The following trial balance was prepared for Tile, Etc., Inc., on December 31, 2
ID: 2527448 • Letter: T
Question
The following trial balance was prepared for Tile, Etc., Inc., on December 31, 2016, after the closing entries were posted: Account Title Debit Credit Cash $ 195,000 Accounts Receivable 142,000 Allowance for Doubtful Accounts $ 26,500 Inventory 459,000 Accounts Payable 112,000 Common Stock 535,000 Retained Earnings 122,500 Totals $ 796,000 $ 796,000 Tile, Etc. had the following transactions in 2017: 1. Purchased merchandise on account for $665,000. 2. Sold merchandise that cost $505,000 for $1,060,000 on account. 3. Sold for $330,000 cash merchandise that had cost $194,000. 4. Sold merchandise for $275,000 to credit card customers. The merchandise had cost $130,000. The credit card company charges a 3 percent fee. 5. Collected $790,000 cash from accounts receivable. 6. Paid $695,000 cash on accounts payable. 7. Paid $162,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4). 9. Loaned $67,000 to J. Parks. The note had an 6 percent interest rate and a one-year term to maturity. 10. Wrote off $9,200 of accounts as uncollectible. 11. Made the following adjusting entries: (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) Recorded seven months of accrued interest on the note at December 31, 2017 (see item 9). Required a. Prepare general journal entries for these transactions; post the entries to T-accounts; and prepare an income statement, a statement of changes in stockholders’ equity, a balance sheet, and a statement of cash flows for 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Statement of Cash Flows, and Balance Sheet only: Items to be deducted must be indicated with a minus sign.) b. Compute the net realizable value of accounts receivable at December 31, 2017. c. If Tile, Etc. used the direct write-off method, what amount of uncollectible accounts expense would it report on the income statement?
Explanation / Answer
a. In the books of Tile Etc. Inc.
Contd.
Tile Etc. Inc.
Income Statement
For the year ended December 31, 2017
Tile Etc Inc.
Statement of Changes in Stockholders' Equity
For the year ended December 31, 2017
Tile Etc. Inc.
Balance Sheet
December 31, 2017
b. Net realizable value of accounts receivable at December 31, 2017: $ 372,150
Transaction/ Event Account Titles Debit Credit $ $ 1. Inventory 665,000 Accounts Payable 665,000 2. Accounts Receivable 1,060,000 Sales Revenue 1,060,000 2. Cost of Goods Sold 505,000 Inventory 505,000 3. Cash 330,000 Sales Revenue 330,000 3. Cost of Goods Sold 194,000 Inventory 194,000 4. Accounts Receivable 266,750 Credit Card Expense 8,250 Sales Revenue 275,000 4. Cost of Goods Sold 130,000 Inventory 130,000 5. Cash 790,000 Accounts Receivable 790,000Related Questions
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