The company’s M.S accountants make adjusting entries monthly, and they make all closing entries annuity company is growing rapidly and prides itself on having no long-term liabilities. M.ST. blceDECEMBER 31, 2018 cash $ 45,000Marketable securities 25,000 Accounts receivable… 125,000Allowance for doubtful accounts $5,000Merchandise inventory 250,000Office supplies. 1,200Prepaid insurance 6,600 Building and fixtures 1,7911,000 Accumulated depreciation 800,000 Land 64,800Accounts payable 70,000Unearned customer deposits 8,000Income taxes payable. 75,000Capital stock 1,000,000Retained earnings 240,200Unrealized holding gain on investments 6,000sales 1,600,000 Cost of goods sold 958,000Bank service charges 200Uncollectible accounts expense 9,000Salary and wages expense 395,000Office supplies expense 400Insurance expense 6,400Utilities expense 3,600Depreciation expense 48,000Income tax expense 75,000 $3,804,200 $3,804,200 Other information trial balance The most recent bank statement reports a balance of $46.975. Included with the bank statement was a $2,500 check from Iggy Smarts, a professional musician, charged back to M.S NSF. The bank's monthly service charge was $25. Three checks written by Music-Is-Us to suppliers of merchandise has not yet cleared the bank for payment as of the statement date. These cheques included: no. 508 $5,500; no. 511, $7,500: and no. 521, $8,000. Deposits of $16,500 reached the bank too late for inclusion in the current bank statement. The company prepare a bank reconciliation at the end of each month.2. M.S has a portfolio of marketable securities that originally cost S19.000. As of Dec 31, the market value of these securities was $27,500. All short-term investments are classified as “available for sale”3. During Dec $6,400 of accounts receivable were written off as uncollectable. Arecent aging of the company's accounts receivable led management to conclude that an allowance for doubtful accounts of $8.500 is needed at Dec 31, 2018. 4. The company uses a perpetual inventory system. A year end physical count revealed that several guitars reported in the inventory records were missing. The cost of the missing units amounted to $1.350. This amount is not considered significant relative to the total.5. At Dec 31. approximately $900 in office supplies remained on hand 6. The company pays for its insurance policies 12 months in advance. Its most recent payment was made on Nov 1. 2018. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months 7. Depreciation expense related to the company's building and fixtures is $5.000 for the month ending Dec 31, 2018. 8.Although M.S carries an extensive inventory, it is not uncommon for experienced musicians to order custom guitars made to their exact specifications. Manufacturers do not allow any sales returns of custom-made guitars. The entire sales amount is collected at the time a custom order is placed and is credited to an account entitled "Unearned Customer Deposits, as a Dec 31, $4,800 of these deposits remained unfilled because the special-order guitars have not been received from manufacturers. The cost of goods sold and the reduction in inventory associated with all custom orders is recorded when the merchandise is delivered to customers. At that time, the adjusting entry requires only a decrease to unearned customer deposits and an increase in sales. 9.Accrued income taxes payable for the entire year ending Dec 31, 2018, total Instructions S81,000. No income tax payments are due until early in 2019. a.Prepare a bank reconciliation and make the journal entries to update the accounting records of M.S as of Dec 31, 2018. b.Prepare the adjusting entry to update the company’s marketable securities portfolio to its mark to market value. c.Prepare the adjusting entry at Dec 31, 2018, to report the company's accounts receivable at their net realizable value (total amount receivable, less estimated allowance for uncollectible accounts). d. Prepare the entry to account for the guitars missing from the company’s investor at the end of the year. e.prepares the adjusting entry for supplies office using during Dec f. Prepare the adjusting entry to account for the expiration of the company insurance policy during Dec. g.Prepare the adjusting entry to account for the depreciation of the company's building and fixtures during Dec.
Bad Debts
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.
The company’s M.S accountants make
M.S
T. blce
DECEMBER 31, 2018
cash $ 45,000
Marketable securities 25,000
Allowance for doubtful accounts $5,000
Merchandise inventory 250,000
Office supplies. 1,200
Prepaid insurance 6,600
Building and fixtures 1,7911,000
Land 64,800
Accounts payable 70,000
Unearned customer deposits 8,000
Income taxes payable. 75,000
Capital stock 1,000,000
Retained earnings 240,200
Unrealized holding gain on investments 6,000
sales 1,600,000
Cost of goods sold 958,000
Bank service charges 200
Uncollectible accounts expense 9,000
Salary and wages expense 395,000
Office supplies expense 400
Insurance expense 6,400
Utilities expense 3,600
Depreciation expense 48,000
Income tax expense 75,000
$3,804,200 $3,804,200
Other information
The most recent bank statement reports a balance of $46.975. Included with the bank statement was a $2,500 check from Iggy Smarts, a professional musician, charged back to M.S NSF. The bank's monthly service charge was $25. Three checks written by Music-Is-Us to suppliers of merchandise has not yet cleared the bank for payment as of the statement date. These cheques included: no. 508 $5,500; no. 511, $7,500: and no. 521, $8,000. Deposits of $16,500 reached the bank too late for inclusion in the current bank statement. The company prepare a bank reconciliation at the end of each month.
2. M.S has a portfolio of marketable securities that originally cost S19.000. As of Dec 31, the market value of these securities was $27,500. All short-term investments are classified as “available for sale”
3. During Dec $6,400 of accounts receivable were written off as uncollectable. Arecent aging of the company'saccounts receivable led management to conclude that an allowance for doubtful accounts of $8.500 is needed at Dec 31, 2018.
4. The company uses a perpetual inventory system. A year end physical count revealed that several guitars reported in the inventory records were missing. The cost of the missing units amounted to $1.350. This amount is not considered significant relative to the total.
5. At Dec 31. approximately $900 in office supplies remained on hand
6. The company pays for its insurance policies 12 months in advance. Its most recent payment was made on Nov 1. 2018. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months
7. Depreciation expense related to the company's building and fixtures is $5.000 for the month ending Dec 31, 2018.
8.Although M.S carries an extensive inventory, it is not uncommon for experienced musicians to order custom guitars made to their exact specifications. Manufacturers do not allow any sales returns of custom-made guitars. The entire sales amount is collected at the time a custom order is placed and is credited to an account entitled "Unearned Customer Deposits, as a Dec 31, $4,800 of these deposits remained unfilled because the special-order guitars have not been received from manufacturers. The cost of goods sold and the reduction in inventory associated with all custom orders is recorded when the merchandise is delivered to customers. At that time, the adjusting entry requires only a decrease to unearned customer deposits and an increase in sales.
9.Accrued income taxes payable for the entire year ending Dec 31, 2018, total Instructions S81,000. No income tax payments are due until early in 2019.
a.Prepare a bank reconciliation and make the
b.Prepare the adjusting entry to update the company’s marketable securities portfolio to its mark to market value.
c.Prepare the adjusting entry at Dec 31, 2018, to report the company's accounts receivable at their net realizable value (total amount receivable, less estimated allowance for uncollectible accounts).
d. Prepare the entry to account for the guitars missing from the company’s investor at the end of the year.
e.prepares the adjusting entry for supplies office using during Dec
f. Prepare the adjusting entry to account for the expiration of the company insurance policy during Dec.
g.Prepare the adjusting entry to account for the depreciation of the company's building and fixtures during Dec.
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