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Tara Kelly Company has the following balances on Jan 1,2017:

Accounts Receivable $500000

Allowance for Bad Debts $(5200)

During the year Tara had a total of $950000 in Sales on AccountsReceivable. She collected $765000 in Cash Collections for herAccount Receivable customers during 2017 as well. Tara was notifiedthat a customer who owed her $6000 had declared bankruptcy duringthe year.

Tara is trying to decide which Account Receivable Allowance andBad Debt Method works best for her:

a. She determines that %5.5 of her CREDIT sales may beuncollectible (% of Net Sales method)

b. She determines that %8 of her Account Receivable Customerswill not pay her (% of Accounts Receivable Method).

REQUIRED

1. record all transactions listed above for 2017 in thejournal

2. update ledgers

3. prepare journal entry if tara uses % of Net sales method

4. what would be Tara's REALIZABLE value?

5. Prepare the journal entry if tara uses $ of AccountReceivable method

6. What would be Tara's Realizable value?

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Jamar Ferry
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28 Sep 2019

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American Meter Company closes its books and prepares financial statements at the end of each month. American uses the perpetual inventory system. The company completed the following transactions during August, 2017:

Aug 1 Issued check no. 682 for August rent of $1,000

2. Issued check no. 683 to pay salaries of $1,240, which includes salary payable of $930 from July 31 (ignore payroll deductions).

2. Issued invoice no. 503 for sale on account to R. T. Loeb, $600. American’s cost of this merchandise was $190.

3. Purchased inventory on credit terms of 1/15, n/60 from Grant, Inc., $1,400

4. Received net amount of cash on account from Fullam Company, $2,156, within the discount period. The invoice, dated July 26 with terms of 2/10, net 30, was in the amount of $2,200.

4. Sold inventory for cash, $330 (cost, $104)

5. Received from Park-Hee, Inc. merchandise that had been sold earlier for $550 (cost, $174)

5. Issued check no. 684 to purchase supplies for cash, $780

6. Collected interest revenue of $1,100

7. Issued invoice no. 504 for sale on account to K. D. Skipper, $2,400 (cost, $759)

8. Issued check no. 685 to pay Federal Company $2,600 of the amount owed at July 31. This payment occurred after the discount period.

11. Issued check no. 686 to pay Grant, Inc. the net amount owed from August 3

12. Received cash from R. T. Loeb in full settlement of her account receivable from August 2

16. Issued check no. 687 to pay salary expense of $1,240

19. Received half the July 31 amount receivable from K. D. Skipper—after the end of the discount period

19. Purchased inventory for cash $850, issuing check no. 688

22. Purchased furniture on credit terms of 3/15, n/60 from Beaver Corporation, $510

23. Sold inventory on account to Fullam Company, issuing invoice no. 505 for $9,966 (cost, $3,152)

25. Issued check no. 689 to pay utilities, $432

26. Purchased supplies on credit terms 2/10, n/30 from Federal Company, $180

30. Returned damaged inventory to company from whom American made the cash purchase on August 19, receiving cash of $850

30. Granted a sales allowance of $175 to K. D. Skipper

31. Purchased inventory on credit terms 1/10, n/30 from Suncrest Supply, $8,330

31. Issued check no. 690 to Lester Mednick, owner of the business, for personal withdrawal, $1,700

The chart of accounts with account balances as of July 31, 2017 are as follows:

General Ledger

101 Cash $ 8,650 401 Sales Revenue

102 Accounts Receivable 19,560 402 Sales Discounts

104 Interest Receivable 403 Sales Returns & Allowances

105 Merchandise Inventory 41,800 410 Interest Revenue

109 Supplies 2,150 501 Cost of Goods Sold

117 Prepaid Insurance 2,200 510 Salary Expense

140 Note Receivable, Long-Term 11,000 513 Rent Expense

160 Furniture 37,270 514 Depreciation Expense

161 Accumulated Depreciation 10,550 516 Insurance Expense

201 Accounts Payable 13,410 517 Utilities Expense

204 Salary Payable 930 519 Supplies Expense

207 Interest Payable 320 523 Interest Expense

220 Note Payable, Long-Term 42,000

301 Lester Mednick, Capital 55,420

302 Lester Mednick, Withdrawals

400 Income Summary

Accounts Receivable Subsidiary Ledger:

Fullam Company, $3,200

R T. Loeb, 0

Park-Hee Inc., 7,590

K.D. Skipper, 8,770

Accounts Payable Subsidiary Ledger:

Beaver Corporation $ 0

Federal Company 13,410

Grant, Inc, 0

Suncrest Supply 0

Prepare a Trial Balance in the Trial Balance Columns of a Worksheet (Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, and Balance Sheet headings).

