1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Step2247 [10]
3 years ago
6

Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving s

ales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1

a. Sold $1,352,600 of merchandise (that had cost $976,400) on credit, terms n/30.
b. Wrote off $20,100 of uncollectible accounts receivable.
c. Received $674,300 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 2.80% of accounts receivable would be uncollectible.

Year 2
a. Sold $1,552,800 of merchandise (that had cost $1,325,200) on credit, terms n/30.
b. Wrote off $31,300 of uncollectible accounts receivable.
c. Received $1,282,200 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 2.80% of accounts receivable would be uncollectible.

Required:
Prepare journal entries to record Liang's year 1 and year 2 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.)
Business
1 answer:
dolphi86 [110]3 years ago
7 0

Answer:

Liang Company

Journal Entries:

a. Debit Accounts receivable $1,352,600

Credit Sales revenue $1,352,600

To record the sale of goods on credit, terms n/30.

Debit Cost of goods sold $976,400

Credit Inventory $976,400

To record the cost of goods sold.

b. Debit Allowance for Uncollectible Accounts $20,100

Credit Accounts receivable $20,100

To write-off uncollectible accounts.

c. Debit Cash $674,300

Credit Accounts receivable $674,300

To record the receipt of cash on account.

d. Debit Bad Debts Expense $38,530

Credit Allowance for Uncollectible $38,530

To record bad debts expense and bring the ending balance of the Allowance for Uncollectible accounts to a credit balance of $18,430 (2.80% of accounts receivable ($658,200))

Year 2

a. Debit Accounts receivable $1,552,800

Credit Sales revenue $1,552,800

To record the sale of goods on credit, terms n/30.

Debit Cost $1,325,200

Credit Inventory $1,325,200

To record the cost of goods sold on account.

b. Debit Allowance for Uncollectible Accounts $31,300

Credit  Accounts receivable $31,300

To write-off uncollectible accounts.

c. Debit Cash $1,282,200

Credit Accounts receivable $1,282,200

To record the receipt of payment on account.

d. Debit Bad Debts Expense $38,000

Credit Allowance for Uncollectible $38,000

To record bad debts expense and bring the ending balance of the Allowance for Uncollectible Accounts to a credit balance of $25,130 (2.80% of accounts receivable ($897,500))

Explanation:

Data and Analysis:

Year 1:

a. Accounts receivable $1,352,600 Sales revenue %1,352,600

on credit, terms n/30.

Cost of goods sold $976,400 Inventory $976,400

b. Allowance for Uncollectible Accounts  $20,100 Accounts receivable $20,100

c. Cash $674,300 Accounts receivable $674,300

d. Bad Debts Expense $38,530 Allowance for Uncollectible $38,530 ending balance $18,430 (2.80% of accounts receivable ($658,200))

Year 2

a. Accounts receivable $1,552,800 Sales revenue $1,552,800

on credit, terms n/30.

Cost $1,325,200 Inventory $1,325,200

b. Allowance for Uncollectible Accounts $31,300 Accounts receivable $31,300

c.Cash $1,282,200 Accounts receivable $1,282,200

d. Bad Debts Expense $38,000 Allowance for Uncollectible $38,000

Ending balance $25,130 2.80% of accounts receivable ($897,500)

You might be interested in
In order to qualify for Long Term Care insurance, a person must be unable to perform how many of the basic activities of daily l
Marysya12 [62]
B ) at least 2 activities ~ apex
4 0
3 years ago
Read 2 more answers
Mr. Baxter IV, would like to retire in 26 years. He would like to accumulate $1,500,000 at the time of retirement to live a cont
Vinvika [58]

Answer:

Monthly deposit=  $840.74

Explanation:

Giving the following information:

Number of periods= 26*12= 312 months

Future Value= $1,500,000

Interste rate= 0.11/12= 0.0092

<u>To calculate the monthly deposit, we need to use the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (1,500,000*0.0092) / [(1.0092^312) - 1]

A= $840.74

6 0
3 years ago
Kent Fuller is in the 34 percent tax bracket. A nontaxable employee benefit with a value of $2,300 would have a tax-equivalent v
Phantasy [73]

Answer:

$3,484.85

Explanation:

Calculation to determine tax-equivalent value

Using this formula

Tax-equivalent value=Nont-taxable amount/(1-Tax rate)

Let plug in the formula

Tax-equivalent value=$2,300/(1-.34)

Tax-equivalent value=$2,300/.66

Tax-equivalent value=$3,484.85

Therefore A nontaxable employee benefit with a value of $2,300 would have a tax-equivalent value of:$3,484.85

6 0
3 years ago
The market risk premium is 9.0%, and the risk-free rate is 5.0%. If the expected return on a bond is 9.5%, what is its beta?
leva [86]

Answer:

The beta is 1

Explanation:

The computation of beta using the CAPM model is shown below:

As we know that

Expected rate of return = Risk free rate of return + Beta × Market risk premium

9.5% = 5% + Beta × 9.0%

9.5% - 5% = Beta × 9.0%

9.0% = Beta × 9.0%

So, the beta is 1

We simply applied the above formula so that the correct value could come

And, the same is to be considered  

4 0
3 years ago
Is Starbucks bucking the trend of other food-service stores, or is something else going on?
Natasha_Volkova [10]

Answer:

its it's something else

4 0
3 years ago
Other questions:
  • Over one-third of female offenders are serving time for ________ offenses
    6·1 answer
  • Jim was a mechanic. One day when he attempted to weld a car's gasoline tank, it exploded and he was hurt. He filed to collect wo
    12·1 answer
  • Briefly describe variable, fixed, mixed, and step costs, and indicate how the total cost function of each changes as activity in
    9·1 answer
  • Vega Enterprises has computed the following unit costs for the year just ended: Direct material used $12 Direct labor 18 Variabl
    15·1 answer
  • Gaggle Inc. decides to wrongly infringe on Chirp Chirp's patent and establish a similar "knock-off" product because Chirp Chirp
    5·1 answer
  • You invest 60% of your financial assets in Standard &amp; Poor’s Depository Receipts with an expected return of 10% and a standa
    8·1 answer
  • Harrison Co. issued 14-year bonds one year ago at a coupon rate of 6.9 percent. The bonds make semiannual payments. If the YTM o
    11·1 answer
  • bledsoe Corporation has provided the following data for the month of November: Inventories: Beginning Ending Raw materials $ 26,
    6·1 answer
  • The minimum amount (planned) of fuel to be aboard a domestic flight within the 48 contiguous united states, after reaching the m
    13·1 answer
  • Free or minimal cost items offered by companies in order to entice customers to buy their product are called?
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!