PART V - ACCOUNTS RECEIVABLE - UNCOLLECTIBLE ACCOUNTS (12 points) Instructions: Present the journal entries specified below; show supporting calculations. A ACCOUNTS RECEIVABLE=UNCOLLECTIBLE ACCOUNTS The trial balance of Gannon Company at December 31, 2017 includes the following: Debits Credits Accounts Receivable .. 100,000 Allowance for Doubtful Accounts 500 Sales (all on credit) 800,000 Sales Returns and Allowances 30,000 (1) if Gannon uses the aging method and estimates that $4,000 of receivables will be uncollectible, prepare the adjusting entry. (2) If Gannon estimates uncollectibles at 1% of net credit sales, prepare the appropriate adjusting entry (3) Assume that on February 10, 2018 the specific account of Mark Tresh with a balance of $600, is deemed uncollectible. Record the write-off. (4) Assume that on May 12, 2018 Tresh pays one-half of the above balance in full and is expected to pay the remainder within 30 days. Record the appropriate entries. B. SALE OF ACCOUNTS RECEIVABLE AND CREDIT CARD SALES Instructions: Present the journal entries specified below. (1) Price Company sells $400,000 of accounts receivable to National Factors, Inc. for cash less a 2.5% service charge. Record the sale. (2) Made Visa credit card sales totaling $7,500. A 2% service fee is charged by Visa. Record the sale on the books of Price Company. PART VI NOTES RECEIVABLE (8 points) Instructions: Prepare journal entries to record the following events: July 1: Howell Company received an 8%, 4-month $30,000 note dated July 1 from a customer for the balance of his open account. Nov. 1: The note is honored and no interest has been previously accrued. Nov. 1: Assume instead that the note is dishonored by its maker and there is hope of future collection. Nov. 1: Assume instead that the note is dishonored and there is no hope of future collection. BONUS I (9 points): The following information pertains to Family Video Company: 1. Cash balance per bank, July 31, $7,263. 2. July bank service charge not recorded by the depositor $28. Cash balance ner hooks July 31 $7284 depositor $28. 3. Cash balance per books, July 31, $7,284. 4. Deposits in transit, July 31, $1,500. 5. Bank collected $900 note for Family in July, plus interest $36, less fee of $20. The collection has not been recorded by Family, and no interest has been accrued 6. Outstanding checks, July 31, $591. Instructions: (a) Prepare a bank reconciliation at July 31. (b) Journalize the adjusting entries at July 31 on the books of Family Video Company. BONUS II (6 points): The ledger of Hixson Company at the end of the current year shows Accounts Receivable of $120,000, Sales $840,000, and Sales Returns and Allowances $30,000. Instructions: (a) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31 assuming bad debts are expected to be 1% of net sales. (c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 6% of accounts receivable. PART VI NOTES RECEIVABLE (8 points) Instructions: Prepare journal entries to record the following events: July 1: Howell Company received an 8%, 4-month $30,000 note dated July 1 from a customer for the balance of his open account. Nov. 1: The note is honored and no interest has been previously accrued. Nov. 1: Assume instead that the note is dishonored by its maker and there is hope of future collection. Nov. 1: Assume instead that the note is dishonored and there is no hope of future collection. BONUS I (9 points): The following information pertains to Family Video Company: 1. Cash balance per bank, July 31, $7,263. 2. July bank service charge not recorded by the depositor $28. Cash balance ner hooks July 31 $7284 BONUS II (6 points): The ledger of Hixson Company at the end of the current year shows Accounts Receivable of $120,000, Sales $840,000, and Sales Returns and Allowances $30,000. Instructions: (a) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell's $1,400 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31 assuming bad debts are expected to be 1% of net sales. (c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 6% of accounts receivable
