Accounting – presented below is an aging schedule for mccann company

Presented below is an aging schedule for McCann Company.

 

 

 

 

 

A

 

B

 

C

 

D

 

E

 

F

 

G

 

 

1

 

Customer

 

Total

 

Not Yet Due

 

Number of Days Past Due

 

 

2

 

 

3

 

30-Jan

 

31-60

 

61-90

 

Over 90

 

 

4

 

Amos

 

$22,000

 

 

 

$10,000

 

$12,000

 

 

 

 

 

 

5

 

Brian

 

40,000

 

$40,000

 

 

 

 

 

 

 

 

 

 

6

 

Chevy

 

57,000

 

16,000

 

6,000

 

 

 

$35,000

 

 

 

 

7

 

Drake

 

34,000

 

 

 

 

 

 

 

 

 

$34,000

 

 

8

 

Others

 

132,000

 

96,000

 

16,000

 

14,000

 

 

 

6,000

 

 

9

 

 

 

$285,000

 

152,000

 

$32,000

 

$26,000

 

$35,000

 

$40,000

 

 

10

 

Estimated Percentage Uncollectible

 

 

 

3%

 

6%

 

13%

 

25%

 

60%

 

 
 
 

11

 

Total Estimated Bad Debts

 

$42,610

 

$4,560

 

$1,920

 

$3,380

 

$8,750

 

$24,000

 

 
 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2012, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000.

 

 

 

Instructions

 

(a) Journalize and post the adjusting entry for bad debts at December 31, 2012

 

(b) Journalize and post to the allowance account the following events and transactions in the year 2013

 

(1) On March 31, a $1,000 customer balance originating in 2012 is judged uncollectible.

 

(2) On May 31, a check for $1,000 is received from the customer whose account was written off as uncollectible on March 31.

 

 

 

(c)  Journalize the adjusting entry for bad debts on December 31, 2013, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated bad debts will be $28,600.

 

 

 

P10-1A

 

 

 

Rumblebuffin Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.

 

 

 

Debits

 

1. Cost of filing and grading the land                                                       $4,000

 

2. Full payment to building contractor                                                  700,000

 

3. Real estate taxes on land paid for the current year                            5,000

 

4. Cost of real estate purchased as a plant site (land

 

     building $45,000)                                                                                  145,000

 

5. Excavation costs for new building                                                       35,000

 

6. Architect’s fees on building plans                                                        10,000

 

7. Accrued real estate taxes paid at time of purchase

 

    of real estate                                                                                                2,000

 

8. Cost of parking lots and driveways                                                     14,000

 

9. Cost of demolishing building to make land suitable

 

    for construction of new building                                                         15,000

 

                                                                                                                     $930,000

 

 

 

Credit

 

10. Proceeds from salvage of demolished building                            $     3,500

 

 

 

Instructions

 

Analyze the foregoing transactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account titles.

 

 

 

Item                Land               Buildings                   Other Accounts

 

 

 

P10-3A

 

On January 1, 2012, Tiggy Company purchased the following two machines for use in its production process.

 

            Machine A: The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, unsurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Tiggy estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.

 

 

 

            Machine B: The recorded cost of this machine was $160,000. Tiggy estimates that the useful life of the is 4 years with a $10,000 salvage value remaining at the end of that time period.

 

 

 

Instructions

 

(a) Prepare the following for Machine A.

 

(1)  The journal entry to record its purchase on January 1, 2012.

 

(2)  The journal entry to record annual depreciation at December 31, 2012.

 

(b) Calculate the amount of depreciation expense that Tiggy should record for Machine B each year of its useful life, under the following assumptions.

 

(1)  Tiggy uses the straight-line method of depreciation.

 

(2)  Tiggy uses the declining-balance method. The rate used is twice the straight-line rate.

 

(3)  Tiggy uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2012, 45,000 units; 2013, 35,000 units; 2014, 25,000 units; 2015, 20,000 units.

 

 

      (c) Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2012)? The highest amount in year 4 (2015)? The highest total amount over the 4-year period?

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