BAT4M Unit 2 Activity 3 Assignment 1 - Accounting for Current Assets Record the following transactions in the spreadsheet template provided for this assignment. 1. On May 1, 2015, Ahmed & Ahmed Dental Office had five patients who paid with different forms of payment. They use a revenue account called Dental Service Fees. Assume there is no sales tax. Record the following transactions in the general journal: a) A patient pays $70 cash for a regular check-up. - Bank and Dental Service Fees b) A patient pays $125 with a ScotiaBank Visa card. ScotiaBank charges merchants a 4% service fee. - Bank, Credit Card Expense 5 I Dental Service Fees 125 (Dental Service Fees $35 is not 130) c) A patient pays $225 for two fillings with a debit card. The bank charges merchants 15 cents per transaction. - Net amount of 225 and 15 cents will be banked (Dr. Bank), Dr. Debit Card Expense I Cr Dental Service Fees $$$ total you received d) Sarah Smithson promises to pay $150 for dental services at the end of the month. - AIR and Dental Service Fees e) A patient pays for $150 in services with an American Express card. The service fee that American Express charges merchants is 5%. - AIR American Express. Credit Card ExpenseI Cr. Dental Service Fees $150 Rodriguez Carpentry accepts a six month, 8% promissory note from James Matheson on June 1 to settle a $14,000 outstanding account receivable. Record the following transactions in the general journal: a) The issuing of the note on June 1. - Create a new asset account N'IR Name of business and reduce AIR with the same amount (Cr) b) Full payment of the note on December 1. - How much do you receive from JM in total? 1. Receive the principle amount of 14000 PLUS Interest revenue for 6 months/12 month charge of 8% Calculate: Interest Revenue 0) Assume the note is dishonoured on December 1. - Be Careful with the Amount you will debit to AIR. it should principle amount + interest - When you make credit entries NIR and IIR On February 1, 2015, Samson Design writes off $2,500 of its accounts receivable as bad debts. a. Using the direct write-off method, record this transaction. - Bad Debt Expense and Accounts Receivable b. Which GAAP is (are) violated when the direct write-off method is used? Explain your answer. - two GAAPS are violated 4. In 2015, Decorators Unlimited had net credit sales totaling $1,200,000. Based on past years, 2.5% of credit sales are estimated to be uncollectible. The balance in the Allowance for Doubtful Accounts account is $12,000. a. Record the journal entry to adjust for the estimated bad debts on December 31, 2015 assuming Decorators uses the income statement method. - two accounts affected, Adjusting entries for bad debts, Bad Debts Expense/Allowance for Doubtful Accounts by 0.025 of total net credit sales b. On February 1, 2016, the account receivable for B. Stinson of $3,000 is deemed uncollectible. Record the journal entry to write off this account. - Two accounts affected AIR should go down, counter account will be ADA
