Financial Accounting Connect Access Card
Financial Accounting Connect Access Card
5th Edition
ISBN: 9781260159622
Author: J. David Spiceland
Publisher: Mcgraw-Hill
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Chapter 5, Problem 1AP

1.

To determine

Prepare journal entries to record adventure T transactions occurring during the first six months of 2022.

1.

Expert Solution
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Explanation of Solution

Prepare journal entries to record adventure T transactions occurring during the first six months of 2022 as follows:

DateAccount Title and ExplanationDebit ($)Credit ($)
January 24,2022Equipment5,000
Cash5,000
(To record the equipment purchased for cash)
February 25, 2022Accounts receivable3,000
Service Revenue3,000
(To record providing services on account)
February 28, 2022Cash2,850
Sales discounts150
Accounts Receivable3,000
(To record receipt of cash with discount )
March 19, 2022Accounts receivable4,000
Service Revenue4,000
(To record providing services on account)
March 27, 2022Cash3,800
Sales discounts200
Accounts Receivable4,000
(To record receipt of cash with discount )
April 7, 2022Cash7,500
Deferred revenue7,500
(To record cash received in advance)
April 14, 2022Deferred revenue7,500
Service Revenue7,500
(To record providing services on account)
May 9, 2022Accounts Receivable6,000
Service Revenue6,000
(To record providing services on account)
May 31, 2022Notes receivable6,000
Accounts receivable6,000
(To record acceptance of notes receivable)
June 15, 2022Accounts Receivable24,000
Service Revenue$24,000
(To record providing services on account)

Table (1)

2.

To determine

Prepare adjusting journal entry to record following information as on 30th June 2019.

2.

Expert Solution
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Explanation of Solution

a.

Prepare adjusting journal entry to record uncollectible accounts.

Journal entry for uncollectible accounts:

DateAccount Title and ExplanationDebit($)Credit($)
June 30, 2022Bad debts expenses (1)2,400
Allowance for uncollectible accounts2,400
(To record the estimation of future bad debts)

Table (2)

Working note:

Estimate future bad debts=[Accounts receivable×estimated Percentage of uncollectible accounts]=$24,000×10%=$2,400

(1)

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. Estimated future uncollectible accounts receivable are known as bad debt expense.

  • Bad debt expense is a component of stockholders’ equity and decreased it. So, debit bad debt expense for $2,400,
  • Allowance for uncollectible accounts is a contra asset account and decreased it. So, credit allowance for uncollectible accounts for $2,400.

b.

Prepare adjusting entry to record accrue one month of interest on the notes receivable from Manufacturing M.

DateAccount Title and ExplanationDebit($)Credit($)
June 30, 2022Interest receivable40
Interest revenue (2)40
(To record accrued interest revenue)

Table (3)

Working note:

Calculate interest revenue.

Interest revenue=Notes receivable×Interest rate×Time period=$6,000×8%×112=$40

(2)

  • Interest receivable is a current asset, and it is increased. Therefore, debit interest receivable account for $40.
  • Interest revenue is a component of stockholders’ equity, and it is increased. Therefore, credit interest revenue account for $40.

C.

Prepare a partial balance sheet showing the net accounts receivable section.

Incorporation GA
Partial Balance Sheet
As at June 30, 2022
AssetsAmount ($)Amount ($)
Current assets:
Accounts receivable24,000
Less: Allowance for uncollectible accounts(2,400)
Net accounts receivable21,600

Table (4)

Prepare existing trail balance of Incorporation GA.

Great Adventures, Inc.
Trial Balance
30th June 2022
AccountsDebit ($)Credit ($)
Cash38,500
Accounts Receivable-0-
Allowance for Uncollectible Accounts      -0-
Interest Receivable-0-
Notes Receivable-0-
Prepaid Rent400
Equipment40,000
Accumulated Depreciation16,000
Accounts Payable2,800
Deferred Revenue-0- 
Interest Payable1,650
Notes Payable30,000
Common Stock20,000
Retained Earnings33,450
Service Revenue-0-
Interest Revenue-0-
Sales Discounts-0-
Depreciation Expense8,000
Insurance Expense2,400
Rent Expense1,200
Salaries Expense12,000
Supplies Expense500
Bad Debt Expense-0-
Interest Expense900
Totals103,900103,900

Table (5)

(2)

Prepare financial statement of Incorporation GA.

Great Adventures, Inc.
Income Statement
For the period ended June 30, 2022
Amount ($)Amount ($)
Revenues:
Service revenue44,500
Sales discounts(350)
Interest revenue40
Net revenues44,190
Expenses:
Depreciation Expense8,000
Insurance Expense2,400
Rent Expense1,200
Salaries Expense12,000
Supplies Expense500
Bad Debt Expense2,400
Interest Expense900
Total expenses27,400
Net income16,790

Table (6)

Great Adventures, Inc.
Balance Sheet
30th June 2022
 Amount ($) Amount ($)
Assets Liabilities 
Current assets:Current liabilities:
Cash47,650Accounts payable2,800
Accounts receivable24,000Interest payable1,650
Allowance for uncollectible accounts-2,400Total current liabilities4,450
Interest receivable40Notes payable30,000
Notes receivable6,000Total liabilities34,450
Prepaid Rent400
Total current assets75,690Stockholders’ Equity 
Long-term assets:Common stock20,000
Equipment29,000Retained earnings50,240
  Total stockholders’ equity70,240
Total assets104,690Total liabilities and stockholders’ equity104,690

Table (7)

(3)

Prepare closing entries of Incorporation GA.

