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Accounting_ExercisesnoVII.xlsx
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EXERCIES VII

Aging of accounts receivables
Name Total 1-30 days 31-60 days 61-90 days more than 90 days
A € 15,000 € 15,000
B € 24,000 € 24,000
C € 24,000 € 12,000 € 12,000
D € 15,000 € 2,000 € 3,000 € 10,000
E € 12,000 € 3,000 € 5,000 € 3,000 € 1,000
Other € 36,000 € 25,000 € 7,000 € 2,000 € 2,000
Total € 126,000 € 81,000 € 27,000 € 15,000 € 3,000
Historical bad debt percentages 1.0% 3.0% 6.0% 60.0%
Bad debt allowance to be provided
Account Receivables valuation
Thomson Corp. had sales of € 100,000 during 2015, including € 60,000 on credit. Balances on Dec. 31, 2014, were Accounts Receivable, € 9,000, and Allowance for Bad Debts, € 800 (= credit balance). Data for 2015: collections on accounts receivable were € 56,000. Bad debts expense was estimated at 2 % of credit sales, as in previous years. Write-offs of bad debts during 2015 were € 1,000.
Dt Ct Dt Ct
Dt Ct Dt Ct
ESTIMATIONS OF BAD DEBT EXPENSE Dt Ct
CREDIT SALES
Balance Sheet on Nov. 30, 2014
Assets Equities
Equipment 2,000 Paid-in Capital 8,000
Land 2,500 Retained Earnings 1,000
Office Supplies Inventory 1,200 Loan Payable 2,000
Accounts Receivable 7,400 Tax payables 900
Cash, Bank 3,000 Accounts payable 3,200
Prepaid expenses 3,000 Unearned rent revenue 4,000
Total assets 19,100 Total equities 19,100
ASSETS ACCOUNTS
CASH, BANK OFFICE SUPPLY INVENTORY ACCOUNT RECEIVABLES EQUIPMENT LAND PREPAID EXPENSES
Dt Ct Dt Ct Dt Ct Dt Ct Dt Ct Dt Ct
EQUITY AND LIABILITIES ACCOUNTS
PAID IN CAPITAL RETAINED EARNINGS TAX PAYABLES ACCOUNTS PAYABLES LOAN PAYABLE SALARY PAYABLES UNEARNED RENT REVENUE
Dt CT Dt Ct Dt Ct Dt Ct Dt Ct Dt Ct Dt Ct
END.BAL. € 0
TEMPORARY ACCOUNTS € 0 € 0
transactions
1. Cash-Purchase of € 1 800 of Office Supplies Inventory
2. Performed consulting services, for which we received € 9,100 cash immediately
3. Received an invoice for a series of advertisements, € 1 200, that appeared in the local news during December and will be paid in January.
4. In November 2014 we performed additional consulting work, € 2 000 on credit (5/30, n 90) and in December the customer used the discount for prompt payment.
5. Performed advertisement services for Customer XYZ, for which we will receive € 1,000 on 2 month credit sale.
6. Paid salaries to employees of € 1 200 for December.
7. We sold some of the redundant office supplies inventory on the market –€ 500 through credit card transaction (a straight 3% of credit card services were taken).
8. Received an invoice for external services of € 1 400 for December to be paid with 60 credit term
9. Paid outstanding tax payables.
10. Paid trade creditors € 1,300.
11. The cost of office supplies used during December is € 1,100.
12. In the beginning of September 2014 a subscription rights for local newspaper magazine of € 6 000 was paid for half-a year term in advance;
13. In the beginning of October 2014 company receives rent for 6 months in advance, €6,000
14. At the end of the month Company repaid to the Bank credit tranche 500 and paid interest charges (interest rate as of 9 % p.a.)
15. At the end of month the Customer XYZ made a claim on the advertisement services and we agreed to sales allowance (a reduction of the original selling price) in the amount of 20%.
16. Depreciation of equipment for December amounts to € 100.
INCOME STATEMENT
EXPENSES REVENUES
Assets Owner`s equity and liabilities
Equipment Paid-in Capital
Land Retained Earnings
Office Supplies Inventory Loan Payable
Accounts Receivable Tax payables
Cash, Bank Accounts payable
Prepaid expenses Unearned rent revenue
Total assets Total equities