Question
Question 2 The failure to properly record an adjusting entry to accrue an expense will result in an understatement of expenses and an understatement of
Question 2
The failure to properly record an adjusting entry to accrue an expense will result in anunderstatement of expenses and an understatement of liabilities. Explain why this statement is true and provide an example of a journal entry supporting your explanation.
Question 8
In preparing a statement of cash flows, cash flows from operating activities...can be calculated by appropriately adding to or deducting from net income those items in the income statement thatDO NOTaffect cash.
Explain why this statement is correct and provide two examples (one adding and one deducting) from net income.
Question 9
The normal journal entry for recording bad debt expense under the allowance method?
a.Debit Accounts Receivable, credit Allowance for Doubtful Accounts.
b.Debit Allowance for Doubtful Accounts, credit Bad Debt Expense.
c.Debit Bad Debt Expense, credit Allowance for Doubtful Accounts.
d.Debit Allowance for Doubtful Accounts, credit Accounts Receivable.
Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account
a.has no effect on net income
b.decreases net income
c.increases the allowance for uncollectible accounts
d.has no effect on the allowance for uncollectible accounts
Note: The correct answer has been highlighted for the above two questions.
Assuming the company uses the allowance method, prepare the necessary journal entries for the following two scenarios:
Data:
Current balance in Accounts Receivable is $100,000
Current balance in Allowance for Doubtful Accounts is $5,000
Scenario 1- The company has now determined that the Allowance for doubtful accounts balance should be 10% of the current balance in Accounts Receivable.
Make the necessary journal entry.DebitCredit
Scenario 2- The company has determined that the $3,000 receivable balance due from Archer Corp (a customer) should be written-off.
Make the necessary journal entry.DebitCredit
After accounting for the two scenarios above,
What is the balance in the Allowance for Doubtful Accounts?
What is the balance in Accounts Receivable?
What is the NET Accounts Receivable balance?
Question 10
On December 15thPolaris Co. purchases on account $1.5 million in merchandise. The credit terms are 2/10, n/30. Prepare the journal entry(s) on December 15thto record the purchase. On December 30thPolaris Co. pays for their purchase. Record the necessary journal entry(s) on December 30th.
Note: Assume Polaris Company records their purchases net.
Note: The above transaction is a PURCHASE, NOT A SALE!
Question 11
Ice Cold Co.needed additional cash to run its company. Therefore, on March 1, 2017,Ice Cold Co. issued a note payable to North Star Bank in the amount of $6,900,000, bearing interest at 8%, and payable in three equal annual principal payments of $2,300,000.
Prepare the necessary journal entries forMarch 1, 2017andDecember 31, 2017.
DebitCredit
March 3, 2017
Cash$6,900.000
$6,900,000
December 31, 2017
?$460,000
?$460,000
Note: As of December 31, 2017 (company year-end) the interest owed is$460,000. Show how this amount is calcuated.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started