DateAccount titles and ExplanationDebitCredit
30 June 2021Service revenue$44,500 
 Interest revenue$40 
      Sales discount $350
      Retained earnings $44,190
 (To record close revenue accounts)  

Table (8)

  • Service revenue is a component of stockholders’ equity, and it is decreased. Therefore, debit service revenue account for $44,500.
  • Interest revenue is a component of stockholders’ equity, and it is decreased. Therefore, debit interest revenue account for $40.
  • Sales discount is a contra revenue account, and it is decreased. Therefore, credit sales discount account for $350.
  • Retained earnings are a component of stockholders’ equity, and it is increased. Therefore, credit retained earnings account for $44,190.
DateAccount titles and ExplanationDebitCredit
30 June 2021Retained earnings$27,400 
      Depreciation expense $8,000
      Insurance expense $2,400
      Rent expense $1,200
      Salaries expense $12,000
      Supplies expense $500
       Bad debt expense $2,400
       Interest expense $900
 (To record close expense accounts)  

Table (9)

  • Retained earnings are a component of stockholders’ equity, and it is decreased. Therefore, debit retained earnings account for $27,400.
  • Depreciation expense is a component of stockholders’ equity, and it is increased. Therefore, credit depreciation expense account for $8,000.
  • Insurance expense is a component of stockholders’ equity, and it is increased. Therefore, credit insurance expense account for $2,400.
  • Rent expense is a component of stockholders’ equity, and it is increased. Therefore, credit rent expense account for $1,200.
  • Salaries expense is a component of stockholders’ equity, and it is increased. Therefore, credit salaries expense account for $12,000.
  • Supplies expense is a component of stockholders’ equity, and it is increased. Therefore, credit supplies expense account for $500.
  • Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debt expense account for $2,400.
  • Interest expense is a component of stockholders’ equity, and it is increased. Therefore, credit interest expense account for $900.

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Chapter 5 Solutions

Financial Accounting Connect Access Card

Ch. 5 - Prob. 11SSQCh. 5 - Prob. 12SSQCh. 5 - 12. On May 1, 2021, Nees Manufacturing lends...Ch. 5 - Prob. 14SSQCh. 5 - Prob. 15SSQCh. 5 - Prob. 1AECh. 5 - Prob. 2AECh. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - Prob. 8RQCh. 5 - Prob. 9RQCh. 5 - Prob. 10RQCh. 5 - Prob. 11RQCh. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14RQCh. 5 - Prob. 15RQCh. 5 - Prob. 16RQCh. 5 - Prob. 17RQCh. 5 - Prob. 18RQCh. 5 - Prob. 19RQCh. 5 - Prob. 20RQCh. 5 - Prob. 21RQCh. 5 - Prob. 22RQCh. 5 - Prob. 23RQCh. 5 - Prob. 24RQCh. 5 - Prob. 25RQCh. 5 - Prob. 1BECh. 5 - Prob. 2BECh. 5 - Prob. 3BECh. 5 - Prob. 4BECh. 5 - Prob. 5BECh. 5 - Prob. 6BECh. 5 - Prob. 7BECh. 5 - Prob. 8BECh. 5 - Prob. 9BECh. 5 - Calculate uncollectible accounts using the aging...Ch. 5 - Calculate uncollectible accounts using the aging...Ch. 5 - Use the direct write-off method to account for...Ch. 5 - Use the direct write-off method to account for...Ch. 5 - Use the direct write-off method to account for...Ch. 5 - BE5–15 Calculate the missing amount for each of...Ch. 5 - Calculate interest revenue on notes receivable...Ch. 5 - Prob. 17BECh. 5 - Prob. 18BECh. 5 - Prob. 19BECh. 5 - Prob. 1ECh. 5 - Prob. 2ECh. 5 - Record credit sale and cash collection with a...Ch. 5 - Prob. 4ECh. 5 - Prob. 5ECh. 5 - Prob. 6ECh. 5 - Establish an allowance for uncollectible accounts...Ch. 5 - Record the adjustment for uncollectible accounts...Ch. 5 - Prob. 9ECh. 5 - Record the adjustment for uncollectible accounts...Ch. 5 - Record the adjustment for uncollectible accounts...Ch. 5 - E5–12 Consider the following transactions...Ch. 5 - Prob. 13ECh. 5 - Prob. 14ECh. 5 - Prob. 15ECh. 5 - E5-16 Refer to the information in...Ch. 5 - Record notes receivable and interest revenue...Ch. 5 - E5–18 Below are amounts (in millions) from three...Ch. 5 - Compare the percentage-of-receivables method and...Ch. 5 - Compare the percentage-of-receivables method and...Ch. 5 - Prob. 21ECh. 5 - Prob. 22ECh. 5 - Calculate the amount of revenue to recognize...Ch. 5 - Prob. 2PACh. 5 - Prob. 3PACh. 5 - Prob. 4PACh. 5 - Prob. 5PACh. 5 - Prob. 6PACh. 5 - Prob. 7PACh. 5 - Prob. 8PACh. 5 - Prob. 9PACh. 5 - Prob. 1PBCh. 5 - Prob. 2PBCh. 5 - Prob. 3PBCh. 5 - Prob. 4PBCh. 5 - Compare the direct write-off method to the...Ch. 5 - P5–6B Wanda B. Rich is the CEO of Outlet Flooring,...Ch. 5 - Prob. 7PBCh. 5 - Prob. 8PBCh. 5 - Prob. 9PBCh. 5 - Prob. 1APCh. 5 - American Eagle Outfitters, Inc. AP5–2 Financial...Ch. 5 - Prob. 3APCh. 5 - Prob. 4APCh. 5 - Prob. 5APCh. 5 - Prob. 6APCh. 5 - Prob. 7APCh. 5 - Prob. 8AP
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