
4,700
60
8,700
600
4,100
38,000
11,500
10,700
3,100
4,300
1,400
1,200
7,300
10,000
18,075
1,300
49,355
27,185
4,080
2,000
770
1,275
980

106,290

106,290

Additional adjustment information:
a. Depreciation on buildings, $1,100; on equipment, $600
b. Bad debts expense, $240
c. Interest accumulated but not paid: on note payable, $50; on mortgage payable, $530
(this interest is due during the next accounting period)
d. Insurance expired, $175
e. Salaries accrued but not paid $370
f. Rent was collected in advance and the performance obligation is now satisfied, $800
g. Office suppl...


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