19. Below is information relating to Sundberg Inc. Please use this information t

Question

19. Below is information relating to Sundberg Inc. Please use this information to sove the problem The general ledger account for Accounts Receivable shows a debit balance of $100,000. Allowance for Uncollectible Accounts has a credit balance of $2,000. Net sales for the year were $930,000. In the past, 2 percent of sales have proved uncollectible, and an aging of accounts receivable accounts results in an estimate of $27,000 of uncollectib sing the percentage of net sales method, the Allowance for Uncollectible Accounts balance (after adjustment) would be a. $20,600 b. $2,000 c. $16,600 d?$18,600. 20. Bill's Lawnmower Repair accepts all major bank credit cards, except American Express including Bank of America, which assesses a 3.0% charge on sales for usingts card On December 7, Brinker had $10,000 in Bank of America credit sales. What entry should Bill make on December 7 to record the deposit? A. Debit Accounts Receivable $10,000; credit Sales $10,000 B. Debit Cash $10,300; credit Credit Card Expense $300; credit Sales $10,000 C. Debit Cash $4,800; credit Sales $4,800. D. Debit Cash $9,700; debit Credit Card Expense $300; credit Sales $10,000. E. Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales $4,800

Explanation / Answer

Account receivable $100,000 Allowance for uncollectable account $2,000 Net sales for the year $930,000 Allowance for uncollectable account $18,600 (2% of Sales as per percentage of net sales method) Allowance for uncollectable account (after adjustment) $20,600 (2000+18600) Percentage of net sales method does not consider accounts receivable It also does not consider whether beginning balance of allowance is adequate Hence : Answer: a. $20,600 Credit caed sales will result in sales revenue $10,000 Credit card fees (3% of $10,000=$300) is credit card expense $300 Cash received through sales =10000-300= $9,700 Answer D.Debit Cash $9,700;Debit credit card expense $300,Credit sales $10,000 6 Land Purchase price $178,000 Brokers commission $15,000 Payment for demolition and removal of existing building $5,000 Cash received fromsale ofmaterials salvaged in demolotion ($2,000) Debit to capital asset account of land $196,000 Answer:$196,000 7 Answer :b Regardless of method,the amount of total depreciation expense during the life of asset will be same

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