Question

Questions:  For Kroger deposits in transit: What is the account titled Store deposits in-transit (refer to footnote 1)? This is not an account you will find on the majority of company financial statements. Why does Kroger include this account? Is it odd that this account is larger than the cash balance? How do you explain this?

Information Needed to Answer Questions:

Jan. 28, 2017 Jan. 30, 2016 $322 910 1,649 7,852 (1,291) 898 $ 277 923 1,734 7,440 (1,272) 790 9,892 19,619 1,053 2,724 609 33,897 10,340 21,016 1,153 3,031 965 36,505 2,252 2,370 CONSOLIDATED BALANCE SHEETS- USD ($) $ in Millions Current assets Cash and temporary cash investments Store deposits in-transit Receivables FIFO inventory LIFO reserve Prepaid and other current assets Total current assets Property, plant and equipment, net Intangibles, net Goodwill Other assets Total Assets Current liabilities Current portion of long-term debt including obligations under capital leases and financing obligations Trade accounts payable Accrued salaries and wages Deferred income taxes Other current liabilities Total current liabilities Long-term debt including obligations under capital leases and financing obligations Deferred income taxes Pension and postretirement benefit obligations Other long-term liabilities Total Liabilities Commitments and contingencies (see Note 13) SHAREHOLDERS' EQUITY Preferred shares, $100 per share, 5 shares authorized and unissued Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2016 and 2015 Additional paid-in capital Accumulated other comprehensive loss Accumulated earnings Common shares in treasury, at cost, 994 shares in 2016 and 951 shares in 2015 Total Shareholders' Equity - The Kroger Co. Noncontrolling interests Total Equity Total Liabilities and Equity 5,818 1,234 251 3,305 12,860 11,825 1,927 1,524 1,659 29,795 5,728 1,426 221 3,226 12,971 9,709 1,752 1,380 1,287 27,099 1,918 1,918 3,070 (715) 15,543 (13,118) 6,698 2,980 (680) 14,011 (11,409) 6,820 (22) 6,798 $33,897 12 6,710 $36,505

Answer 1

Requirement 1
Transaction	General Journal	Debit	Credit
1	Bad debt expense	$ 1,35,560.00
	Allowance for Doubtful Accounts		$ 1,35,560.00
	(To Record Adjusting Entry at Year end)
2	Bad debt expense	$       1,62,279
	Allowance for Doubtful Accounts		$       1,62,279
	(To Record Adjusting Entry at Year end)
3	Bad debt expense	$          87,131
	Allowance for Doubtful Accounts		$          87,131
	(To Record Adjusting Entry at Year end)
Working :
1	Bad debts are estimated @ 4% of Credit sales
	$3389000*4%	$ 1,35,560.00
2	Bad debts are estimated 3% of total sales
	[$2020300+$3389000 ]*3%	$       1,62,279
3	Allowance is 7% of Accounts Receivable
	unadjusted Balance	$          15,250	Debit
	Estimated Balance ( $1026867*7%)	$          71,881	Credit
		$          87,131	Credit