i have attached the quiz

Part 1 (11 points)
The Can’t Wait ’Til Winter Break Company is preparing its financial statements for the current year. Its accounts receivable (“credit department”) personnel has struggled with collecting all of the accounts receivable on the books. The credit dept. uses the following AGING schedule showing the likelihood of collecting the outstanding A/R from customers. The aging schedule is for the year ended 12-31-2017 and is based on past (historical) experience.
Accounts Months Percentage Deemed
Receivable Outstanding Collectible
$80,000 < 1 month 98%
65,000 1 to 3 months 95%
40,000 3 to 6 months 90%
30,000 > 6 months 75%
The current balance in the Allowance for Bad Debts Account (aka “Allowance for Uncollectible Accounts) account is a $11,350 CREDIT.
REQUIRED:
1. Using the aging of A/R method, compute the amount of bad debt expense for 2017 AND record the proper adjusting entry. Show all computations clearly!!! (3 points)
BAD DEBT EXPENSE COMPUTATION (must show!):
ENTRY: DR:
CR:
DUE DATE: THURSDAY, NOVEMBER 30, 2017 AT THE BEGINNING OF CLASS–NO
EXCEPTIONS! YOUR SIGNATURE BELOW CERTIFIES THAT YOU WORKED
COMPLETELY ALONE ON THIS QUIZ. THAT IS, YOU DO NOT DISCUSS, COMPARE,
CONSULT, TALK, ASSIST, ETC., ABOUT THIS QUIZ WITH ANYONE ELSE OTHER THAN
PROFESSOR KRANYAK. ANY EVIDENCE THAT YOU DID NOT COMPLY WITH THIS
REQUIREMENT WILL RESULT IN A ZERO ON THIS QUIZ.
2
2. Show how the A/R section of the Balance Sheet would appear at 12-31-2017 after taking into account the 2017 adjusting entry. (2 points)
ITEM (3) BELOW DOES NOT APPLY TO THE INFORMATION ABOVE!
3. Assume a company with an A/R balance of $200,000 and an Allowance for Bad Debts of $60,000, writes off a customer’s account of $10,000. Show what the A/R section of the Balance Sheet would look like before and after the write-off. (2 points)
BEFORE WRITE-OFF AFTER WRITE-OFF
4. Clearly explain how a WRITE-OFF of A/R (NOT the bad debt expense estimate; there is a difference!) affects the following financial statement items: (2 POINTS)
a. Net Income:
b. Net Accounts receivable:
5. Clearly explain how a bad debt expense estimate (aka “estimate of uncollectible accounts”) affects the following financial statement items: (2 points)
a. Net Income:
b. Net Accounts receivable:
DUE DATE: THURSDAY, NOVEMBER 30, 2017 AT THE BEGINNING OF CLASS–NO
EXCEPTIONS! YOUR SIGNATURE BELOW CERTIFIES THAT YOU WORKED
COMPLETELY ALONE ON THIS QUIZ. THAT IS, YOU DO NOT DISCUSS, COMPARE,
CONSULT, TALK, ASSIST, ETC., ABOUT THIS QUIZ WITH ANYONE ELSE OTHER THAN
PROFESSOR KRANYAK. ANY EVIDENCE THAT YOU DID NOT COMPLY WITH THIS
REQUIREMENT WILL RESULT IN A ZERO ON THIS QUIZ.
3
Part 2 (2 points)
Assume net credit sales are $500,000, beginning A/R was $35,000 and ending A/R was $45,000. Compute the following:
ARTO:
Average Collection Period:
If the credit terms are 2/10; N30, is this collection period good or bad? Explain clearly!!
DUE DATE: THURSDAY, NOVEMBER 30, 2017 AT THE BEGINNING OF CLASS–NO
EXCEPTIONS! YOUR SIGNATURE BELOW CERTIFIES THAT YOU WORKED
COMPLETELY ALONE ON THIS QUIZ. THAT IS, YOU DO NOT DISCUSS, COMPARE,
CONSULT, TALK, ASSIST, ETC., ABOUT THIS QUIZ WITH ANYONE ELSE OTHER THAN
PROFESSOR KRANYAK. ANY EVIDENCE THAT YOU DID NOT COMPLY WITH THIS
REQUIREMENT WILL RESULT IN A ZERO ON THIS QUIZ.
4
Part 3 (8 points)
The Can’t Kill My Passion for Accounting Company purchased a conveyor belt machine on January 1, 2017 for $600,000. There was also 5% sales tax on the machine. Installation and delivery charges totaled $7,000. Installers, Alexander and Arthur, performed test runs of the belt which cost $1,000. During the installation, Alexander slipped while snapping a photo to his buddy Jacob. Alexander then bumped into Arthur who fell onto the conveyor belt. Arthur’s ride down the moving belt caused damage equaling $2,500. The machine is expected to have a useful life of 20 years with an estimated salvage value of $18,000.
REQUIREMENTS:
1. Compute the initial cost of the machine on 1-1-2017. (1.5 points)
2. Compute the yearly depreciation expense under the straight-line method.
(1.5 points)
3. Assume the company sells the machine at the end of 5 years (or 12-31-2021) for $500,000. Compute the book value at 12-31-2021 and calculate the gain or loss on the sale. (2 points)
BOOK VALUE:
GAIN OR LOSS:
4. Record the journal entry for the sale on 12-31-2021. (3 points)