Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2.12BE
Closing entries
• LO2–7
The year-end adjusted
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Exercise 7-21B Complete the accounting cycle using long-term asset transactions (LO7-4, 7-7)
[The following information applies to the questions displayed below.]
On January 1, Year 1, the general ledger of a company includes the following account balances:
Accounts
Debit
Credit
Cash
$ 59,200
Accounts Receivable
26,000
Allowance for Uncollectible Accounts
$
2,700
Inventory
Notes Receivable (5%, due in 2 years)
36,800
18,000
Land
160,000
Accounts Payable
15,300
Common Stock
225,000
57,000
$ 300,000
Retained Earnings
Totals
$ 300,000
During January Year 1, the following transactions occur:
January 1 Purchase equipment for $20,000. The company
estimates a residual value of $2,000 and a four-year
service life.
4 Pay cash on accounts payable, $10,000.
8 Purchase additional inventory on account, $87,900.
January
January
January 15 Receive cash on accounts receivable, $22,500.
January 19 Pay cash for salaries, $30,300.
January 28 Pay cash for January utilities, $17,000.…
Question 7 of 8
>
-/ 30
Oak Ridge Corporation has accounts receivable of $95,500 at March 31, 2022. An analysis of the accounts shows these amounts.
Balance, March 31
Month of Sale
2022
2021
March (current)
$66,300
$76,200
February (1 - 30 days past due)
12,000
8,800
December and January (31 - 90 days past due)
9,300
2,700
(over 90 days past due)
7,900
1,200
$95,500
$88,900
Credit terms are n/30. At March 31, 2022, there is an unadjusted $2,200 credit balance in Allowance for Doubtful Accounts. The
company uses the percentage of receivables by age category for estimating uncollectible accounts Oak Ridge's estimates of bad debts
are as shown below.
Estimated Percentage
Age of Accounts
Uncollectible
Current
2%
1-30 days past due
5%
31-90 days past due
30%
Over 90 days past due
50%
Prepare an aging schedule to determine the total estimated uncollectibles accounts at March 31, 2022.
III
Brief Exercise 8-03 a-b
At the end of 2021, Larkspur Co. has accounts receivable of $675,100 and an allowance for doubtful accounts of $24,370. On January 24, 2022, it is learned that the company’s receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,127.(a)Prepare the journal entry to record the write-off. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Enter an account title
Enter a debit amount
Enter a credit amount
Enter an account title
Enter a debit amount
Enter a credit amount
(b)What is the cash realizable value of the accounts receivable before the write-off and after the write-off?
Before Write-Off
After Write-Off
Cash realizable value
$Enter a dollar amount
$Enter a dollar amount
Chapter 2 Solutions
Intermediate Accounting
Ch. 2 - Explain the difference between external events and...Ch. 2 - Each economic event or transaction will have a...Ch. 2 - What is the purpose of a journal? What is the...Ch. 2 - Explain the difference between permanent accounts...Ch. 2 - Describe how debits and credits affect assets,...Ch. 2 - Describe how debits and credits affect temporary...Ch. 2 - What is the first step in the accounting...Ch. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - What is an unadjusted trial balance? An adjusted...Ch. 2 - Define adjusting entries and discuss their...Ch. 2 - Define closing entries and their purpose.Ch. 2 - Define prepaid expenses and provide at least two...Ch. 2 - Deferred revenues represent liabilities recorded...Ch. 2 - Define accrued liabilities. What adjusting journal...Ch. 2 - Prob. 2.17QCh. 2 - [Based on Appendix A] What is the purpose of a...Ch. 2 - [Based on Appendix B] Define reversing entries and...Ch. 2 - [Based on Appendix C] What is the purpose of...Ch. 2 - Prob. 2.21QCh. 2 - Transaction analysis LO21 The Marchetti Soup...Ch. 2 - Journal entries LO22 Prepare journal entries for...Ch. 2 - Prob. 2.3BECh. 2 - Journal entries LO22 Prepare journal entries for...