INSTRUCTIONS: Answer ALL questions.
1. (10%) The following data were accumulated for use in reconciling the bank account of The Skin Saver Co. for October:1. Cash balance according to the depositorA????1s records at October 31, $12,530.20.Cash balance according to the bank statement at October 31, $11,100.50.Checks outstanding $3,276.20Deposit in transit, not recorded by bank, $4,780.40.A check for $340 in payment of an account was erroneously in the check register as $430.Bank debit memorandum for service charges, $15.50.
Prepare a bank reconciliation (in appropriate format).
Journal Entries: Debit Credit
2. (8%) Swenson Co. is a wholesaler of office supplies. An aging of the company’s accountsreceivable on December 31, 2014, and a historical analysis of the percentage of un-collectible accounts in each age category are as follows:
PercentAge Interval Balance UncollectibleNot past due $320,000 2%1-30 days past due 86,000 431-60 days past due 17,000 961-90 days past due 12,000 1591-180 days past due 7,400 60Over 180 days past due 3,500 80
Estimate what the proper balance of the allowance for doubtful accounts should be as ofDecember 31, 2014. $_____________
3. (4%)Using the data above, assume that the allowance for doubtful accounts for Swenson Co. has a debit balance of $2,000 as of December 31, 2014. Journalize the adjusting entry for uncollectible accounts as of December 31, 2014.
Date Description Ref Debit Credit
4. (18%) Journalize the following transactions in the accounts of Clinton Co., which operates a riverboat casino:
Mar. 1. Received an $8,500, 30-day, 12% note dated March 1 from Adams Co. on account.
Mar. 21. Received a $15,600, 60-day, 10% note dated March 21 from Murphy Co. on account.
Mar. 31. The note dated March 1 from Adams Co. is dishonored, and the customer’s account is charged for the note, including interest.
May 20. The note dated March 21 from Murphy Co. is dishonored, and the customer’s account is charged for the note, including interest.
June 29. Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 15% on the total amount debited to Adams Co. on March 31.
Aug. 31. Wrote off against the allowance account the amount charged to Murphy Co. on May 20 for the dishonored note dated March 21.
Date Descriptions Ref Debit Credit 5.) (10%)A truck was acquired on April 1st of the current year at a cost of $60,000, and has an estimated residual value of $8,000 and an estimated useful life of 5 years, or 100,000 miles. Determine the following: (a) the amount of depreciation by the straight-line method for the first and second year, (b) the amount of depreciation for the first and second year computed by the double declining-balance method (at twice the straight-line rate), and (c) The units of production method for the first and second year. The truck was driven 17,000 & 29,000 miles respectively for the 1st and 2nd year.
6.) (6%)Sandblasting equipment acquired at a cost of $128,000 has an estimated residual value of $8,000 and an estimated useful life of 5 years. It was placed in service on July 1 of the current fiscal year, which ends on December 31. Determine the depreciation for the current fiscal year and for the following fiscal year by (a) the straight-line method and (b) the declining-balance method, at twice the straight-line rate.
7.) (4%)Boxer Co. Acquired mineral rights for $18,700,000. The mineral deposit is estimated at 33,000,000 tons. 1. Determine the amount of depletion expense for the current year.
Journalize the adjusting entry to recognize the expense.
Date Descriptions Ref Debits Credits
8. (10%) Journalize the following transactions in the accounts of Obama Co., which operates a riverboat casino:
Mar. 21. Received a $9,000, 60-day, 9% note dated March 21 from Murphy Co. on account.
May 20. The note dated March 21 from Murphy Co. is dishonored, and the customer’s account is charged for the note, including interest.
Aug. 31. Wrote off against the allowance account the amount charged to Murphy Co. on May 20 for the dishonored note dated March 21.
Date Descriptions Ref Debit Credit
9. Icon Company acquired patent rights on January 1, 2009 for $1,125,000. The patent has a useful life equal to its legal life of 15 years. On January 2, 2012, Icon successfully defended the patent in a lawsuit at a cost of $90,000.
Required:
(1) Determine the patent amortization expense for the current year ended December 31, 2012.
(2) Journalize the adjusting entry to recognize the amortization.
Date Descriptions Ref Debit Credit