Question
Timken Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the year, $22,500 of accounts receivable were written off
Timken Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the year, $22,500 of accounts receivable were written off as being uncollectible. In addition, $13,500 of the accounts that were written off in 2015 were unexpectedly collected. At its year-end December 31, 2016, Timken had $225,000 of accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $13,500 credit at December 31, 2015.
Age (days) | Accounts Receivable |
1-30 | $ 90,000 |
31-60 | 45,000 |
61-90 | 22,500 |
91-120 | 54,000 |
Over 120 | 13,500 |
Total | $225,000 |
Required:
Prepare journal entries to record the following 2016 transactions:The write-off of $22,500The recovery of $13,500Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2016.The estimated uncollectible accounts at December 31, 2016 are calculated as follows:
Age (days) | Estimated Loss percentage |
1-30 | 1.5% |
31-60 | 3% |
61-90 | 4% |
91-120 | 9% |
Over 120 | 45% |
Required: Prepare the adjusting entry required at December 31, 2016.
and
Lexington Heating LLC records cash receipts deposited on a daily basis. All cash disbursements are made by checks. These disbursements are also recorded on a daily basis.
The following information is provided for July 2016:
Lexington general ledger checking account balance at July 31, 2016 was $4,634.
The bank statement checking account balance was $4,884 at July 31, 2016.
Cash receipts recorded for July 2016 in Lexingtons accounting records, but did not appear on the bank statement, totaled $487.
Bank memos previously not available to Lexington are included in the bank statement. These memos includes a NSF check received from a customer for $143. Also, the were bank services charges of $11 for new checks ordered. Another memo advices Lexington that $543 has been deposited in their checking account ($550 less the bank charge of $7). This represents the net proceeds of a collection the bank had made on behalf of Lexington on a $550 note receivable.
Checks written and recorded during July in Lexingtons accounting, but not included in the bank statement includes the following checks:
Ck no. 1311 $ 59
Ck no. 1312 $ 91
Ck no. 1313 $120
Ck no. 1314 $ 74
Ck no. 1315 $ 35
Check 1146 was recorded in Lexingtons accounting recordings at $345 and listed in the bank statement at $543. This was not a bank error.
Checks that were outstanding as of 30 June 2016 included check no. 1115 $167 and check no. 1118 $197. Check no. 1118 was paid in the bank statement and check 1115 was not.
Required: Prepare a bank reconciliation at July 31, 2016.
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