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries; income determination LO24,...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Income determination LO24 If none of the...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Financial statements LO26 The following account...Ch. 2 - Financial statements LO26 The following account...Ch. 2 - Closing entries LO27 The year-end adjusted trial...Ch. 2 - Prob. 2.13BECh. 2 - Transaction analysis LO21 The following...Ch. 2 - Journal entries LO22 Prepare journal entries to...Ch. 2 - T-accounts and trial balance LO23 Post the...Ch. 2 - Journal entries LO22 The following transactions...Ch. 2 - Prob. 2.5ECh. 2 - Debits and credits LO22 Indicate whether a debit...Ch. 2 - Transaction analysis; debits and credits LO22...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries; solving for unknowns LO24,...Ch. 2 - Adjusting entries LO25 The Mazzanti Wholesale...Ch. 2 - Financial statements and closing entries LO26,...Ch. 2 - Closing entries LO27 American Chip Corporations...Ch. 2 - Prob. 2.14ECh. 2 - Cash versus accrual accounting; adjusting entries ...Ch. 2 - External transactions and adjusting entries LO22,...Ch. 2 - Accrual accounting income determination LO24,...Ch. 2 - Cash versus accrual accounting LO28 Stanley and...Ch. 2 - Prob. 2.19ECh. 2 - Worksheet Appendix 2A The December 31, 2018,...Ch. 2 - Reversing entries Appendix 2B The employees of...Ch. 2 - Reversing entries Appendix 2B Refer to E 29 and...Ch. 2 - Reversing entries Appendix 2B Refer to E 29 and...Ch. 2 - Special journals Appendix 2C The White Companys...Ch. 2 - Prob. 2.25ECh. 2 - Accounting cycle through unadjusted trial balance ...Ch. 2 - Accounting cycle through unadjusted trial balance ...Ch. 2 - Adjusting entries LO25 Pastina Company sells...Ch. 2 - Accounting cycle; adjusting entries through...Ch. 2 - Adjusting entries LO25 Howarth Companys fiscal...Ch. 2 - Accounting cycle LO22 through LO27 The general...Ch. 2 - Adjusting entries and income effects LO22, LO25...Ch. 2 - Adjusting entries LO25 Excalibur Corporation...Ch. 2 - Accounting cycle; unadjusted trial balance through...Ch. 2 - Prob. 2.10PCh. 2 - Prob. 2.11PCh. 2 - Cash versus accrual accounting LO28 Zambrano...Ch. 2 - Worksheet Appendix 2A Using the information from...Ch. 2 - Judgment Case 21 Cash versus accrual accounting;...Ch. 2 - Prob. 2.2BYPCh. 2 - Communication Case 23 Adjusting entries LO24 I...Ch. 2 - Continuing Cases Target Case LO24, LO28 Target...
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- Question 5As Perry Materials Supply was preparing for the year-end close, their balances were as follows: Accounts Receivable - Dr 146,000 and Allow for uncollectible Accounts - Dr 6,200 Perry Materials uses the aging method and has completed the following analysis of the accountsreceivable:Customer 1-30 Days 31-60 Days 61-90 DaysOver 90DaysTotalBalanceJohnson $4,600 $3,200 $7,800Hot Pots, Inc. 800 1,000 1,800Potter 40,000 550 40,550Harrison 3,600 900 4,500Marx 2,000 50 2,050Younger 65,000 65,000Merry Maids 5,900 5,900Acher 12,000 6,400 18,400Totals $127,500 $13,750 $3,700 $1,050 $146,000Uncollectible percentage 2% 10% 20% 40%Estimated uncollectibleamount $2,550 $1,375 $740 $420 $5,085Required:1. How much will the Uncollectible account expense for the year be?2. What will the final balance in the Allowance account be, after adjusting for uncollectibleaccount expense?arrow_forwardQUESTION 14 The schedule of aging accounts for a Company, at the end of the year 2020, appears below Accounts Recenable $40 000 10 000 5.500 1800 57 300 Estmate Bad Debts Curent 130 days overdue 31-60 days overdue More than 60 days overdue Total 1% 5% 10% 20% The alowance was estimated by using the schedule of ageing accounts The allowance account had a debit balance of $600, before the estimate was made Required: Prepare the adjusting entry to record bad debts expense for 2020 (SHOW YOUR CALCULATIONS) CALT+IN+F10Mac)arrow_forwardQuestion 6 (22 pts): Margin Account Assume you buy one July '23 KC HRW contract today at $5.2875; its