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JulijaS [17]
3 years ago
15

As of December 31, 2016, Nala Incorporated reported accounts receivable for $275,000 less allowance for doubtful accounts of $27

,000 on their balance sheet. During 2017, Nala Incorporated had the following transactions related to their receivables balance:
(1) Sales on account $180,000
(2) Collections of accounts receivable 125,000
(3) Sales returns 20,000
(4) Write-offs of accounts receivable deemed uncollectible 35,000
(5) Recovery of bad debts previously written off 2,500

(a) Prepare the journal entries for each of these five transactions
(b) Prepare the journal entry to record bad debt expense for 2017, assuming that the aging of accounts receivable indicates that estimated bad debts are 10% of accounts receivable.
Business
1 answer:
Rudik [331]3 years ago
3 0

Answer:

a. 1. Debit Accounts receivable $180,000

Credit Sales $180,000

2. Debit cash $125,000

Credit Accounts receivable $125,000

3. Debit Sales return $20,000

Credit $20,000

4. Debit Provision for bad debts expense $35,000

Credit Accounts receivable $35,000

5. Debit Accounts receivable $ $2,500

Credit Provision for bad debts expense $2,500

Debit Cash $2,500

Credit Accounts receivable $2,500

B. Debit Bad debts expense $27,500

Credit provision for bad debt expense $27,500

Explanation:

1. Sale on account will increase the accounts receivable. So we have to debit accounts receivable and credit to sales in the amount of $180,000

2. Collections will decrease the accounts receivable due payments made by the customer. So we have to debit cash and credit accounts receivable by $125,000

3. Sales return is a contra asset account that will decrease the accounts receivable and also the net sales. So we will debit sales return and credit accounts receivable in the amount of $20,000

4. Write offs will decrease the provision for bad debts account as well as the accounts receivable accounts by $35,000

5. Recovery of bad debts previously written off has no effect in accounts receivable but will increase the provision for bad debts due to reversal of entry previously made. First, we will reverse the original written off entry. Debit Accounts receivable and credit provision for bad debts expense in the amount of $2,500. Then we will record the collection by debiting cash and crediting accounts receivable in the amount of $2,500

B. Let’s determine the balance of accounts receivable first,

Beg. $275,000 + 180,000 sale on account - 125,000 collection - 20,000 sales return - 35,000 write-off = $275,000

Therefore, $275,000 x 10% = $27,500

Entry:

Debit Bad debts expense $27,500

Credit provision for bad debts expense $27,500

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Answer:

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Explanation:

Net cash provided by financing activities refers to the difference between the total cash inflows and total cash outflows from the financing activities section of the cash flow staement.

The net cash provided by financing activities can be calculated by preparing a partial cash flow statement as follows:

Concord Corporation

Net Cash Flow Statement (Partial)

As at December 31, 2022

<u>Details                                                                     Amount    </u>

Par value common stock issued for cash             190,000

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Therefore, the net cash provided by financing activities -$157,600.

Alternatively, the net cash provided by financing activities can be calculated as follows:

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3 years ago
In each of the following cases, calculate the accounting break even and the cash break even points. Ignore any tax effects in ca
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Answer:

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Case 1 Cash break-even point = 11,286 units

Case 2 Accounting break-even point = 20,000 units

Case 2 Cash break-even point = 11,875 units

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Case 3 Cash break-even point = 138 units

Explanation:

Break even point refers to the point or sales unit where total cost is equal to total revenue. That is, both total revenue and total cost at the point are even and there neither profit nor loss.

Break even point can be computed for accounting break even and the cash break even points. The difference between the two is that accounting break even point include depreciation in the fixed cost while the cash break even point deduct non cash expenses from the fixed cost. The formula for the are as follows:

Accounting break even point = Fixed cost / (Unit price - Unit cost)

Cash break even point = (Fixed cost - Depreciation) / (Unit price - Unit cost)

Using the two formula for this question, we have:

Case 1 Accounting break even point = $7,000,000 / ($2,800 - $2,295) = $7,000,000 / $505 = 13,861 units

Case 1 Cash break even point = ($7,000,000 - $1,250,000) / ($2,800 - $2,295) = $5,750,000 / $505 = 11,286 units

Case 2 Accounting break even point = $160,000 / (51 - 43) = $160,000 / $8 = 20,000 units

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Answer:

yes

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Answer:

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(Being issue of shares recorded)

So, the cash account is debited whereas the common stock and paid-in capital should be credited

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