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Luden [163]
3 years ago
15

The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:

Business
1 answer:
S_A_V [24]3 years ago
8 0

Answer:

The Wild Trout Gallery

1. T-accounts:

Allowance for Doubtful Accounts

Date     Account Titles               Debit     Credit

Jan. 1    Balance                                     $34,200

Dec. 31 Uncollectible Expense                   1,700

Dec. 31 Balance                     $35,900

2. Journal Entry:

Jan. 19:

Debit Accounts Receivable $1,630

Credit Uncollectible Expense $1,630

To reinstate the account of Arlene Gurley written off as uncollectible.

Debit Cash Account $1,630

Credit Accounts Receivable $1,630

To record the receipt of cash from Arlene Gurley.

Apr. 3:

Debit Uncollectible Expense $9,340

Credit Accounts Receivable $9,340

To record the write-off of balance owed by Premier GS Co.

July 16:

Debit Cash $16,800

Debit Uncollectible Expense $50,400

Credit Accounts Receivable $67,200

To record the receipt of 25% of balance and write-off of remaining debt.

Nov. 23:

Debit Accounts Receivable $2,655

Credit Uncollectible Expense $2,655

To reinstate the account of Harry Carr written off as uncollectible.

Debit Cash Account $2,655

Credit Accounts Receivable $2,655

To record the receipt of cash from Harry Carr.

December 31:

Debit Uncollectible Expense $15,990

Credit Accounts Receivable $15,990

To record the write-off of uncollectibles.

Debit Uncollectible Expense $1,700

Credit Allowance for Doubtful Accounts $1,700

To record the estimated uncollectibles.

Dec. 31:

Debit Uncollectible Expense $1,700

Credit Allowance for Doubtful Accounts $1,700

To record the uncollectible expense.

3. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry):

Accounts Receivable balance     $825,700

Allowance for Doubtful Accounts   35,900

Net realizable value                     $789,800

4. Allowance for Doubtful Accounts = 0.5% of $5,100,000 = $25,500

a. Bad Debt Expense for the year:

Jan. 19 Reinstatement of written off account   -$1,630

Apr. 3   Premier GS Co. write-off                          9,340

July 16 Hayden Co. write-off                              50,400

Nov. 23 Reinstatement of Harry Carr account  -2,655

Dec. 31  Write-off of: Cavey Co.,                          7,025

             Fogle Co.,                                               2,085

             Lake Furniture,                                      5,365

             Melinda Shryer,                                       1,515

Dec. 31 Allowance for Doubtful Accounts        -8,700

Amount of bad debt expense                        $62,745

b. Balance in the allowance account after the adjustment of December 31:

= $25,500

Journal Entry:

Debit Allowance for Doubtful Accounts $8,700

Credit Bad Debts Expense $8,700

To record the reduced allowance for doubtful accounts.

c. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry):

Accounts Receivable balance     $825,700

Allowance for Doubtful Accounts   25,500

Net realizable value                    $800,200

Explanation:

a) Data and Calculations:

Hayden Co.:

Cash receipt = $16,800 or 25%

Total balance = $67,200 ($16,800/25%)

Uncollectible write-off = $50,400 ($67,200 * 75%)

b) The allowance for doubtful accounts will be increased by $1,700 to arrive at a new balance of $35,900 from $34,200.

c) If allowance for uncollectible accounts is based on 1/2% of 1% of sales, then the allowance for uncollectible accounts will be reduced by ($34,200 - 25,500) $8,700 from $34,200 to $25,500.

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Answer:

1.COST BEHAVIOUR

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2. $153 per set

3. I would expect the average product cost per set to increase.

Explanation:

1. Calculation to Enter the dollar amount of each cost item under the appropriate headings

COST BEHAVIOUR

VARIABLE FIXED

Direct labor $118,000 $0

Advertising $0 $50,000

Factory supervision $0 $40,000

Property taxes, factory building$0 $3,500

Sales commissions$80,000 $0

Insurance, factory $0 $2,500

Depreciation, administrative office equipment$0 $4,000

Lease cost, factory equipment$0 $12,000

Indirect materials, factory $6,000 $0

Depreciation, factory building $0 $10,000

Administrative office supplies (billing) $3,000 $0

Administrative office salaries $0 $60,000

Direct materials used (wood, bolts, etc.)$94,000 $0

Utilities, factory $20,000 $0

TOTAL COSTS $321,000 $182,000

SELLING OR ADMINISTRATIVE

COST

Direct labor $0

Advertising $50,000

Factory supervision $0

Property taxes, factory building $0

Sales commissions $80,000

Insurance, factory $0

Depreciation, administrative office equipment $4,000

Lease cost, factory equipment $0

Indirect materials, factory $0

Depreciation, factory building $0

Administrative office supplies (billing) $3,000

Administrative office salaries$60,000

Direct materials used (wood, bolts, etc.) $0

Utilities, factory $0

TOTAL COSTS $197,000

PRODUCT COST

DIRECT INDIRECT

Direct labor $118,000 $0

Advertising $0 $0

Factory supervision $0 $40,000

Property taxes, factory building$0 $3,500

Sales commissions $0 $0

Insurance, factory $0 $2,500

Depreciation, administrative office equipment $0 $0

Lease cost, factory equipment$0 $12,000

Indirect materials, factory$0 $6,000

Depreciation, factory building $0 $10,000

Administrative office supplies (billing) $0 $0

Administrative office salaries $0 $0

Direct materials used (wood, bolts, etc.)$94,000 $0

Utilities, factory$0 $20,000

TOTAL COSTS $212,000 $94,000

Therefore the dollar amount of each cost item under the appropriate headings will be :

COST BEHAVIOUR

Variable Fixed

$321,000 $182,000

SELLING OR ADMINISTRATIVE

Cost $197,000

PRODUCT COST

Direct Indirect

$212,000 $94,000

2. Computation to determine the average product cost of one patio set.

Using this formula

Average product cost of one patio set =(Direct costs +Indirect costs)/Capacity set per year

Let plug in the formula

Average product cost of one patio set=($212,000+$94,000)/2,000 sets

Average product cost of one patio set =$306,000/2,000 sets

Average product cost of one patio set = $153 per set

Therefore The Average product cost of one patio set will be $153 per set

3. In a situation were the production drops I Would expect the average product cost per set to INCREASE, reason been that the fixed costs would extend over few units which will inturn cause the average cost per unit to increase.

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Answer:

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