Check figure: Trial Balance before any adjusting entries should total $142,516

The 2 questions before this was the following.

Journalize the August transactions in the general journal (page 9). Do not include the explanations. American makes all credit sales on terms of 2/10, n/30 unless otherwise indicated. I have posted the beginning balances to the general ledgers and subsidiary ledgers for you.

Post daily to the general ledger. Also post to the accounts receivable subsidiary ledger and the accounts payable subsidiary ledger when appropriate. On August 31 post to the general ledger.

I'm unsure if what I get form the previous answers will also help do this quesiton.

Foundations of Accounting I

Accounting Project

Written by: Karen Pitsch

David’s Entertainment is a merchandising business. Their accountbalances as of November 30, 2012 (unless otherwise indicated), areas follows:

110 Cash $ 73,920

112 AccountsReceivable 34,250

113 Allowance for DoubtfulAccounts 11,000

115 MerchandiseInventory 123,900

116 PrepaidInsurance 3,750

117 StoreSupplies 2,850

123 StoreEquipment 100,800

124 Accumulated Depreciation-StoreEquipment 20,160

210 AccountsPayable 21,450

211 SalariesPayable 0

218 InterestPayable 0

220 Note Payable (Due2017) 15,000

310 D. Williams, Capital (January 1,2012) 73,260

311 D. Williams,Drawing 50,000

312 IncomeSummary 0

410 Sales 853,445

411 Sales Returns andAllowances 20,020

412 SalesDiscounts 13,200

510 Cost of MerchandiseSold 414,575

520 Sales SalariesExpense 74,400

521 AdvertisingExpense 18,000

522 DepreciationExpense 0

523 Store SuppliesExpense 0

529 Miscellaneous SellingExpense 2,800

530 Office SalariesExpense 40,500

531 RentExpense 18,600

532 InsuranceExpense 0

533 Bad DebtExpense 0

539 Miscellaneous AdministrativeExpense 1,650

550 InterestExpense 1,100

David’s Entertainment uses the perpetual inventory system andthe First-in, First-out costing method. Transportation-in andpurchase discounts should be added to the Inventory Control Sheet,but since this will complicate the computation of the First-in,First-out costing method, please ignore this step in the process.They also use the Allowance Method for bad debt.

The Accounts Receivable and Accounts Payable Subsidiary Ledgersalong with the Inventory Control Sheet should be updated as eachtransaction affects them (daily).

David’s Entertainment sells four types of televisionentertainment units.

The sale prices of each are:

TV A: $3,500

TV B: $5,250

TV C: $6,125

PS D: $9,000

During December, the last month of the accounting year, thefollowing transactions were completed:

Dec. 1. Issued check number 2632 for theDecember rent, $2,600.

Purchased three TV C units on account from Prince Co., terms2/10, n/30, FOB shipping point, $11,100.

Issued check number 2633 to pay the transportation changes onpurchase of December 3, $400. (NOTE:Do not include shipping andpurchase discounts to the Inventory Control sheet for thisproject.)

Sold four TV A and four TV B on account to Albert Co., invoice891, terms 2/10, n/30, FOB shipping point.

Sold two projector systems for cash.

Purchased store supplies on account from Matt Co., terms n/30,$580.

Issued check to Prince Co. number 2634 for the full amount due,less discount allowed.

Issued credit memo for one TV A unit returned on sale ofDecember 6.

Issued check number 2635 for advertising expense for last halfof December, $1,500.

Received cash from Albert Co. for the full amount due (lessreturn of December 14 and discount).

19. Issued check number 2636 to buy two TV C units, $7,600.

19. Issued check number 2637 for $6,100 to Joseph Co. onaccount.

Sold five TV C units on account to Cameron Co., invoicenumber

892, terms 1/10, n/30, FOBshipping point.

For the convenience of the customer, issued check number 2638for shipping charges on sale of December 20, $700.

Received $12,250 cash from McKenzie Co. on account, nodiscount.

Purchased three projector systems on account from Elisha Co.,terms 1/10, n/30, FOB destination, $15,600.

24. Received notification that Marie Co. has been grantedbankruptcy with no

amount of recovery. We are to write-off her amount due. (Note:See page

402 for entry required.)

Issued a debit memo for return of $5,200 because of a damagedprojection

system purchased onDecember 21, receiving credit from the seller.

Issued check number 2639 for refund of cash on sales made forcash, $600.(Customer was going to return goods until an allowancewas arranged.)

27. Issued check number 2640 for sales salaries of $1,750 andoffice

salaries of $950.

