Chapter 7/8/9 study set

Solstice Company determines on October 1 that it cannot collect $62,000 of its accounts receivable from its customer, P. Moore. Apply the direct write-off method to record this loss as of October 1.

10/1 DR bad debts expense 62000 CR accounts receivable- P. Moore 62000

On December 1, Daw Company accepts a $40,000, 45-day, 9% note from a customer. (1) Prepare the year-end adjusting entry to record accrued interest revenue on December 31. (2) Prepare the entry required on the note's maturity date assuming it is honored. (Use 360 days a year.)

12/31 DR interest receivable 300 CR interest revenue 300 1/15 DR cash 40,450 CR notes receivable 40,000 CR interest revenue 150 CR interest receivable 300

1. straight line 2. units of production 3. double declining balance

3 depreciation methods

Levine Company uses the perpetual inventory system. April 8 Sold merchandise for $9,000 (that had cost $6,651) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. April 12 Sold merchandise for $7,800 (that had cost $5,054) and accepted the customer's Continental Card. Continental charges a 2.5% fee.

4/8 DR cash 8640 DR credit card expense 360 CR sales 9000 DR cogs 6651 CR merchandise inventory 6651 4/12 DR cash 7605 DR credit card expense 195 CR sales 7800 DR cogs 5054 CR merchandise inventory 5054

Juno Co. purchased a machine for $10,000 and estimates it will use the machine for four years with a $2,000 salvage value. Using the double declining-balance depreciation method, compute the machine's first year depreciation expense.

5,000 step 1- 1/ useful life (4 years)= .25 step 2- 2 x straight line rate (.25) = .50 step 3- double declining declining balance rate (.50) x beginning-period book value (10,000) = 5,000

The estimated allowances for uncollectibles is 18720 CREDIT b. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $4,000 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $500 debit.

B. 12/31 DR bad debts expense 14720 CR allowance for doubtful accounts 14720 C. 12/31 DR bad debts expense 19220 CR allowance for doubtful accounts 19220

A patent was purchased for $20,000 and expected to be used for the 20-year life with no salvage value. The entry to expense the patent during the second year of life will include which of the following entries?

DR Amortization Expense 1000 CR Accumulated Amortization 1000

Keesha Company borrows $155,000 cash on December 1 of the current year by signing a 90-day, 12%, $155,000 note. Record the issuance of the note on December 1.

DR cash 155000 CR notes payable 15500

Accepts a note for $3,000 with a %12 interest rate on Dec 16.

DR cash 3060 CR interest revenue 45 CR interest receivable 15 CR notes receivable 3000

Dextra Computing sells merchandise for $7,000 cash on September 30 (cost of merchandise is $4,900). Dextra collects 5% sales tax. Record the entry for the $7,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15. Record the cash sales and 5% sales tax.

DR cash 7350 CR sales 700 Cr sales tax payable 350

Selena Gomez sells $900,000 in tickets for three concerts, the entry is...

DR cash 900000 CR unearned (ticket) revenue 900000

Techcom has $100 of credit card sales with a %4 fee

DR cash 96 DR credit card expense 4 CR sales 100

Dextra Computing sells merchandise for $7,000 cash on September 30 (cost of merchandise is $4,900). Dextra collects 5% sales tax. Record the entry for the $7,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15. Record the cost of September 30th sales.

DR cogs 4900 CR merchandise inventory 4900

Dextra Computing sells merchandise for $7,000 cash on September 30 (cost of merchandise is $4,900). Dextra collects 5% sales tax. Record the entry for the $7,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15. Record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.

DR sales tax payable 350 CR cash 350

book a receivable for $950 to compstore

DR- AR-compstore 950 CR- sales 950

At yr end Dec.31 Chan Company estimates it's bad debts as %1 of it's annual credit sales of $487500. On the following Feb. 1 Chan decides that the $580 account of P.Park is uncollectible and writes it off as bad debt. June 5, Park unexpectedly pays amount previously written off.

