SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
1) The balance of accounts receivable is $275,000. The allowance for uncollectible accounts
has a credit balance of $240. Net credit sales for the year were $771,000 and cash sales were
$68,000. Information for estimating uncollectible accounts expense is presented below. For
each independent situation, prepare the adjusting entry to record the estimate and
determine the resultant balance in the allowance for uncollectible accounts.
a. The company uses the aging-of-accounts-receivable method. A partial aging of
accounts receivable balance is presented below:
Not yet due
31-60 days past due
61-90 days past due
91-120 days past due
Over 120 days past due
b. The company uses the percent-of-sales method. Historical data indicates that
approximately 3% of net credit sales are uncollectible.
2) Martin Manufacturing held three interest-bearing notes during 2005 and 2006. For each
note, determine the following items.
The maturity date
b. The maturity value
c. Interest revenue to be reported on December 31, 2005
Note 1 - issued September 25, 2005, $15,000, 10%, 60 days
Note 2 issued November 20, 2005, $25,000, 12%. 90 days
Note 3 - issued December 30, 2005, 14,000, 9%, 30 days
3) McAfee Construction acquired the following plant assets on January 1, 2009. The delivery
equipment was driven for 12,000 miles of its useful estimated life of 100,000 miles.
Compute depreciation for each of the assets. For the year ending 2009
a. Office equipment
c. Delivery equipment
4) Porter Business Products acquired equipment on January 1, 2008 for $470,000. The
equipment has an estimated useful life of 5 years and an estimated residual value of
$30,000. The equipment is expected to produce 150,000 units. During 2008, the equipment
produced 24,000 units and during 2009, the equipment produced 60,000 units. Calculate
depreciation expense for 2008 and 2009 under each of the following methods.
5) Taylor Computer Services purchased a tract of land and contracted with a builder to build
an office building, a parking lot, and landscaping. The following transactions resulted
from the contractor's activities. Determine the total costs allocated to the land, building,
and land improvements accounts.
Purchased land for $135,000.
Paid a demolition company $40,000 to remove an old structure on the property.
Paid $14,000 in delinquent taxes on the property.
Paid the contractor $333,000 to design and build the office building.
Paid $34,700 for fencing. Paid $39,500 for paving.
Paid an electrical contractor $14,900 for outdoor lighting.
Cost of land
b. Cost of building
Cost of land improvements
6) Jones Construction purchased a group of assets for $740,000. The individual assets and
their market values are listed as follows. Prepare the journal entry to record the
a. Compute gross pay for the following individuals assuming time in excess of 40 hours
is paid at the rate of one and one-half of regular pay.
Pay Rate Per Hour
b. All employees are subject to a rate of 8% FICA tax, 25% federal income tax, and union
dues of $20 per week. Federal unemployment taxes are levied at a rate of .8% and state
unemployment taxes are levied at a rate of 5.4%. No employee has earned more than
$7,000, induding this week's earnings. Determine the total net pay for all employees
combined. Round to the nearest dollar.
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