Journal Entries
A company has credit sales of 500,000. They expect 6% to be uncollectible and have a previous balance of 12,000 in the allowance for doubtful accounts. What is the correct journal entry?
Bad Debt Expense +30,000
ADA. +30,000
What type of account is Allowance for Doubtful Accounts? Does it have a normal Dr. or Cr. balance?
Contra-Asset, Credit
Which type of receivable arises from sales of goods or services on credit?
Accounts Receivable
(1/Life in Years)*2
The face value (aka Par) is paid at the beginning or the end of the life of the bond?
End
How do we undo a write off for an account worth $20,000 that was later paid in cash?
1. AR +20,000
ADA. +20,000
2. Cash +20,000
AR -20,000
What does the Receivables Turnover Ratio calculate?
How many times a year you collect receivables
How do you calculate Net Receivables?
Gross AR- Allowance for Doubtful Accounts= Net AR
Accumulated Depreciation is a __________ account
Contra-Asset
T/F: Cash interest is the same every year
True
Using the aging method, $45,000 is estimated to be uncollectible. The previous balance for allowances is $24,000. What is the correct Journal Entry?
Bad Debt Expense +21,000
ADA +21,000
Does the amount of the PPE account (i.e. machine, truck, equipment) ever get written down prior to sale? If not, what account shows the decrease in value?
No, Accumulated Depreciation
Is Bad Debt Expense or Allowance for Doubtful Accounts a permanent account?
ADA
T/F: Land is depreciated
False
A bond with a Market Rate>Stated Rate is a Discount or Premium
Discount
Depreciation is $72,000 is year 3. What is the correct Journal Entry?
Depreciation Expense +72,000
Accumulated Depreciation +72,000
When is no disclosure required for a contingent liability?
When the contingency has remote chance
As bad debt expense increases, what happens to net income?
Decreases
Using the Straight Line method, calculate yearly depreciation expense for a $400,000 machine, with a life of 12 years, and a salvage value of $75,000.
$27,083
A bond sold at 105 is a premium or a discount?
Premium
A bond has a cash interest payment of $80 and Interest Expense of $72. Record the Journal Entry.
Interest Expense +72
Premium on B.P. +8
Interest Payable +80
What is the purpose of selling bonds?
Allows a company to finance its operations
End Gross AR=
Beg. Balance+Credit Sales-Cash Collected-Write Offs
A $70,000 truck is depreciated annually using straight line method. It has a life of 10 years and salvage value of $15,000. It is sold in the 4th year for $42,000. Record the gain or loss.
Cash +42,000
Acc. Dep. -22,000
Loss +6,000
Truck -70,000
A 1,000 bond is sold at 95. Calculate the beginning balance of the discount.
$950