(1)
Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
Ø Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and owners’ equities.
Ø Credit, all increase in liabilities, revenues, and owners’ equities, all decrease in assets, expenses.
To prepare: The adjusting entries in the books of Company TJ at the end of the year.
(2)
The correct amount of net income for August 31, and the total assets, liabilities and owner’s equity of Company TJ.
Trending nowThis is a popular solution!
Chapter 3 Solutions
Accounting, Chapters 1-13
- 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_forwardUsing data in Exercise 9-9, assume that the allowance for doubtful accounts for Waddell Industries has a credit balance of 6,350 before adjustment on August 31. Journalize the adjusting entry for uncollectible accounts as of August 31. Waddell Industries has a past history of uncollectible accounts, as follows. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8. The accounts receivable clerk for Waddell Industries prepared the following partially completed aging of receivables schedule as of the end of business on August 31: The following accounts were unintentionally omitted from the aging schedule and not included in the preceding subtotals: a. Determine the number of days past due for each of the preceding accounts as of August 31. b. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals.arrow_forwardPrepare the adjusting journal entries to record the credit losses for the following independent situations. Required: (Explanation for the journal entry is NOT required.) a. The Allowance for Impairment has a S1,500 credit balance prior to adjustment. Net credit sales during the year are $425,000 and 4% are estimated to be uncollectible. Assume the income statement approach is used. b. The Allowance for Impairment has a $300 debit balance prior to adjustment. Based on an aging schedule of accounts receivable prepared on December 31, $18,100 of accounts receivable are estimated to be uncollectible. Assume the statement of financial position approach is used. c. Explain how the transaction in (b) affects the accounting equation.arrow_forward
- Allowance for Doubtful Accounts has a debit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates uncollectible receivables of $13,000. Which of the following entries records the proper adjusting entry for bad debt expense?arrow_forwardPrepare journal entries for each transaction listed. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) a. At the end of June, bad debt expense is estimated to be $14,600. b. In July, customer balances are written off in the amount of $8,300.arrow_forwardAllowance for Doubtful Accounts has a credit balance of $667 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $17,457. Based on this estimate, which of the following adjusting entries should be made? Select the correct answer. debit Bad Debt Expense, $16,790; credit Allowance for Doubtful Accounts, $16,790 debit Allowance for Doubtful Accounts, $667; credit Bad Debt Expense, $667 debit Allowance for Doubtful Accounts, $18,124; credit Bad Debt Expense, $18,124 debit Bad Debt Expense, $667; credit Allowance for Doubtful Accounts, $667arrow_forward
- Present entries to record the following (a,b,c) for a business that uses the Allowance Method: a: Record the adjusting entry at 12/31/19, the end of the fiscal year to provide for doubtful accounts. The accounts receivable account has a balance of $100,000 and the contra asset account, before adjustment has a debit balance of $700. Analysis of receivables indicates doubtful accounts of $4,500. b: In March of the following fiscal year $610 owed by the Filthy Disgusting Yankees Inc was written off. c: Six months later the $610 is reinstated and payment of that amount received What is the estimated realizable value of the accounts receivable as reported on the Balance Sheet prepared as of 12/31/19 Assuming that the business had been following the direct write off method for accounting for uncollectibles, present the entry to record the write-off in (1b) Record the entry for the reinstatement of the account written off in (3) under the direct write-off method Assignment: Record 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_forwardFor each of the following scenarios, indicate the amount of the adjusting journal entry for Bad Debt expense to be recorded, the balance in Allowance for Doubtful Accounts after adjustment at December 31, and the net realizable value of Accounts Receivable at December 31. a. Based on an analysis of Simmon's Company's $380,000 balance in Accounts Receivable at December 31, it was estimated that $15,500 will be uncollectible. There is a credit balance of $1,200 in Allowance for Doubtful Accounts before adjustment. Bad Debt Expense $fill in the blank 1 Allowance for Doubtful Accounts at Dec. 31 fill in the blank 2 Net Realizable Value of A/R at Dec. 31 fill in the blank 3 b. Blake Company had credit sales of $900,000 at year-end, and has an Accounts Receivable balance of $425,000 at December 31, and an Allowance for Doubtful Accounts credit balance of $11,000 before adjustment. Blake estimates bad debt expense as 3/4 of 1% of credit sales. Bad Debt Expense $fill in the…arrow_forward
- Ernie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company's accounting manager provides Ernie with the following information, before any adjustment. Accounts receivable Estimated percent uncollectible Allowance for uncollectible accounts. Operating income $ 520,000 $ 22,000 $ 340,000 88 (debit) In the previous year, Sleep Tight Bedding reported operating income (after adjustment) of $295,000. Ernie knows that it's important to report an upward trend in earnings. This is important not only for Ernie's compensation and employment, but also for the company's stock price. If investors see a decline in earnings, the stock price could drop significantly, and Ernie owns a large amount of the company's stock. This has caused Ernie many sleepless nights. Required: 1. Record the adjusting entry for uncollectible accounts using the accounting manager's estimate of 8% of accounts receivable. 2-a. After the adjusting entry is recorded in requirement 1, what…arrow_forwardAt December 31, Ingleton Company reports the following results for the year. In addition, its unadjusted trial balance includes the following items. Cash sales. $1,025,000 Credit sales. $1,342,000 Accounts receivable. $575,000 debit Allowance for doubtful accounts. $7,500 credit Required 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts are estimated to be 2.5% of credit sales. b. Bad debts are estimated to be 1.5% of total sales. c. An aging analysis estimates that 6% 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_forward
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning