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Bad debts / Fixed assets and depreciation

See attached files for problems.

P9-3B Presented below is an aging schedule for Jafar Company:
Number of Days Past Due
Customer: Total: Not yet due: 1 ~ 30 31 ~ 60 61 ~ 90 Over 90
Akers $30,000 $13,500 $16,500
Baietto 45,000 $45,000
Comer 75,000 22,500 7,500 $45,000
DeJong 57,000 $57,000
Others 189,000 138,000 22,500 19,500 9,000
$396,000 $205,500 $43,500 $36,000 $45,000 $66,000
Estimated % Uncollectible 2% 6% 10% 25% 50%
Total Est. Bad Debts $54,570 $4,110 $2,610 $3,600 $11,250 $33,000

At December 31, 2010, the unadjusted balance in Allowance for Doubtful Accounts is credit of $16,000

Instructions:
(a) Journalize and post the adjusting entry for bad debts at December 31, 2010.
(b) Journalize and post to the allowance account the following events and transactions in the year 2011:
(1) March 1, an $1,900 customer balance originating in 2010 is judged uncollectible.
(2) May 1, a check for $1,900 is received from the customers whose account was written off as
uncollectible on March 1.
(c) Journalize the adjusting entry for bad debts on December 31, 2011. Assume that the unadjusted balance in
Allowance for Doubtful Accounts is a debit of $2,000 , and the aging schedule indicates that total
estimated bad debts will be $42,300

P10-5B At December 31, 2010, Starkey Company reported the following as plant assets:
Land $2,000,000
Buildings $20,000,000
Less: Accumulated Depreciation - Buildings 8,000,000 12,000,000
Equipment 30,000,000
Less: Accumulated Depreciation - Equipment 4,000,000 26,000,000
Total plant assets $40,000,000
During 2011, the following selected cash transactions occurred:
Apr 1 Purchased land for $1,200,000
May 1 Sold equipment that cost $420,000 when purchased on January 1, 2007. The equipment
was sold for $240,000
Jun 1 Sold land purchased on June 1, 20001, for $1,000,000 The land cost was $340,000
Jul 1 Purchased equipment of $1,100,000
Dec 31 Retired equipment that cost $300,000 when purchased on December 31, 2001. No salvage
value was received.

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Solution Summary

The solution explains two problems - P9-3B relating to bad debt expense and P10-5B relating to fixed assets purchase and sale

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