Dec.31 DR bad debt expense 4875 CR allowance for doubtful accounts 4875 Feb.1 DR allowance for doubtful accounts 580 CR AR. P. Park 580 June 5 DR AR. P. Park 580 CR allowance for doubtful accounts 580 DR cash 580 CR AR. P. Park 580

Federal government taxes implemented on employers in order to provide unemployment benefits to qualified workers are known as (use acronym)

FUTA

On Oct. 5 Techcom agreed to accept $232 in cash along with a $600, 60 day, %!5 note from J.Cook to settle her $832 past due account. Record end of period interest adjustment.

Oct.5 DR cash 232 DR notes receivable 600 CR AR-J.Cook Dec.4 DR cash 615 CR notes receivable 600 CR interest revenue 15 Dec.31 DR interest receivable CR interest revenue

current period sales x bad debt percentage = estimated bad debt expense

Percent of sales method

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as:

SUTA

Which of the following liabilities could be a multi-period known liability? Unearned Subscription Revenues Notes Payable Wages Payable Accounts Payable

Unearned Subscription Revenues Notes payable

journal entry- a. note given to extend credit period b. at maturity

a. DR accounts payable CR cash CR notes payable b. DR notes payable DR interest expense CR cash

journal entry- a. note given to borrow from bank b. when note given to borrow from bank extends over two periods b. at maturity

a. DR cash CR notes payable b. DR interest expense CR interest payable c. DR interest expense DR interest payable (what you still have left to pay for interest) DR notes payable CR cash

journal entry- a. note given to borrow from bank b. at maturity

a. DR cash CR notes payable b. DR notes payable DR interest expense CR cash

A liability created by buying goods or services on credit is typically recorded to

accounts payable

________ are amounts owed to suppliers for products or services purchased on credit.

accounts payable

- to adjust the allowance for doubtful accounts balance so that the adjusted balance is equal to the estimate of the uncollectible AR

accounts receivable method

AR x percent = estimated amount of uncollectible accounts

accounts receivable method

accumulated depreciation + book value =

acquisition cost

this account is a contra asset account and deals with uncollectible accounts

allowance for doubtful accounts

This method is more common for larger companies. This method estimates the total bad debts at the end of each period that is expected to be realized from period sales.

allowance method

is a note receivable account a asset, liability, or equity account?

asset account

Angela Bennett is an employee of Marks Co. This past year, Angela received 1% of Marks net income, in addition to her annual salary. This added benefit is called a:

bonus plan

The exclusive right to publish or sell a musical, literary, or artistic work during the life of the creator plus 70 years is called a

copyright

allocating cost of an asset to an expense

depreciation

Unemployment taxes are examples of (employee/employer) taxes

employer

principal of the note x annual interest rate x time expressed in fraction of year (always a denominator of 360)

formula for interest

_______ are nonphysical assets used in operations that give companies long-term rights, or competitive advantages.

intangible assets

----------------- are measurable obligations arising from agreements, contracts, or laws. These include accounts payable, notes payable, payroll obligations, sales taxes, and unearned revenues.

known liabilities

A --- is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

liability

Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) ______ account.

liability

The purchase of a group of plant assets for one price is called a ______ purchase.

lump sum

the day the note (both the principal of the note and the interest accumulated on the note) which must be repaid

maturity date

______ are assets that are physically consumed when used, such as mineral deposits and oil and gas fields.

natural resources

A _______ is an exclusive right granted to its owner to manufacture and sell an item or use a process for 20 years.

patent

- based on income statement relation between bad debts and sales - also known as the income statement method - uses sales # reported on the income statement

percent of sales method

two common methods to estimate bad debts

percent of sales method and accounts receivable method

a written promise to pay a specific amount

promissory note

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

sales tax payable

A written promise to pay a specified amount on a stated future date within one year or the company's operating cycle, whichever is longer, is considered a __________.

short-term note payable

(cost - salvage value) / useful life

straight line depreciation formula

Amounts received in advance from customers for future products or services are typically recorded in a liability account called _______.

unearned revenues

Paid absences offered to employees are called ---- benefits.

vacation