homework

Homework Problems:

1) Happy Daze uses the allowance method to estimate

uncollectible

accounts

receivable. The company produced the following aging of the accounts receivable at yearend of 2011.

Instructions

(a) Calculate the total estimated bad debts based on the above information.

(b) Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in (a). Assume the unadjusted balance in Allowance for Doubtful Accounts is a $5,400 debit.

(c) Of the above accounts, $7,500 is determined to be specifically uncollectible on April 2. Prepare

the journal entry to write off the uncollectible account.

(d) The company collects $2,000 subsequently on a specific account that had previously been determined to be uncollectible in (c) May 15. Prepare the journal entry(ies) necessary to restore the account and record the cash collection.

2) A company established a petty cash fund of $100 on September 1. On September 10, the petty cash fund was replenished when there was $16 remaining and there were petty cash receipts for: office supplies, $27; transportation-in on inventory purchased, $32; and postage, $22. On September 15, the petty cash fund was increased to $125 in total. Record the above transactions in general journal form. 

3) At December 31, Warren Company reports the following results for its calendar year from the adjusted trial balance.
  
a. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 1.1% of credit sales.
b. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be .8% of total sales.
c. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are estimated to be 7.0% of year-end accounts receivable. 

4) Bug Off Company provides insect extermination services. On October 31, 2012, the company’s cash account per its general ledger showed a balance of $4,732.

The bank statement from Newton Bank on that date showed the following balance.

NEWTON BANK

Checks and Debits Deposits and Credits Daily Balance

XXX XXX 10/31 $4,070

A comparison of the details on the bank statement with the details in the cash account

revealed the following facts:

1. The statement included a debit memo of $50 for the printing of additional company checks.

2. . Cash sales of $342 on October 6 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $372. The bank credited Bug Off Company for the correct amount.

3. Outstanding checks at October 31 totaled $1,250, and deposits in transit were $2,390.

4. On October 13, the company issued check No. 4263 for $196 to H. Simpson, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Bug Off Company for $169.

5. A $900 note receivable was collected by the bank for Bug Off Company on October 31 plus $50 interest. The bank charged a collection fee of $15. No interest has been accrued on the note.

6. Included with the cancelled checks was a check issued by Big Oaf Company for $120 that was incorrectly charged to Bug Off Company by the bank.

7. On October 31, the bank statement showed an NSF charge of $230 for a check issued by Tom Piper, a customer, to Bug Off Company on account.

Instructions

(a) Prepare the bank reconciliation at October 31, 2012.

(b) Prepare the necessary adjusting entries for Bug Off Company at October 31, 2012.

Number of Days Outstanding

Total0-3031-6061-9091-120Over 120

Accounts receivable435,000$ 238,000$ 120,000$ 44,000$ 13,000$ 20,000$

% uncollectible1.50%3%8%10%15%

Estimated

uncollectible
accounts
Sheet1

Number of Days Outstanding
Total 0-30 31-60 61-90 91-120 Over 120
Accounts receivable $ 435,000 $ 238,000 $ 120,000 $ 44,000 $ 13,000 $ 20,000
% uncollectible 1.50% 3% 8% 10% 15%
Estimated
uncollectible
accounts

Sheet2

Sheet3