Triple C is a PA hardware retailer. It prepares its accounting reccords on the a
ID: 2496660 • Letter: T
Question
Triple C is a PA hardware retailer. It prepares its accounting reccords on the accrual basis under Generally Accepted Accounting Principles. It uses a perpetual inventory system. The following transactions have taken place during the month of April. Prepare the accounting entries in good journal entry form"
A. Triple C borrowed $100,000 from its bank under a load due in six months with an anual interest rate of 6%.
B. As of April 30th, Triple C has not paid any interest to the bank. Journalize the necessary entry.
C. Triple C gave a check in the amount of $10,000 to Billings and Fees, as a retainer for future services.
D. During April, Hugh Billings spent 3 hours on the Triple C account at $250 per hour.
E. On April 15th, Triple C purchased inventory on account costing $75,000 which it expected to sell for $125,000 under terms of 1/10, n/30, which it paid one week later
F. During April, sales totaled $100,000. $50,000 were cash sales and $50,000 were on account
G. Triple C estimates its bad debt expense at 1% of sales
H. Accepted from customers the return of merchandise sold for cash for $1,000.
I. Received a debt memorandum with its bank statement as of April 30th for credit card processing costs of $1,089.
J. Was unable to locate the customer who wrote the bad check returned by the bank.
Explanation / Answer
(A)
DR Cash $100,000
Loan payable $100,000
(To record $100,000 borrowed short-term from bank)
(B)
DR Interest Expense $500**
Interest Payable $500
(To record interest accrued and payable on loan taken from bank)
** Interest accrued/payable for 1 month = $100,000 x 6% x (1/12) = $500
(C)
DR Deferred Expense $10,000
Expense $10,000
(To record payment made for retainer for future service)
(D)
Transaction is not clear. Who is Hug Billings & why did he spend 3 hours on the account? Is he an external auditor/accountant?
(E)
(1) Apr 15
DR Inventory $75,000
Accounts Payable** $75,000
(To record purchase of inventory on account)
** Expected future revenue, which has no certainty, is not considered while recording a current transaction.
(2) Apr 22
DR Accounts Payable $75,000
Cash $75,000
(To record payment for inventory purchased on credit)
(F)
DR Cash $50,000
DR Accounts Receivable $50,000
Revenue $100,000
(To record cash and credit revenue earned)
(G)
DR Bad Debt Expense $1,000**
Allowance for Bad Debt $1,000
(To record estimated bad debt)
** Bad debts estimate = $100,000 x 1% = $1,000
(H)
DR Sales return $1,000
Accounts Payable $1,000
(To record cash sales return being accepted)
(I)
DR Credit card processing expense $1,089
Credit card processing cost payable $1,089
(To record credit card processing cost falling due with bank)
(J)
Incomplete transaction. What is the amount of the bad check? However, assuming the bad check amount is $X, entry is as follows:
DR Allowance for Bad Debt $X
Accounts Receivable $X
(To record bad debt written off)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.