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    Minnesota Viking income statement; allowance method for bad debt

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    1. The adjusted trial balance for the Minnesota Vikings, prepare the income statement and statement of owner's equity for the year ended Feb. 14, 1996. There were no owner investments during the year.

    Minnesota Vikings
    Adjusted Trial Balance
    Feb. 14, 1996
    Debit Credit

    Cash $ 12,000
    Accounts Receivable 25,000
    Supplies 4,000
    Prepaid Insurance 8,000
    Land 50,000
    Building 130,000
    Accum. Depn. - Building $ 10,000
    Equipment 65,000
    Accum. Depn. - Equipment 8,000
    Accounts Payable 17,000
    Salaries Payable 9,000
    Unearned Revenue 21,000
    Mortgage Payable 100,000
    Capital 50,000
    Withdrawals 20,000
    Revenue 230,000
    Salaries Expense 65,000
    Utilities Expense 23,000
    Insurance Expense 14,000
    Supplies Expense 11,000
    Depreciation Expense 18,000 ________
    Totals $ 445,000 $ 445,000

    2. This is the adjusted trial balance for the Minnesota Vikings, prepare the classified balance sheet as of Feb. 14, 1996.

    Minnesota Vikings
    Adjusted Trial Balance
    Feb. 14, 1996

    Debit Credit

    Cash $ 12,000
    Accounts Receivable 25,000
    Supplies 4,000
    Prepaid Insurance 8,000
    Land 50,000
    Building 130,000
    Accum. Depn. - Building $ 10,000
    Equipment 65,000
    Accum. Depn. - Equipment 8,000
    Accounts Payable 17,000
    Salaries Payable 9,000
    Unearned Revenue 21,000
    Mortgage Payable 100,000
    Capital 149,000
    Withdrawals 20,000
    _________ _________
    Totals $ 445,000 $ 445,000

    3. Vermont National Parks reported the following events during its first year of operations:

    a. Sold $450,000 of merchandise, one-half on credit and one-half for cash.

    b. Collected $185,000 from customers on account.

    c. Wrote off the following account:

    LL Bean - $ 800
    Land's End - 750
    Coulmbia - 675

    d. Unexpectedly received $750 from Land's End in payment of` their account.

    e. Made an entry to record estimated bad-debt expense of $4,500.

    Required: Vermont National Parks uses the allowance method to account for bad debts, prepare the necessary journal entries to record the above transactions.

    4. Data for the first month of operations of Bond 007 Wear follow:

    1/1 Purchased 23 units @$73
    1/6 Sold 15 units
    1/12 Purchased 7 units @ $76
    1/17 Sold 10 units
    1/20 Purchased 5 units @ $78
    1/25 Sold 4 units
    1/29 Sold 3 units

    Required: Assuming all units were sold for $80, calculate the following using the FIFO perpetual inventory method:

    a. Cost of goods sold
    b. Ending inventory
    c. Gross margin for the month

    5. Dole Plantation purchased machinery on Jan. 4, 2002 at the total cost of $46,500. Sam estimated the useful life of the machinery to be eight (8) years or 860,000 hours, with an estimated residual value of $3,500. The machinery was used for 85,000 hours in 2002 and 112,000 hours in 2003.

    Required: Calculate the depreciation expense for 2002 and 2003 under each of the following methods:

    2002 2003

    Straight-line _________________ _________________
    Units-of-production _________________ _________________
    Double-declining-balance _________________ _________________

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    Solution Summary

    The solution discusses Minnesota Viking income statements for the allowance method for bad debt.

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