Questions -
1) Accounts Receivable and Uncollectible Accounts
Enterprising Students Incorporated uses the direct write off method. Their customer, CCS Sales, has declared bankruptcy with no assets to pay off creditors. Present the journal entry, in proper format to record the necessary adjustment for the $22,000 remaining in the Accounts Receivable Subsidiary ledger from CSS Sales. Describe the direct write off method. When is it acceptable to use the direct write off method? Describe the other method for accounting for receivables. Provide example journal entries and explanations.
2) Bank Reconciliation
The Bank Balance presented on the bank statement totals $10,000 while the general ledger cash balance for this account, on the same date, the last day of the month, displays a value of $12,255.
Please explain the issues related to this difference and how they would be resolved. Use you experience in creating a bank reconciliation to assist you in considering the variables.
3) Describe a Classified Income Statement. Include a description of the calculations on the statement. Why are the calculations important?
4) Choose one the inventory valuation methods (FIFO, LIFO or weighted average). Describe how the method is used to value inventory and its effect on cost of goods sold and ending inventory.
5) On July 1, 2014 Linked Up Inc. acquired a new machine at a cost of $15,000 with a residual value of $3,000. The estimated useful life is 5 years and 100,000 units. For the year ending June 30, 2015 the machine produced 15,000 units. For the year ending June 30, 2016, the machine produced 10,000 units.
- Using the following depreciation methods (straight line, units of production) calculate the depreciation for the year ending 6/30/15 and present each of the three journal entries in proper form.
- On July 1, 2016 the machine is sold for $10,000. Complete the journal entry in proper form based on your calculations under each of the depreciation methods (see item 1 in this problem). You will present two separate, independent journal entries.