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20. Assume that part of accounts and other receivables on Thompson Toys' balance sheet is $16 million
and that Thompson estimates its uncollectible accounts as 2 percent of all accounts receivable. Record
the adjusting entry assuming that the company uses accounts receivable aging method to recognize
uncollectible accounts if the Allowance for Uncollectible Accounts has a balance of:
a. $104,000 credit
b. $46,000 debit
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
21. Explain the difference between the two methods used to estimate uncollectible accounts and identify
which financial statement is emphasized by each method.
22. Assume that part of accounts and other receivables on Thompson Toys' February 2, 2010, balance
sheet is comprised of $43,225,000 of notes receivable. Two notes make up the amount. The first note
has a face value of $30,000,000 and bears interest at 7 percent for 90 days. The second note has a face
value of $13,225,000 and bears interest at 9 percent for 120 days. Record the journal entry for the
collection of the 7 percent note on May 3 and the dishonor of the 9 percent note on June 2. (Omit
explanations; assume no interest had been accrued.) Round amounts to nearest dollar.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
ANS:
23. In the journal provided, prepare entries for the following (assume a calendar-year accounting period):
Omit explanations.
Dec.
1
Received a three-month, 15 percent note receivable for $800 from a customer as
an extension of his past-due account.
31
Made the year-end adjustment for accrued interest.
Mar.
1
Received full payment on the note.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
24. Determine the interest on the following notes payable: Round answers to two decimal places.
a. $3,000 at 10 percent for 60 days
b. $600 at 16 percent for 4 months
c. $5,000 at 12 percent for 45 days
d. $900 at 14 percent for 30 days
25. The following information pertains to the bank transactions of Crawford Company:
a.
Cash on the books as of September 30 was $499. Cash as shown on the bank statement
for the same date was $1,330.
b.
A deposit of $160, representing cash receipts of September 30, did not appear on the
bank statement.
c.
Outstanding checks totaled $240.
d.
Bank service charges for September amounted to $9.
e.
The bank collected for Crawford Company $840 (which includes $40 interest) on a
note left for collection.
f.
An NSF check for $80 from a customer, Jack Betz, was returned with the statement.
1. Prepare a bank reconciliation for Crawford Company as of September 30.
2. State the amount of cash that would appear on the balance sheet as of September 30.
Crawford Company
Bank Reconciliation
September 30, 2010
ANS:
26. The general ledger account for Accounts Receivable shows a debit balance of $37,500. The Allowance
for Uncollectible Accounts has a debit balance of $1,000. Net sales for the year were $375,000. In the
past, 2 percent of net sales have proved uncollectible. An aging of accounts receivable accounts results
in an estimate of $6,250 of uncollectible accounts receivable. Calculate (1) Uncollectible Accounts
Expense and (2) the ending balance of the Allowance for Uncollectible Accounts using (a) the
percentage of net sales method and (b) the accounts receivable aging method.
27. The general ledger account for Accounts Receivable shows a debit balance of $40,000. The Allowance
for Uncollectible Accounts has a credit balance of $2,000. Net sales for the year were $250,000. In the
past, 3 percent of net sales have proved uncollectible. An aging of accounts receivable accounts results
in an estimate of $9,000 of uncollectible accounts receivable. Calculate (1) Uncollectible Accounts
Expense and (2) the ending balance of the Allowance for Uncollectible Accounts using (a) the
percentage of net sales method and (b) the accounts receivable aging method.
28. Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts
Expense. As of December 31, Caplan's accountant prepared the following data about ending
receivables: $20,000 was not yet due (1 percent expected not to be collected), $10,000 was 1-60 days
past due (4 percent expected not to be collected), and $2,000 was over 60 days past due (8 percent
expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit
balance prior to adjustment of $200. In the journal provided, prepare Caplan's end-of-period
adjustment for estimated uncollectible accounts. Also prepare the entry that would have been made
had the credit balance instead been a debit balance. Omit explanations.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
29. Assuming that the allowance method is being used, prepare journal entries to record the following
transactions. Omit explanations.
Mar.
15
Sold merchandise to Faust for $6,000 on account.
Apr.
15
Received $3,000 from Faust.
Aug.
15
Wrote off Faust's account as uncollectible.
Nov.
15
Unexpectedly received payment in full from Faust.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
30. In the journal provided, prepare the entries for the following transactions. (Omit explanations.)
Dec.
1
Sold merchandise on account to Katurah Wells for $600.
12
Received payment of $400 from Katurah Wells.
31
Made adjusting entry for Uncollectible Accounts Expense, using the
percentage of net sales method. Net sales for the year totaled $14,000,
uncollectible accounts are estimated at 2 percent, and Allowance for
Uncollectible Accounts has a $50 credit balance prior to adjustment.
Feb.
5
Wrote off Katurah Wells's balance because she filed for bankruptcy.
17
Unexpectedly received the $200 from Katurah Wells.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
31. Carlson Corporation engaged in the following transactions involving promissory notes in 2009 and
2010. Journalize these transactions in the journal provided. (Omit explanations.) Round to nearest
whole dollar.
2009
Sept.
1
Sold land to Duane Eppy for $30,000. A six-month, 10 percent note was
received in exchange (no gain or loss realized).
Nov.
1
Received a 30-day, 12 percent note receivable from Tricha Kalson in
settlement of her accounts receivable of $500.
Dec.
1
Tricha Kalson dishonored her note issued 30 days earlier. Round to nearest
whole dollar.
31
Recorded accrued interest on the note received on September 1.
2010
Mar.
1
Received payment in full from Duane Eppy.
General Journal
Page 1
Date
Description
Post.
Ref.
Debit
Credit
