LIITU LU Compile us yuiuu ll Lids! Part 1: Accounts Receivables and Allowance Method 1) Catalina Co. is a large wholesaler of flowers. At the end of 2014, the company's controller estimates 4% of the $650,000 in Accounts Receivable will be uncollectible. aWrite the joumal entry to record Bad Debt Expense for the period if the Allowance for Doubtful Accounts has a credit balance of $15,500 before this adjusting entry is posted: 12/31/14 ALT b. How does the posting of this joumal entry affect the accounting equation? C. What is the Net Realizable Value of Accounts Receivable reported in Catalina Co.'s balance sheet as of Dec. 31, 2014? 2) (Continuation of question 1). Assume that during 2015, a total of $27,200 Accounts Receivable has to be written off due to customers' inability to pay what they owe Catalina Co. a. What joumal entry would be used to record this write-off of $27,200? 12/31/15 b. How does the posting of this joumal entry affect the accounting equation? c. What is the Allowance for Doubtful Accounts balance after this write off? (Your answer should indicate the amount and whether it is a Debit or Credit balance. Hint: Use a T-account to determine your answer.) d. Catalina Co. assumes that at the end of 2015, 4% of its new $500,000 Accounts Receivable balance will be uncollectible. Using the Allowance for Doubtful Accounts balance from above (que unts balance from above (question 2) c.) determine the Bad Debt Expense that would be recorded at the end of 2015 and enter the joumal entry below: 12/31/2015 . ........................... Debt Expense that would be recorded at the end of 2015 and enter the joumal entry below: 12/31/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 3) New scenario: Assume that on July 1 Jones Co. wrote off $200 due from Moore Co. due to Moore Co.'s inability to pay what they owed. What joumal entry would Jones Co. record for this write off assuming Jones uses the allowance method? 7/01/2015 4) (Continuation of question 3). Now assume that on Aug. 1 Moore Co. pays the amount previously written off by Jones Co. What two joumal entries must Jones Co. record related to this collection of a previously written off Accounts Receivable? 08/01/2015 08/01/2015 Part 2: Notes Receivable 5) On October 1, 2012, Saleson Company lends $36,000 to Benson Company for 7 months. What joumal entry does Coleson Company record for this transaction? 10/01/2012 6) (Continuation of question 5). The Note Receivable is established with a 3% annual interest rate, and the terms of the note states that the principal and interest will be due and paid on May 1, 2013. What adjusting joumal entry is needed to accrue interest revenue eamed for 2012 before Coleson Company prepares financial statements on December 31, 2012? 12/31/2012 7) (Continuation of question 5 & 6). On May 1, 2013, Benson Company pays all principal and interest owed to Caleson Company. Write the joumal entry (from the viewpoint of Coleson Company) to record the collection. 05/01/2013 art 3: PP&E Transactions Taylor and Sons buys equipment on Aug. 1, 2008 for $100,000 cash. They estimate the equipment will have a salvage value of $13,000 and a useful life of 5 years. a. Write the joumal entry to record depreciation for 2008. 12/31/08 b. Record the joumal entry to record depreciation expense for the second year. 12/31/09 c. What is the book value of this equipment on the December 31, 2009 Balance Sheet? Paige Industries purchased equipment on May 1, 2011 for $150,000. The equipment is estimated to have a $45,000 salvage value at the end of its 5 year life. The company uses straight-line method of depreciation. What is the balance in accumulated depreciation at 12/31/15? )On March 1, 2014, Timberland Inc sells machinery for $86,000. The machinery originally cost $142,000 and had an estimated 8 year life with an expected salvage value of $22,000. The Accumulated Depreciation account had a balance of $91,250 on December 31, 2013 a. What is the gain or loss on the date of the sale? (Hint: Don't forget to update depreciation through the date of sale first!) b. What is the joumal entry to record this sale? 3/1