Vail Company recorded the following selected transactions during November 2015.
Date General Journal Debit Credit
Nov. 5 Accounts Receivable—Ski Shop 5,000
Sales 5,000
10 Accounts Receivable—Welcome Enterprises 2,892
Sales 2,892
13 Accounts Receivable—Zia Natara 1,696
Sales 1,696
21 Sales Returns and Allowances 438
Accounts Receivable—Zia Natara 438
30 Accounts Receivable—Ski Shop 6,029
Sales 6,029
Prepare a general ledger having T-accounts for Accounts Receivable, Sales, and Sales Returns and Allowances. Post these entries to both the general ledger and the
accounts receivable ledger.
General Ledger
Sales
Sales Returns and
Accounts Receivable
Nov 05 5000
Nov 10 2892
Nov 13 1696
Nov 30 6029
End Bal 15179
0 5000 Nov 5 Nov 21 438
438 Nov 21 0 2892 Nov 10 End Bal 438
0 1696 Nov 13
0 6029 Nov 30
Accounts Receivable Subsidiary
Welcome
Zia
Ski Shop Nov 10 2892 Nov 13 1696 439 Nov 21
Nov 05 5000 End Bal 2892 End Bal 1258
Nov 30 6029
End Bal 11029
part of question 1 but is its own
question Prepare a schedule of accounts receivable.
VAIL COMPANY
Schedule of Accounts Receivable
November 30, 2015
Ski Shop $11,029
Welcome Enterprises 2,892
Zia Natara 1,258
Total $15,179
Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card, Levine
receives an immediate credit to its account when it deposits sales receipts. Suntrust assesses a 4% service charge for credit card sales. The second credit card that
Levine accepts is the Continental Card. Levine sends its accumulated receipts to Continental on a weekly basis and is paid by Continental about a week later.
Continental assesses a 2.5% charge on sales for using its card.
Apr. 08 Sold merchandise for $3,200 (that had cost $2,365) and accepted the customer's Suntrust Bank Card. The
Suntrust receipts are immediately deposited in Levine's bank account.
12 Sold merchandise for $6,000 (that had cost $3,888) and accepted the customer's Continental Card. Transferred
$6,000 of credit card receipts to Continental, requesting payment.
20 Received Continental's check for the April 12 billing, less the service charge.
Prepare journal entries to record the above selected credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)
Date General Journal Debit Credit
Apr 08 Cash 3,072
Credit card expense 128
Sales 3,200
Apr 08 Cost of goods sold 2,365
Merchandise inventory 2,365
Apr 12 Accounts receivable—Continental 5,850
Credit card expense 150
Sales 6,000
Apr 12 Cost of goods sold 3,888
Merchandise inventory 3,888
Apr 20 Cash 5,850
Accounts receivable—Continental 5,850
Explanation: Apr 08 Credit card expense = $3,200 × 0.04 = $128 Apr 12 Credit card expense = $6,000 × 0.025 = $150
Dexter Company applies the direct write-off method in accounting for uncollectible accounts.
March 11 Dexter determines that it cannot collect $9,300 of its accounts receivable from its customer Lester Company.
29 Lester Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt.
Prepare journal entries to record the above selected transactions of Dexter.
Date General Journal Debit Credit
March 11 Bad debts expense 9,300
Accounts receivable—Lester Co. 9,300
March 29 Accounts receivable—Lester Co. 9,300
Bad debts expense 9,300
March 29 Cash 9,300
Accounts receivable—Lester Co. 9,300
At year-end (December 31), Chan Company estimates its bad debts as 1.00% of its annual credit sales of $709,000. Chan records its Bad Debts Expense for that
estimate. On the following February 1, Chan decides that the $355 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays
the amount previously written off.
Prepare the journal entries for these transactions.
Date General Journal Debit Credit
Dec 31 Bad debts expense 7,090
Allowance for doubtful accounts 7,090
Feb 01 Allowance for doubtful accounts 355
Accounts receivable—P. Park 355
Jun 05 Accounts receivable—P. Park 355
Allowance for doubtful accounts 355
Jun 05 Cash 355
Accounts receivable—P. Park 355
Explanation: Dec 31 To record estimated bad debts expense (0.010 × $709,000) = $7,090
At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2015, it has outstanding
accounts receivable of $89,000, and it estimates that 5% will be uncollectible.
Prepare the adjusting entry to record bad debts expense for year 2015 under the assumption that the Allowance for Doubtful Accounts has:
(a) a $1,513 credit balance before the adjustment.
(b) a $445 debit balance before the adjustment.
Transaction General Journal Debit Credit
(a) Bad debts expense 2,937
Allowance for doubtful accounts 2,937
(b) Bad debts expense 4,895
Allowance for doubtful accounts 4,895
Explanation (a)
Unadjusted balance 1,513 credit
Estimated balance ($89,000 × 0.05) - 4,450 credit
Required adjustment = 2,937 credit
(b)
Unadjusted balance 445 debit
Estimated balance ($89,000 × 0.05) + 4,450 credit
Required adjustment = 4,895 credit
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts receivable $ 670,00
0
$ 416,00
0
$ 110,00
0
$ 56,00
0
$ 38,00
0
$ 50,00
0
Percent uncollectible 3 % 4 % 7 % 9 % 12 %
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
Accounts Receivable Percent Uncollectible (%)
Not due: $416,000 x 3 % = $12,480
1 to 30: 110,000 x 4 % = 4,400
31 to 60: 56,000 x 7 % = 3,920
61 to 90: 38,000 x 9 % = 3,420
Over 90: 50,000 x 12 % = 6,000
Estimated balance of allowance for un-collectibles $30,220 credit
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $5,600 credit and $2,100 debit.
Date General Journal Debit Credit
Dec 31 Bad debts expense 24,620
Allowance for doubtful accounts 24,620
Dec 31 Bad debts expense 32,320
Allowance for doubtful accounts 32,320
Explanation for b
Unadjusted balance $ 5,600 credit
Estimated balance - 30,220 credit
Required adjustment $ = 24,620 credit
Unadjusted balance $ 2,100 debit
Estimated balance + 30,220 credit
Required adjustment $ = 32,320 credit
