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Concept explainers
At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney:
Net income for April | $120,000 |
Total assets at April 30 | 750,000 |
Total liabilities at April 30 | 300,000 |
Total stockholders’ equity at April30 | 450,000 |
In preparing the financial statements, adjustments for the following data were overlooked:
- Supplies used during April, $2,750.
- Unbilled fees earned at April30, $23,700.
Depreciation of equipment for April, $1,800.- Accrued wages at April 30, $1,400.
Instructions
1.
2. Determine the correct amount of net income for April and the total assets, liabilities, and Stockholders’ equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The adjustment for supplies used is presented as an example.
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Chapter 3 Solutions
CengageNOWv2, 2 terms Printed Access Card for Warren/Reeve/Duchac’s Financial & Managerial Accounting, 14th
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- Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?arrow_forwardAT&U Company has the following data for the year ended December 31, Year 1:Sales (credit) $2,500,000Sales returns and allowances 50,000Accounts receivable (December 31, Year 1) 640,000Allowance for doubtful accounts(before adjustment at December 31, Year 1, credit balance) 20,000Estimated amount of uncollected accounts based on aging analysis(December 31, Year 1) On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much in sales discounts will be recorded if payment is received from the customer on January 8?a. $0 b. $2,000 c. $98,000 d. $100,000 .*A company had sales of $40,000, sales discounts of $800, sales returns of $1,600, and commissions owed to salespeople of $600. What is net sales? a. $37,600 b. $38,400 c. $39,200 d. $40,000 . A company’s accounts receivable balance after posting net collections from customers is $150,000. Management has determined the following: $100,000 of the accounts that are 1…arrow_forwardMcKensie Company’s Accounts Receivable balance at December 31 was $100,000, and there was a negative balance of $600 in the Allowance for Uncollectible Accounts. The firm estimates that 3% of the Accounts Receivable will prove to be uncollectible. After the appropriate adjusting entry is made for credit losses, what is the net amount of accounts receivable included in the current assets at year-end? Select one: a. $87,900 b. $86,700 c. $97,000 d. $90,000 e. None of the abovearrow_forward
- At December 31, Hawke Company reports the following results for its calendar year. In addition, its unadjusted trial balance includes the following items. Cash sales. $1,905,000 Credit sales. $5,682,000 Accounts receivable. $1,270,100 debit Allowance for doubtful accounts. $16,580 debit Required 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts are estimated to be 1.5% of credit sales. b. Bad debts are estimated to be 1% of total sales. c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible. 2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part 1a. 3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part 1c.arrow_forwardAs Perry Materials Supply was preparing for the year-end close, their balances were as follows: Accounts Receivable - $146000 (dr) Allowance for uncollectible accounts - $6200 (dr) Uncollected Account Expense - $0 Perry Materials uses the aging method and has completed the following analysis of the accounts receivable: Customer 1-30 Days 31-60 Days 61-90 Days Over 90 Days Total Balance Johnson $4,600 $3,200 $7,800 Hot Pots, Inc. 800 1,000 1,800 Potter 40,000 550 40,550 Harrison 3,600 900 4,500 Marx 2,000 50 2,050 Younger 65,000 65,000 Merry Maids 5,900 5,900 Acher 12,000 6,400 18,400 Totals $127,500 $13,750 $3,700 $1,050 $146,000 Uncollectible percentage 2% 10% 20% 40% Estimated uncollectible amount $2,550 $1,375 $740 $420 $5,085 Required: How much will the…arrow_forwardVan Hise Company’s Accounts Receivable balance at December 31 was $600,000, and there was a debit balance of $3,600 in the Allowance for Doubtful Accounts. Van Hise estimates that 3% of the Accounts Receivable will prove to be uncollectible. After the appropriate adjusting entry is made for credit losses, what is the net amount of accounts receivable included in the current assets at year-end? Select one: A. $540,000 B. $527,400 C. $582,000 D. $520,200arrow_forward
- Oceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. Its Allowance for Doubtful Accounts has a $2,400 credit balance prior to adjusting entries. It has just completed an aging analysis of accounts receivable at December 31, Year 1. This analysis disclosed the following information: Not yet due 1-30 days past due 31-60 past due Age Group Total $ 76,000 $ 36,000 $ 25,000 Percentage Considered Uncollectible 1% 2% 10% What is the appropriate balance for Oceanside's Allowance for Doubtful Accounts at December 31, Year 1?arrow_forwardAt the end of the year a company has the following accounts receivable and estimates of uncollectible accounts: 1 Accounts not yet due = $72,000; estimated uncollectible = 3%. 2. Accounts 1-30 days past due $37,000; estimated uncollectible = 20%. 3. Accounts more than 30 days past due = $8,000; estimated uncollectible = 45%. Record the year-end adjustment for uncollectible accounts, assuming the current balance of the Allowance for Uncollectible Accounts is $1100 (debit). (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the bad debt expense. Note: Enter debits before credits. Event General Journal Debit Credit 1 Bad Debt Expense Allowance for Uncollectible Accounts Record entry Clear entry View general journalarrow_forwardAt the end of the first year of operations mayberry advertising had account receivable of $21100. Management of the company estimates that 8% of the accounts will not be collected What adjustment would mayberry advertising record to establish allowance for accounts? Record the adjusting for allowance for uncollectibl accountsarrow_forward
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