Chapter 6 Reporting and Interpreting Sales Revenue Receivables and Cash 1 The following transactions were selected from among those completed by Cadence Retailers in 2013 Nov 20 Sold 20 items of merchandise to Customer B at an invoice price of 5 500 total terms 3 10 n 30 Nov 25 Sold two items of merchandise to Customer C who charged the 400 sales price on her Visa credit card Visa charges Cadence Retailers a 2 percent credit card fee Nov 28 Sold 10 identical items of merchandise to Customer D at an invoice price of 9 000 total terms 3 10 n 30 Nov 29 Customer D returned one of the items purchased on the 28th the item was defective and credit was given to the customer Dec 6 Customer D paid the account balance in full Dec 20 Customer B paid in full for the invoice of November 20 2013 Assume that Sales Returns and Allowances Sales Discounts and Credit Card Discounts are treated as contra revenues compute net sales for the two months ended December 31 2013 Do not round your intermediate calculations Net sales 2 During 2014 Adams Assembly Inc recorded credit sales of 1 300 000 Based on prior experience it estimates a 1 percent bad debt rate on credit sales Prepare journal entries for each transaction If no entry is required for a transaction event select No journal entry required in the first account field a The appropriate bad debt expense adjustment was recorded for the year 2014 b On December 31 2014 an account receivable for 4 000 from March of the current year was determined to be uncollectible and was written off General Journal Debit Credit Transaction a b 3 The bookkeeper at Jefferson Company has not reconciled the bank statement with the Cash account saying I don t have time You have been asked to prepare a reconciliation and review the procedures with the bookkeeper The April 30 2014 bank statement and the April ledger accounts for cash showed the following summarized A comparison of checks written before and during April with the checks cleared through the bank showed outstanding checks at the end of April of 5 600 No deposits in transit were carried over from March but a deposit was in transit at the end of April Prepare a detailed bank reconciliation for April Jefferson Company Bank Reconciliation April 30 2014 Company s Books Bank Statement Correct cash balance Correct cash balance Prepare the journal entries that the company should make as a result of the bank reconciliation What was the balance in the cash account in the ledger on May 1 2014 1 2 3 Description Description Description Debit Credit Debit Credit Debit Credit What total amount of cash should be reported on the balance sheet at the end of April Cash balance Total amount of cash Description Debit Credit 4 approach to estimate bad debt expense The balance of each account receivable is aged on the basis of three time periods as follows 1 not yet due 295 000 2 up to 120 days past due 55 000 and 3 more than 120 days past due 18 000 Experience has shown that for each age group the average loss rate on the amount of the receivables at year Chou Company uses the aging Partial Balance Sheet Dec 31 2015 end due to uncollectability is 1 2 5 percent 2 11 percent and 3 30 percent respectively At December 31 2015 end of the current year the Allowance for Doubtful Accounts balance is 100 credit before the end of period adjusting entry is made Prepare the appropriate bad debt expense adjusting journal entry for the year 2015 If no entry is required for a transaction event select No journal entry required in the first account field Show how the various accounts related to accounts receivable should be shown on the December 31 2015 balance sheet Amounts to be deducted should be indicated by a minus sign 5 Siemens is one of the world s largest electrical engineering and electronics companies Headquartered in Germany the company has been in business for over 160 years and operates in 190 countries In a recent annual report it disclosed the following information concerning its allowance for doubtful accounts euros in millions denoted as Record summary journal entries related to the allowance for doubtful accounts for the current year If no entry is required for a transaction event select No journal entry required in the first account field Enter your answers in millions not in euros Description Credit Debit 1 2 Description Debit Credit 6 During 2014 Robby s Camera Shop had sales revenue of 170 000 of which 75 000 was on credit At the start of 2014 Accounts Receivable showed a 16 000 debit balance and the Allowance for Doubtful Accounts showed a 900 credit balance Collections of accounts receivable during 2014 amounted to 60 000 a On December 31 2014 an Account Receivable J Doe of 1 700 from a prior year was determined to be Description Debit Credit Partial Income Statement Year 2014 Partial Balance Sheet Year 2014 uncollectible therefore it was written off immediately as a bad debt b On December 31 2014 on the basis of experience a decision was made to continue the accounting policy of basing estimated bad debt losses on 1 5 percent of credit sales for the year Description Debit Credit Show how the amounts related to Accounts receivable and Bad debt expense would be reported on the income statement and balance sheet for 2014 Disregard income tax considerations Amounts to be deducted should be indicated by a minus sign Chapter 6 Reporting and Interpreting Sales Revenue Receivables and Cash 1 The following transactions were selected from among those completed by Cadence Retailers in 2013 Nov 20 Sold 20 items of merchandise to Customer B at an invoice price of 5 500 total terms 3 10 n 30 Nov 25 Sold two items of merchandise to Customer C who charged the 400 sales price on her Visa credit card Visa charges Cadence Retailers a 2 percent credit card fee Nov 28 Sold 10 identical items of merchandise to Customer D at an invoice price of 9 000 total terms 3 10 n 30 Nov 29 Customer D returned one of the items purchased on the 28th the item was defective and credit was given to the customer Dec 6 Customer D paid the account balance in full Dec 20 Customer B paid in full for the invoice of November 20 2013 Assume that Sales Returns and Allowances Sales Discounts and Credit Card Discounts are treated as contra revenues compute net sales for the two months ended December 31 2013 Do not round your intermediate calculations Net sales 13 749 Sales revenue 5 500 400 9 000 Less Sales returns and allowances 1 10 9 000 from D Less Sales discounts 9
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