[The following information applies to the questions displayed below.] Tony and S
ID: 2537979 • Letter: #
Question
[The following information applies to the questions displayed below.]
Tony and Suzie are ready to expand Great Adventures even further in 2019. Tony believes that many groups in the community (for example, Boy Scouts, church groups, civic groups, and local businesses) would like to hold one-day outings for their members. Groups would engage in outdoor activities such as rock climbing, fishing, capture the flag, paintball, treasure hunts, scavenger hunts, nature hikes, and so on. The purpose of these one-day events would be for each member of the group to learn the importance of TEAM (Together Everyone Achieves More).
Tony knows that most people are not familiar with these types of activities, so to encourage business he allows groups to participate in the event before paying. He offers a 4% quick-payment discount to those that pay within 10 days after the event. He also guarantees that at least eight hours of outdoor activities will be provided or the customer will receive a 20% discount. For the first six months of the year, the following activities occur for TEAM operations.
Jan. 24 Great Adventures purchases outdoor gear such as ropes, helmets, harnesses, compasses, and other miscellaneous equipment for $4,700 cash.
Feb. 25 Mr. Kendall’s Boy Scout troop participates in a one-day TEAM adventure. Normally, Tony would charge a group of this size $3,200, but he wants to encourage kids to exercise more and enjoy the outdoors so he charges the group only $2,700. Great Adventures provides these services on account.
Feb. 28 The Boy Scout troop pays the full amount owed, less the 4% quick-payment discount.
Mar. 19 Reynold’s Management has its employees participate in a one-day TEAM adventure. Great Adventures provides services on account for $3,700, and Reynold’s agrees to pay within 30 days
Mar. 27 Reynold’s pays the full amount owed, less the 4% quick-payment discount.
Apr. 7 Several men from the Elks Lodge decide to participate in a TEAM adventure. They pay $7,200, and the event is scheduled for the following week.
Apr. 14 The TEAM adventure is held for members of the Elks Lodge.
May. 9 Myers Manufacturing participates in a TEAM adventure. Great Adventures provides services on account for $5,700, and Myers agrees to pay within 30 days.
Jun. 130 Several MBA groups participate in TEAM adventures during June. Great Adventures provides services on account for $22,500 to these groups, with payment due in July.
Jun. 30 Myers Manufacturing fails to pay the amount owed within the specified period and agrees to sign a three-month, 7% note receivable to replace the existing account receivable.
____
Required:
1. Record TEAM adventure transactions occurring during the first six months of 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. As of June 30, 2019, Great Adventures finishes its first 12 months of operations. If Suzie wants to prepare financial statements, part of the process would involve allowing for uncollectible accounts receivable.
a. Suppose Suzie estimates uncollectible accounts to be 8% of accounts receivable (which does not include the $5,700 note receivable from Myers Manufacturing). Record the adjustment for uncollectible accounts on June 30, 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare a partial balance sheet showing the net accounts receivable section. (Amounts to be deducted should be indicated by a minus sign.)
Explanation / Answer
1
Date Journal Entries Debit Credit
Jan 24 Equipments 4700
Cash 4700
(Being eqipments & gears pruchasedin cash)
Feb 25 Boy Scout Troop 2700
Trade discount 500
To Services Provided 3200
( Being services provided & discount allowed)
Feb 28 Cash 2592
Cash Discount 108
Boy Scout Troop 2700
(Being payment received and cash discount offered)
March 19 Reylonds Management 3700
Services Provided 3700
(Being services provided on account)
March 27 Cash 3552
Cash Discount 142
Reylonds Managemet 3700
(Being payment received)
April 7 Cash 7200
Services Provided 7200
(Being services rendered in cash)
April 14 No Entry
May 9 Myers Manufacturing 5700
Services Rendered 5700
(Being services rendered on account)
Jun1-30 Debtors 22500
Services Rendered 22500
(Being services provided tomultiple debtors)
June 30 7% Note receivable from Myers 5700
Myers Manufacturing 5700
(Being debotr in name of Myers Manufacturing replaced with 7% notes receivable)
2. a) Uncollectible accounts 1800
Debtors 1800
(Being estimated bad debts recognised)
b) Partial Balance Sheet
Assets
Current Assets:
Debtors 22,500
7% Note receivable 5,700
Less: Estimated bad debts 1,800
Net accounts receivable 26,400
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