Accounting And Finance Assignment Question
E1 Presented below are selected transactions of S Company. S sells in large quantities to other companies and also sells its product in a small retail outlet.
March 1 Sold merchandise on account to J. Company for $3,000, terms 2/10, n/30.
3 J Company returned merchandise worth $500 to Santos.
9 S collected the amount due from J Company from the March 1 sale.
15 S sold merchandise for $400 in its retail outlet. The customer used his S credit card.
31 S added 1.5% monthly interest to the customer’s credit card balance.
Instructions
Prepare journal entries for the transactions above.
E2 L Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the following information.
Month of Sale Balance, March 31
March $60,000
February 17,600
January 8,500
Prior to January 7,000
$93,100
Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company’s estimate of bad debts is shown on the next page.
Estimated Percentage
Age of Accounts Uncollectible
1–30 days 2.0%
31–60 days 5.0%
61–90 days 30.0%
Over 90 days 50.0%
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31 to record bad debts expense.
E 3 At December 31, 2011, K Company had a balance of $15,000 in Allowance for Doubtful Accounts. During 2012, K wrote off accounts totaling $13,000. One of those accounts ($1,800) was later collected. At December 31, 2012, an aging schedule indicated that the balance in Allowance for Doubtful Accounts should be $19,000.
Instructions
Prepare journal entries to record the 2012 transactions of K Company
E 4. M Co. holds a 90days , 12% note for Br. 50,000 dated july 10 , that was received from a customer on account . On July 30 the note is discounted at LC bank at a rate of
a) 12.5%
b) 15%
for each discount rate determine:
- the maturity date of the note
- maturity value
number of days in a discount period maturity
- the amount of discount
- the amount of proceeds
- present the appropriate journal entry
E 5. On January 1, 2012, Pierre Company had Accounts Receivable $139,000, Notes Receivable $25,000, and Allowance for Doubtful Accounts $13,200. The note receivable is from Stacy Richter Company. It is a 4-month, 12% note dated December 31, 2011. Pierre Company prepares financial statements annually. During the year, the following selected transactions occurred.
Jan. 5 Sold $20,000 of merchandise to Bernard Company, terms n/15.
20 Accepted Bernard Company’s $20,000, 3-month, 9% note for balance due.
Feb. 18 Sold $8,000 of merchandise to La Bamba Company and accepted La Bamba’s $8,000, 6-month, 9% note for the amount due.
Apr. 20 Collected Bernard Company note in full.
30 Received payments in full from Stacy Richter Company on the amount due.
May 25 Accepted Cloppy Inc.’s $4,000, 3-month, 7% note in settlement of a past-due balance on account.
Aug. 18 Received payment in full from La Bamba Company on note due.
25 The Cloppy Inc. note was dishonored. Cloppy Inc. is not bankrupt; future payment is anticipated.
Sept. 1 Sold $12,000 of merchandise to Bessie Lou Company and accepted a $12,000, 6-month,
10% note for the amount due.
Instructions
Journalize the transactions.
