Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 3.27E
Identifying the impact of
Austin Acoustics recorded the following transactions during October 2016:
a. Received $2,500 cash from customer for three months of service beginning October 1, 2016, and ending December 31, 2016. The company recorded a $2,500 debit to Cash and a $2,500 credit to Unearned Revenue.
b. Employees are paid $3,000 on Monday following the five-day workweek October 31, 2016, is on Friday.
c. The company pays $440 on October 1, 2016 for its six-month auto insurance policy. The company recorded a $440 debit to Prepaid Insurance and a $440 credit to Cash.
d. The company purchased office furniture for $8,300 on January 2, 2016. The company recorded a $8,300 debit to Office Furniture and a $8,300 credit to Accounts Payable. Annual
e. The company began October with $50 of office supplies on hand. On October 10, the company purchased office supplies on account of$100. The company recorded a $100 debit to Office Supplies and a $100 credit to Accounts Payable. The company used $120 of office supplies during October.
f. The company received its electric bill on October 30 for $325 but did not pay it until November 10.
g. The company paid November’s rent of $2,500 on October 30. On October 30, the company recorded an $2,500 debit to Rent Expense and an $2,500 credit to Cash.
Indicate if an adjusting entry is needed for each item on October 31 for the month of October. Assuming the adjusting entry is not made, indicate which specific category or categories of accounts on the financial statements are misstated and if they are overstated or understated. Use the following table as a guide. Item a is completed as an example:
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following transactions were completed by Irvine Company during the current fiscal year ended December 31:
Required: 1. Record the January 1 credit balance of $25,685 in a T-account for Allowance for Doubtful Accounts.
2.A. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.
B. Post each entry that affects the following selected T-accounts and determine the new balances: Allowance for Doubtful Accounts and Bad Debt Expense.
3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¼ of 1% of the net sales of $17,710,000 for the year, determine the following:
A. Bad debt expense for the year.
B. Balance in the allowance account after the adjustment of…
At the end of the annual reporting period, the accounts of Berry Company showed the following information:
a. Sales Revenue for 2015, P180,000 of which one sixth was on credit.
b. Allowance for doubtful accounts, balance January 1, 2015, P900 credit.
c. Accounts receivable, balance December 31, 2015 ( prior to the write-off of uncollectible accounts during 2015), P18,050.
d. Uncollectible accounts to be written off, December 31, 2015, P1,050.
e. Aging schedule at December 31, 2015, showing the following breakdown of total accounts receivable: Status Amount % Uncollectible Not past due P10,000 .5% Past due 1-60 days 4,000 1% Past due over 60 days 3,000 8%
Question:
1. During 2015, how much of the accounts receivable was collected?
a. P12,500
b. P11,950
c. P10,950
d. P11,000
2. On total receivables at year-end, using the aging of accounts receivable, what is the entry to record bad debts expense ?
a. Debit Bad debts expense 330; credit Allowance for bad debts 330…
On December 31, 2017, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $10,000.
What amount would the company report as its net accounts receivable on December 31, 2017?
Prepare the journal entry to write off the accounts on January 2, 2018.
Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?
Chapter 3 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
Ch. 3 - Which of the following is true of accrual basis...Ch. 3 - Get Fit Now gains a client who prepays 540 for a...Ch. 3 - The revenue recognition principle requires a. time...Ch. 3 - Adjusting the accounts is the process of a....Ch. 3 - Which of the following is an example of a deferral...Ch. 3 - Assume that the weekly payroll of In the Woods...Ch. 3 - The adjusted trial balance shows a. amounts that...Ch. 3 - A D Window Cleaning performed 450 of services but...Ch. 3 - A worksheet a. is a journal used to record...Ch. 3 - On February 1, Clovis Wilson Law Firm contracted...
Ch. 3 - What is the difference between cash basis...Ch. 3 - Which method of accounting (cash or accrual basis)...Ch. 3 - Which accounting concept or principle requires...Ch. 3 - What is a fiscal year? Why might companies choose...Ch. 3 - Under the revenue recognition principle, when is...Ch. 3 - Prob. 6RQCh. 3 - When are adjusting entries completed, and what is...Ch. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQCh. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - What is an accrued expense? Provide an example.Ch. 3 - What is an accrued revenue? Provide an example.Ch. 3 - Prob. 18RQCh. 3 - When is an adjusted trial balance prepared, and...Ch. 3 - If an accrued expense is not recorded at the end...Ch. 3 - What is a worksheet, and how is it used to help...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - Comparing cash and accrual basis accounting for...Ch. 3 - Comparing cash and accrual basis accounting for...Ch. 3 - Applying the revenue recognition principle South...Ch. 3 - Applying the matching principle Suppose on January...Ch. 3 - Identifying types of adjusting entries A select...Ch. 3 - Journalizing and posting adjusting entries for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Prob. 3.9SECh. 3 - Prob. 3.10SECh. 3 - Prob. 3.11SECh. 3 - Journalizing an adjusting entry for accrued...Ch. 3 - Prob. 3.13SECh. 3 - Determining the effects on financial statements In...Ch. 3 - Prob. 3.15SECh. 3 - Prob. 3.16SECh. 3 - Prob. 3.17SECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Prob. 3.20ECh. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.23ECh. 3 - Prob. 3.24ECh. 3 - Prob. 3.25ECh. 3 - Prob. 3.26ECh. 3 - Identifying the impact of adjusting entries on the...Ch. 3 - Journalizing adjusting entries and analyzing their...Ch. 3 - Prob. 3.29ECh. 3 - Prob. 3.30ECh. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Understanding the alternative treatment of...Ch. 3 - Journalizing adjusting entries and subsequent...Ch. 3 - Journalizing adjusting entries and identifying the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - A Using the worksheet to record the adjusting...Ch. