JG Foods provides food delivery services to construction sites. At the end of th
ID: 2362771 • Letter: J
Question
JG Foods provides food delivery services to construction sites. At the end of the year, the company reports the following amounts: cash 18,375, delivery truck 31,575, accounts payable 21,428, maintenance expense 8,175, salaries expense 76,875, SERVICE REVENUE 170,250 food expense 67,575, garage.office building 56,250, paper supplies 428, salaries payable 3,300... In addition, the company had common stock of 30,000 at the beginning of the year and issued an additional 9,375 during the year. The company also had retained earnings of 24,900 at the beginning of the year and did not declare any dividends during the year. 1. determine net income 2. determine ending common stock 3. determine ending retained earnings 4. determine total assets 5. determine liabilities 6. determine total stockholders equitiyExplanation / Answer
1. Prepare the following entry for this company to recognize bad debts under each of the following independent assumptions. a) Bad debts are estimated to be 2% of credit sales. With percentage of sales the current balance in the allowance account is ignored. 3,534,000 x 2% = 70,680 Dr Bad Debt Expense 70,680 Cr Allowance for Doubtful Accounts 70,680 The Allowance account now has a credit balance of 70,680 - 15,750 = $54,930 b) An aging analysis estimates that 5% of year-end accounts receivable are uncollectible. When using percentage of receivables, the Allowance account must be taken into consideration. 1,070,100 x 5% = 53,505 amount estimated to be uncollectible. Since there is a debit balance in the Allowance account, that is added to the previous amount. 53,505 + 15,750 = $69,255 amount of adjustment Dr Bad Debt Expense 69,255 Cr Allowance for Doubtful Accounts 69,255 The Allowance account now has a credit balance of 53,505, the same amount that is estimated to be uncollectible. 2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2011, balance sheet given the facts in part 1a. Accounts Receivable $1,070,100 Less: Allowance for Doubtful Accounts 54,930 Net Accounts Receivable $1,015,170 3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2011, balance sheet given the facts in part 1b. Accounts Receivable $1,070,100 Less: Allowance for Doubtful Accounts 53,505 Net Accounts Receivable $1,016,595
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.