Adjusting and Correcting Entries Upon inspecting the books and records for Wernli Company for the year ended December 31, 2013, you find the following data: (a) A receivable of $640 from Hatch Realty is determined to be uncollectible. The company maintains an allowance for bad debts for such losses. (b) A creditor, E. F. Bowcutt Co., has just been awarded damages of $3,500 as a result of breach of contract by Wernli Company during the current year. Nothing appears on the books in connection with this matter. (c) A fire destroyed part of a branch office. Furniture and fixtures that cost $12,300 and had a book value of $8,200 at the time of the fire were completely destroyed. The insurance company has agreed to pay $7,000 under the provisions of the fire insurance policy. (d) Advances of $950 to salespersons have been previously recorded as sales salaries expense. (e) Machinery at the end of the year shows a balance of $19,960. It is discovered that additions to this account during the year totaled $4,460, but of this amount, $760 should have been recorded as repairs. Depreciation is to be recorded at 10% on machinery owned throughout the year but at one-half this rate on machinery purchased or sold during the year. Record the entries required to adjust and correct the accounts. (Ignore income tax consequences.)
Adjusting and Correcting Entries Upon inspecting the books and records for Wernli Company for the year ended December 31, 2013, you find the following data: (a) A receivable of $640 from Hatch Realty is determined to be uncollectible. The company maintains an allowance for bad debts for such losses. (b) A creditor, E. F. Bowcutt Co., has just been awarded damages of $3,500 as a result of breach of contract by Wernli Company during the current year. Nothing appears on the books in connection with this matter. (c) A fire destroyed part of a branch office. Furniture and fixtures that cost $12,300 and had a book value of $8,200 at the time of the fire were completely destroyed. The insurance company has agreed to pay $7,000 under the provisions of the fire insurance policy. (d) Advances of $950 to salespersons have been previously recorded as sales salaries expense. (e) Machinery at the end of the year shows a balance of $19,960. It is discovered that additions to this account during the year totaled $4,460, but of this amount, $760 should have been recorded as repairs. Depreciation is to be recorded at 10% on machinery owned throughout the year but at one-half this rate on machinery purchased or sold during the year. Record the entries required to adjust and correct the accounts. (Ignore income tax consequences.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Adjusting and Correcting Entries Upon inspecting the books and records for Wernli Company for the year ended December 31, 2013, you find the following data: (a) A receivable of $640 from Hatch Realty is determined to be uncollectible. The company maintains an allowance for bad debts for such losses. (b) A creditor, E. F. Bowcutt Co., has just been awarded damages of $3,500 as a result of breach of contract by Wernli Company during the current year. Nothing appears on the books in connection with this matter. (c) A fire destroyed part of a branch office. Furniture and fixtures that cost $12,300 and had a book value of $8,200 at the time of the fire were completely destroyed. The insurance company has agreed to pay $7,000 under the provisions of the fire insurance policy. (d) Advances of $950 to salespersons have been previously recorded as sales salaries expense. (e) Machinery at the end of the year shows a balance of $19,960. It is discovered that additions to this account during the year totaled $4,460, but of this amount, $760 should have been recorded as repairs. Depreciation is to be recorded at 10% on machinery owned throughout the year but at one-half this rate on machinery purchased or sold during the year. Record the entries required to adjust and correct the accounts. (Ignore income tax consequences.)
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