Purchased store equipment on account from Matt Co., terms n/30,FOB

destination, $1,200.

Issued check number 2641 for store supplies, $470.

Sold four TV C units on account to Randall Co., invoice number893,

terms 2/10, n/30, FOB shipping point.

Received cash from sale of December 20, less discount, plustransportation

paid on December 20. (Roundcalculations to the nearest dollar.)

Issued check number 2642 for purchase of December 21, lessreturn

of December 25 and discount.

Issued a debit memo for $300 of the purchase returned from

December 28.

Instructions:

Enter the balances of each of the accounts in the appropriatebalance column of a four-column account (General Ledger).WriteBalance in the item section, and place a check mark (x) in the PostReference column.

Journalize the transactions in a sales journal, purchasesjournal, cash receipts journal, cash payments journal, or generaljournal as illustrated in chapter 7.Also post to the AccountsReceivable and Accounts Payable Subsidiary ledgers and InventoryControl Sheet as needed.

Total each column on the special journals and prove thejournal.

Post the totals of the account named columns and individuallypost the “other” columns as well to the General Ledger.

Prepare the Schedule of Accounts Receivable and the Schedule ofAccounts Payable (their total amount must equal the amount in theircontrolling general ledger account).

Prepare the unadjusted trial balance on the worksheet.

Complete the worksheet for the year ended December 31, 2012,using the following adjustment data:

a. Merchandise inventory on December31 $90,800

b. Insurance expired during theyear 1,250

c. Store supplies on hand on December31 975

d. Depreciation for the current year needs tobe calculated. The business uses

the Straight-line method, the store equipment has a useful life of10 years

with no salvage value. (NOTE: the purchase and return will not beincluded

as the dates of the transactions were after the 15th ofthe month).

e. Accrued salaries on December 31:

Salessalaries $1,400

Officesalaries 760 2,160

f. The note payable terms are at 8%, payment is notbeing made until Jan. 3, 2013. Interest must be recognized for onemonth.

g. Net realizable value of Accounts Receivable is determined tobe $27,950.

8. Prepare a multiple-step income statement, a statement ofowner’s equity, and a

classified balance sheet in goodform. (Recommend review of “Current Liabilities” on pages 166 &167 and “Current Maturities of Long-term Debt” on page 480.)

9. Journalize and post the adjusting entries.

Journalize and post the closing entries.Indicate closed accountsby inserting a line

in both balance columns opposite the closing entry.

Prepare a post-closing trial balance.

Check Figures for Accounting Project:

Cash Receipts Journal; Cash Column: 97,939

Unadjusted Trial Balance Total: 1,080,620

Net Income: 264,350

Post-Closing Trial Balance: 347,490

Foundations of Accounting I

Accounting Project

Written by: Karen Pitsch

David’s Entertainment is a merchandising business. Their accountbalances as of November 30, 2012 (unless otherwise indicated), areas follows:

110 Cash $ 73,920

112 AccountsReceivable 34,250

113 Allowance for DoubtfulAccounts 11,000

115 MerchandiseInventory 123,900

116 PrepaidInsurance 3,750

117 StoreSupplies 2,850

123 StoreEquipment 100,800

124 Accumulated Depreciation-StoreEquipment 20,160

210 AccountsPayable 21,450

211 SalariesPayable 0

218 InterestPayable 0

220 Note Payable (Due2017) 15,000

310 D. Williams, Capital (January 1,2012) 73,260

311 D. Williams,Drawing 50,000

312 IncomeSummary 0

410 Sales 853,445

411 Sales Returns andAllowances 20,020

412 SalesDiscounts 13,200

510 Cost of MerchandiseSold 414,575

520 Sales SalariesExpense 74,400

521 AdvertisingExpense 18,000

522 DepreciationExpense 0

523 Store SuppliesExpense 0

529 Miscellaneous SellingExpense 2,800

530 Office SalariesExpense 40,500

531 RentExpense 18,600

532 InsuranceExpense 0

533 Bad DebtExpense 0

539 Miscellaneous AdministrativeExpense 1,650

550 InterestExpense 1,100

David’s Entertainment uses the perpetual inventory system andthe First-in, First-out costing method. Transportation-in andpurchase discounts should be added to the Inventory Control Sheet,but since this will complicate the computation of the First-in,First-out costing method, please ignore this step in the process.They also use the Allowance Method for bad debt.

The Accounts Receivable and Accounts Payable Subsidiary Ledgersalong with the Inventory Control Sheet should be updated as eachtransaction affects them (daily).

David’s Entertainment sells four types of televisionentertainment units.

