During the first quarter of 2017, the following transactions occurred On Februar
ID: 2595565 • Letter: D
Question
During the first quarter of 2017, the following transactions occurred On February 1, Novak collected fees of $7,200 in advance. The company will perform $600 of services each month from February 1, 2017, to January 31, 2018 On February 1, Novak purchased computer equipment for $11,250 plus sales taxes of $750, $3,750 cash was paid with the rest on account. Check #455 was used On March 1, Novak acquired a patent with a 10-year life for $12,000 cash. Check #456 was used On March 28, Novak recorded the quarter's sales in a single entry. During this period, Novak had total sales of $170,000 (not including the sales referred to in item 1 above). All of the sales were on account. On March 29, Novak collected $163,000 from customers on account. on March 29, Novak paid $16,390 on accounts payable. Check #457 was used on March 29, Novak paid other operating expenses of $97,500. Check #458 was used On March 31, Novak wrote off a receivable of $300 for a customer who declared bankruptcy On March 31, Novak sold for $1,620 equipment that originally cost $11,000. It had an estimated life of 5 years and salvage of $1,000. Accumulated depreciation as of December 31, 2016, was $8,000 using the straight line method. (Hint: Record depreciation on the equipment sold, then record the sale.) 1. 3. 4. 5. 6, 8. 9.Explanation / Answer
DATE, 2017
DETAILS
AMOUNT $
DEBIT A/C
CREDIT A/C
1
FEB 1
FEES COLLECTED IN ADVANCE
7200
CASH
FEES IN ADVANCE
TRANSFER OF FEES FOR YEAR
$600 X 2 MTHS
1200
FEES IN ADVANCE
INCOME STATEMENT
2
FEB 1
PURCHASED EQUIPMENT ON ACCOUNT #455
11250
EQUIPMENT
750
SALES TAX
12000
ACC PAY EQUIPMENT
FEB 1
PAID SUPPLIER OF EQUIPMENT #455
3750
ACC PAY SUPPLIER
CASH
3
MAR 1
PAID FOR PATENT #456
12000
PATENTS
CASH
4
MAR 28
SALES ON ACCOUNT
170000
ACC REC
SALES
5
MAR 29
COLLECTED FROM DEBTORS
163000
CASH
ACC REC
6
MAR 29
PAYMENTS TO SUPPLIERS #457
16390
ACC PAY
CASH
7
MAR 29
PAID FOR OPERATING EXPENSES #458
97500
OP EXP
CASH
8
MAR 31
WROTE OFF BAD DEBTS
300
BAD DEBTS
ACC REC
9
MAR 31
DISPOSAL OF EQUIPMENT FOR $1620 AFTER RECORDING DEP FOR THE YEAR
11000
DISPOSAL
EQUIPMENT
*TRANF OF ACC DEP
10000
ACC DEP
DISPOSAL
1620
CASH
DISPOSAL
620
DISPOSAL
INCOME STATEMENT
10
MAR 31
AMORTIZATION OF PATENT
100
AMORT
ACC AMOR PATENT
11
MAR 31
BANK CHARGES AS PER BANK STATEMENT
100
BANK CHGS
BANK
12
MAR 31
**ASSUMING THE BALANCE AFTER 170,000 – 163000 ARE ALL PAST DUE DATE THE AFTER BAD DEBT WRITE OFF = $6700 X 24% = 1608
1608
BAD DEBTS
PROV FOR BAD DEBTS
*
DEPN ON ‘OLD EQUIPMENT’ ? NO VALUES GIVEN ……
*
DEPN ON BUILDING ? NO VALUES GIVEN………
INCOME TAX ? NO INCOME STATEMENT PREPARED ?MISSING INFO ?
DATE, 2017
DETAILS
AMOUNT $
DEBIT A/C
CREDIT A/C
1
FEB 1
FEES COLLECTED IN ADVANCE
7200
CASH
FEES IN ADVANCE
TRANSFER OF FEES FOR YEAR
$600 X 2 MTHS
1200
FEES IN ADVANCE
INCOME STATEMENT
2
FEB 1
PURCHASED EQUIPMENT ON ACCOUNT #455
11250
EQUIPMENT
750
SALES TAX
12000
ACC PAY EQUIPMENT
FEB 1
PAID SUPPLIER OF EQUIPMENT #455
3750
ACC PAY SUPPLIER
CASH
3
MAR 1
PAID FOR PATENT #456
12000
PATENTS
CASH
4
MAR 28
SALES ON ACCOUNT
170000
ACC REC
SALES
5
MAR 29
COLLECTED FROM DEBTORS
163000
CASH
ACC REC
6
MAR 29
PAYMENTS TO SUPPLIERS #457
16390
ACC PAY
CASH
7
MAR 29
PAID FOR OPERATING EXPENSES #458
97500
OP EXP
CASH
8
MAR 31
WROTE OFF BAD DEBTS
300
BAD DEBTS
ACC REC
9
MAR 31
DISPOSAL OF EQUIPMENT FOR $1620 AFTER RECORDING DEP FOR THE YEAR
- TRANSFR OF COST
11000
DISPOSAL
EQUIPMENT
*TRANF OF ACC DEP
10000
ACC DEP
DISPOSAL
- CASH RECEIVED
1620
CASH
DISPOSAL
- TRAFS OF PROFIT
620
DISPOSAL
INCOME STATEMENT
10
MAR 31
AMORTIZATION OF PATENT
100
AMORT
ACC AMOR PATENT
11
MAR 31
BANK CHARGES AS PER BANK STATEMENT
100
BANK CHGS
BANK
12
MAR 31
**ASSUMING THE BALANCE AFTER 170,000 – 163000 ARE ALL PAST DUE DATE THE AFTER BAD DEBT WRITE OFF = $6700 X 24% = 1608
1608
BAD DEBTS
PROV FOR BAD DEBTS
*
DEPN ON ‘OLD EQUIPMENT’ ? NO VALUES GIVEN ……
*
DEPN ON BUILDING ? NO VALUES GIVEN………
INCOME TAX ? NO INCOME STATEMENT PREPARED ?MISSING INFO ?
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