Intermediate Accounting Questions
Q1. The following transactions affecting the accounts receivable of Wonderland Corporation took place during the year ended January 31, 2015:
Sales (cash sales of $210,270 and remaining credit) - $591,050
Cash received from credit customers, all of whom took advantage of the discount feature of the company's credit terms 4/10, n/30 - 303,800 (assume gross method for discounts is used)
Cash received from cash customers - 210,270
Accounts receivable written off as worthless - 5,250
Credit issued to credit customers for sales returns and allowances - 63,800 (no allowance for sales returns currently set up)
Cash refunds given to cash customers for sales returns and allowances - 13,318
Recoveries on accounts receivable written off as uncollectible in prior periods (not included in cash amount stated above) - 8,290
The following two balances were taken from the January 31, 2014 balance sheet:
- Accounts receivable: 95,842
- Allowance for doubtful accounts: 9,740 (credit)
The corporation provides for its net uncollectible account losses by crediting Allowance for Bad Debts for 4.5% of ending accounts receivable.
Instructions:
1. Prepare the journal entries to record the transactions for the year ended January 31, 2015
2. Prepare the adjusting journal entry for estimated uncollectible accounts on January 31, 2015.
Q2. The following information for the month of March is available from Batters, Inc.'s accounting records:
Balance per bank statement, March 2015 - $12,100
Cash balance per books, March 31, 2015 - 15,295
Deposit made on February 28; recorded by bank on March 3 - 3,600
March 31, 2015 outstanding checks:
- #2346 438
- #2348 231
- #2355 107
Bank service charge for March (not recorded yet by Betters) - 54
NSF check of customer returned by bank - 832
A check drawn on Moore Co. erroneously charged to Batters - 275
A $347 check to a supplier in payment of account was erroneously recorded on Batter's books as $437 - ?
Deposit made on March 31, recorded by bank April 3 - 2,900
Required: Prepare a March 31, 2015 bank reconciliation in good form.