ACCOUNTING FOR RECEIVABLES Instructions: For Compass Corporation and its fiscal year ended December 31, 2014: 1. Using the following journal and the data provided below in A), B), and C), prepare the necessary adjusting journal entries. Please include appropriate dates and explanations for each entry. 2. Using the attached T-accounts for the ledger, post only the adjusting journal entries that you prepared below for adjustments A) and C). (NOTE: DO NOT POST JOURNAL ENTRY B)!!!!!.) 3. Once the ledger account balances are updated, prepare updated financial statements. 4. Answer questions a-f. Adjusting Journal Entry Information: A) Using the information in the analysis of A/R below, prepare the adjusting journal entry to record the estimate of uncollectible receivables, using the analysis of receivables method. (T-account is provided to assist you in your calculations, the official ledger is on the following page.) Compass Corporation Allowance for Doubtful Accounts Analysis of Accounts Receivable Method 1200 Unadj.Bal For the Year Ended December 31, 2014 Total Percent Dollars A/R Aged Category Amount Uncollectible Uncollectible Not Past Due 40000 2% 1 - 30 Days Past Due 17250 4% 31-60 Days Past Due 10100 10% 61-90 Days Past Due 5000 35% Over 90 Days Past Due 2500 50% Total 74850 B) Using the information in the % of sales analysis below, prepare the adjusting journal entry to record the estimate of bad debts, using the percentage of sales method. (T-accounts is provided to assist you in your calculations, the official ledger is on the following page.) Compass Corporation Allowance for Doubtful Accounts Net Credit Sales Method 1200 Unadj.Bal For the Year Ended December 31, 2014 Information regarding sales for year ended December 31, 2014: Net credit sales for the year = 630000 Estimated % of uncollectible sales = 0.75% Estimated bad debts at 12/31/2014 = C) Prepare the adjusting journal entry to record the accrual of interest as of 12/31/2014 for Note Receivable #1 based on the following information: Issued date of note = 10/2/2014 Face amount of note = $40,000 Term of note, in days = 120 Annual interest rate = 6% 1. PREPARE 3 REQUIRED JOURNAL ENTRIES Date Description Post Ref Debit Credit Adjusting Entries A) B) C) 4. QUESTIONS a) What is the amount used in the adjustment to record the uncollectible receivables in 1A)? b) What is the amount used in the adjustment to record the uncollectible receivables in 1B)? c) If the company had used the percentage of sales method when preparing the financial statements, how would it effect the following: +/- Amount Total Revenue $ Total Expenses $ Net Income $ Total Assets $ Total Liabilities $ Stockholders' Equity $ d) What is the due date of the note receivable? e) What is the maturity value of the note receivable? f) What is the journal entry the company will record when payment on note receivable #1 is received in full on its due date? Description Debit Credit g) Calculate the following ratios: Accounts receivable turnover = = Number of Days' Sales in Receivables = = h) What conclusions can you draw about the operations of Compass Corporation based on the ratio calculations you made in g) above?

Pad 33% 2:12 AM learn.vccs.edu ACCOUNTING FOR RECEIVABLES 1. Using the following journal and the data provided below in A), B), and C), prepare the necessary adjusting journal entries. Please include appropriate dates and explanations for each entry. 2. Using the attached T-accounts for the ledger, post only the adjusting journal entries that you prepared below for adjustments A) and C). TE NOT POST L ENTRY B!!!) 3. Once the ledger account balances are updated, prepare updated financial statements. . Answer questions a-f A) Using the information in the analysis of A/R below, prepare the adjusting journal entry to record the estimate of uncollectible receivables, using the analysis of receivables method. account is provided to assist you in your calculations, the official ledger is on the following page.) Alowance for Doubtful Accounts Compass Corporation Analysis of Accounts Receivable Method For the Year Ended December 31, 2014 1200 Unadj Bal Total Percent ANR Aged Category Not Past Due 1-30 Days Past Dus 31-50 Days Past Due 61-90 Deys Past Due Over 90 Days Past Due 17250 10100 Total B) Using the information in the % of sales analysis below, prepare the adjusting journal entry to record the estimate of bad debts, using the percentage of sales method. (T-accounts is provided to assist you in your calculations, the official ledger is on the following page.) Compass Corporation Net Credit Sales Method For the Year Ended December 31, 2014 Alowance for Doubtful Accounts 1200 Unadj Bal Information regarding sales far year ended December 31, 2014: Net credit sales for the year Estimated % of uncollectible sales Estimated bad debts at 1231/2014 0 75% C) Prepare the adjusting journal entry to record the accrual of interest as of 12/31/2014 for Note Receivable #1 based on the following information: $40,000 6% 10/2/2014 Issued date of note Term of note, in days Face amount of note Annual interest rate 120 Date Description Post Ref Debit Credit