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P7.2 (LO 3) Groupwork (Bad Debt Reporting) The following are a series of unrelated situations. 1. Halen Company's unadjusted trial balance at December 31, 2020, included the following accounts. Debit Credit Accounts receivable $53,000 Allowance for doubtful accounts 4,000 Net sales $1,200,000 Halen Company estimates its bad debt expense to be 7% of gross accounts receivable. Determine its bad debt expense for 2020 2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2020, disclosed the following Amounts estimated to be uncollectible $ 180,000 Accounts receivable 1,750,000 Allowance for doubtful accounts (per books) 125.000 What is the net amount expected to be collected of Stuart's receivables at December 31, 2020? 3. Shore Co. provides for doubtful accounts based on 4 of gross accounts receivable. The following data are available for 2020. $4,400,000 57.000 17,000 Credit sales during 2020 Bad debt expense Allowance for doubtful accounts 1/1/20 Collection of accounts written off in prior years (customer credit was reestablished) Customer accounts written off as uncollectible during 2020 8,000 30,000 What is the balance in Allowance for Doubtful Accounts at December 31, 2020? 4. At the end of its first year of operations, December 31, 2020, Darden Inc. reported the following information Accounts receivable, net of allowance for doubtful accounts Customer accounts written off as uncollectible during 2020 Bad debt expense for 2020 $950,000 24,000 84.000 What should be the balance in accounts receivable at December 31, 2020, before subtracting the allowance for doubtful accounts? 5. The following accounts were taken from Bullock Inc.'s trial balance at December 31, 2020. Debit Credit Net credit sales $750,000 Allowance for doubtful accounts $ 14,000 Accounts receivable 310,000 If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2020, Instructions Answer the questions relating to each of the five independent situations as requested. *P7.13 (LO 6) (Bank Reconciliation and Adjusting Entries) The cash account of Aguilar Co. showed a ledger balance of $3.969.85 on June 30, 2020. The bank statement as of that date showed a balance of $4.150. Upon comparing the statement with the cash records, the following facts were determined 1. There were bank service charges for June of $25. 2. A bank memo stated that Bao Dai's note for $1.200 and interest of $36 had been collected on June 29, and the bank had made a charge of $5.50 on the collection. (No entry had been made on Aguilar's books when Bao Dai's note was sent to the bank for collection.) 3. Receipts for June 30 for $3.390 were not deposited until July 2. 4. Checks outstanding on June 30 totaled $2,136.05. 5. The bank had charged the Aguilar Co.'s account for a customer's uncollectible check amounting to $253.20 on June 29. 6. A customer's check for $90 (as payment on the customer's Accounts Receivable) had been entered as $60 in the cash receipts journal by Aguilar on June 15 7. Check no. 742 in the amount of S491 had been entered in the cash journal as $419, and check no 747 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases and were payments on Aguilar's Accounts Payable. Instructions a. Prepare a bank reconciliation dated June 30, 2020, proceeding to a correct cash balance. b. Prepare any entries necessary to make the books correct and complete. 14) Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials 14)_F__ 16) F 15) Job-order costing would be most likely used by a firm that produces homogeneous products 16) When identical or similar units of products or services are mass produced, job-costing is used to calculate an average production cost for all units produced 17) The weighted average process costing method does NOT distinguish between units started in the previous period but completed during the current period and units started and completed during the current period 18) Equivalent units in beginning work in process PLUS equivalent units of work done in the current period MINUS equivalent units completed and transferred out in the current period EQUALS equivalent units in ending work in process 13) F 19) F 19) In the weighted average costing method, the costs of direct materials in beginning inventory are NOT induded in the cost per un calculation since direct materials are almost always added at the start of the production process 20) To calculate weighted average conversion cost per equivalent unit you multiply total conversion costs to date by total equivalent units of work done to date Styles Paragraph TRUE FALSE Write it the statement is true and it the statement is talse. 1) A top-selling product might actually result in losses for the company. 2) Companies that overcost products will most likely lose market share. 1)_T_ 2) _F_ 3) As product diversity and indirect costs increase, it is usually best to switch away from an activity based cost system to a broad averaging system 3) _F_ 4) T 4) If a company overcosts one of its products, then it will undercost at least one of its other products. 5) Direct costs plus indirect costs equal total costs. 5) T_ 6) When refining a costing system, a company should dassify as many costs as possible as direct costs. 6) F LI 7) in a homogeneous cost pool, all costs have a similar cause-and-effect relationship with the cost-allocation base 8) Direct trading of costs improves cost accuracy 9) T 9) A cost-allocation base is a necessary element when using a strategy that will refine a costing system 10)_T 10) ABC systems are a further refinement of department costing systems. 11) Examples of industries that would use process costing include the soft drink bottling and oil industry 11)_T__ 12) F 12) The principal difference between process costing and job costing is that in job costingan averaging process is used to compute the unit costs of products or services 13) Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process 13)___ _

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