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The A.T. Cross Company is well known for its Crosspens. The company recently reported the following amounts in itsunadjusted trial balance as of December 31, 2010.

1.

Assume Cross uses 1/2 of 1 percent ofsales to estimate its bad debt expense for the year. Prepare theadjusting journal entry required at December 31, 2010, forrecording Bad Debt Expense. (TIP: The percentage of credit salesmethod directly calculates Bad Debt Expense.)

2.

Assume instead that Cross uses the aging of accounts receivablemethod and estimates that $1,005,000 of Accounts Receivable will beuncollectible. Prepare the adjusting journal entry required atDecember 31, 2010, for recording bad debt expense. (TIP: The agingof accounts receivable method focuses on calculating what theadjusted Allowance for Doubtful Accounts balance should be. Youneed to consider the existing balance when determining theadjustment.)

3.

Assume instead that Cross uses the aging of accounts receivablemethod and estimates that $1,005,000 of Accounts Receivable will beuncollectible and unadjusted balance in Cross

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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Swathmore Clothing Corporation grants its customers 30 days’credit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 2% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly.

At the end of 2012, accounts receivablewere $606,000 and the allowance account had a credit balance of$70,000. Accounts receivable activity for 2013 was as follows:

Beginning balance $ 606,000
Credit sales 2,780,000
Collections (2,643,000 )
Write-offs (55,000 )
Ending balance $ 688,000
The company’scontroller prepared the following aging summary of year-endaccounts receivable:
Summary
AgeGroup Amount Percent Uncollectible
0–60days $ 450,000 3 %
61–90 days 74,000 13
91–120 days 65,000 24
Over120 days 99,000 39
Total $ 688,000
Required:
1.

Prepare a summary journal entry to record the monthly bad debtaccrual and the write-offs during the year. (If no entry isrequired for a particular event, select "No journal entry required"in the first account field.)

1. Record monthly bad debt expense accrual summary.

2. Record year 2013 accounts receivable write-offs.

2.

Prepare the necessary year-end adjusting entry for bad debtexpense. (If no entry is required for an event, select "Nojournal entry required" in the first account field.)

Record the year-end adjusting entry for bad debt expense
3.1 What is thetotal bad debt expense for 2013
3.2 Calculate theamount of accounts receivable that would appear in the 2013 balancesheet?

15. At December 31, the stockholders’ equity of Smith Companywas as follow:
Common stock, $5 par value: 1,100,000 shares issued
and 1,000,000 shares outstanding $5,500,000
Additional paid-in capital 1,400,000
Retained earnings 1,500,000
Treasury stock, (100,000 shares) (700,000)
Total stockholders’ equity $7,700,000
The book value per share of common stock is
a. $7.00
b. $7.20
c. $8.40
d. $7.70


16. The fraud triangle applies to
a. U.S companies but not international companies.
b. international companies but not U.S. companies.
c. U.S. and Canadian companies but not other internationalcompanies.
d. U.S and international companies.

17.. Lewis Company gathered the following reconcilinginformation in preparing its April bank reconciliation:
Cash balance per books, 4/30 $19,800
Deposits in transit 2,700
Notes receivable and interest collected by bank 6,600
Bank charge for check printing 150
Outstanding checks 13,500
NSF check 1,260
The adjusted cash balance per books on April 30 is
a. $12,930.
b. $14,190.
c. $23,730.
d. $24,990.

18. An aging of a company's accounts receivable indicates that$14,000 are estimated to be uncollectible. If Allowance forDoubtful Accounts has a $1,100 credit balance, the adjustment torecord bad debts for the period will require a
a. debit to Bad Debt Expense for $14,000.
b. debit to Allowance for Doubtful Accounts for $12,900.
c. debit to Bad Debt Expense for $12,900.
d. credit to Allowance for Doubtful Accounts for $14,000.

19. Stockton Company uses the percentage of sales method forrecording bad debt expense. For the year, cash sales are $600,000and credit sales are $2,700,000. Management estimates that 1% isthe sales percentage to use. What adjusting entry will StocktonCompany make to record the bad debt expense?
a. Bad Debt Expense 33,000
Allowance for Doubtful Accounts 33,000
b. Bad Debt Expense 27,000
Allowance for Doubtful Accounts 27,000
c. Bad Debt Expense 27,000
Accounts Receivable 27,000
d. Bad Debt Expense 33,000
Accounts Receivable 33,000

20. Depreciation is a process of
a. asset devaluation.
b. cost accumulation.
c. cost allocation.
d. asset valuation.

21. On September 1, Joe's Painting Service borrows $150,000 fromNational Bank on a 4-month, $150,000, 6% note. The entry by Joe'sPainting Service to record payment of the note and accrued intereston January 1 is
a. Notes Payable 153,000
Cash 153,000
b. Notes Payable 150,000
Interest Payable 3,000
Cash 153,000
c. Notes Payable 150,000
Interest Payable 9,000
Cash 159,000
d. Notes Payable 150,000
Interest Expense 3,000
Cash 153,000

22. All of the following are intangible assets except
a. copyrights.
b. goodwill.
c. patents.
d. research and development costs.

23. If a corporation hasonly one class of stock, it is referred to as
a. classless stock.
b. preferred stock.
c. solitary stock.
d. common stock.

Swathmore Clothing Corporation grants its customers 30 days’credit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 2% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly. At the end of 2012, accountsreceivable were $576,000 and the allowance account had a creditbalance of $40,000. Accounts receivable activity for 2013 was asfollows: Beginning balance $ 576,000 Credit sales 2,630,000Collections (2,493,000 ) Write-offs (40,000 ) Ending balance $673,000 The company’s controller prepared the following agingsummary of year-end accounts receivable: Summary Age Group AmountPercent Uncollectible 0–60 days $ 435,000 3 % 61–90 days 98,000 1091–120 days 50,000 20 Over 120 days 90,000 30 Total $ 673,000Required: 1. Prepare a summary journal entry to record the monthlybad debt accrual and the write-offs during the year. (If no entryis required for a particular event, select "No journal entryrequired" in the first account field.) 2. Prepare the necessaryyear-end adjusting entry for bad debt expense. (If no entry isrequired for an event, select "No journal entry required" in thefirst account field.) 3.1 What is total bad debt expense for 2013?3.2 Calculate the amount of accounts receivable that would appearin the 2013 balance sheet?

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