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I need help on what to do for the adjusting and correcting journal entry. a) Based on your inquiries, you note that $35,000 of accounts

I need help on what to do for the adjusting and correcting journal entry.

a) Based on your inquiries, you note that $35,000 of accounts receivable had been written off during the year. The clerk had debited bad debt expense for $35,000 and credited Accounts Receivable for $35,000. When $8,500 of accounts previously written off had been collected, the accountant debited cash and credited sales. The company uses the allowance method based on the aging of accounts receivable. Based on this method, Smith Co determines that uncollectible accounts are $46,600 at the end of 2018.

b)You note during the review of sales, that a rebate was issued for the 2018 Income Tax Game to encourage sales. 36,000 games were sold. Customers can mail in their receipt and receive a $1 rebate per game. It is estimated that 60% of customers will send in the rebate. The rebate expires on January 31, 2019. To date, 8,000 customers have sent in the rebate and $16,000 has been refunded. Without any direction, the accounting clerk debited Miscellaneous Selling Expense and credited Cash for the $16,000. The management of Smith Co would prefer to have this type of expense in a separate account (Rebate Expense) so they can properly analyze for future ideas.

c) Smith Co uses the Dollar Value LIFO inventory method. For internal purposes, the Merchandise Inventory Account is maintained at FIFO (current costs). At the end of the year, the LIFO reserve account is adjusted so inventory on the balance sheet reflects Dollar Value LIFO. You need to calculate the proper inventory balance and adjust the LIFO reserve. The price index for this year is 1.26 . Prior year inventory records show the following calculation for 2018: 175,000 X 1.0 = 175,000 100,000 X 1.05 = 105,000

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Smith Co End of Period Worksheet For the Year Ended December 31, 2018 Unadjusted Trial Balance Adjusted Trial Balance Adjustments DR Account Title DR 330,000 694,980 Cash 17,000 Allowance for Doubtful Accounts Interest Receivable Merchandise I 425,000 LIFO Reserve Prepaid Adve Prepaid Rent Office Supplies Note Receirable Avaiable for Sale Secres Office Buiding Accumulated Depreciation Office Building 32,000 17,000 6,000 25,000 375,000 3,750,000 87,500 1,275,000 AccumulateDepreiaio Storage Building 750,000 225,000 325,000 Accumulated Depreciation Office Equipment Patent Accounts Payable Sales Tax Payable Salaries Payable Payrol Taxes Payable Interest Payable Income Tax Payable Uneamed Rent Revenue Loan Payable - Onstar Bank Loan Payable - Codstar Bank Common Stock Additional Paid in Retained Ea Accumulated Other Com Dividends 65,000 150,000 345,000 25,000 650,000 2,000,000 650,000 1,998,750 920,000 25,000 84,750 4,528 Sales Returns and Alowances Sales Discounts Cost of Goods Sokd Sales Salaries Office Salaries Ex 1,979,500 436,400 274,000 16,000 Office Buid - Stores 23,000 15,000 Research & Insurance Ex 35,000 Miscelaneous Administrative Rent Revenue Interest Revenue on Note Receivable Dividend Revene on AFS Securities Interest Expense Bad Debt Expense Amortization Expense Income Tax Expense 75,000 25,000 35,000 121,150 11,585,450 11,585,450

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