PS_05_Solution_(APSCW_-_F2009)

# PS_05_Solution_(APSCW_-_F2009) - FINANCIALACCOUNTING...

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BUSI W3013 Solution to Problem Set 05 | Page 1 F INANCIAL A CCOUNTING BUSI W3013 | F ALL 2009 S OLUTION TO P ROBLEM S ET 05 PROFESSOR ANDREW SCHMIDT I. J&A Company General Journal: 2008 Assets = Liabilities + CC + RE D+[C–] D–[C+] D–[C+] D–[C+] 1 Inventory AP +440 +440 2 AP Cash –420 –420 3 AR Sales +650 +650 COGS Inventory –370 –370 4 Allow for UA AR +30 –30 5 AR Allow for UA +5 –5 Cash AR +570 –570 6 Wages Exp Wages Payable Cash –45 +15 –60 7 PPD Insurance Cash +48 –48

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BUSI W3013 Solution to Problem Set 05 | Page 2 Adjusting Entry Calculations: Depreciation Expense PP&E [440 – 20] ÷ 20 = 30 Insurance Expense \$48 ÷ 24 = \$2 per month: \$2 * 6 = \$12 Bad Debt Expense Amount of Ending AR % Uncollectible \$ Amount Uncollectible 1 month past due 100 1% \$ 1.00 1-2 months past due 70 5% \$ 3.50 2+ months past due 65 10% \$ 6.50 235 \$ 11.00 Allowance for UA The \$9.60 amount calculated in the aging schedule above represents the ending balance of the Allowance account. As you can see, before recording the bad debt expense, the Allowance account had a (debit) balance of –16. So, BDE = 11 – (–16) = 27. BB 9 4. 30 5. 5 BDE ??? EB 11 Adjusting Entries: Assets = Liabilities + CC + RE D+[C–] D–[C+] D–[C+] D–[C+] A1 Depr Exp AD – PP&E –30 –30 A2 Insurance Exp PPD Insurance –12 –12 A3 Bad Debt Exp Allow for UA –27 –27
BUSI W3013 Solution to Problem Set 05 | Page 3 Closing Entries: Assets = Liabilities + CC + RE D+[C–] D–[C+] D–[C+] D–[C+] C1 Sales COGS Bad Debt Exp Depr Exp Insurance Exp Wages Exp Inc Sum –650 +370 +27 +30 +12 +60 +151 C2 Inc Sum RE –151 +151

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BUSI W3013 Solution to Problem Set 05 | Page 4 General Ledger Cash Accounts Receivable Allow. For Uncol. Accts BB 150 2. 420 BB 180 4. 30 4. 30 BB 9 5. 570 6. 45 3. 650 5. 570 5. 5 7. 48 5. 5 A3. 27 207 235 11 Inventory PP&E AD – PP&E BB 100 3.2. 370 BB 440 BB 270 1. 440 A1. 30 170 440 300 Accounts Payable Common Stock Retained Earnings 2. 420 BB 31 BB 225 BB 335 1. 440 C2. 151 51 225 486 Sales COGS Depreciation expense 3. 650 3. 370 A1. 30 C1. 650 650 370 C1. 370 30 C1. 30 PPD Insurance Wages Payable Insurance Exp 7. 48 A2. 12 6. 15 A2. 12 15 36 12 C1. 12 Wages Exp Bad debt expense Income Summary 6. 60 A3. 27 C2. 151 C1. 151 C1 .60 27 C1. 27
BUSI W3013 Solution to Problem Set 05 | Page 5 J&A Company Income Statement For the Year ended on 12/31/2008

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PS_05_Solution_(APSCW_-_F2009) - FINANCIALACCOUNTING...

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