M Final Exam Chegg Study | Guided S/X Dezto. mheducation.com/hm.tpx Elite Events
ID: 2488994 • Letter: M
Question
M Final Exam Chegg Study | Guided S/X Dezto. mheducation.com/hm.tpx Elite Events Corporation has provided event planning services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting purposes. At the end of each quarter, the company adjusts its records using the aging of accounts receivable method. The company entered into the following partial list of transactions during the first quarter a. During January, the company provided services for $360,000 on credit. b. On January 31, the company estimated bad debts using 1 percent of credit sales c. On February 4, the company collected $310,000 of accounts receivable d. On February 15, the company wrote off a $3,600 account receivable e. During February, the company provided services for $310,000 on credit. f. On February 28, the company estimated bad debts using 1 percent of credit sales. g. On March 1, the company loaned $14,000 to an employee who signed a 6% note, due in 9 months. h. On March 15, the company collected $3,600 on the account written off one month earlier i. On March 31, the company accrued interest earned on the note j. On March 31, the company adjusted for uncollectible accounts, based on the following aging analysis Allowance for Doubtful Accounts has an unadjusted credit balance of $9,600. Number of Days Unpaid Customer Total 31-60 61-90 Over 90 0-30 $2,000 $ 1,000 $1,000 Aerosmith Biggie Small Others (not shown to save space 101,400 39,600 42,600 9,600 9,600 ZZ Top 2,000 $1,000 $ 1,000 7600 7600 Total Accounts Receivable Estimated uncollectible (%) 113,000 $48,200 $43,600 $10,600 $10,600 40% 5% 10% 20% 25 lu Required Information 10.00 polnt 2 1:08Explanation / Answer
Assets = Liabilities + Stockholder Equity a Accounts Receivable 360000 sales b Allowance for Doubtful Debts 3600 Bad Debt Expenses c Cash 310000 Accounts Receivable -310000 d Accounts Receivable -3600 Allowance for Doubtful Debts -3600 e Accounts Receivable 310000 Sales f Allowance for Doubtful Debts 3100 Bad Debt Expenses g Cash -14000 Loan Receivable 14000 h Accounts Receivable 3600 Allowance for Doubtful Debts 3600 Cash 3600 Accounts Receivable -3600 i Allowance for Doubtful Debts 2900 Bad Debt Expenses Allowance for Doubtful Debts 3530 Bad Debt Expenses Total 670000 13130 Calculation of estimated uncollectible amount days Amount % Estimated uncollectible 0-30 48200 5 2410 31-60 43600 10 4360 61-90 10600 20 2120 over 90 10600 40 4240 Total 13130 Already credit balance of $9600 is there so bad debt expense will be recorded for 13130-9600 3530 But as it has a credit balance of $9600 so we have to make one more entry for march allowance 9600-(3600+3100-3600+3600) 2900 Note: There should be a seprate coloumn for revenue or expenses but as it is not shown in the template in which figures to be written so I will be showing it under stockholder equity as the part of retained earnings as finally the Retained earning is affected by net income. Accounts Title Dr Cr a Accounts Receivable 360000 Sales 360000 b Bad Debts Expense 3600 Allowance for Doubtful Debts 3600 c Cash 310000 Accounts Receivable 310000 d Allowance for Doubtful Debts 3600 Accounts Receivable 3600 e Accounts Receivable 310000 Sales 310000 f Bad Debts Expense (310000*1%) 3100 Allowance for Doubtful Debts 3100 g Note Receivable 14000 cash 14000 h Accounts Receivable 3600 Allowance for Doubtful Debts 3600 Cash 3600 Accounts Receivable 3600 i Bad Debts Expense 3530 Allowance for Doubtful Debts 3530 Balance Sheet Assets Current assets Cash 299600 Accounts Receivable 356400 Less: Allowance for Doubtful debts 13130 343270 Loan receivable 14000 Total assets 656870 Liabilities Stockholder Equity 656870 ans 4 Bad Debt expense (Before Income from Operations) Interest Receivable (After Income from Operations)
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