Comprehensive Accounting Cycle Review 9-2 (Part Level Submission) (a) Record jou

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Comprehensive Accounting Cycle Review 9-2 (Part Level Submission)

(a)

Record journal entries for transactions 1–9. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Comprehensive Accounting Cycle Review 9-2 (Part Level Submission)

Riverbed Corp prepares quarterly financial statements. The post-closing trial balance at December 31, 2016, is presented below.
RIVERBED CORP
Post-Closing Trial Balance
December 31, 2016 Debit Credit Cash $24,200 Accounts Receivable 22,400 Allowance for Doubtful Accounts $1,300 Equipment 24,000 Accumulated Depreciation—Equipment 15,000 Buildings 118,000 Accumulated Depreciation—Buildings 15,000 Land 20,000 Accounts Payable 12,370 Common Stock 90,000 Retained Earnings 74,930 $208,600 $208,600
During the first quarter of 2017, the following transactions occurred:
1. On February 1, Riverbed collected fees of $16,800 in advance. The company will perform $1,400 of services each month from February 1, 2017, to January 31, 2018. 2. On February 1, Riverbed purchased computer equipment for $10,125 plus sales taxes of $675. $3,375 cash was paid with the rest on account. Check #455 was used. 3. On March 1, Riverbed acquired a patent with a 10-year life for $10,800 cash. Check #456 was used. 4. On March 28, Riverbed recorded the quarter’s sales in a single entry. During this period, Riverbed had total sales of $140,000 (not including the sales referred to in item 1 above). All of the sales were on account. 5. On March 29, Riverbed collected $133,000 from customers on account. 6. On March 29, Riverbed paid $16,370 on accounts payable. Check #457 was used. 7. On March 29, Riverbed paid other operating expenses of $97,500. Check #458 was used. 8. On March 31, Riverbed wrote off a receivable of $300 for a customer who declared bankruptcy. 9. On March 31, Riverbed sold for $2,130 equipment that originally cost $14,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of December 31, 2016, was $10,400 using the straight line method. (Hint: Record depreciation on the equipment sold, then record the sale.)
Bank reconciliation data and adjustment data:
1. The company reconciles its bank statement every quarter. Information from the December 31, 2016, bank reconciliation is:
Deposit in transit: 12/30/2016 $5,500 Outstanding checks #440 3,500 #452 400 #453 700 #454 5,875
The bank statement received for the quarter ended March 31, 2017, is as follows:
Beginning balance per bank $29,175 Deposits: 1/2/2017, $5,500; 2/2/2017, $16,800; 3/30/2017, $133,000 155,300 Checks: #452, $400; #453, $700; #457, $16,370; #458, $97,500 (114,970) Debit memo: Bank service charge (record as operating expense) (100) Ending bank balance $69,405 2. Record revenue earned from item 1 above. 3. $25,000 of accounts receivable at March 31, 2017, are not past due yet. The bad debt percentage for these is 4%. The balance of accounts receivable are past due. The bad debt percentage for these is 22%. Record bad debt expense. (Hint: You will need to compute the balance in accounts receivable before calculating this.) 4. Depreciation is recorded on the equipment still owned at March 31, 2017. The new equipment purchased in February is being depreciated on a straight-line basis over 5 years and salvage value was estimated at $900. The old equipment still owned is being depreciated over a 10-year life using straight-line with no salvage value. 5. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $16,000. 6. Amortization is recorded on the patent. 7. The income tax rate is 30%. This amount will be paid when the tax return is due in April. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)

Explanation / Answer

No Date Account titles and Explanation Debit Credit 1 01-Feb-17 Bank account $16,800 Fee for Seriveces $15400 Prepaid Fee $1400 Being fee collected for 12 months out of which one month fee pertains to next year. Next year fee accounted as prepaid fee and to be reversed in next year as income. 2 01-Feb-17 Computer Equipment $10,125 Sales tax $675 Cash on hand $3,375 Accounts Payable $7,425 Being computer equipment purchased. Partially paid by cash and remaining by credit 3 01-Mar-17 Patent $10800 Cash on Hand $10800 Being patent purchased with cash for 10 years period 4 28-Mar-17 Account receivables $140,000 Sales Revenue $140,000 Being sales for the quarter has been recorded 5 29-Mar-17 Bank account $133,000 Account receivables $133,000 Being cash collected from customers 6 29-Mar-17 Accounts payables $16,370 Bank account $16,370 Being amount paid to creditors vide check # 457 7 29-Mar-17 Operating expenses $97,500 Bank account $97,500 Being amount paid towards operating expenses vide check # 458 8 31-Mar-17 Bad debts written Off $300 Account receivables $300 Being bad debts written off 9a 31-Mar-17 Accumulated depreciation $650 Equipment $650 Being Depreciation provided for the quarter ended March 31. 9b 31-Mar-17 Bank account $2,130 Loss on Sale of Assets $820 Equipment $2,950 Being asset sold for a loss of $820 and received $2,130 Total asset value is $14,000, accumulated depreciation is $11,050 and remaining value is $2950 where as we received only $2150 giving a loss of $820

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