Financial Accounting Instructor-Turck 75012) Supex (Receivables) wip.docx Use your own accounting paper G. Following are selected transactions, including all transactions affecting Allowance for Doubtful Accounts, for Garden Company during the year 2021. The balance in Allowance for Doubtful Accounts as of January 1, 2021 is a $1,500 credit. July 14 Write off a $750 account receivable arising from a sale to Briggs Company 3 months ago (Garden Company uses the allowance method.) July 30 Garden Company receives a $1,000, 3-month, 10% note from a product sale to Surrell Company. (assume Garden Company uses periodic inventory system) Aug. 15 Receives $2,000 cash plus $10,000 note from Evans in exchange for merchandise that sells for $12,000. The note is dated August 17, bears 12% interest, and matures in six months. Sep. 15 Receives $9,900 in exchange for discounting without recourse the $10,000 note (see August 15) at the local bank. Please accrue 1-month's interest then journalize the cash receipt. Oct. 30 Garden Company receives payment on Sumrell note dated July 30. Nov. 1 Made a $200 credit card sale with a 4% fee the net cash proceeds will be received overnight from the credit card companyand automatically deposited in company's bank account Nov. 5 Made a $500 credit card sale with a 5% feethe payment from the credit card company is received via check on Nov 7. Prepare the Nov. 7 entry also. Nov. 15 Receives the full amount of $750 from Briggs Company that was previously written off on July 14. Record the bad debts recovery. Nov. 20 Write off a $2,500 account receivable arising from a prior year sale to Owens' Inc. (1) Prepare journal entries to record these transactions on the books of Garden Company. (2) Prepare the following: a) AJE(a): Prepare an adjusting entry to accrue any Interest Revenue and Interest Receivable on the basis of outstanding Notes Receivable. (if any) b) The unadjusted balance in Allowance for Doubtful Accounts is $1,000 debit balance. Confirm this balance for yourself by posting AFDA entries to the account (there should be 3 entries to post; don't forget the beginning balance). Has management over or under estimated the level of write-offs to Accounts Receivable for the year 2021? Following the directions below, prepare two alternative adjusting journal entries for Bad Debt Expense on December 31, 2021. (i) AJE(b) (alternative 1) Balance Sheet Method: Assume Bad Debt Expenses is estimated by an aging of Accounts Receivable. Based on analysis of Accounts Receivable, management estimates $20,400 of the outstanding Account Receivable will never be collected (ii) AJE(b) (alternative 2) Income Statement Method: Assume Bad Debt Expenses is estimated by using the percent of Sale Revenue approach. Management estimates Bad Debt Expense for the period is 1% of credit sales. Credit sales for the year amounted to $2,000,000. Apparently the bank used a discount rate of 15.85% to arrive at $9,900. ($10, 600 15.85% % %12 = $700) Maturity Value $10,600 Bank Discount -700 Cash rec'd from bank $ 9,900 This note is provided because a student once asked me, "What is the discount rate on 4 450 this problem?" Financial Accounting Instructor-Turck 75012) Supex (Receivables) wip.docx Use your own accounting paper G. Following are selected transactions, including all transactions affecting Allowance for Doubtful Accounts, for Garden Company during the year 2021. The balance in Allowance for Doubtful Accounts as of January 1, 2021 is a $1,500 credit. July 14 Write off a $750 account receivable arising from a sale to Briggs Company 3 months ago (Garden Company uses the allowance method.) July 30 Garden Company receives a $1,000, 3-month, 10% note from a product sale to Surrell Company. (assume Garden Company uses periodic inventory system) Aug. 15 Receives $2,000 cash plus $10,000 note from Evans in exchange for merchandise that sells for $12,000. The note is dated August 17, bears 12% interest, and matures in six months. Sep. 15 Receives $9,900 in exchange for discounting without recourse the $10,000 note (see August 15) at the local bank. Please accrue 1-month's interest then journalize the cash receipt. Oct. 30 Garden Company receives payment on Sumrell note dated July 30. Nov. 1 Made a $200 credit card sale with a 4% fee the net cash proceeds will be received overnight from the credit card companyand automatically deposited in company's bank account Nov. 5 Made a $500 credit card sale with a 5% feethe payment from the credit card company is received via check on Nov 7. Prepare the Nov. 7 entry also. Nov. 15 Receives the full amount of $750 from Briggs Company that was previously written off on July 14. Record the bad debts recovery. Nov. 20 Write off a $2,500 account receivable arising from a prior year sale to Owens' Inc. (1) Prepare journal entries to record these transactions on the books of Garden Company. (2) Prepare the following: a) AJE(a): Prepare an adjusting entry to accrue any Interest Revenue and Interest Receivable on the basis of outstanding Notes Receivable. (if any) b) The unadjusted balance in Allowance for Doubtful Accounts is $1,000 debit balance. Confirm this balance for yourself by posting AFDA entries to the account (there should be 3 entries to post; don't forget the beginning balance). Has management over or under estimated the level of write-offs to Accounts Receivable for the year 2021? Following the directions below, prepare two alternative adjusting journal entries for Bad Debt Expense on December 31, 2021. (i) AJE(b) (alternative 1) Balance Sheet Method: Assume Bad Debt Expenses is estimated by an aging of Accounts Receivable. Based on analysis of Accounts Receivable, management estimates $20,400 of the outstanding Account Receivable will never be collected (ii) AJE(b) (alternative 2) Income Statement Method: Assume Bad Debt Expenses is estimated by using the percent of Sale Revenue approach. Management estimates Bad Debt Expense for the period is 1% of credit sales. Credit sales for the year amounted to $2,000,000. Apparently the bank used a discount rate of 15.85% to arrive at $9,900. ($10, 600 15.85% % %12 = $700) Maturity Value $10,600 Bank Discount -700 Cash rec'd from bank $ 9,900 This note is provided because a student once asked me, "What is the discount rate on 4 450 this