Chapter 7: 17BE (page 364)
Use the information presented in BE7-16 for Horton Corporation. Prepare any entries necessary to make Horton’s accounting records correct and complete.
Debit and credit side of journal totals$433.
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(Bank Reconciliation and Adjusting Entries) Logan Bruno Company has just received the August 31, 2017, bank statement, which is summarized below.
Country National Bank | Disbursement | Receipts | Balance |
Balance August 1 | \(9,369 | ||
Deposits during August | \)32,200 | \(41,569 | |
Note collected for depositor, including \)40 interest | 1,040 | 42,609 | |
Checks cleared during August | 34,500 | 8,109 | |
Bank service charges | 20 | 8,089 | |
Balance, August 31 | 8,089 |
The general ledger Cash account contained the following entries for the month of August.
Cash | |||
Balance, August 1 | 10,050 | Disbursement in August | 34,903 |
Receipt during August | 35,000 |
Deposits in transit at August 31 are \(3,800, and checks outstanding at August 31 total \)1,050. Cash on hand at August 31 is \(310. The bookkeeper improperly entered one check in the books at \)146.50 which was written for $164.50 for supplies (expense); it cleared the bank during the month of August.
Instructions
(a) Prepare a bank reconciliation dated August 31, 2017, proceeding to a correct balance.
(b) Prepare any entries necessary to make the books correct and complete.
(c) What amount of cash should be reported in the August 31 balance sheet?
(Notes Receivable Journal Entries) On December 31, 2017, Oakbrook Inc. rendered services to Beghun Corporation at an agreed price of \(102,049, accepting \)40,000 down and agreeing to accept the balance in four equal installments of $20,000 receivable each December 31. An assumed interest rate of 11% is imputed.
Instructions
Prepare the entries that would be recorded by Oakbrook Inc. for the sale and the receipts and interest on the following dates (prepare an amortization schedule). (Assume that the effective-interest method is used for amortization purposes.)
(a) December 31, 2017.
(b) December 31, 2018.
(c) December 31, 2019.
(d) December 31, 2020.
(e) December 31, 2021.
(Journalize Various Accounts Receivable Transactions) The balance sheet of Starsky Company at December 31, 2016, includes the following.
Note receivable | \(36,000 | |
Accounts receivable | 182,100 | |
Less: Allowance for doubtful accounts | 17,300 | \)200,800 |
Transactions in 2017 include the following.
1. Accounts receivable of \(138,000 were collected including accounts of \)60,000, on which 2% sales discounts were allowed.
2. \(5,300 was received in payment of an account which was written off the books as worthless in 2016.
3. Customer accounts of \)17,500 were written off during the year.
4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.
Instructions
Prepare all journal entries necessary to reflect the transactions above.
Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Taylor Swift Inc. shows the following balances.
Debit | Credit | |
Accounts Receivable | \(90,000 | |
Allowance for Doubtful Accounts | 1,750 | |
Sales revenue (all on credit) | \)680,000 |
Instructions
Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 5% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,700 credit balance.
Under IFRS:
(a) the entry to record estimated uncollected accounts is the same as GAAP.
(b) loans and receivables should only be tested for impairment as a group.
(c) it is always acceptable to use the direct write-off method.
(d) all financial instruments are recorded at fair value.
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