Bad debts and Write-offs
Write-offs always have two journal entries: one regular journal entry and one adjusting entry. What are these journal entries?
JE: DR Allowance for D/A, CR A/R
AJE: DR Bad debt exp, CR Allowance for D/A
Sale of $10,000 on terms of 1/10, n/20.
Do two journal entries to initially record this sale: one using the gross method, one using the net method.
Net: DR A/R 9900, CR Sales revenue 9900
Gross: DR A/R 10000, CR Sales revenue 10000
If Snapple Inc. overstates its ending inventory, what are the effects on cost of goods sold and net income for the current year?
Cost of goods sold will be understated and net income will be overstated.
Under what account are shipping costs for inventory recorded?
Inventory
What's your favorite color?
nice :)
Bad debt expense for the year is estimated to be $49,000. If the balance of the Allowance for Doubtful Accounts is a $3,000 debit before adjustment, what is the balance after adjustment?
credit balance of $46,000
Lumberjack Lumber Co. sells $12,000 of lumber to House Contractors, Co. on April 8th at a discount of 3/15, n/30. What is the journal entry for Lumberjack Lumber Co. if House Contractors pays in full on April 15th using the net method?
DR Cash 11640
CR A/R 11640
During a period of rising purchase prices, which inventory costing method will yield the lowest cost of goods sold?
FIFO
If something is sold FOB destination, who pays for shipping and when does ownership transfer from the seller to the buyer?
Seller pays for shipping, and ownership transfers when the merchandise arrives at its destination.
Sales: $750,000
COGS: $275,000
A/R in 2019: $310,000
A/R in 2020: $390,000
What is the A/R turnover?
2.14
Doofenshmirtz Evil Inc. uses the aging method to account for bad debt expense. Based on an aging of accounts receivable, $3500 of accounts receivable are estimated to be uncollectable. On January 1, 2018, the balance in the Allowance for Doubtful Accounts account was $4800. During the year, $5200 of accounts receivable were written off as uncollectable. What is the bad debt expense of the company for 2018?
$3900
Books-A-Thousand company makes $20,000 in sales on January 1 with the terms 2/10, n/30. The buyer pays on January 8th. What is the journal entry on January 8th for the Books-A-Thousand company?
DR Cash 19600
DR Sales Discount 400
CR Accounts Receivable 10000
Rick's Sporting Goods had the following inventory for July:
1 Beginning Inventory 125 units @ $4.00
10 Purchase 250 units @ $5.00
15 Purchase 130 units @ $5.50
20 Purchase 200 units @ $6.50
Ending inventory 240 units
A periodic inventory system is used.
What is the COGS using the LIFO method?
$2690
Douglasville Productions, Inc. ordered merchandise from the Atlanta Company on May 10, 2020, for $33,000. The credit terms were 2/10, n/30. The goods were invoiced and shipped FOB shipping point on May 11. Douglasville Productions, Inc. received the merchandise on May 17 and paid the amount due on May 19. When did ownership transfer from the seller to the buyer?
May 11
Grass Pro Shops is a merchandise company. The company's sales for the year were $420,000 and COGS was $196,000.
What is the company's gross profit margin ratio?
53%
The following data is from the records of Walt Gisney company for 2019:
credit sales $450,000
Accounts Receivable $295,000
Allowance for Doubtful Accounts $11,000
The percent of uncollectable accounts receivable is 3%. What is the balance of Allowance for Doubtful Accounts after adjusting for bad debt expense?
credit balance of 24500
Macrosoft Corp. made a sale on March 1st of a note receivable for $8,000 with a 3% interest rate. The note is due on August 31st. Record the journal entry for the receipt of the note receivable.
DR cash 8120
CR interest revenue 120
CR notes receivable 8000
Rick's Sporting Goods had the following inventory for July:
1 Beginning Inventory 125 units @ $4.00
10 Purchase 250 units @ $5.00
15 Purchase 130 units @ $5.50
20 Purchase 200 units @ $6.50
Ending inventory 240 units
A periodic inventory system is used.
What is the COGS using the weighted average cost method?
$2483.30
Cactus Supply Co. has an inventory of $425,000 at the end of 2019. On Dec 29, they sold $6,000 worth of cacti FOB destination. The sale shipped on Dec 30 and arrived at its destination on Jan 2. What is Cactus Supply Co.'s inventory on Dec 31?
$425,000
Bob's Market makes $1750 in sales by accepting the American Express card from its customers. American Express charges a 2% fee for their services. What is the journal entry to record the sale to customers and the receipt of cash from American Express?
DR Cash 1715
DR Credit Card Expense 35
CR Sales Revenue 1750