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practiceFinalEXAMkey - Accounting 350 Spring 2003 Exam 1...

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Accounting 350 Spring, 2003 Exam 1 Name . . SSN# . .- .- . Use the space below to indicate questions about which you made clarifying assumptions, or of which you found the wording to be unclear and feel a need to explain your answer. Please no questions during the exam.
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Question 1 (20 points) Accounts/Notes Receivable Buddy Collars, Inc. balance sheet at December 31, 2001 includes the following: Accounts receivable $252,000 Less: Allowance for uncollectible accounts (5,000) Accounts receivable (net) – 12/31/01 $247,000 The company had Credit sales during 2002 for $395,000, and collections totaled $450,000. Additional transactions for fiscal 2002 include the following. Please provide JE. 1. Customers returned previously sold merchandise totaling $2,500. Customer A/R balance still outstanding on day of return. Sales Returns and Allowances 2,500 A/R 2,500 2. Customer accounts totaling $10,250 were written off during the year. Allowance for doubtful accounts 10,250 A/R 10,250 3. Buddy sold to Annie, Inc. $50,000 of accounts receivable without recourse. Annie Inc’s fee for factoring receivables is 4%. Further, a 3% holdback was retained by Annie for expected sales returns. Using past experience Buddy expects that $5,000 of these accounts receivable will be uncollectible. Cash 46,350 Financing fee 2,000 Due from Annie 1,500 Accounts Receivable 50,000 Additional Facts for Questions 4 & 5 Utilizing the % of receivables approach, Buddy determined that the 6% of fiscal year-end receivables are uncollectible or 2% of 2002 sales revenue. Please roll forward balances for all provided information, and then record the year-end adjusting journal transaction recognizing bad debt expense, Roll-Forward A/R = 252,000+395,000-450,000-2,500(1)-10,250-50,000(3)= 134,250 Roll-Forward AFDA = (5,000)+10,250= 5,250 4a. Show journal entry using the % of receivables method.
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