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ACCT 315 Assignment

The document contains journal entries related to accounts receivable, sales returns and allowances, allowance for doubtful accounts, and cash transactions. It discusses recording estimated sales returns at the end of each reporting period to avoid overstating accounts receivable and sales. It also provides examples of calculating bad debt expense using percentage of receivables and percentage of credit sales methods. The document includes reconciling cash balances, factoring transactions, and adjusting entries for allowance for doubtful accounts.

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huma
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58 views

ACCT 315 Assignment

The document contains journal entries related to accounts receivable, sales returns and allowances, allowance for doubtful accounts, and cash transactions. It discusses recording estimated sales returns at the end of each reporting period to avoid overstating accounts receivable and sales. It also provides examples of calculating bad debt expense using percentage of receivables and percentage of credit sales methods. The document includes reconciling cash balances, factoring transactions, and adjusting entries for allowance for doubtful accounts.

Uploaded by

huma
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Q.

1 Part I

a) Net method Debit Credit

31-Mar Cash $ 12,000.00


Sales Discounts Forfeited $ 120.00
Accounts Receivable $ 11,880.00

b) Gross Method
31-Mar Cash $ 12,000.00
Accounts Receivable $ 12,000.00

Part II a)
31-Mar Sales Returns and Allowances $ 75,000.00
Allowances for Sales Returns and Allowances $ 75,000.00

It is important to include an estimate of sales return and allowance entry in


Sawyer Corporation’s financial statements as sales returns and allowances
should be recognized in the period of the sale to avoid overstating accounts
receivable and sales. Sales returns and allowances are therefore estimated
Part II b and adjusted at the end of each reporting period.If estimated returns and
allowances are significant, an allowance for sales returns and allowances
account, which is an asset valuation account contra to accounts receivable,
is used to record the estimates.

Part III a)
Bad Debt Expense $ 5,270.00
Allowance for Doubtful Accounts $ 5,270.00
($120,000*5%)-730

Part III b)
Bad Debt Expense $ 5,020.00
Allowance for Doubtful Accounts $ 5,020.00
($510,000-8,000)*1%
Q 2. 1 Gross Method
Debit
28-Mar Accounts Receivable $ 3,200.00
Sales Revenue

29-Mar Sales Returns and Allowances $ 600.00


Accounts Receivable

3-Apr Cash $ 9,600.00


Sales Revenue

6-Apr Cash $ 4,548.00


Sales Discounts $ 52.00
Accounts Receivable

14-Apr Allowance for Doubtful Accounts $ 6,000.00


Accounts Receivable

25-Apr Cash $ 12,000.00


Accounts Receivable $ 12,000.00
Sales Revenue

30-May Accounts Receivable $ 2,000.00


Allowance for Doubtful Accounts

30-May Cash $ 2,000.00


Accounts Receivable

Q 2. 2

Not yet due 5% -


1-30 days past due 10% 12,000.00
More than 60 days over 20% 9,000.00
Debit
Bad Debt Expense $ 6,000.00
Allowance for Doubtful Accounts

Q 2.3 Debit
Bad Debt Expense $ 2,056.00
Allowance for Doubtful Accounts

Credit Sales $ 191,000.00


Sales on Credit March 28 $ 3,200.00
Sales Returns and Allowances March 28 -$ 600.00
Sales on Credit April 25 $ 12,000.00
$ 205,600.00
1%
$ 2,056.00

Chelsea Corp ,using percentage of sales method, will incur lower bad debt expense

Percentage of receivables basis..... $ 6,000.00


Percentage of Credit sales basis $ 2,056.00
Lower bad debt expense with
percentage of sales basis by $ 3,944.00
Credit
$ 21,000.00
$ 3,200.00

$ 600.00

$ 9,600.00

$ 4,600.00

$ 6,000.00
6000 1000
2000
2056
$ 24,000.00 6000 5056 6056

$ 2,000.00 3-Apr-17
31-May-17
58
$ 2,000.00

- 9000
1,200.00 12000
1,800.00
3,000.00

Credit A.R 6000 O.b 1000


Ar 2000
$ 6,000.00 Bad debt 6000
c/d 3000

Credit

$ 2,056.00

A.R 6000 O.b 1000


Ar 2000
Bad debt 2056
c/d 944

cur lower bad debt expense by 3944 compared to percentage of recievable basis, as shown
Q.3 PartI
Bank
Cash balance , September 2017 $ 20,000.00
Less: Cheques paid during October -$ 11,800.00
Less: Bank Service Charge for October -$ 200.00
$ 8,000.00
Add: Deposits recorded by bank in October $ 35,000.00

Cash Balance, October 2017 $ 43,000.00

Deposits recorded by bank in October. 43,000-20,000+11,800+200=35,00

Q.3 Part II
Balance per bank $ 30,000.00
Deposit in Transit $ 9,000.00
Outstanding Cheques -$ 24,000.00
Bank service charge $ 600.00
Bank Error $ 2,100.00
Cash Balance per books $ 17,700.00
0+11,800+200=35,000
Q.4
a.Torsten Manufacturing
Debit Credit
Cash $ 218,400.00
Due from Factor $ 12,000.00
Loss on Sale of Recievables $ 9,600.00
Accounts Receivable $ 240,000.00

b.Victor Factor Corp


Debit Credit
Accounts Receivable $ 240,000.00
Due to Customer $ 12,000.00
Financing Revenue $ 9,600.00
Cash $ 218,400.00
9600
12000
Q.5
Debit
30-Nov-17 Bad Debt Expense $ 645.00
Allowance for Doubtful Accounts
$52,000-S$9,000=$43,000*1.5% = 645

Bad Debt Expense $ 10,250.00


Allowance for Doubtful Accounts
$7,000+$3,250=$10,250

Bad Debt Expense $ 7,130.00


Allowance for Doubtful Accounts
($97,000*4%)+$3,250=$7,130

Cash $ 22,500.00
Loss on sale of Receivables $ 2,500.00
Accounts Receivable
$25,000* 10%=$2,500
Credit

$ 645.00

$ 10,250.00

$ 7,130.00

$ 25,000.00

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