Exercise 8-1
On January 6, Aaron Co. sells merchandise on account to Foley Inc. for $9,900, terms 4/10, n/30. On January 16, Foley pays the amount due.
Prepare the entries on Aaron Co.'s books to record the sale and related collection assuming Aaron Co. maintains periodic inventory system.
Exercise 8-2
1. On January 10, Allison Milo uses her Crawford Co. credit card to purchase merchandise from Crawford Co. for $3,000. On February 10, Milo is billed for the amount due of $3,000.
2. On February 12, Milo pays $1,000 on the balance due.
3. On March 10, Milo is billed for the amount due, including interest at 2% per month on the unpaid balance as of February 12.
Prepare the entries on Crawford Co.'s books related to the transactions that occurred on January 10, February 12, and March 10.
Exercise 8-3
At the beginning of the current period, Griffey Corp. had balances in Accounts Receivable of $229,700 and in Allowance for Doubtful Accounts of $8,400 (credit). During the period, it had net credit sales of $858,000 and collections of $776,000. It wrote off as uncollectible accounts receivable of $7,000. However, a $3,200 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $24,500 at the end of the period.
(a) Prepare the entries to record sales and collections during the period.
(b) Prepare the entry to record the write-off of uncollectible accounts during the period.
(c) Prepare the entries to record the recovery of the uncollectible account during the period.
(d) Prepare the entry to record bad debt expense for the period.
(e) Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts.
Ending balance in Accounts Receivable $
Ending balance in Allowance for Doubtful Accounts $
(f) What is the net realizable value of the receivables at the end of the period?
The net realizable value of the receivables at the end of the period $
Exercise 8-4
The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $84,000; Credit Sales $911,000; and Sales Returns and Allowances $49,000.
(a) If Wainwright uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Wainwright determines that Hiller's $1,000 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $1,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 12% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $690 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.
Exercise 8-6
1. On December 31, 2013, when its Allowance for Doubtful Accounts had a debit balance of $1,100, Hunt Co. estimates that 9% of its accounts receivable balance of $85,300 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts.
2. On May 11, 2014, Hunt Co. determined that J. Byrd's account was uncollectible and wrote off $3,000.
3. On June 12, 2014, Byrd paid the amount previously written off.
Prepare the journal entries on December 31, 2013, May 11, 2014, and June 12, 2014.
Exercise 8-7
Malone Supply Co. has the following transactions related to notes receivable during the last 2 months of the year. The company does not make entries to accrue interest except at December 31.
1. Nov. 1 Loaned $65,400 cash to B. Carr on a 12-month, 8% note.
2. Dec. 11 Sold goods to R. P. Kiner, Inc., receiving a $3,300, 90-day, 8% note.
3. Dec. 16 Received a $10,300, 180-day, 8% note to settle an open account from M. Adcock.
4. Dec. 31 Accrued interest revenue on all notes receivable.
Journalize the transactions for Malone Supply Co.
Exercise 8-8
These transactions took place for Glavine Co.
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2013
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1.
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May 1
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Received a $5,500, 12-month, 8% note in exchange for an outstanding account receivable from S. Rooney.
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2.
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Dec. 31
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Accrued interest revenue on the S. Rooney note.
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2014
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3.
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May 1
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Received principal plus interest on the S. Rooney note. (No interest has been accrued since December 31, 2013.)
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Record the transactions in the general journal. The company does not make entries to accrue interest except at December 31.
Exercise 9-1
The following expenditures relating to plant assets were made by Watkens Company during the first 2 months of 2014.
(a) Indicate the account title to which each expenditure should be debited.
1. Paid $7,000 of accrued taxes at the time the plant site was acquired.
2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on a new delivery truck.
4. Paid $21,000 for parking lots and driveways on the new plant site.
5. Paid $250 to have the company name and slogan painted on the new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for a 1-year accident insurance policy on the new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Exercise 9-3
On March 1, 2014, Zobrist Company acquired real estate, on which it planned to construct a small office building, by paying $85,780 in cash. An old warehouse on the property was demolished at a cost of $7,700; the salvaged materials were sold for $1,680. Additional expenditures before construction began included $1,300 attorney's fee for work concerning the land purchase, $4,940 real estate broker's fee, $8,900 architect's fee, and $14,800 to put in driveways and a parking lot.
(a) Determine the amount to be reported as the cost of the land.
Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $98,800. The company estimated that the machine has a salvage value of $8,800. The machine is expected to be used for 71,200 working hours during its 8-year life.
Compute the depreciation expense under the straight-line method for 2014 and 2015, assuming a December 31 year-end.
Exercise 9-5
Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $98,800. The company estimated that the machine has a salvage value of $8,800. The machine is expected to be used for 71,200 working hours during its 8-year life.
Compute the depreciation expense under the straight-line method for 2014 and 2015, assuming a December 31 year-end.
Exercise 9-10
Suppose during 2014 that Federal Express reported the following information (in millions): net sales of $35,495 and net income of $98. Its balance sheet also showed total assets at the beginning of the year of $25,922 and total assets at the end of the year of $24,565.
Calculate the asset turnover and return on assets.
Exercise 9-11
Shonrock International is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company's current offerings, but offer a complementary fit to its existing product line. Richard Farley, senior production department manager, is very excited about the high-tech new equipment that will have to be acquired to produce the new products. Donna Beson, the company's CFO, has provided the following
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Without New Products
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With New Products
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Sales revenue
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$12,246,300
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$16,349,500
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Net income
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$491,450
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$914,000
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Average total assets
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$5,063,000
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$13,678,000
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(a) Compute the company's return on assets, profit margin, and asset turnover, both with and without the new product line.
Attachment:- Accounting_Assignment.rar