At the end of 2017 fiscal year, L&Z Co. has the following information: Balance Sheets Current Assets Accounts receivable, net of...
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At the end of 2017fiscal year, L&Z Co. has the following information:
BalanceSheets
Current Assets
Accountsreceivable, net of allowance of$1,076 $16,194
a) During 2018, the company wrote off $200 of specific accounts thatwere deemed uncollectable. Prepare the journal entry to record thewrite-off of these accounts receivable. (4 pts)
b) At the end of2018 (12/31/2018), management estimate 8% of account receivablesbalance will likely be difficult to collect. The company’s AccountsReceivable has a gross ending balance of $17,600 . Prepare thejournal entry to record bad debt expense for 2018 using thepercentage of receivables method (the balance sheet approach). (8pts)
c) If credit sales for 2018were $118,000, compute the amount of cash collected from customersin 2018 (note: take into account the event in part a). (6 pts)
d) On Oct 1st , 2018, thecompany sold coal to Beta Electric, receiving a 6-month,noninterest-bearing note for $100,000. The effective interest rateon the note is 8%. The company has a fiscal year-end of 12/31. (10pts)
- i. Prepare the journal entry torecord the sale. (6 pts)
ii. Prepare adjusting journal entriesregarding the note receivable on 12/31/2018. (4 pts)
At the end of 2017fiscal year, L&Z Co. has the following information:
BalanceSheets
Current Assets
Accountsreceivable, net of allowance of$1,076 $16,194
a) During 2018, the company wrote off $200 of specific accounts thatwere deemed uncollectable. Prepare the journal entry to record thewrite-off of these accounts receivable. (4 pts)
b) At the end of2018 (12/31/2018), management estimate 8% of account receivablesbalance will likely be difficult to collect. The company’s AccountsReceivable has a gross ending balance of $17,600 . Prepare thejournal entry to record bad debt expense for 2018 using thepercentage of receivables method (the balance sheet approach). (8pts)
c) If credit sales for 2018were $118,000, compute the amount of cash collected from customersin 2018 (note: take into account the event in part a). (6 pts)
d) On Oct 1st , 2018, thecompany sold coal to Beta Electric, receiving a 6-month,noninterest-bearing note for $100,000. The effective interest rateon the note is 8%. The company has a fiscal year-end of 12/31. (10pts)
- i. Prepare the journal entry torecord the sale. (6 pts)
ii. Prepare adjusting journal entriesregarding the note receivable on 12/31/2018. (4 pts)
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