ACC 406 Lecture Notes - Lecture 1: Financial Statement, Income Statement, Accounts Receivable

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4 Mar 2016

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For purposes of this example assume you do meet the criteria for revenue recognition. ) This is not part of the cash they received in (1). : three customers declared bankruptcy. The company wrote off their accounts receivable, which totaled ,500: at year end the company estimated that 7% of the outstanding accounts receivable would be uncollectible in the upcoming year. Abc company has the following balances at january 1, 2014: During the year the following summary transactions occurred: the company provided ,450,000 of services. The company collected 40% in cash immediately but the remainder was sold on account: the company collected ,000 in cash from their outstanding accounts receivable, three customers declared bankruptcy. The company wrote off their accounts receivable, which totaled ,500: at year end the company estimated that 2. 5% of the net credit sales would be uncollectible in the upcoming year. Note: check figure numbers are available at the bottom of this document!

Related Questions

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 dayâs 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 dayâs sales in receivables is 37 days?

scarletraven382

Record (journalize) transactions in the books) Doherty Tree Cellular, Inc.,
completed the following transactions during April 2012, its first month of operations:

Apr 1	Received $19,800 and issued common stock.
2	Purchased $200 of office supplies on account.
4	Paid $14,300 cash for land to use as a building site.
6	Performed service for customers and received cash of $2,600.
9	Paid $100 on accounts payable.
17	Performed service for UFax on account totaling $1,900.
23	Collected $100 from UFax on account.
30	Paid the following expenses: salary, $1,900; rent, $1,300.

1.Record the transactions in the journal of Doherty Tree Cellular, Inc. Key transactions by date and include an explanation for each entry.

CLASS, LETS TAKE RECORDING STEP 1 STEP FURTHER - THE TRIAL BALANCE

Now that we know what the accounting equation is and we have some experience with Journal Entries.

Letâs review the process and take the recording process one step further.

STEP 1) Analyze transaction: As an actual accountant, we determine if a transaction should be recorded by analyzing source documents.

For example: If the Company makes a sale; they will complete a sales document (or sales
tape is generated). If the Company purchases something a purchase invoice is forwarded to Accounting. There is a different type of source documents for different types of transactions.

Note: as an accountant a large part of the battle is making sure there is a source document for all transactions and that all departments capture and forward these documents to Accounting!

STEP 2) Accounting prepares journal entry: for each transaction based on GAAP. (Mostly using the constraints, assumptions, principles we've discussed: materiality, conservatism, matching, revenue recognition, etc).

The entry is entered into a Journal for those types of Transactions (There is a Sales Journal, A/P Journal for purchases, Payroll journal for payroll related entries, General Journal for misc. entries., etc.

Journal entries are made in the proper form, and include: date, description, indent of credit side of each entry.

STEP 3) The Journal entry is posted to General ledger; which includes all activity for all accounts.

However, the recording process is not over. Letâs talk about the trial balance. Please answer ALL however only post ONE question at a time to allow more to participate.

1) Why do we prepare it?

apricotox859

The following transactions were completed by Daws Company during the current fiscal year ended December 31:

Jan. 29.		Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible.
Apr. 18.		Reinstated the account of Spencer Clark, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,000 cash in full payment of Clark's account.
Aug. 9.		Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets.
Nov. 7.		Reinstated the account of Vinyl Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,000 cash in full payment of the account.
Dec. 31.		Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc., $12,100; DeVine Co., $8,110; Moser Distributors, $21,950; Oceanic Optics, $10,000.
31.		Based on an analysis of the $1,450,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry.

Instructions

1) Record the January 1 credit balance of $54,200 in a T account for Allowance for Doubtful Accounts.

2) Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:

Allowance for Doubtful Accounts

Bad Debt Expense

3) Determine the expected net realizable value of the accounts receivable as of December 31.

4) Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense of Â½ of 1% of the sales of $13,200,000 for the year, determine the following:

Bad debt expense for the year.

Balance in the allowance account after the adjustment of December 31.

Expected net realizable value of the accounts receivable as of December 31.

pinkmuskrat317

ACC 406 Lecture Notes - Lecture 1: Financial Statement, Income Statement, Accounts Receivable

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