Chapter 3, Problem 14E

Required: (a) Prepare journal entries to record the impairment loss of receivable in 2021 under Statement of Financial Position approach. (b) Prepare partial Statement of Financial Positions to show the accounts receivables at 31 December 2021.

Compute for the accounts written-off during 2021.

Santana Rey, owner of Business Solutions, realizes that she needs to begin accounting for bad debts expense. Assume that Business Solutions has total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Required 1. Prepare the adjusting entry to record bad debts expense on March 31, 2020, under each separate assumption. There is a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31. a. Bad debts are estimated to be 1% of total revenues. b. Bad debts are estimated to be 2% of accounts receivable. (Round to the dollar.) 2. Assume that Business Solutions’s Accounts Receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020. If Rey uses the method in part 1b, what adjusting journal entry is made to recognize bad debts expense on June 30, 2020? 3. Should Rey consider adopting the direct…

At December 31, 2022, the records of Kingbird, Inc. contained the following amounts before adjustment. Accounts Receivable Allowance for Doubtful Accounts (a) What amount of bad debt expense will Kingbird, Inc. report if its aging schedule indicates that $12,240 of accounts receivable will be uncollectible. Bad debt expense $ $216,000 1,800 (b) During the next month, January 2023, a $2,520 account receivable is written off as uncollectible. What amount of bad debt expense will Kingbird, Inc. report in January 2023? Bad debt expense $ (c) Repeat part (b), assuming that Kingbird, Inc. uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable. Bad debt expense $

On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $26,000. The balance sheet (before the effect of income taxes) reflected total assets, $82,000; total liabilities, $36,000; and stockholders’ equity, $46,000. The data for the four adjusting journal entries follow:Effect of Amortization of $7,200 for the year on software was not recorded.Salaries and Wages amounting to $16,200 for the last three days of December 2018 were not paid and not recorded (the next payroll will be on January 10, 2019).Rent revenue of $3,600 was collected on December 1, 2018, for office space for the three-month period December 1, 2018, to February 28, 2019. The $3,600 was credited in full to Deferred Revenue when collected.Income taxes were not recorded and not paid. The income tax rate for the company is 30%.Complete the…

After completing the adjusting entries but before closing the nominal accounts as of December 31, 2020, the following errors were discovered in the records of Winston Corporation: 1) Depreciation computed on the building for the years 2018, 2019 and 2020 were overstated by P10,000 per year. 2) Cost of the minor repair on the machinery of P1,200, made on June 30, 2019, was charged to Machinery account. Machinery balance is depreciated at an annual rate of 10%. 3) Unused office supplies as of December 31, 2019 of P1,250 were overlooked. The company debits Office supplies expense upon purchase of supplies. 4) 3-year insurance premium of P12,000 was paid on October 1, 2018. The amount was charged to Insurance expense account and no adjustment for the unexpired premium was taken up. 5) Merchandise purchased on 2019 of P32,000, term: FOB shipping point, was taken up in the books when the goods were received in January 2020. These items were not included in the inventory count made on…

1. Prepare the entry to record the write-off ofuncollectible accounts during 2019. 2. Prepare the entries to record the recovery ofthe uncollectible account during 2019 3. Prepare the entry to record bad debt expense(BDE) at the end of 2019. Ending balance ofAFDA was Rp18,200 (Cr.) 4. Determine the ending balance of AccountsReceivable as of December 31, 2019. 5. What is the net realizable value of thereceivables at the end of 2019? 6. The company has a notes receivable ofRp24,000 at January 15, 2019 for 3 months at10% interest rate. Prepare journal entry as ofApril 15, 2019, on its due date.

On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $34,000. The balance sheet (before the effect of income taxes) reflected total assets, $98,000; total liabilities, $44,000; and stockholders' equity, $54,000. The data for the four adjusting journal entries follow: a. Effect of Amortization of $8,800 for the year on software was not recorded. b. Salaries and Wages amounting to $17,800 for the last three days of December 2018 were not paid and not recorded (the next payroll will be on January 10, 2019). c. Rent revenue of $6,000 was collected on December 1, 2018, for office space for the three-month period December 1, 2018, to February 28, 2019. The $6,000 was credited in full to Deferred Revenue when collected. d. Income taxes were not recorded and not paid. The income tax rate for the company is…

For each of the above independent situations, prepare the adjusting entries that must be made on the December 31, 20X1, worksheet.