On January 1 of the current year,

1.     On January 1 of the current year, Slaton, inc. had the following accounts on its books:

Accounts Receivable                                          $120,000   (debit)

Allowance for Uncollectible Accounts                        4,000 (credit) CHAPTER 8

During this year, credit sales were $600,000 and collections on account were $580,000.

Required:

a.     Prepare general journal entries for the following transactions that occurred during the year:

(1)   Wrote off L. Baxter’s account, $3,400.

(2)   Wrote off N. Vale’s account, $1,200.

(3)   N. Vale, who is in bankruptcy, paid $400 in final settlement of the account written off in transaction (2).  This amount is not included in the $580,000 collections.

(4)   On December 31, estimated the year’s bad debts expense at 1% of credit sales.

b.     Show how Accounts Receivable and the Allowance for Uncollectible Accounts would appear on the year-end balance sheet.

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2.       Ginger Pastries buys a specialty table saw for her metal fabrication business on January 1, 2013.

a.        The machine cost $60,000 and is expected to be used for five years. 

b.       At the end of the five years it is expected that the machine can be sold for $4,000. 

c.       Compute the depreciation expense for the third year (2015) using both:

                                                               i.       straight-line and CHAPTER 9

                                                             ii.      double-declining-balance depreciation methods. CHAPTER 9

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3.     Schuler Company had machinery that had originally cost $82,000.  The machinery was three years old and had been depreciated using the double-declining-balance method, over a five-year useful life with a residual value of $6,000.  Answer each of the following independent questions:

Required:

a.   If the company sold the machinery for $35,000, prepare a journal entry to record the sale.

b.   If the company sold the machinery for $16,000, prepare a journal entry to record the sale.