Question

January 1 Purchase equipment for $20,600. The company estimates a residual value of $2,600 and a five-year service life. January 4 Pay cash on accounts payable, $10,600. January 8 Purchase additional inventory on account, $93,900. January 15 Receive cash on accounts receivable, $23,100. January 19 Pay cash for salaries, $30,900. January 28 Pay cash for January utilities, $17,600. January 30 Sales for January total $231,000. All of these sales are on account. The cost of the units sold is $120,500. The following information is available on January 31, 2021. Depreciation on the equipment for the month of January is calculated using the straight-line method. The company estimates future uncollectible accounts. The company determines $4,100 of accounts receivable on January 31 are past due, and 50% 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 revenue on notes receivable for January. Unpaid salaries at the end of January are $33,700. Accrued income taxes at the end of January are $10,100.

Answer 1

Answer:

Solution Provided

Explanation:

Equipment Purchased = $20,600

Residual Value= 2600

useful life = 5years

Dep Straight line Method = Cost- Residual Value

                                                  useful life

Dep= 20,600-2600

             5

Dep=$ 3600

               Cash Account                                        

                      Debit                            Credit

Salaries                                               30,900

Utilities                                                17,600

Sales             231,000

Bal C/D                                                182,500

                     231,000                        231,000

                             

                           Accounts Receivable                  

                           Debit                             Credit

Due                     4100

Uncollectable

(50%x 4100)                                             2050

uncollectable

(3%x 2050)                                                61.5

Bal C/d                                                     1988.5

                          4100                               4100

                      Accrued Income                          

                         Debit                                Credit

unpaid salaries                                           33700

Income Tax                                                 10,100

Bal C/d             43,800                                          

                        43,800                                43,800

                            Equipment Account                      

                           Debit                                    Credit

Purchase           20,600

                           Depreciation Account                    

                             Debit                                   Credit

DEp Charge                                                      3600