Accounting 1 very urgent
BCO114 Accounting I Task brief & rubrics
Task: Assignment 3 (33% of course grade)
You are asked to answer all the questions in the proposed exercises.
This task assesses the following learning outcomes:
• Understand uncollectible receivables and how to account for uncollectible receivables
• Apply acquired knowledge and skills to prepare the income statement
• Demonstrate understanding of merchandising activities and financial assets
LAUNCH: WEEK 4 Friday October 30th, 2020 / DELIVERY: WEEK 4 Sunday November 1st, 2020, 23:59hrs ON MOODLE
Submission file format: Word document with all the answers.
EXERCISE 1 (20 points)
(1) Glanding Co. uses the balance sheet approach in estimating uncollectible accounts expense. Its Allowance for Doubtful Accounts has a €1,200
credit balance prior to adjusting entries. It has just completed an aging analysis of accounts receivable at 31 December 2019. This analysis disclosed
the following information:
Age Percentage
Group Considered
Total Uncollectible
Not yet due € 53,000 1 %
1-30 days past due € 31,000 2 %
31-60 past due € 14,000 8 %
(a) Using the table above, calculate the appropriate balance for Glanding's Allowance for Doubtful Accounts at 31 December 2019. (5 points)
(b) Prepare the year-end adjusting entry for uncollectible accounts. (5 points)
General Journal
Date Account Titles and Explanation Debit Credit
(2) Camp Co. had credit sales of €690,000 for March. Accounts receivable of €5,830 were determined to be worthless and were written off during
March. Accounts receivable total €730,000 at March 31. Management feels that based on past experience, approximately 2% of net credit sales will
prove to be uncollectible.
(a) Assuming Camp Co. uses the direct write-off method of accounting for uncollectible accounts, what is uncollectible accounts expense for
March? (5 points)
(b) Assuming Camp Co. uses the income statement approach to account for uncollectible accounts, what is uncollectible accounts expense
for March? (5 points)
EXERCISE 2 (20 points)
On 1 September 2019, Mike Co. signed a 12% six-month note receivable in settlement of accounts receivable of €320,000. The note and interest
are all due at maturity.
(a) Prepare the entry on 1 September 2019 made by Mike Co. to record the receipt of this note receivable. (5 points)
(b) Prepare the 31 December 2018 (fiscal year-end), adjusting entry made by Mike Co. with regard to this note receivable. (5 points)
(c) Prepare the entry made by Mike Co. on 1 March 2020 (maturity date of note), to record collection of note and interest. (5 points)
(d) Assume that on 1 March 2020, the maker of the note defaults and Mike Co. does not collect the note and interest. Explain what Mike Co.
would do in accounting records in this situation. (5 points)
General Journal
Date Account Titles and Explanation Debit Credit
(a)
(b)
(c)
EXERCISE 3 (25 points)
Philosophic Co. is an office supply store. The company uses a perpetual inventory system.
Record the following transactions in the company’s general journal. To conserve space, you may omit the written explanations which normally should
accompany the entries.
July 1 Purchased four Lorac copying machines on account from Lorac Corp. Total
invoice price was €2,500 per machine (€10,000 total); terms of 2/10, n/30. These
machines are intended for resale.
July 3 Found one of the Lorac copiers to be defective and returned it to Lorac, thus
reducing the amount owed.
July 9 Sold one of the Lorac copiers to Morris Realty. The sales price was €3,500, terms
2/10, n/60.
July 17 Paid the amount owned to Lorac Corp.
July 24 Received full payment from Morris.
General Journal
Date Account Titles and Explanation Debit Credit
EXERCISE 4 (25 points)
Using the Adjusted Trial Balance for merchandising company, perform the following tasks:
1. Prepare an Income Statement in multiple-step format with subtotals for net sales, gross profit, income before taxes, and net income. (20 points)
2. Calculate Gross Profit Margin. (5 points)
Tower Corporation
Adjusted Trial Balance
at 31 December 2019
Debit Credit Cash 7,590 Accounts Receivable 5,910 Merchandise Inventory 4,870 Prepaid Insurance 2,550 Equipment 25,230 Accumulated Depreciation: Equipment 450 Accounts Payable 4,230 Capital Stock 24,690 Retained Earnings, January 1, 2019 5,550 Dividends 1,150 Sales revenue 48,150 Sales returns 740 Cost of Goods Sold 17,000 Salaries Expense 8,850 Utilities Expense 2,130 Rent Expense 3,390 Depreciation Expense 450 Interest Expense 230 Income Tax Expense 2,980 ______
€83,070 €83,070
Rubrics
Descriptor
9-10 The student demonstrates an excellent understanding of the concepts.
8-8.9 The student demonstrates a good understanding of the concepts.
7-7.9 The student demonstrates a fair understanding of the concepts.
6-6.9 The student demonstrates some, but insufficient understanding of the concepts.
3-5.9 The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.
1-2.9 The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.
0 The student leaves the question blank or cheats.
Points are stated at the end of each question.