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Chapter 14 / Exercise C2
Introductory Econometrics: A Modern Approach
Wooldridge
Expert Verified
recorded this NSF check.36,430Exercise 6-­‐9 Algorithm
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Chapter 14 / Exercise C2
Introductory Econometrics: A Modern Approach
Wooldridge
Expert Verified
5-9 DateDebitCreditDec. 314,8754,875Feb. 01580580Jun. 05580580Jun. 05580580Prepare the journal entries of Chan to record these transactions and events of December 31, February 1, and June 5.At year-end (December 31), Chan Company estimates its bad debts as 0.5% of its annual credit sales of \$975,000. Chan records its Bad Debts Expense for that estimate. On the following February 1, Chan decides that the \$580 account of P. Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off. CashAccounts Receivable - P. ParkAllowance for Doubtful AccountsAccounts Receivable - P. ParkAccounts Receivable - P. ParkAllowance for Doubtful AccountsGeneral JournalBad Debts ExpenseAllowance for Doubtful AccountsUnadjusted0Adjustment4,875Dec. 31\$975,0000.5% of sales4,875SalesBad Debts ExpenseEstimate based on SalesIncome Statement Approach(\$975,000 x .005) - \$0Exercise 7-­‐4
5-10 DateDebitCreditDec. 31Bad Debts Expense1,391
At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2013, it has outstanding accounts receivable of \$55,000, and it estimates that 2.0% will be uncollectible.Prepare the adjusting entry to record bad debts expense for year 2013 assuming that the Allowance for Doubtful Accounts has a \$291 debit balance before the adjustment.General JournalUnadjusted291Req. Adjust.1,3912% of \$55,0001,100Allowance for Doubtful AccountsEstimate based on ReceivablesBalance Sheet ApproachAccounts ReceivableDec. 3155,000Balance Sheet Presentation:Accounts Receivable\$55,000Allowance for Doubtful Accounts(1,100)Accounts Receivable (net)\$53,900Exercise 7-­‐5
5-11 Depreciation expense = 50%of beginning book valuePrepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation.In early January 2013, New Tech purchases computer equipment for \$154,000 to use in operating activities for the next four years. It estimates the equipment’s salvage value at \$25,000.Double-Declining-Balance Depreciationx Beginning-of-year book value200%4 yearsYearBeginning Book ValueDepreciation RateAnnual DepreciationYear-End Book Value2013\$154,00050%\$77,000\$77,000201477,00050%38,50038,500201538,500Force13,50025,000\$38,500 minus (50% of \$38,500) equals \$19,250, which is less than the salvage value of \$25,000.