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Journalizing adjusting entries and subsequent...Ch. 3 - Journalizing adjusting entries and identifying the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Prob. 3.43BPCh. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Prob. 3.45CPCh. 3 - Prob. 3.46PSCh. 3 - One year ago, Tyler Stasney founded Swift...Ch. 3 - Prob. 3.1CTEICh. 3 - XM, Ltd. was a small engineering firm that built...Ch. 3 - Prob. 3.1CTFSCCh. 3 - In 75 words or fewer, explain adjusting journal...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?arrow_forwardRogan Companys total sales on account for the year amounted to 327,000. The company, which uses the allowance method, estimated bad debts at 1 percent of its credit sales. Required Journalize the following selected entries: 2017 Dec.31 Record the adjusting entry. 2018 Mar. 2Write off the account of A. M. Billson as uncollectible, 584. June 6Write off the account of W. H. Gilders as uncollectible, 492. Check Figure Adjusting entry amount, 3,270arrow_forwardAdjusting Entries Kretz Corporation prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for March 2016: Kretz Corporation takes out a 90-day, 8%, $15,000 note on March 1, 2016, with interest and principal to be paid at maturity. The asset account Office Supplies on Hand has a balance of $1,280 on March 1, 2016. During March, Kretz adds $750 to the account for purchases during the period. A count of the supplies on hand at the end of March indicates a balance of $1,370. The company purchased office equipment last year for $62,600. The equipment has an estimated useful life of six years and an estimated salvage value of $5,000. The companys plant operates seven days per week with a daily payroll of $950. Wage earners are paid every Sunday. The last day of the month is Thursday, March 31. The company rented an idle warehouse to a neighboring business on February 1, 2016, at a rate of $2,500 per month. On this date, Kretz Corporation credited Rent Collected in Advance for six months rent received in advance. On March 1, 2016, Kretz Corporation credited a liability account, Customer Deposits, for $4,800. This sum represents an amount that a customer paid in advance and that Kretz will earn evenly over a four-month period. Based on its income for the month, Kretz Corporation estimates that federal income taxes for March amount to $3,900. Required For each of the preceding situations, prepare in general journal form the appropriate adjusting entry to be recorded on March 31, 2016.arrow_forward
- Prepare an aging schedule to determine the total estimated uncollectibles at March 31,2018arrow_forwardAt December 31, 2017, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $1,738,920 2,812,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $852,036 debit 10,250 debit Allowance for doubtful accounts Problem 9-2A Part 1 Required: 1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions. a. Bad debts are estimated to be 3% of credit sales. b. Bad debts are estimated to be 2% of total sales. C. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31, 2017). View transaction list Journal entry worksheet 1. 2. 3 Bad debts are estimated to be 3% of credit sales.arrow_forwardHardy's Landscape Service's total revenue on account for 2018 amounted to $273,205. The company, which uses the allowances method, estimates bad debts at 1/2 percent of total revenue on account. Required: Journalize the following selected entries: 2012 Dec. 12 Record services performed on account for E.E. Morton, $245. Dec. 31 Record the adjusting entry for Bad Debts Expense. Dec. 31 Record the closing entry for Bad Debts Expense. 2013 Feb. 18 Write off the account of E.E. Morton as uncollectible, $245.arrow_forward
- During its first year of operation in 2014, Browne Sales Corporation made most of its sales on credit. At the end of the year, accounts receivable amounted to $199,000. On December 31, 2014, management reviewed the collectible status of the accounts receivable. Approximately $16,500 of the $199,000 of accounts receivable were estimated to be uncollectible. What adjusting entry would be made December 31, 2014?arrow_forwardDuring the year ended December 31, 2018, Kelly's Camera Shop had sales revenue of $140,000, of which $70,000 was on credit. At the start of 2018, Accounts Receivable showed a $11,000 debit balance and the Allowance for Doubtful Accounts showed a $540 credit balance. Collections of accounts receivable during 2018 amounted to $62,000. Data during 2018 follow: a. On December 10, a customer balance of $1,200 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December. 2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2018. 3. On the basis of the data available, does the 2 percent rate appear to be reasonable? Complete this question by entering your answers in…arrow_forwardCasebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Customer Amount $ 4,650 Shawn Brooke Eve Denton 5,180 Art Malloy 11,050 Cassie Yost 9,120 Total $30,000 a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during the year. Based on past history and industry averages, 4% of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Company's net income have been under the direct write-off method than under the allowance method?arrow_forward
- For each of the above independent situations, prepare the adjusting entries that must be made on the December 31, 20X1, worksheet.arrow_forwardPrepare the appropriate journal entries that should be recorded as a result of each of these contingencies. If no journal entry is indicated,state why?arrow_forwardAt the end of 2016, Splish Brothers Inc. has accounts receivable of $675,100 and an allowance for doubtful accounts of $24,370. On January 24, 2017, it is learned that the company’s receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,127.(a) Prepare the journal entry to record the write-offarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
College Accounting (Book Only): A Career ApproachAccountingISBN:9781305084087Author:Cathy J. ScottPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781305084087
Author:Cathy J. Scott
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY