Open the following selected accounts recording the opening balances as of Januar
ID: 2583212 • Letter: O
Question
Open the following selected accounts recording the opening balances as of January 1 of the current year.
114.1
Allowance for doubtful accounts
12,200 Credit
313
Income summary
718
Bad debts expense
3.Record the following transactions in general journal form in the Group Project Excel Spreadsheet Problem 2 Parts 2 - 6 tab.
4.Post these transactions to the three selected accounts above and to Accounts receivable.
5.Enter the ending balances in the three accounts above and enter the ending balance in the Accounts Receivable account.
Apr 1, 09
Accepted a $20,000, one - year, 8% note dated April 1 from Bruce Hanson for the sale of inventory; Cost of Goods Sold was $16,500.
June 27
Wrote off the $2,375 balance owed by Miller Corp., which has no assets.
Oct. 5
Received 25% of the $12,000 balance owed by F.M. Knox Co., a bankrupt, and wrote off the remainder as uncollectible.
Dec. 31
Based on an analysis of the $257,724 of accounts receivable, it was estimated that $14,500 will be uncollectible. Record the adjusting entry using the Aging method.
Dec. 31
Record the adjusting entry for interest accrued on the Bruce Hanson note
Dec. 31
Record the entries to close the appropriate accounts into Retained Earnings.
April 1, 10
Collected the maturity value on the Hanson note.
6.Determine the net accounts receivable (the amount Summer expects to collect as of December 31.
7.Compute the accounts receivable turnover and the day’s sales in receivables for the year. Assume that there were $1,800,000 sales account.
8.How is Summer Company doing with collection of their accounts receivable compared to the industry? Assume the industry average for the accounts receivable turnover is 11 and the industry average for the day’s sales in receivables is 37 days?
114.1
Allowance for doubtful accounts
12,200 Credit
313
Income summary
718
Bad debts expense
Explanation / Answer
3) Journal Entries :
4) T-Accounts:
Accounts Receivables Account :
6) The net Accounts Receivables = AR - Allowance for Doubtful Accounts = $257724 - 14500 = $243224
7) Accounts Receivables turnover = Sales / AR = $1800000 / $257724 = 6.98 times
the days sales in receivables for the year = (AR/ Sales ) * 365 = ( $257724 / 1800000 ) * 365 = 52 days
8) The Summer company is performing worse to the Industry as its AR turnover is 7 times and days sales in receivables is 52 days in comparison to Industry's turnover of 11 and days sales in receivables being 37 days.
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Date Accounts Titles and explanation Debit $ Credit $ Ap 1 09 8% Note receivables 20000 Sales revenue 20000 COGS 16500 Inventory 16500 June 27 Allowance for Doubtful Accounts 2375 Accounts Receivables 2375 (being written off) Oct 5 Cash 3000 Allowance for Doubtful Accounts 9000 Accounts Receivables 12000 (being partial receivables received) Dec 31 Bad Debts Expenses 13675 Allowance for Doubtful Accounts 13675 [14500 - (12200-2375-9000) ] = $13675 Dec 31 Interest Receiables 1200 Interest revenues 1200 (20000 * 8% * 9/12) Dec 31 Interest Revenues 1200 Retained Earnings 1200 Retained Earnings 13675 Bad Debts Expenses 13675 Ap 1 10 Cash 21600 8% Note Receivables 20000 Interest Receiables 1200 Interest Revenue 400 (being of note receivables and the interest amount)Related Questions
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