Financial Accounting
4th Edition
ISBN: 9780134125053
Author: Kemp, Robert S., Waybright, Jeffrey.
Publisher: Pearson Education,
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Chapter 3, Problem 42AP
Problems (Group A)
Common adjusting
Journalize the adjusting entry needed at December 31, the end of the current accounting yean for each of the following independent cases affecting Premier Powersports, Inc. No other
- a. Prior making the adjusting entry on December 31, the balance in Prepaid Insurance is $4,800. Premier Powersports, Inc., pays liability insurance each year on June 1.
- b. Premier Powersports, Inc., pays employees each Friday. The amount of the weekly payroll is $6,500 for a five-day workweek. December 31, the fiscal year-end, is a Tuesday.
- c. Premier Powersports, Inc., received notes receivable from some customers for services provided. For the current year, accrued interest amounts to $835 and will be collected next year.
- d. The beginning balance of Supplies was $900. During the year, $3,800 of supplies were purchased. At December 31, the supplies on hand total $1,400.
- e. During the year, Premier Powersports, Inc., received $12,500 in advance for services to be provided at a later date. As of December 31, Premier Powersports, Inc,, earned $8,900 of the total fees received in advance during the current year.
- f.
Depreciation for the current year includes Vehicles, $2,550, and Equipment, $1,000.
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S11-5 Determining current portion of long-term note payable
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o the
Learning Obiective 2.
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(Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31,2018, before any year-end adjustments, the Accounts Receivable balance of HamptonCompany, Inc., is $330,000. The Allowance for Uncollectible Accounts has a $15,400 creditbalance. Hampton prepares the following aging schedule for Accounts Receivable:Age of AccountsTotal Balance 1–30 Days 31–60 Days 61–90 Days Over 90 Days$330,000 $100,000 $70,000 $30,000Estimated uncollectible 0.6% 3.0% 5.0%$130,00040.0%Requirements1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowanceaccount adequate? Too high? Too low?2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.3. Show how Hampton will report Accounts Receivable on its December 31 balance sheet.
(Learning Objective 4: Record and report current liabilities) Travis Publishingcompleted the following transactions for one subscriber during 2018:Oct 1 Sold a one-year subscription, collecting cash of $1,800, plus sales tax of 10%.The subscription will begin on October 1.Nov 15 Remitted (paid) the sales tax to the state of South Carolina.Dec 31 Made the necessary adjustment at year-end.Requirement1. Journalize these transactions (explanations not required). Then report any liability on thecompany’s balance sheet at December 31, 2018.
Chapter 3 Solutions
Financial Accounting
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