QUESTION 1:

At December 31, 2019, Obermeyer Imports reported the following information on its balance sheet.

Accounts receivable$250,000

Less: Allowance for doubtful accounts 15,000

During 2019, the company had the following transactions related to receivables.

1.Sales on account $2,600,000

2.Sales returns and allowances 45,000

3.Collections of accounts receivable2,250,000

4.Write-offs of accounts receivable deemed uncollectible10,000

5.Recovery of bad debts previously written off as uncollectible3,000

Instructions

(a)Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable.

(b)Enter the January 1, 2019, balances in Accounts Receivable and Allowance for Doubtful Accounts. Post the entries to the two accounts (use T-accounts), and determine the balances.

(c)Prepare the journal entry to record bad debt expense for 2019, assuming that an aging of accounts receivable indicates that estimated bad debts are $22,000.

QUESTION 2:

Grayson's Lumber Mill sold two machines in 2019. The following information pertains to the two machines:

PurchaseUsefulSalvageDepreciation Sales

Machine Cost DateLife ValueMethodDate SoldPrice

#1$66,0007/1/155 yrs.$6,000Straight-line7/1/19 $15,000

#2$50,0007/1/185 yrs.$5,000Double-declining-12/31/19 $30,000

balance

Instructions

(a)Compute the depreciation on each machine to the date of disposal.

(b)Prepare the journal entries in 2019 to record 2019 depreciation and the sale of each machine.