Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 2, Problem 2.8BE
Income determination
• LO2–4
If none of the adjusting
BE 2–7
• LO2–5
Prepare the necessary adjusting entries at its year-end of December 31, 2018, for the Jamesway Corporation for each of the following situations. No adjusting entries were recorded during the year.
1. On December 20, 2018, Jamesway received a $4,000 payment from a customer for services to be rendered early in 2019. Service revenue was credited.
2. On December 1, 2018, the company paid a local radio station $2,000 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited.
3. Employee salaries for the month of December totaling $16,000 will be paid on January 7, 2019.
4. On August 31, 2018, Jamesway borrowed $60,000 from a local bank. A note was signed with principal and 8% interest to be paid on August 31, 2019.
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Question
Part A
Albert Trading Limited used the statement of financial position approach to estimate the
impairment loss of receivable. An aging of account receivable at 31 December 2019 revealed
that S68,000 of the S835,000 outstanding accounts receivable will prove uncollectible. The
Allowance for Impairment has a debit balance of $6,200 prior to adjustment.
Required:
(Explanation of the Journal Entry is not required)
Prepare an adjusting entry on 31 December 2019 to recognize the impairment loss of receivable.
Part B
On 12 January 2020, Peter Lee, a major customer, declared bankruptey, and Albert Trading,
determined that a receivable from Peter Lee in the amount of $3,400 was worthless.
Required:
(Explanation of the Journal Entry is not required)
Prepare the joumal entry required by Albert Trading in this situation.
Allowance method entries
The following transactions were completed by Wild Trout Gallery during the current fiscal year ended December 31:
Jan. 19. Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $1,995 cash in full payment of Arlene's
account.
Apr. 3. Wrote off the $11,430 balance owed by Premier GS Co., which is bankrupt.
July 16. Received 40% of the $20,500 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.
Nov. 23. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,250 cash in full payment.
Dec.
Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $8,600 ; Fogle Co., $2,555 ; Lake Furniture, $ 6,565 ; Melinda Shryer, $1,855.
31.
Dec.
Based on an analysis of the $1,012,000 of accounts receivable, it was estimated that $44,000 wil be uncollectible.…
QUESTION 4
THIS QUESTION CONSISTS OF TWO UNRELATED PARTS
PART A:
The following provision has been included in the financial statements of Thriving (Pty)
Ltd as at 31 December 2023:
• Provision for expected future operating losses R100 000
REQUIRED:
Discuss how the provision should be accounted for in the annual financial statements
of Thriving (Pty) Ltd so as to comply with IAS 37 of the International Financial
Reporting Standards.
PART B:
During 2022, Enviroserve (Pty) Ltd is involved in litigation relating to environmental
damages and is being sued for damages amounting to R800 000. Legal costs are
estimated to amount to R40 000. The definition and recognition criteria of a provision
are met.
In the following financial year, 2023, actual costs paid amount to:
• Environmental damage repair costs R 820 000
• Legal costs R 40 000
REQUIRED:
Prepare all the necessary general journal entries to account for the environmental
damage and legal costs in the 2022 and 2023 financial statements…
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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