5. Bad debts have been recorded on a direct write-off basis. Experience of simil

Question

5. Bad debts have been recorded on a direct write-off basis. Experience of similar enterprises indicates that losses will approximate 1?4 of 1% of sales. Bad debts written off were:

6. The bank deducts 6% on all contracts financed. Of this amount, 1?2% is placed in a reserve to the credit of Roberts Company that is refunded to Roberts as finance contracts are paid in full. (Thus, Roberts should have a receivable for these payments and should record revenue when the net balance is remitted each year.) The reserve established by the bank has not been reflected in the books of Roberts. The excess of credits over debits (net increase) to the reserve account with Roberts on the books of the bank for each fiscal year were as follows.

7. Commissions on sales have been entered when paid. Commissions payable on March 31 of each year were as follows.

8. A review of the corporate minutes reveals the manager is entitled to a bonus of 1% of the income before deducting income taxes and the bonus. The bonuses have never been recorded or paid.

Prepare the journal entry or entries you would give the bookkeeper to correct the books. Assume the books have not yet been closed for the fiscal year ended March 31, 2015. Disregard correction of income taxes. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

Can you help with the journal entries, thanks.

Explanation / Answer

No. Account Titles and Explanation Debit Credit 1 Sales $       12,090.00    Account Receivable $ 12,090.00 Consignment Inventory $         9,672.00    Cost of goods sold $    9,672.00 2 Accounts Receivable $         6,100.00    Sales $    6,100.00 3 Warranty Expenses $       12,445.00    Allowance for warranty expenses $ 12,445.00 Calculation of warranty expenses Sales $ 3,745,000.00 Warranty expenses (0.5% of sales) $       18,725.00 Less: Icurred $       (6,280.00) Allowance $       12,445.00 4 Bad debts expenses $         3,443.00    Allowance for bad debts $    3,443.00 Calculation of Bad debts expenses Sales $ 3,745,000.00 Bad debts expenses (0.25% of sales) $         9,362.50 Less: Icurred $       (5,920.00) Allowance $         3,442.50 5 Accounts Receivable $       12,000.00    Finance Charges Reversed $ 12,000.00 6 Commission expenses $         3,420.00    Commission payable $    3,420.00 7 Bonus expenses $         2,866.00     Bonus payable $    2,866.00

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