1. Depreciation on the equipment for the month of January is calculated using th
ID: 2566184 • Letter: 1
Question
1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $3,600 and a two-year service life. 2. At the end of January, $17,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 3% will not be collected. 3. Accrued interest expense on notes payable for January. 4. Accrued income taxes at the end of January are $13,600. 5. By the end of January, $3,600 of the gift cards sold on January 2 have been redeemed. 2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Accounts Debit Credit Cash $ 25,700 Accounts Receivable 47,400 Allowance for Uncollectible Accounts $ 4,800 Inventory 20,600 Land 52,000 Equipment 18,000 Accumulated Depreciation 2,100 Accounts Payable 29,100 Notes Payable (6%, due April 1, 2019) 56,000 Common Stock 41,000 Retained Earnings 30,700 Totals $ 163,700 $ 163,700Explanation / Answer
Allowance calculation Particulars Accounts receivables % Allowance Amount of allowance First 17000 30% 5100 Balance 30400 3% 912 Total 47400 6012 Sl No Dr/Cr Account Amount 1 Dr Depreciation expense 600 (18000-3600)/24 Cr Accumulated depreciation 600 2 Dr Bad debt expense 6012 As per workings Cr Allowance for uncollectible accounts 6012 3 Dr Interest expense 280 56000*6%/12 Cr Interest payable 280 4 Dr Income tax expense 13600 Cr Income taxes payable 13600 5 Dr Gift card liability 3600 Cr Sales 3600
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