ACG 2021 questions

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8. A company allows its customers to use bank credit cards to charge purchases. When customers use the credit cards, the net amount is deposited in the company's checking account. The company also is charged a 2.5% service charge for these credit card sales. Assume that on April 13, the company sold $25,000 worth of merchandise to customers who used credit cards.

 

5. The following series of transactions occurred during 2007 and 2008 when Linwood Co. sold merchandise to John Moore. Linwood's annual accounting period ends on December 31.

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Prepare Linwood Co.'s journal entries to record the above transactions assuming they use the allowance method of accounting for uncollectible accounts.  

 

6. A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:

 

 

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Required. Answer the following questions.

 

  1. Prepare the adjusting entry to estimate bad debts if Bad debts are estimated to be 2.5% of credit sales.
  1.  What is the balance in the allowance for doubtful accounts at December 31?______________

 

  1. Prepare the partial balance sheet if accounts receivable at December 31 is $175.000.

 

  1. Prepare the adjusting entry to estimate the bad debts if an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.
  1.  What is the balance in the allowance for doubtful accounts at December 31?______________ 
  1. Prepare the partial balance sheet if accounts receivable at December 31 is $175.000.

 

 

 

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