#6 (5 marks 10 minutes)

Smith Company shows the following information on December 31, 2017, the companys fiscal year-end: Account Debit Credit

Accounts receivable $17,000

Allowance for doubtful accounts 400

Sales ($5,000 of cash sales) $75,000

The companys accountant generated the following aging schedule of accounts receivable:

Number of Days Outstanding Amount Receivable Estimated Uncollectible

0-30 days $10,000 1%

31-60 days 4,000 5%

61-90 days 2,000 10%

Over 90 days 1,000 25%

Required:

a.) Prepare the adjustment to allowance for doubtful accounts based on the information above.

b.) Show how accounts receivable, net would be disclosed on the balance sheet.

c.) What is the most likely cause of the allowance for doubtful accounts being in a debit balance?

d.) On February 15, 2018, the company writes off a $300 account receivable from Marco Inc. Record the journal entry.

#7 (4 marks 8 minutes)

Aberdeen Auto Mart uses a perpetual inventory system and reports the following transactions for the month of May for one of its products:

Date Explanation Units Cost/Price

August 1 Beginning inventory 40 $25.00

August 4 Purchase 20 28.00

August 15 Sale 50 60.00

August 21 Purchase 20 29.00

August 26 Purchase 70 30.00

August 31 Sale 40 60.00

Required:

a.) Prepare an inventory record using the weighted average method.

b.) Prepare journal entry/entries for August 31 sale

#8 (4 marks 8 minutes)

On June 30, 2017, ABC Company purchased a piece of equipment for $25,000. The equipment was expected to be useful for 5 years after which time it would be sold for $5,000. The companys accountant wishes to use double-declining balance depreciation. The companys fiscal year end is December 31.

Required:

Compute depreciation expense for each year of the assets life (2017, 2018, 2019, 2020, 2021, 2022). No Journal Entries needed.

#9 (5 marks 10 minutes)

On October 1, 2017, XYZ Company buys a new truck for $60,000 cash. The truck has an estimated useful life of 10 years and an estimated residual value of $10,000. The companys accountant wishes to use straight line depreciation. On July 1, 2019 the company sells the truck for $54,000 cash.

Required: Record all journal entries for the life of the truck.

#10 (8 marks 16 minutes)

On August 31, Year 7, DEF Company issues a $1,000,000 10-year 5% bond. The market rate of interest is 5.5%. The bond quote is 96.1932. The companys fiscal year end is July 31. The bond pays interest semi-annually on February 28, and August 31 each year.

Required:

a.) Prepare a bond amortization table as outlined below for the first 2 years of the bond.

b.) Record the journal entry for the issuance of the bond (August 31, Year 7)

c.) Record the journal entry for the first semi-annual payment. (February 28, Year 8)

d.) Record the journal entry for the year end adjustment. (July 31, Year 8)

e.) Record the journal entry for the second semi-annual payment. (August 31, Year 8)

Bond amortization table

Date	Payment	Interest expense	Discount amortized	Carrying value