3. A) REM, Inc. had assets of $44 and liabilities of $18 on January 1. During th

Question

3. A) REM, Inc. had assets of $44 and liabilities of $18 on January 1. During the year, assets increased $10 and liabilities decreased $9. Calculate the December 31 balance of owner’s equity.

B) James Taylor Co. has Accounts Receivable of $200,000 at February 28, 20xx. The Allowance for Bad Debts has a $6,000 credit balance. The company has aged the receivables and discovered that $50,000 has not reached the due date, $80,000 is between one and sixty days past the due date and the final $70,000 is over 61 days past the due date. Make the correct end of period adjusting journal entry for bad debt expense assuming 3% of the not yet due receivables are bad; 8% of the between 1-60 day receivables are worthless and 20% of the receivables older than 61 days are worthless and calculate the company’s net accounts receivable that will be reported on the balance sheet.

Anyone know how to do these?

Please show all work :)

Explanation / Answer

Answer for Question 3(A):

Owners equity=Asset-Liabilities

Owners Equity=($44+10)-($18-$9)

Therefore, Owners Equity=$45

Answer for Question 3(B):

Step 1:Calculation of Bad Debt

Step 2:Adjusting entry at year end

Step 3:calculation of  the company’s net accounts receivable that will be reported on the balance sheet.

Sl No Particulars Account Receivable Percentage Bad Debt 1 Not yet due receivables $50,000 3% $1500 2 Between 1-60 day receivables $80,000 8% $6400 3 Receivables older than 61 days $70,000 20% $14,000 Total $200,000 $21,900

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