initial is $2,310 with a maintenance of $2,100. o Today - July KC HRW settles at 528'6. What do you deposit in the margin account? o Session 2-July KC HRW settles at 520'2 What is the gain or loss from session 2? What is the balance? Is there a margin call? If so, what is it? o Session 3-July KC HRW settles at 526'6 What is the gain or loss from session 3? What is the balance? Is there a margin call? If so, what is it? o Session 4 - Offset July KC HRW at 536'4 What is the gain or loss from session 4? What is the balance? Is there a margin call? If so, what is it? o Session 5 - Offset July KC HRW at 530'0 Calculate the profit or loss on the trade.arrow_forward
- Problem 6 Tantrum Company provided the following information in relation to accounts receivable at year-end: Days Outstanding % Uncollectible Estimated Amount 1,200,000 0-60 1% 2% 61-120 900,000 Over 120 1,000,000 6% During the current year, the entity wrote off P70,000 in accounts receivable and recovered P20,000 that had been written off in prior years. At the beginning of current year, the allowance for uncollectible accounts was P60,000. Under the aging method, what amount of uncollectible accounts expense should be reported for the current year?arrow_forwardQUESTION 2: | Accounts Receivable 100,000 2,000 Allowance for Uncollectible Accounts The company uses the "aging method" for determining its Doubtful accounts. The adjustment is made only once a year at the end of December. The aging analysis is as follows: Aging Category Not yet due 30 days past due 60 days past due Over 90 days past due Estimated Doubtful % Amount $40,000 $30,000 $20,000 $10,000 2% 3% 4% 5% Required: a) Prepare the adjustment in journal entry format. b) Show the balances of the accounts that will be reported in the balance sheet.arrow_forwardProblem 6-3: The Kissagram Corporation The Kissagram Corporation produced the following summary of its Accounts Receivable on October 31, 2021: Customer Total $ Notes Aniston 9000 25% over 30-60 days; Remainder 90. Leblanc 9000 100% > 90 days outstanding. Required 1. Prepare an aged schedule of Accounts Receivable. Use the following categories: 90 days (delinquent). 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $). Assume bad debt percentages for each category of 0.7%, 7%, 12% and 22%. Upon completion, enter the following data here: Allowance for Doubtful Accounts submitarrow_forward
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- A credit sale of $3800 is made on April 25, terms 1/10, n/30, on which a return of $300 is granted on April 28. What amount is received as payment in full on May 4? $3465 • $3800 • $3500 Ⓒ $3762arrow_forwardok The following transactions took place for Smart Solutions Incorporated. ces 2020 a. July 1 Loaned $70,000 to employees of the company and received back one-year, 10 percent notes. b. December 31 Accrued interest on the notes. 2021 c. July 1 d. July 1 Required: Prepare the journal entries that Smart Solutions Incorporated would record for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Received interest on the notes. (No interest has been recorded since December 31.) Received principal on the notes. Journal entry worksheet 1 Loaned $70,000 to employees of the company and received back one-year, 10 percent notes. Record the transaction. 2 Note: Enter debits before credits. < Date July 01, 2020 < Journal entry worksheet 1 Date Note: Enter debits before credits. December 31, 2020 Record entry 1 Accrued interest on the notes. Record the transaction. 2 Journal entry worksheet 2…arrow_forwardQuestion 31 Nelsie Corporation has an outstanding 60- day 6% note receivable armounting to P 15.000 dated December 1 of the current yoar. The company is using the calendar yoar in preparing its financial statomonts. What account should be creditod and what is the amount? Interest Income, P 75 Interest Income, P 900 Oc Accrued Interest Income, P 150 Unearmed Interest Income, P150arrow_forward
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