Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Entries for Bank Reconciliation The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: 1. Cash balance according
Entries for Bank Reconciliation The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: 1. Cash balance according to the company's records at July 31, $16,690. 2. Cash balance according to the bank statement at July 31, $17,840. 3. Checks outstanding, $3,390. 4. Deposit in transit, not recorded by bank, $2,720. 5. A check for $170 in payment of an account was erroneously recorded in the check register as $710. 6. Bank debit memo for service charges, $60. Journalize the entries that should be made by the company, part (A) Error and part (B) Service Charge. a. July 31 b. July 31 Compare Two Methods of Accounting for Uncollectible Receivables Digital Depot Company, which operates a chain of 40 electronics supply stores, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the firm is considering changing to the allowance method. Information is requested as to the effect that an annual provision of 14% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts: Year of Origin of Accounts Receivable Written Off as Uncollectible Year Sales Uncollectible Accounts Written Off 1st 2nd 3rd 4th 4th $18,000 9,000 $21,200 1st 2nd 3rd 4th $12,500,000 14,800,000 18,000,000 24,000,000 $18,000 30,200 39,900 52,600 3,600 $27 3,600 2,300 9,300 5,100 $27,000 12,500 $35,000 Required: 1. Assemble the desired data. Enter all amounts as positive numbers. Digital Depot Company Bad Debt Expense Expense Based on Estimate Increase (Decrease) in Amount of Expense Balance of Allowance Account, End of Year Year 1st 2nd Expense Actually Reported $ Expense Based on Estimate Increase (Decrease) in Amount of Expense Balance of Allowance Account, End of Year Expense Actually Reported $ Year 1st 2nd 3rd 4th 2. Experience during the first four years of operations indicated that the receivables either were collected within two years or had to be written off as uncollectible. Does the estimate of 14% of sales appear to be reasonably close to the actual experience with uncollectible accounts originating during the first two years
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started