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ACC557 Week 5 E8-3 E8-5 E8-14 P8-7A

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ACC557 Week 5 E8-3 E8-5 E8-14 P8-7A
Financial Accounting 8e

E8-3 The ledger of Elburn Company at the end of the current year shows Accounts
Receivable $110,000, Sales Revenue $840,000, and Sales Returns and Allowances
$28,000.

Instructions
(a) If Elburn uses the direct write-off method to account for uncollectible accounts, journalize
the adjusting entry at December 31, assuming Elburn determines that T. Thum’s
$1,400 balance is uncollectible.

(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance,
journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 1% of net sales, and (2) 10% of accounts receivable.

(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance,
journalize the adjusting entry at December 31, assuming bad debts are expected to be
(1) 0.75% of net sales and (2) 6% of accounts receivable

E8-5 At December 31, 2013, Crawford Company had a balance of $15,000 in Allowance for
Doubtful Accounts. During 2014, Crawford wrote off accounts totaling $14,100. One of those
accounts ($1,800) was later collected. At December 31, 2014, an aging schedule indicated
that the balance in Allowance for Doubtful Accounts should be $19,000.
Instructions
Prepare journal entries to record the 2014 transactions of Crawford Company

E8-14 Lashkova Company had accounts receivable of $100,000 on January 1, 2014. The
only transactions that affected accounts receivable during 2014 were net credit sales of
$1,000,000, cash collections of $920,000, and accounts written off of $30,000.
Instructions
(a) Compute the ending balance of accounts receivable.
(b) Compute the accounts receivable turnover ratio for 2014.
(c) Compute the average collection period in days.

P8-7A On January 1, 2014, Derek Company had Accounts Receivable $139,000, Notes
Receivable $30,000, and Allowance for Doubtful Accounts $13,200. The note receivable is
from Kaye Noonan Company. It is a 4-month, 12% note dated December 31, 2013. Derek
Company prepares fi nancial statements annually. During the year, the following selected
transactions occurred.

Jan. 5 Sold $24,000 of merchandise to Zwingle Company, terms n/15.

20 Accepted Zwingle Company’s $24,000, 3-month, 9% note for balance due.

Feb. 18 Sold $8,000 of merchandise to Gerard Company and accepted Gerard’s $8,000,
6-month, 8% note for the amount due.

Apr. 20 Collected Zwingle Company note in full.

30 Received payment in full from Kaye Noonan Company on the amount due.

May 25 Accepted Isabella Inc.’s $4,000, 3-month, 7% note in settlement of a past-due
balance on account.

Aug. 18 Received payment in full from Gerard Company on note due.

25 The Isabella Inc. note was dishonored. Isabella Inc. is not bankrupt; future payment
is anticipated.

Sept. 1 Sold $12,000 of merchandise to Fernando Company and accepted a $12,000,
6-month, 10% note for the amount due.

Instructions
Journalize the transactions.

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