Chapter 5 (Recievables)
On April 25, Foreman Electric installs wiring in a new home for $3,500 on account. However, on April 27, Foreman's electrical work does not pass inspection. The customer complains, and Foreman reduces the invoice by $600. On April 30, the customer makes full payment of the balance. What is the journal entry on April 27?
(Debit) Sales Allowance $600
(Credit) Cash $600
What kind of account is Sales Allowance?
Explain how a business would record specific identification method for inventory.
Key word: identifiable, separate, distinct
University Car Wash purchased new soap dispensing equipment on January 1 that cost $270,000, including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. The first year it was used for 3100 hours, the second 1100 hours.
Using the Straight-line method, what is the first and second year depreciation?
YR 1 = $41000
YR 2 = $41000
The Giles Agency offers a 12% trade discount when providing advertising services of $1,000 or more to its customers. Audrey's Antiques decides to purchase advertising services of $3,500 (not including the trade discount) on account. Record The Giles Agency's journal entry for the purchase.
(Debit) A/R $3,080
(Credit) Service Revenue $3,080
[There is no account named trade discount.]
What is the definition of inventory?*
Short-term / current assets that company intends to sell to customers during normal business operations
On March 17, Fox Lumber sells materials to Whitney Construction for $12,000, terms 2/10, n/30. Whitney pays for the materials on March 23. What amount would Fox record as revenue on March 17?
March 17 = Revenue credited $12,000
March 23 = Sales Discount debited $240
= Net revenue: $11,760
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Using FIFO, what is the balance of ending inventory?
$1750
University Car Wash purchased new soap dispensing equipment on January 1 that cost $270,000, including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. The first year it was used for 3100 hours, the second 1100 hours.
Using the Double decline method, what is the accumulated depreciation after Year 2?
$150,000
Bingerton Industries began the year with an inventory of $85,000. On January 5th, they purchased $310,000 worth of inventory on account. On January 10th, Inventory costing $335,000 was sold on account for $520,000. Based on the perpetual inventory system, what is the journal entry(s) on January 10th for the sale of inventory?
#1
(Debit)Accounts Receivable $520,000
(Credit) Sales Revenue $520,000
#2
(Debit) COGS $335,000
(Credit) Inventory $335,000
(T/F) (+200/-200)
During periods of rising costs, FIFO generally results in a higher ending inventory balance.
On August 1, 2027, Nees Manufacturing lends $10,000 to Roberson Supply using a 9% note due in 9 months. Nees has a December 31 year-end. April 30th, Roberson pays the full amount, including the interest. What is the journal entry for Nees on April 30th to close the notes receivable?
(Debit) Cash $10,675
(Credit) Notes Receivable $10,000
(Credit) Interest Receivable $375
(Credit) Interest Revenue $300
At the beginning of the year, Bennett Supply has inventory of $3,500. During the year, the company purchases an additional $12,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $4,000. What amount will Bennett report for cost of goods sold?
$11,500
University Car Wash purchased new soap dispensing equipment on January 1 that cost $270,000, including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. The first year it was used for 3100 hours, the second 1100 hours.
Using the Activity-based method, what is the net amount of equipment in the balance sheet after year 2?
$183,900
At the beginning of the year, Mitchum Enterprises allows for estimated uncollectible accounts
of $21,400. On July 20th, actual bad debt was determined for $15,000.
Record the write-off to uncollectible accounts.
(Debit) AUA $15,000
(Credit) Accounts Receivable $15,000
A company reports the following amounts at the end of the year:
Sales revenue (net) $450,000
Cost of goods sold $270,000
Net income $60,000
Compute the company's gross profit ratio.
.4
=Gross profit/ net sales (or net revenue)
Wager (0-400)
If at the end of the year Allowance for Uncollectible Accounts has a credit balance before any adjusting entries, what does that tell us about last year's estimate?
Bonus points if you can explain your reasoning (+100)
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Using Weighted Avg, what is the Cost of Goods Sold?
$3068.31
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Land Acquisition*
Land= $82,000
Building= $620,000
Brazilian Bakery purchases land, building, and equipment for a single purchase price of $320,000. However, the estimated fair values of the equipment, land, and building are $84,000, $189,000, and $147,000.
What are the amounts the company should record for the land, the building, and the equipment?
Equipment $64
Land $144
Building $112
What are the 4 levels of the multiple-step income statement in order? And where is advertising expense included in?
gross profit, operating income (includes advertising), income before income taxes, and net income
What about interest expense?
At the end of the year, Mercy Cosmetics' balance of Allowance for Uncollectible Accounts is $600 (credit) before adjustment. The balance of Accounts Receivable is $25,000. The company estimates that 12% of accounts will not be collected over the next year. What Mercy Cosmetics's bad debt expense at the end of the year?
Bad Debt Expense = $2,400
When do you record bad debt expense?
KSU purchased 100 books on account from Readers Wholesale for $3,300. Pays cash for freight costs of $200 on books purchased from Readers. Returns 20 books to Readers because part of the order is incorrect. What is the balance of that inventory (assuming there is no beginning balance)?
$2840
New Deli is in the process of closing its operations. It sold its three-year-old ovens to Sicily Pizza for $341,000. The ovens originally cost $455,000, had an estimated service life of 10 years, had an estimated residual value of $30,000, and were depreciated using straight-line depreciation.
Record (journal entry) the sale of the ovens at the end of the third year.
(Debit) Cash $341,000
(Debit) Accumulated Depreciation $127,500
(Credit) Equipment $455,000
(Credit) Gain $13,500
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Mercy Hospital has the following balances on December 31, 2027, before any adjustment: Accounts Receivable = $70,000; Allowance for Uncollectible Accounts = $1,400 (credit). What is the end of the year adjusting entry?
Bad Debt Expense $14,150
Allowance for Uncollectible Accounts $14,150
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1. Depreciation
2. Goodwill
3. Amortization
4. Natural resources
5. Intangible assets
6. Copyright
7. Trademark
a. Exclusive right to display a word, a symbol, or an emblem.
b. Exclusive right to benefit from a creative work.
c. Assets that represent contractual rights.
d. Oil and gas deposits, timber tracts, and mineral deposits.
e. Purchase price less fair value of net identifiable assets.
f. The allocation of cost for plant and equipment.
g. The allocation of cost for intangible assets.
1.F
2.E
3.G
4.D
5.C
6.B
7.A