At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $10
0 each. The company estimates future uncollectible accounts. The company determines $5,300 of accounts receivable on January 31 are past due, and 35% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. Accrued income taxes at the end of January are $13,600. 6. Record closing entries.
2 answers:
Answer:
CLOSING ENTRIES
31 JAN Debit Inventory write down $1840 Credit inventory
Debit provision for doubtful debts adjustment $1775 Credit Provision for bad debts $1775
Debit interest expense $215 Credit Interest payable $215
Debit Taxation expense $13,600 Credit Tax payable $13600
Explanation:
closing inventory= 430+1150+1250+(1350-165)-3900= 115*116 = 13340
vs NRV =115*100 = 11500
write down = 13340-11500=1840
Provision for doubtful debts =
5300*0.35= 1855
remaining accounts receivables = $624000+43000= 667000-573000 =94000*3%= 2820
provision = 2820+1855 =4675
Interest 43000*6%*1/12=215
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