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1: A company has a correct $25,000 year-end balance in its SalesDiscount account. Explain what that 25,000 represents.

Is that account closed out at the end of the year?

2: What is the "Operating Cycle" for a merchandiser?

3: Identify 4 accounts that are closed out by a merchandiser buta service business would not have those accounts to close.

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Patrina Schowalter
Patrina SchowalterLv2
29 Sep 2019

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2.

A company has a correct $25,000 year-end balance in its SalesDiscount account. Explain what that 25,000 represents.


Is that account closed out at the end of the year?

Scenario:

You are the Accountant for WanneBeeCorporation

WannaBee Corporation has $1,500,000 of Receivables on December31, 2000. WannaBee uses the Allowance Method and historical dataindicates that 7% of receivables become uncollectible. The end of year balance in the ADA is 0.

The following are the 2000 end of year receivables.

AR-Goodboy $25,000 AR-NannyNancy $250,000

AR-BusyBody $75,000 AR-AlphaBetCo $130,000

AR-DippyDo $55,000 AR-TipsyTurvy $98,000

AR-MerryMen $145,000 AR-HappyHart $289,000

AR-CurlyCues $211,000 AR-MityMan $47,000

AR-PrettyPenny $109,000 AR-JumpingJax $66,000

During 2001 the following events occurred:

Goodboy defaulted.

BusyBody declared bankruptcy but paid$19,000.

DippyDo paid the account in full.

MerryMen still owes $48,000.

CurlyCues has not answered the phonefor 8 months(write it off)

PrettyPenny paid its account.

NannyNancy paid $150,000 and onNovember 21 made a 120 note at 4% APR for the remainder.

AlphaBetCo paid its account infull.

TipsyTurvy has closed itsbusiness.

HappyHart paid its bill.

MityMan still owes its account.

JumpingJax paid

You are the Accountant for WanneBeeCorporation

WannaBee Corporation has $1,500,000 of Receivables on December31, 2000. WannaBee uses the Allowance Method and historical dataindicates that 7% of receivables become uncollectible. The end of year balance in the ADA is 0.

The following are the 2000 end of year receivables.

AR-Goodboy $25,000 AR-NannyNancy $250,000

AR-BusyBody $75,000 AR-AlphaBetCo $130,000

AR-DippyDo $55,000 AR-TipsyTurvy $98,000

AR-MerryMen $145,000 AR-HappyHart $289,000

AR-CurlyCues $211,000 AR-MityMan $47,000

AR-PrettyPenny $109,000 AR-JumpingJax $66,000

During 2001 the following events occurred:

Goodboy defaulted.

BusyBody declared bankruptcy but paid$19,000.

DippyDo paid the account in full.

MerryMen still owes $48,000.

CurlyCues has not answered the phonefor 8 months.

PrettyPenny paid its account.

NannyNancy paid $150,000 and onNovember 21 made a 120 note at 4% APR for theremainder.

AlphaBetCo paid its account infull.

TipsyTurvy has closed itsbusiness.

HappyHart paid its bill.

MityMan still owes its account.

JumpingJax paid ½ its bill and willnot pay the rest.

The Receivables balance at the end of the year is $2,235,000

1. Prepare the Required AJE for December 31,2000.

2. Prepare the Required AJE for December 31,2001.

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