2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/e
2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/e
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $3,700 and a two-year
service life.
• The company estimates future uncollectible accounts. The company determines $16,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The
remaining accounts receivable on January 31 are not past due, and 4% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
• Accrued interest expense on notes payable for January.
• Accrued income taxes at the end of January are $13,500.
By the end of January, $3,500 of the gift cards sold on January 2 have been redeemed.
2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Transcribed Image Text:On January 1, Year 1, the general ledger of a company includes the following account balances:
Accounts
Debit
Credit
Cash
$ 25,600
Accounts Receivable
47,200
Allowance for Uncollectible Accounts
$
4,700
Inventory
20,500
Land
51,000
Equipment
Accumulated Depreciation
Accounts Payable
17,500
2,000
29,000
55,000
40,000
Notes Payable (6%, due April 1, Year 2)
Common Stock
Retained Earnings
31,100
Totals
$ 161,800
$ 161,800
During January Year 1, the following transactions occur:
January 2 Sold gift cards totaling $9,000. The cards are redeemable for merchandise within one year of the purchase date.
January 6 Purchase additional inventory on account, $152,000.
January 15 The comapany sales for the first half of the month total $140,000. All of these sales are on account. The cost of the units sold is $76,300.
January 23 Receive $125,900 from customers on accounts receivable.
January 25 Pay $95,000 to inventory suppliers on accounts payable.
January 28 Write off accounts receivable as uncollectible, $5,300.
January 30 The comapany sales for the second half of the month total $148,000. Sales include $10,000 for cash and $138,000 on account. The cost of the units sold is $82,000.
January 31 Pay cash for monthly salaries, $52,500.
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