The sale prices of each are:

TV A: $3,500

TV B: $5,250

TV C: $6,125

PS D: $9,000

During December, the last month of the accounting year, thefollowing transactions were completed:

Dec. 1. Issued check number 2632 for theDecember rent, $2,600.

Purchased three TV C units on account from Prince Co., terms2/10, n/30, FOB shipping point, $11,100.

Issued check number 2633 to pay the transportation changes onpurchase of December 3, $400.(NOTE:Do not include shipping andpurchase discounts to the Inventory Control sheet for thisproject.)

Sold four TV A and four TV B on account to Albert Co., invoice891, terms 2/10, n/30, FOB shipping point.

Sold two projector systems for cash.

Purchased store supplies on account from Matt Co., terms n/30,$580.

Issued check to Prince Co. number 2634 for the full amount due,less discount allowed.

Issued credit memo for one TV a unit returned on sale ofDecember 6.

Issued check number 2635 for advertising expense for last halfof December, $1,500.

Received cash from Albert Co. for the full amount due (lessreturn of December 14 and discount).

19. Issued check number 2636 to buy two TV C units, $7,600.

19. Issued check number 2637 for $6,100 to Joseph Co. onaccount.

Sold five TV C units on account to Cameron Co., invoicenumber

892, terms 1/10, n/30, FOBshipping point.

For the convenience of the customer, issued check number 2638for shipping charges on sale of December 20, $700.

Received $12,250 cash from McKenzie Co. on account, nodiscount.

Purchased three projector systems on account from Elisha Co.,terms 1/10, n/30, FOB destination, $15,600.

24. Received notification that Marie Co. has been grantedbankruptcy with no

Amount of recovery. We are to write-off her amount due. (Note:See page

402 for entry required.)

Issued a debit memo for return of $5,200 because of a damagedprojection

System purchased onDecember 21, receiving credit from the seller.

Issued check number 2639 for refund of cash on sales made forcash, $600.(Customer was going to return goods until an allowancewas arranged.)

27. Issued check number 2640 for sales salaries of $1,750 andoffice

Salaries of $950.

Purchased store equipment on account from Matt Co., terms n/30,FOB

Destination, $1,200.

Issued check number 2641 for store supplies, $470.

Sold four TV C units on account to Randall Co., invoice number893,

Terms 2/10, n/30, FOB shipping point.

Received cash from sale of December 20, less discount, plustransportation

Paid on December 20. (Roundcalculations to the nearest dollar.)

Issued check number 2642 for purchase of December 21, lessreturn

Of December 25 and discount.

Issued a debit memo for $300 of the purchase returned from

December 28.

Instructions:

Enter the balances of each of the accounts in the appropriatebalance column of a four-column account (General Ledger).WriteBalance in the item section, and place a check mark (x) in the PostReference column.

Journalize the transactions in a sales journal, purchasesjournal, cash receipts journal, cash payments journal, or generaljournal as illustrated in chapter 7. Also post to the AccountsReceivable and Accounts Payable Subsidiary ledgers and InventoryContro

Sheet as needed.

Total each column on the special journals and prove thejournal.

Post the totals of the account named columns and individuallypost the “other” columns as well to the General Ledger.

Prepare the Schedule of Accounts Receivable and the Schedule ofAccounts Payable (their total amount must equal the amount in theircontrolling general ledger account).

Prepare the unadjusted trial balance on theworksheet.

Complete the worksheet for the year ended December 31, 2012,using the following adjustment data:

a. Merchandise inventory on December31 $90,800

b. Insurance expired during theyear 1,250

c. Store supplies on hand on December31 975

d. Depreciation for the current year needs tobe calculated. The business uses

The Straight-line method, the store equipment has a useful life of10 years

With no salvage value. (NOTE: the purchase and return will not beincluded

As the dates of the transactions were after the 15th ofthe month).

e. Accrued salaries on December 31:

Salessalaries $1,400

Officesalaries 760 2,160

f. The note payable terms are at 8%, payment is notbeing made until Jan. 3, 2013. Interest must be recognized for onemonth.

g. Net realizable value of Accounts Receivable is determined tobe $27,950.

8. Prepare a multiple-step income statement, a statement ofowner’s equity, and a

Classified balance sheet in goodform. (Recommend review of “Current Liabilities” on pages 166 &167 and “Current Maturities of Long-term Debt” on page 480.)

9. Journalize and post the adjusting entries.

Journalize and post the closing entries.Indicate closed accountsby inserting a line

In both balance columns opposite the closing entry.

Prepare a post-closing trial balance.

Cash Receipts Journal; Cash Column: 97,939

Unadjusted Trial Balance Total: 1,080,620

Post-Closing Trial Balance: 347,490

Net Income: 264,350

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