For journal entries in this assignment, enter AR for Accounts Receivable, ADA for Allowance for Doubtful Accounts, BDE for Bad Debt Expense, REV for Sales Revenue, and CASH for Cash. Please be careful as you type, because Blackboard is very rigid!

Enter all numeric answers in whole dollars but without a $.

Priestly Inc. records sales on account of $150,000 during the month of June. The company estimates bad debt expense as of 3.5% of credit sales.

1. Show the journal entry for the June sales on account (enter account name from the choices in the general instructions above, and then the amount).
   • Debit:
   • Credit:
2. Show the journal entry for June's bad debt expense.
   • Debit:
   • Credit:
3. Assuming Priestly's opening balance of Accounts Receivable on June 1 was $0, what is its balance of net Accounts Receivable after the two entries above?

Just before closing its books on June 30, Priestly learns that one of its customers, the McKay Company, has run into financial difficultly and cannot pay an invoice totaling $1,875. Priestly decides to write off McKay's account.

1. Show the journal entry for the write-off.
   • Debit:
   • Credit:
2. What is Priestly's balance of net Accounts Receivable after the write-off?

On July 15, Priestly is pleasantly surprised to receive a check for $1,100 from McKay with a note saying the remainder of the balance due will be sent in two weeks.

1. Show the journal entry to reinstate to Accounts Receivable the amount for which payment has been received.
   • Debit:
   • Credit:
2. Show the journal entry to record McKay's payment.
   • Debit:
   • Credit:
3. What is Priestly's balance of net Accounts Receivable after the two entries above pertaining to McKay?

2 points

QUESTION 2

Gomez, Inc. sells machinery and equipment to farmers. Most sales are on account. On April 1, 2017, the company has a debit balance of $280,000 in accounts receivable and a credit balance of $12,600 in the allowance for doubtful accounts. During the second quarter (from April 1 through June 30, 2017), Gomez records the following activities:

• Total sales of $315,000. $5,000 are in cash, and the rest are on account.
• Cash collections from customers for previous credit sales totaling $395,000.
• Write-offs of two accounts as uncollectible: one for $4,500 and one for $9,700.

Based on historical averages and expectations about the economy going forward, Gomez calculates bad debt expense as 4.0% of credit sales during the period.

Calculate the following amounts (enter whole numbers without a $):

1. The bad debt expense for the quarter ended June 30, 2017.
2. The balance of accounts receivable on June 30, 2017.
3. The balance of the allowance for doubtful accounts on June 30, 2017.
4. The net accounts receivable balance on June 30, 2017.

1 points

QUESTION 3

For journal entries in this assignment, enter AR for Accounts Receivable, ADA for Allowance for Doubtful Accounts, BDE for Bad Debt Expense, REV for Sales Revenue, and CASH for Cash. Please be careful as you type, because Blackboard is very rigid!

At the end of the current period, the accounting ledger of Blue Spruce Corp. shows an Accounts Receivable balance of $62,500 and Credit Sales of $652,380. The company has not yet recognized bad debt expense for the period.

Assume the Allowance for Doubtful Accounts has a credit balance of $780 in the trial balance, and that uncollectible accounts are expected to be 7% of gross Accounts receivable. Hint: this means the company will first determine the desired ending balance of the Allowance and then "back into" the required amount of bad debt expense.

1. Show the adjusting entry at the end of the period to recognize bad debt expense.
   • Debit:
   • Credit:
2. What is the amount of net accounts receivable after recording the entry above?

Now assume (instead of the scenario above) that the Allowance for Doubtful Accounts has a debit balance of $650 in the trial balance, and that uncollectible accounts are expected to be 6% of gross Accounts receivable. (Note: A debit balance in the allowance occurs when write-offs in a period exceed the opening credit balance of the allowance. After we recognize bad debt expense, the allowance will once again have a credit balance, as is appropriate for a contra-asset account.)

1. Show the adjusting entry at the end of the period to recognize bad debt expense. Use the account abbreviations from problem 1 above.
   • Debit:
   • Credit:
2. What is the amount of net accounts receivable after recording the entry above?

1 points

QUESTION 4

The Dimitros Company records the following transactions during September 2018:

• Cash sales to customers totaling $6,800.
• Credit card sales to customers totaling $21,500. The credit card fee to the merchant is 3.0%. The credit card companies have paid all amounts due for September.
• A $3,000 sale on account to a long-time customer with terms of 2/10, n/30. The sale is made on September 5. The customer pays the invoice on September 14.
• A customer returns product they had purchased last month for $450. Dimitros accepts the return and gives the customer a cash refund.

Calculate the following amounts:

1. Service charge expense for credit card sales
2. Sales discount (contra-revenue) for sales on account
3. Sales returns (contra-revenue)
4. Gross sales revenue
5. Net sales revenue
6. Net cash collected from sales

1 points

QUESTION 5

Record Crane Company's journal entries for the following events. Use the following account abbreviations: AR = accounts receivable; CASH = cash; REV = Sales revenue; ALL = allowance for doubtful accounts; RET = returns; DISC = sales discount.

Note: in part c, two accounts are debited. GIven the limitations of Blackboard, it is critical that you enter these two in alphabetical order, for example, ALL before CASH.

1. On July 1, Crane Company sold merchandise on account to Stacey Inc. for $28,000, terms 2/10, n/30. Debit: Credit:
2. On July 8, Stacey Inc. returned merchandise to Crane Company for a credit refund of $4,000. Debit: Credit:
3. On July 11, Stacey Inc. paid for the merchandise. Debit: Debit: Credit: