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Ashford ACC 205 Week Two Exercise Assignment 2014

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Question;Week;2 Assignment;ACC;205;1. Recognition of;concepts. Jim Armstrong operates a small company that books enter?tainers;for theaters, parties, conventions, and so forth. The company?s fiscal year;ends on June 30. Consider the following items and classify each as either (1);pre?paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued;revenue, or (5) none of the foregoing.;a Interest owed on the company's bank;loan, to be paid in early;b Professional fees earned but not;billed as of June 30;c Office supplies on hand at year-end;d An advance payment from a client for a;performance next month at a convention;e The payment in part (d) from the;client's point of view;f Amounts paid on June 30 for a 1-year;insurance policy;g The bank loan payable in part (a);h Repairs to the firm's copy machine;incurred and paid in June;2. Understanding the closing process. Examine;the following list of accounts;Note Payable;Accumulated Depreciation: Building;Alex Kenzy, Drawing;Accounts Payable;Product Revenue;Cash;Accounts Receivable;Supplies Expense;Utility Expense;Which of the;preceding accounts;appear on a post-closing trial;balance?are commonly known as temporary;or nominal, accounts?generate a debit to Income;Summary in the closing process?are;closed to the capital account in the closing process?;3. Adjusting entries;and financial statements. The following information pertains to Sally;Corporation;The company previously collected $1,500;as an advance payment for services to be rendered in the future. By the end of;December, one half of this amount had been earned.Sally Corporation provided $1,500 of;services to Artech Corporation, no billing had been made by December 31.Salaries owed to employees at year-end;amounted to $1,000.The Supplies account revealed a balance;of $8,800, yet only $3,300 of supplies were actually on hand at the end of the;period.The company paid $18,000 on October 1 of;the current year to Vantage Property Management. The payment was for 6 months?;rent of Sally Corporation?s headquarters, beginning on November 1.;Sally Corporation?s accounting year ends on December;31.;Instructions;Analyze;the five preceding cases individually and determine the following;a.;The typeof adjusting entry needed at year-end (Use the following codes;A, adjust?ment of a prepaid expense, B, adjustment of an unearned revenue, C;adjustment to record an accrued expense, or D, adjustment to record an accrued;revenue.);b.;The year-end journal entry to adjust the accounts;c.;The income statement impact of each adjustment (e.g., increases total revenues;by $500);Sally;Corporation provided $1,500 of services to Artech Corporation, no billing had;been made by December 31.Salaries;owed to employees at year-end amounted to $1,000.The;Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were;actually on hand at the end of the period.The;company paid $18,000 on October 1 of the current year to Vantage Property;Management. The payment was for 6 months? rent of Sally Corporation?s;headquarters, beginning on November 1.Sally Corporation?s accounting year;ends on December 31.;4. Adjusting entries.;You have been retained to examine the records of Mary?s Day Care Center as of;December 31, 20X3, the close of the current reporting period. In the course of;your examination, you discover the following;On January 1, 20X3, the;Supplies account had a balance of $1,350. During the year, $5,520 worth of;supplies was purchased, and a balance of $1,620 remained unused on December 31.;Unrecorded;interest owed to the center totaled $275 as of December 31.All;clients pay tuition in advance, and their payments are credited to the Unearned;Tuition Revenue account. The account was credited for $65,500 on August 31.;With the exception of $15,500 all amounts were for the current semester ending;on December 31.Depreciation;on the school?s van was $3,000 for the year.On;August 1, the center began to pay rent in 6-month installments of $24,000. Mary;wrote a check to the owner of the building and recorded the check in Pre?paid;Rent, a new account.Two;salaried employees earn $400 each for a 5-day week. The employees are paid;every Friday, and December 31 falls on a Thursday.Mary?s;Day Care paid insurance premiums as follows, each time debiting Pre?paid;Insurance;Date Paid;Policy No.;Length of Policy;Amount;Feb. 1, 20X2;1033MCM19;1 year;$540;Jan. 1, 20X3;7952789HP;1 year;912;Aug. 1, 20X3;XQ943675ST;2 years;840;Instructions;The center?s accounts were last adjusted on December;31, 20X2. Prepare the adjusting entries necessary under the accrual basis of;accounting.;On;January 1, 20X3, the Supplies account had a balance of $1,350. During the year;$5,520 worth of supplies was purchased, and a balance of $1,620 remained unused;on December 31.Unrecorded;interest owed to the center totaled $275 as of December 31All;clients pay tuition in advance, and their payments are credited to the Unearned;Tuition Revenue account. The account was credited for $65,500 on August 31.;With the exception of $15,500 all amounts were for the current semester ending;on December 31.Depreciation;on the school?s van was $3,000 for the year.;E. On August 1, the center began to pay rent in;6-month installments of $24,000. Mary wrote a check to the owner of the;building and recorded the check in Prepaid Rent, a new account.;F. Two;salaried employees earn $400 each for a 5-day week. The employees are paid;every Friday, and December 31 falls on a Thursday.;G. Mary?s;Day Care paid insurance premiums as follows, each time debiting Prepaid;Insurance;5.;Bank reconciliation and entries. The following information was taken;from the accounting records of Palmetto Company for the month of January;Balance per bank;$6,150;Balance per company records;3,580;Bank service charge for January;20;Deposits in transit;940;Interest on note collected by bank;100;Note collected by bank;1,000;NSF check returned by the bank with the bank;statement;650;Outstanding checks;3,080;Instructions;a. Prepare Palmetto?s January bank;reconciliation.;b. Prepare any;necessary journal entries for Palmetto.;6. Direct write-off method. Harrisburg;Company, which began business in early 20X7, reported $40,000 of accounts;receivable on the December 31, 20X7, balance sheet. Included in this amount;was $550 for a sale made to Tom;Mattingly in July. On January 4, 20X8, the company learned that Mattingly had;filed for personal bankruptcy. Harrisburg uses the direct write-off method to;account for uncollectibles.;a. Prepare the journal entry;needed to write off Mattingly?s account.;b.;Comment on the ability of the direct write-off method to value receivables on;the year-end balance sheet.;7. Allowance method;analysis of receivables. At a January 20X2 meeting, the presi?dent of Sonic;Sound directed the sales staff ?to move some product this year.? The president;noted that the credit evaluation department was being disbanded be?cause it had;restricted the company?s growth. Credit decisions would now be made by the;sales staff.;By the end of the year;Sonic had generated significant gains in sales, and the president was very;pleased. The following data were provided by the accounting department;20X2;20X1;Sales;$23,987,000;$8,423,000;Accounts Receivable, 12/31;12,444,000;1,056,000;Allowance for Uncollectible Accounts, 12/31;?;23,000 cr.;The $12,444,000 receivables balance was aged as;follows;Age of Receivable;Amount;Percentage of Accounts Expected to Be;Collected;Under 31 days;$4,321,000;99%;31260 days;4,890,000;90;61290 days;1,067,000;80;Over 90 days;2,166,000;60;Assume;that no accounts were written off during 20X2.;Instructions;Estimate;the amount of Uncollectible Accounts as of December 31, 20X2.What;is the company?s Uncollectible Accounts expense for 20X2?Compute;the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.Compute the net realizable value at the;end of 20X1 and 20X2 as a percentage of respective year-end receivables;balances. Analyze your findings and comment on the president?s decision to;close the credit evaluation department.

 

Paper#41903 | Written in 18-Jul-2015

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