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P-18-7A    P-16-9a

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P 16-9A (1b Dr. Bad Debt Exp. $6,620)

Uncollectible Accounts Percentage of Sales and Percentage of Receivables. At the completion of the current fiscal year ending December 31, the balance of Accounts Receivable for Yang’s Gift Shop was $30,000 Credit sales for the year were $355,200.

Required:

Make the necessary adjusting entry in general journal from under each of the following assumptions. Show calculations for the amount of each adjustment and the resulting net realize value.

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1. Allowance for Bad Debts has a credit balance of $330.

a. The percentage of sales method is used and uncollectible accounts are estimated to be 2.0% of credit sales.

b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $6,950 in uncollectible accounts.

2. Allowance for bad debts has a debit balance of $400.

a. The percentage of sales method is used and uncollectible accounts are estimated to be 1.5% of credit sales.

b. The percentage of receivables method is used and an analysis of the accounts produces an estimate of $5,685 in uncollectible accounts.

P 18-7A (Depr exp. For year 8 (a) 7,000.00 (b) 1,968.89 (c) 1,555,56

Straight Line, Declining Balance and Sum of The Years Digits Methods. A machine is purchased January 1 at a cost of $59,000. It is expected to serve for eight years and have a salvage value of $3,000.

Required:

Prepare a schedule showing depreciation for each year and the book value at the end of each year using the following methods:

a. Straight line

b. Double declining balance (round to two decimal places)

c. Sum of the years digits (round to two decimal places)

2

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16-9A

pts.

pense

x

1, 20–

$ 1,745

872

GENERAL JOURNAL

Date Account Debit Credit
20–

Dec.

-Jul

1,300

Calculations:

Accounts receivable, December 31, 20–

Allowance for bad debts, new balance

Net realizable value

GENERAL JOURNAL

Date Account Debit Credit
20–

Dec. Accounts Receivable 1,745

1,745

Calculations:
Credit Sales x Percentage

Adjustment Amount

$ 1,745 5.0%

Accounts receivable, December 31, 20– $ 1,745
Allowance for bad debts, new balance 872

Net realizable value

GENERAL JOURNAL

Date Account Debit Credit
20–

Dec.

1,745

Accounts Receivable 1,745

Calculations:
Estimate through analysis (provided)
Allowance for bad debts, previous balance
Adjustment amount

Accounts receivable, December 31, 20–
Allowance for bad debts, new balance
Net realizable value
Problem

Name:
1

0
1a.
GENERAL JOURNAL
Date Account Debit Credit
20–
Dec. 8 May Bad Debt E

x 1,

7 4 5
Allowance for Bad Debts 1,745
Calculations:
Credit Sales Percentage = Adjustment Amount
$ 1,745 5.0% $

872
Accounts receivable, December

3
Allowance for bad debts, new balance
Net realizable value $873
1b.
15 Bad Debt Expense 1,300
Accounts Receivable
Estimate through analysis (provided)
Allowance for bad debts, previous balance
Adjustment amount
$ 1,300
130
$ 1,170
2a.
Uncollectible Accounts Recovered
=
$ 872
$ 873
2b.
Cash

E18-2A

Name:

ly

Estimated Life Percentage

/ years =

x 2

x

= Depreciation

Year 1
Year 3

x

8 9

Original Cost – Salvage Value =

Mark Sears: Enter as a formula

Rate = Depreciation

Year 1 $ 27,000

Mark Sears: Enter as a formula

Year 3

25%
Mark Sears: Enter as a fraction

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Exercise 18-2A
10pts.
1.
Straight-Line Method
Original Cost Salvage Value Estimated Life Year Depreciation
years
Year 1
Year 3
2.
Double-Declining-Balance Method
100% Mark Sears: Enter as a formula
Double-declining rate
Book Value Rate
Year 2
3.
Sum-of-the-Years’-Digits Method
[Life (Life + 1)] / 2 = Denominator
25%
Mark Sears: Enter as a formula
Depreciable Cost
$ 27,000 3,00 $ 24,000
Mark Sears: Enter as a formula
Mark Sears: Enter as a formula

Depreciable Cost x
25%
Mark Sears: Enter as a fraction

2/25
Mark Sears: Enter as a formula
$ 20,225 5/56

P18-7A

Name:

1.
Straight-Line Method

Original Cost Salvage Value Estimated Life

years

Year

Book Value

0
1
2
3
4
5
6
7
8

2.
Double-Declining-Balance Method

Estimated Life Percentage

100% / years =

x 2
Double-declining rate

Year Annual Depreciation Book Value

Book Value x Rate = Depreciation

0

1

2

3
4
5
6
7
8

3.
Sum-of-the-Years’-Digits Method

[Life x (Life + 1)] / 2 = Denominator

Original Cost – Salvage Value = Depreciable Cost

Year Annual Depreciation Book Value

Depreciable Cost
x Rate = Depreciation

0

1

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter book values for Years 1-8 as formulas

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula

Mark Sears: Enter as a formula
2

3
4
5
6
7
8

Problem 18-7A 10pts.
Yearly Depreciation
Annual Depreciation
Mark Sears: Enter book values for Years 1-8 as formulas
Mark Sears: Enter as a fraction

E16-7A

10pts.
GENERAL JOURNAL

Date Account Debit Credit
May 8 Bad Debt Expense 1,745

1,745

15 Bad Debt Expense 1,300

1,300

Wrote off uncollectible account

2 Accounts Receivable/V. Lawrence 1,745

Uncollectible Accounts Recovered 1,745
2 Cash 1,745

Accounts Receivable/V. Lawrence 1,745

May 15 Accounts Receivable/D. Utter 1,300
Uncollectible Accounts Recovered 1,300

Reinstated account receivable

15 Cash 1,300

Accounts Receivable/D. Utter 1,300

Collection on account
20-1
Accounts Receivable/V. Lawrence
Wrote off uncollectible account
July
Accounts Receivable/D. Utter
Sept.
Reinstated account receivable
Collection on account
20-2

Sheet1

E16-7A

10 points

3 points

2 points

E18-2A 10 points

*requirement 1 3 points
*requirement 2 3 points

*requirement 3

10 points

*requirement 1 3 points
*requirement 2 3 points
*requirement 3 4 points

Week 1 Grading Rubric
Point Available Points Earned
10 points
P16-9A
*requirement 1 3 points
*requirement 2
*requirement 3 2 points
*requirement 4
4 points
E18-7A
Total Score

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