Question

A company record the sales return for my credit customer indicate how this transaction would affect assets stockholders equity in revenues

On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances: Accounts Debit Credit Cash $ 24,300 Accounts Receivable 13,800 Allowance for Uncollectible Accounts $ 1,200 Supplies 2,700 Notes Receivable (68, due in 2 years) 22.000 Land 7,200 Accounts Payable 8.200 Common Stock 98,000 Retained Earnings 32.600 Totals $140,000 $140,000 During January 2021, the following transactions occur: January 2 Provide services to customers for cash, $37,100. January 6 Provide services to customers on account, $74,400. January 15 Weite oft accounts receivable as uncollectible, $1,000. January 20 Pay cash for salaries, $31,600. January 22 Receive cash on accounts receivable, $72,000. January 25 Pay cash on accounts payable, $5,700. January 30 Pay cash for utilities during January, $13,900. The following information is available on January 31, 2021 a. The company estimates the amount of their bad debt expense and uncollectible accounts at the end of each month. Out of the total accounts receivable shown on the General Ledger (See General Ledger Tab for total A/R balance) on January 31, the company determines $5,200 is past due, and 20% of these past due amounts are estimated to be uncollectible (Hint multiply the percentage by the $ amount of the A/R that is past due). The remaining accounts receivable balance on January 31 is current (total A/R minus amount that is past due), and 5% of the current balance is estimated to be uncollectible. Hint for a.) 1.) Calculate the amount that is estimated to be uncollectible for the past due A/R 0% past due A/R balance) ii) Calculate the amount that is estimated to be uncollectible for the current balance of A/R (% current balance of A/R) II.) Add these two amounts together ( + ii.) and this your target balance (new ending balance) for the Allowance for Uncollectible Account. Subtract the current balance in Allowance account (See General Ledger Tab for current balance) from this new target balance to calculate the amount that will be recorded into bad debt expense and the allowance account. IV) Watch video tutorial on this subject: https://vimeo.com/cdivideo/review/254531867/7c9cc2a218 a. Supplies at the end of January total $800. b. Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31. c. Unpaid salaries at the end of January are $33,700.

Answer 1

3D Family Fireworks Journal entries No. Date Account 1 2-Jan Cash Service Revenue Credit Calculation Debit $ 37,100 $ 37,100 2 $ 74,400 6-Jan Accounts Receivable Service Revenue $ 74,400 3 $ 1,000 15-Jan Allowance for Uncollectible Accounts Accounts Receivable $ 1,000 4 $ 31,600 20-Jan Salaries expense Cash $ 31,600 5 $ 72,000 22-Jan Cash Accounts Receivable $ 72,000 6 $ 5,700 25-Jan Accounts Payable Cash $ 5,700 7 $ 13,900 30-Jan Utilities Expense Cash $ 13,900 8 Adjusting entries 31-Jan Bad debts expense Allowance for Uncollectible Accounts $ 1,340 Workings below $ 1,340 9 $ 1,900 =2,700-800 31-Jan Supplies expense Supplies $ 1,900 10 $ 110 =22,000*6%*1/12 31-Jan Accrued Interest Revenue Interest Revenue $ 110 11 $ 33,700 $ 33,700 31-Jan Salaries expense Salaries Payable Closing entries 31-Jan Service Revenue Interest Revenue Retained Earnings 12 $ 111,500 $ 110 $ 111,610 13 $ 82,440 31-Jan Retained Earnings Salaries expense Utilities Expense Supplies expense Bad debts expense $ 65,300 13,900 1,900 1,340 Wkgs Bad debts expense Accounts Receivable Past due Not past due Total Accts Rec Ucollectible % Uncollectible Amt $ 5,200 20% $ 1,040 $ 10,000 5% $ 500 $ 15,200 1,540 Allowance for Uncollectible Accounts Beginning Balance Write off Unadjusted Ending Balance Adjusted Ending Balance Bad debts expense $ 1,200 $ (1,000) $ 200 $ 1,540 $ 1,340 =1,540-200

3D Family Fireworks T Accounts Date Debit Date Credit Date Cash Op bal $ 24,300 20-Jan $ 31,600 Op bal 2-Jan $ 37,100 25-Jan $ 5,700 6-Jan 22-Jan $ 72,000 30-Jan $ 13,900 Debit Date Credit Accounts Receivable $ 13,800 $ 74,400 15-Jan $ 1,000 22-Jan $ 72,000 Date Debit Date Credit Date Allowance for Uncollectible Accounts Op bal $ 1,200 Op bal 15-Jan $ 1,000 31-Jan $ 1,340 Debit Date Credit Supplies $ 2,700 31-Jan $ 1,900 Bal. $ 82,200 Accrued Interest Revenue 31-Jan $ 110 Bal. $ 15,200 Notes Receivable (6%, due in 2 years) Op bal $ 22,000 Bal. Land $ 77,200 $ 1,540 Bal. $ 800 Accounts Payable 25-Jan $ 5,700 Op bal Op bal $ 8,200 Bal. $ Bal. Bal. Bal. $ 2,500 110 Salaries Payable 31-Jan $ 33,700 $ 22,000 Common Stock Op bal $ 77,200 Retained Earnings Op bal $ 98,000 $32,600 $ 33,700 $ 98,000 $ 32,600 Bal. Service Revenue 2-Jan 6-Jan Bal. Interest Revenue 31-Jan Bal. Salaries expense 31-Jan $ 31,600 31-Jan $ 33,700 Utilities Expense $ 13,900 $ 110 30-Jan $ 37,100 $ 74,400 $ 111,500 $ 110 Bal. $ 65,300 Bal. $ 13,900 Supplies expense $ 1,900 Bad debts expense 31-Jan $ 1,340 31-Jan Bal. $ 1,900 Bal. $ 1,340

Unadjusted TB Debit Credit 82,200 15,200 200 2,700 22,000 77,200 2,500 3D Family Fireworks Account Names Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Accrued Interest Revenue Notes Receivable (6%, due in 2 years) Land Accounts Payable Salaries Payable Common Stock Retained Earnings Service Revenue Interest Revenue Salaries expense Utilities Expense Supplies expense Bad debts expense Totals Adjusted TB Debit Credit 82,200 15,200 1,540 800 110 22,000 77,200 2,500 33,700 98,000 32,600 111,500 110 65,300 13,900 1,900 1,340 279,950 279,950 98,000 32,600 111,500 31,600 13,900 244,800 244,800

111,500 110 111,610 3D Family Fireworks Income Statement For Month ended Jan 31, 2021 Revenues Service Revenue Interest Revenue Total Revenues Expenses Salaries expense Utilities Expense Supplies expense Bad debts expense Total Expenses Net Income 65,300 13,900 1,900 1,340 82,440 29,170 Statement of Retained Earnings For Month ended Jan 31, 2021 Retained Earnings, Jan 1, 2021 Net Income Retained Earnings, Jan 31, 2021 32,600 29,170 61,770

3D Family Fireworks Balance Sheet As of Jan 31, 2021 Assets Current Assets Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Accrued Interest Revenue Total Current Assets 82,200 15,200 (1,540) 13,660 800 110 96,770 Long-term Assets Notes Receivable (6%, due in 2 years) Land Total Long-term Assets Total Assets 22,000 77,200 99,200 195,970 Liabilities & Stockholders Equity Current Liabilities Accounts Payable Salaries Payable Total Current Liabilities 2,500 33,700 36,200 Stockholders Equity Common Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 98,000 61,770 159,770 195,970