A 4 allowance for doubtful accounts is to be

  • No School
  • AA 1
  • KidHackerGrouse2986
  • 246
  • 100% (14) 14 out of 14 people found this document helpful

This preview shows page 27 - 30 out of 246 pages.

A 4% allowance for doubtful accounts is to be recognized on theremaining accounts receivable after write off.2. Merchandise inventory's present market value is P70,800.3. Furniture and Fixtures' account should be adjusted to replacement value of P45,000. After adjustment toreplacement value, the asset should be considered as 50% depreciated. Kulani's business:1. Only 10% allowance for doubtful accounts is to be recognized on the outstandingaccounts receivable as of June 30, 2014.2. The office equipment should be depreciated further by 8%.3. The fair market value of the merchandise is P46,450.Required : Buni and Kulani agreed to use a new set of books for their partnership.1. Record the capital adjusting entries in both books.2. Prepare the adjusted Trial Balance in both books.3. Close Buni's and Kulani's books.4. Record the investments of both partners in the new books.5. Prepare the starting balance sheet of the "Bukul Trading". Solution: In Buni’s BookRequirement No. 1 Record the capital adjusting entries June 30 1] Allowance for doubtful accounts3,000Accounts Receivable3,000Write off of bad debt accounts.2] Buni, Capital1,680Allowance for doubtful accounts1,680 Set up 4% allowance for doubtful account.
Background image
Partnership and Corporation – Illustrative Approach28After the adjustment in no. 1, the balance of allowance for doubtful account is credit balance P600 and theAccounts Receivable balance is P 57,000. Four percent (4%) of Accounts Receivable is P2,280.Therefore:Should be allowance for doubtful account P 2,280After write off, the balance of allowance fordoubtful account is600Adjustment ( additional) P 1,6803] Merchandise Inventory6,600Buni, Capital6,600Revaluation of merchandise inventory from P64,200 to P70,800.4] Furniture and Fixtures9,000Buni, Capital9,000Revaluation of furniture and fixtures from P36,000 to P45,000.5] Buni, Capital5,700Accumulated depreciation - Fur. & Fixt.5,700To adjust accumulated depreciation to 50% of the agreed value.Agreed value of furniture and fixtures is P45,000 x 50% = P 22,500Per balance sheet the accumulated depreciation is16,800AdjustmentP 5,700Requirement Number 2The Adjusted Trial BalanceTrial Balance____Adjustments___Adj. T-Balance__Debit CreditDebitCreditDebit CreditCash 48,60048,600Accounts Receivable 60,0003,000 57,000Allowance for doubtful accounts 3,600 1,3202,280 Merchandise Inventory 64,200 6,60070,800Supplies Inventory 4,8004,800Furniture and Fixtures 36,000 9,00045,000Accumulated Depreciation 16,800 5,70022,500Accounts Payable 24,00024,000 Notes Payable 48,00048,000Buni, Capital, _______ 121,200 ______ 8,220* 129,420P213,600 213,600 16,920 16,920 P226,200 P226,200_______BUNI, CAPITAL______P 1,680: P 6,6005,700: 9,000P 8,220 balance* Requirement Number 3Closing EntriesDebitCreditAllowance for doubtful account2,280Accumulated Depreciation 22,500Accounts Payable 24,000 Notes Payable 48,000Buni, Capital, 129,420 Cash 48,600Accounts Receivable 57,000Merchandise Inventory 70,800Supplies Inventory 4,800Furniture and Fixtures 45,000To close the books of Buni.
Background image
Partnership and Corporation – Illustrative Approach29In Kulani’s BooksRequirement Number 1 - Record the capital adjusting entries1] Allowance for doubtful accounts300Kulani, Capital300To reduce the allowance for doubtful account from P2,700 to P 2,400.
Background image
Image of page 30

You've reached the end of your free preview.

Want to read all 246 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture