Marks accounts receivable on 1 st january 2011 parker

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QUESTION 3 (7 marks) Accounts Receivable On 1stJanuary 2011, Parker Company has a debit balance of $21,000 in Accounts Receivable and a credit balance of $1,550 in the Allowance for Doubtful Debts. During the year to 31stDecember 2011, Parker made sales on credit terms for $99,100 and collected cash from customers on accounts receivable amounting to $82,000. On 1stAugust 2011, Parker wrote off a bad debt on an account for $230. An ageing analysis at 31stDecember 2011 indicates that the allowance for doubtful debts account should have a credit balance of $2,150. Parker Company’s financial year ends on 31stDecember 2011. Required: a) (i) Prepare the journal entry to record credit sales. (1 mark)
(ii) Prepare the journal entry to record cash collected from customers (1 mark)
(iii) Prepare the journal entry to write off the uncollectible account of $230 against the allowance for doubtful debts (1 mark)
ACCT1501 Practice Exam Questions & Solutions 2014S1 6 (iv) Prepare the adjusting journal entry to the allowance for doubtful debts based on the ageing analysis at 31stDecember 2011 (2 marks)
[2 marks: 1 mark for each account]
830 (v) Prepare the closing journal entry for bad debts expense (2 marks)
[2 marks: 1 mark for each account] 830 830
ACCT1501 Practice Exam Questions & Solutions 2014S1 7 QUESTION 4 ADJUSTING ENTRIES AND FINANCIAL STATEMENTS (22 Marks)The following pre-adjusted trial balance has been prepared for Sydney Company as at 30 June 2014 (for the 12 months beginning on 1 July 2013): DR CR Cash at Bank 10,000 Accounts Receivable 200,000 Allowance for Doubtful Debts 1,000 Inventory 100,000 Prepaid Rent 10,000 Property, Plant and Equipment 450,000 Accumulated Depreciation - PPE 200,000 Accounts Payable 60,000 Bank loan 50,000 Contributed Capital 310,000 Retained Profit at 1 July 2013 34,000 Sales 450,000 Cost of Goods Sold 265,000 Interest Expense 5,000 Wages Expenses 80,000 Rent Expense 5,000 1,115,000 1,115,000 The following information is given which may give rise to year end adjustments: Depreciation on Property, Plant and Equipment is provided for on a straight line basis at 10% per annum, and it is assumed that it will have no salvage value. The balance in Prepaid Rent relates to the 12 month period from 1 January 2014 to 31 December 2014. An ageing analysis shows that $4,000 of Accounts Receivable is estimated to be uncollectible. On 30 June 2014, the directors declared a dividend of $5,000, which the shareholders authorised. The dividend is to be paid on 15 September 2014.
ACCT1501 Practice Exam Questions & Solutions 2014S1 8

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