2. At the end of the current year, Accounts Receivable has a balance of $285,000
ID: 2437922 • Letter: 2
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2. At the end of the current year, Accounts Receivable has a balance of $285,000; Allowance for Doubtful Accounts has a credit balance of $9,000; and net sales for the year total $463,000. Using the aging of receivables method, the balance of the Allowance for Doubtful Accounts is estimated as $50,000 Determine the following: a. Using the Percent of Sales Method and 1% of net sales, what is the amount of the adjusting entry for uncollectible accounts? Balance of allowance for doubtful accounts-Allowance for doubtful accounts. 50,000-9000-41.000 b. Using the Analysis of Receivables Method, what is the amount of the adjusting entry for uncollectible accounts? 3. The following information is for employee Ella Dodd for the week ended March 15 Total hours worked: 48 Rate: $15 per hour, with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of S 100,000. Medicare tax: 1.5% on all earnings, on both employer and employee State unemployment: 3.4% on maximum earnings of$7,000; on employer Federal unem ployment: 0.8% on maximum earnings of $7,000; on employer () Determine (1) total earmings,(2) total deductions, and (3) cash paid. (1) $7240 (b) Determine each of the employer's payroll taxes related to the earnings of Eilla Dodd for the week ended March 15. Post Ref Credit Date Description Mar 15 Payroll Tax Expense Soc Medicare Tax Payable StateExplanation / Answer
2 Allowance for Doubtful accounts a Based on percentage of sales method, the adjusting entry for uncollectible accounts will be for Net sales $463,000 Percentage of net sales 1% Allowance for doubtful accounts $4,630 b Based on analysis of receivable method, the adjusting entry for uncollectible accounts will be for Estimated allowance for doubtful accounts $50,000 Balance of allowance for doubtful accounts $9,000 Adjustment required for $41,000 3 a Total Earnings Hours worked 48 Rate per hour $15 Earnings for 40 hours $600 Earnings for 8 hours in excess of 40 with double time $240 Cumulative earnings prior to current week $6,400 Total Earnings $7,240 Total Deductions Federal income tax withheld $200 United fund deduction $50 Social security (current earning x 6%) $50.40 Medicare tax (Current earnings x 1.5%) $12.60 Total Deductions $313.00 Cash Paid Current earnings $840 Deductions $313 Cash Paid $527 b Employers' payroll taxes Social Security $50.40 Medicare tax $12.60 State unemployment ($600 x 3.4%) $20.40 Federal unemployment ($600 x 0.8%) $4.80 Total payroll taxes $88.20 15-Mar Payroll tax expense $88.20 Social Security tax payable $50.40 Medicare tax payable $12.60 State unemployment tax payable $20.40 Federal unemployment tax payable $4.80 Unemployment tax is on maximum earnings of $7000, $6400 is already taxed earlier thus only $600 will be taxed from current earnings
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