QUESTION










ANSWER
Part 1 |
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a. |
Expense is 2% of credit sales: |
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GENERAL JOURNAL |
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Date |
Account Titles and Explanation |
PR |
Debit |
Credit |
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Bad debt expense |
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228,000 |
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To Allowance for doubtful debt |
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228,000 |
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b. |
Allowance is 5% of accounts receivable: |
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Calculations for Part b: |
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GENERAL JOURNAL |
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Allowance for Doubtful Accounts |
Date |
Account Titles and Explanation |
PR |
Debit |
Credit |
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Bad debt expense |
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105,000 |
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To Allowance for doubtful debt |
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105,000 |
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Closing allowance required |
ie=5%*2100000 |
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ie= 105000 |
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So bad debt expense |
ie= 105000+33000 |
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ie= 138000 |
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Part 2 |
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Accounts receivable |
2,100,000 |
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Less:allowance |
261,000 |
1,839,000 |
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(228000+33000) |
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Part 3 |
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Accounts receivable |
2,100,000 |
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Less:allowance |
138,000 |
1,962,000 |
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Analysis component |
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GENERAL JOURNAL |
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Calculations: |
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Date |
Account Titles and Explanation |
PR |
Debit |
Credit |
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Accounts Receivable |
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Allowance for Doubtful Accounts |
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2017 |
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a. |
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Accounts receivable |
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2,250,000 |
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To sales |
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2,250,000 |
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b. |
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Bad debt expense |
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34,000 |
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To accounts receivable |
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34,000 |
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c. |
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Cash |
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1,330,000 |
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To accounts receivable |
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1,330,000 |
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d. |
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Bad debt expense |
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13,290 |
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To Allowance for doubtful debt |
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13,290 |
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GENERAL JOURNAL |
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Calculations: |
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Date |
Account Titles and Explanation |
PR |
Debit |
Credit |
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Accounts Receivable |
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Allowance for Doubtful Accounts |
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2018 |
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e. |
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Accounts receivable |
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2,940,000 |
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To sales |
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2,940,000 |
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f. |
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Bad debt expense |
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53,000 |
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To accounts receivable |
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53,000 |
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g. |
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Cash |
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2,210,000 |
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To accounts receivable |
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2,210,000 |
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h. |
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Bad debt expense |
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10,155 |
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To Allowance for doubtful debt |
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10,155 |
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Adjusting entry |
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2017 |
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Allowance for doubtful debt |
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47,290 |
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To Accounts receivable |
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47,290 |
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2018 |
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Allowance for doubtful debt |
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63,155 |
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To Accounts receivable |
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63,155 |
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a. |
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Customer |
Month |
Month |
Month |
Month |
Month |
Total |
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Not yet due |
1 to 29 days past due |
30 to 59 days past due |
60 to 89 days past due |
90 to 119 days past due |
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0.5% |
1% |
4% |
10% |
20% |
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B. Axley |
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$32,000 |
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T. Holton |
$15,000 |
$33,000 |
$68,000 |
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W. Nix |
11,000 |
9,000 |
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$21,000 |
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C. Percy |
14,000 |
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5,000 |
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K. Willis |
82,000 |
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$122,000 |
$42,000 |
$73,000 |
$21,000 |
$32,000 |
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Bad debts |
$610.0 |
$420.0 |
$2,920.0 |
$2,100.0 |
$6,400.0 |
$12,450.0 |
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b. |
GENERAL JOURNAL |
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Calculations: |
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Date |
Account Titles and Explanation |
PR |
Debit |
Credit |
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Accounts Receivable |
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Allowance for Doubtful Accounts |
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Uncollectible expense |
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12,450 |
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To allowance for doubtful debt |
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12,450 |
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Parts a, b, and c |
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Note |
Date of Note |
Principal |
Interest Rate |
Term |
Maturity Date |
Days of Accrued Interest at Dec. 31, 2017 |
Accrued Interest at Dec. 31, 2017 |
1 |
Nov. 1/16 |
$240,000 |
4% |
180 days |
apr 30/17 |
60 |
1578.08 |
2 |
Jan. 5/17 |
$100,000 |
5% |
90 days |
apr 5/18 |
90 |
1232.88 |
3 |
Nov. 20/17 |
$90,000 |
4.5% |
45 days |
jan 4/18 |
41 |
454.93 |
4 |
Dec. 10/17 |
$120,000 |
5.5% |
30 days |
jan 9/19 |
21 |
379.73 |
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$550,000 |
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Calculations: |
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Maturity Date |
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1 |
180 |
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2 |
85 |
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3 |
41 |
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4 |
21 |
9 |
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GENERAL JOURNAL |
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Account Titles and Explanation |
PR |
Debit |
Credit |
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Accrued interest |
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454.93 |
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To Interest income |
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454.93 |
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GENERAL JOURNAL |
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Account Titles and Explanation |
PR |
Debit |
Credit |
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Cash |
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90,499.32 |
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To Accrued interest |
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499.32 |
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To Notes receivable |
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90,000.00 |
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