ACT 6692 Mod 12 Assignments

ACT 6692 Mod 12 - ACT 6692 Module 12 Assignment(Problems 12-1Entries for bad debt expense The trial balance before adjustment of Pratt Company

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ACT 6692 Module 12 – Assignment (Problems) 12-1 Entries for bad debt expense The trial balance before adjustment of Pratt Company reports the following balances: Dr. Cr. Accounts receivable $100,000 Allowance for doubtful accounts $ 2,500 Sales (all on credit) 750,000 Sales returns and allowances 40,000 Instructions (a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales. (b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. How will this difference affect the journal entries in part (a)? 12-2 Accounts receivable assigned Prepare journal entries for Lott Co. for: (a) Accounts receivable in the amount of $500,000 were assigned to Vance Finance Co. by Lott as security for a loan of $425,000. Vance charged a 3% commission on the accounts; the interest rate on the note is 12%. (b) During the first month, Lott collected $200,000 on assigned accounts after deducting $450 of discounts. Lott wrote off a $530 assigned account. (c) Lott paid to Vance the amount collected plus one month's interest on the note. 12-3—Factoring Accounts Receivable On May 1, Carter, Inc. factored $800,000 of accounts receivable with Rapid Finance on a without recourse basis. Under the arrangement, Carter was to handle disputes concerning service, and Rapid Finance was to make the collections, handle the sales discounts, and absorb the credit losses. Rapid Finance assessed a finance charge of 6% of the total accounts receivable factored and retained an amount equal to 2% of the total receivables to cover sales discounts. Instructions (a) Prepare the journal entry required on Carter 's books on May 1. (b)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/07/2011 for the course ACCT 6692 taught by Professor Lewis during the Spring '11 term at Troy.

Page1 / 4

ACT 6692 Mod 12 - ACT 6692 Module 12 Assignment(Problems 12-1Entries for bad debt expense The trial balance before adjustment of Pratt Company

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online