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(ACCT102)[200X](s)midterm~smliu^_646.pdf
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Introduction to Accounting
Midterm Examination
Students Name (Please print)
_____________________
Student Number
_____________________
Time: 120 Minutes Marks: 105
I.
ACCOUNTS RECEIVABLES (27 marks, suggested time 30 minutes)
Florida Company uses the aging of accounts receivable method to estimate its bad debt expense. On December 31, 2004 an aging analysis of accounts receivable revealed the following:
Additional information: On June 5, 2005, the company determined that $23,500 accounts receivable was uncollectible.
Required: (Provide your Calculation)
1.
Calculate the amount of the Allowance for Doubtful Accounts that should be reported on the 2004 balance sheet. (4 marks)
620,000
0.50%
3,100
270,000
2%
5,400
145,000
8%
11,600
55,000
20%
11,000
32,000
50%
16,000
18,000
70%
12,600
1,140,000
$59,700
2.
Calculate the amount of the Bad Debt Expense that should be reported on the 2004 income statement, assuming that the balance of the Allowance for Doubtful Accounts on January 1, 2004 was $44,000 and that accounts receivable written off during 2004 totaled $49,200. (4 marks)
ALLOANCE FOR DOUBTFUL ACCOUNT
$44,000
49,200
X
$59,700
44,000 C 49,200 + X = 59,700. X = 64,900
3.
Prepare the adjusting journal entry to record bad debt expense on December 31, 2004. (3 marks)
Debit
Credit
2004
BAD DEBT EXPENSE
64,900
Dec. 31
ALLOWANCE FOR DOUBTFUL ACCOUNT
64,900
4.
Show how Accounts Receivable will appear on the balance sheet as of December 31, 2004. (4 marks)
ACCOUNTS RECEIVABLE
$1,140,000
LESS: ALLOWANCE FOR DOUBTFUL ACCOUNT
59,700
$1,080,300
5.
Prepare journal entry to write off the uncollectible accounts receivable on June 5, 2005. (3 marks)
Debit
Credit
2005
ALLOWANCE FOR DOUBTFUL ACCOUNT
23,500
Jun. 5
ACCOUNTS RECEIVABLE
23,500
6.
Suppose that the companys cash sales account for 90% of its total sales. Because the amount of accounts receivable is relatively small, the manager decided that there is no need to set up an allowance account for possible bad debts. Instead, bad debt will be recognized only when it is actually uncollectible. Under this assumption, prepare entries on December 31, 2004 and June 5, 2005 (as in requirements 3 and 5), if necessary. If no entry is needed, write No entry. (6 marks)
Debit
Credit
2004
Dec. 31
NO ENTRY
2005
Jun. 5
BAD DEBT EXPENSE
23,500
ACCOUNTS RECEIVABLE
23,500
7.
Following requirement 6, which Generally Acce