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    Accounting Assignment - CH8

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    Othman S
    Castagno Company made a sale on account for $18,000 with payment terms of 2/10, n/30 on November 1st. On November 5th, the customer returned $1,000 of merchandise. On November 9th, full payment was received from the customer. The Ramirez Company has accounts receivable of $200,000 at year-end. If the allowance for doubtful accounts has a credit balance of $3,000 and bad debts are expected to be 8% of accounts receivable, calculate and journalize the adjusting entry. Also do the same if the allowance has a debit balance of $3,000. Shafer Company has accounts receivable of $49,

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    Accounting Assignment - CH8

    Uploaded by

    Othman S
    37 views4 pages
    Castagno Company made a sale on account for $18,000 with payment terms of 2/10, n/30 on November 1st. On November 5th, the customer returned $1,000 of merchandise. On November 9th, full payment was received from the customer. The Ramirez Company has accounts receivable of $200,000 at year-end. If the allowance for doubtful accounts has a credit balance of $3,000 and bad debts are expected to be 8% of accounts receivable, calculate and journalize the adjusting entry. Also do the same if the allowance has a debit balance of $3,000. Shafer Company has accounts receivable of $49,

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    accounting assignment _CH8

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    Castagno Company made a sale on account for $18,000 with payment terms of 2/10, n/30 on November 1st. On November 5th, the customer returned $1,000 of merchandise. On November 9th, full payment was received from the customer. The Ramirez Company has accounts receivable of $200,000 at year-end. If the allowance for doubtful accounts has a credit balance of $3,000 and bad debts are expected to be 8% of accounts receivable, calculate and journalize the adjusting entry. Also do the same if the allowance has a debit balance of $3,000. Shafer Company has accounts receivable of $49,

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    37 views4 pages

    Accounting Assignment - CH8

    Uploaded by

    Othman S
    Castagno Company made a sale on account for $18,000 with payment terms of 2/10, n/30 on November 1st. On November 5th, the customer returned $1,000 of merchandise. On November 9th, full payment was received from the customer. The Ramirez Company has accounts receivable of $200,000 at year-end. If the allowance for doubtful accounts has a credit balance of $3,000 and bad debts are expected to be 8% of accounts receivable, calculate and journalize the adjusting entry. Also do the same if the allowance has a debit balance of $3,000. Shafer Company has accounts receivable of $49,

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    of 4

    Name:

    Q1:
    Prepare journal entries to record the following transactions entered into by the Castagno Company:

    2022
    Nov. 1 Sold merchandise on account to Mercer, Inc., for $18,000, terms 2/10, n/30.

    Nov. 5 Mercer, Inc., returned merchandise worth $1,000.

    Nov. 9 Received payment in full from Mercer, Inc.

    Q2:
    The ledger of the Ramirez Company at the end of the current year shows Accounts Receivable of
    $200,000.
    Instructions
    (a) If Allowance for Doubtful Accounts has a credit balance of $3,000 in the trial balance and bad debts
    are expected to be 8% of accounts receivable, journalize the adjusting entry for the end of the period.
    (Show all calculations.)
    (b) If Allowance for Doubtful Accounts has a debit balance of $3,000 in the trial balance and bad debts
    are expected to be 8% of accounts receivable, journalize the adjusting entry for the end of the period.
    (Show all calculations.)
    Q3:
    Shafer Company has the following accounts in its general ledger at July 31: Accounts Receivable $49,000
    and Allowance for Doubtful Accounts $3,400. During August, the following transactions occurred.

    Aug. 15 Sold $30,000 of accounts receivable to More Factors, Inc. who assesses a 2% finance
    charge.

    25 Made sales of $2,500 on Visa credit cards. The credit card service charge is 3%.

    28 Made sales of $4,000 on Shafer credit cards.

    Instructions
    (a) Journalize the transactions.
    (b) Indicate the statement presentation of service charges.
    Q4:
    COMPLETION STATEMENTS
    1. Notes and accounts receivable that result from sales transactions are often called______________
    receivables.

    2. Two accounting problems associated with accounts receivable are (1) ______________ and (2)
    ______________ accounts receivable.

    3. The net amount expected to be collected in cash from receivables is the _____________.

    4. When credit sales are made, _________________ Expense is considered a normal and necessary
    risk of doing business on a credit basis.

    5. The two methods used in accounting for uncollectible accounts are the ____________ method
    and the ______________ method.

    6. Allowance for Doubtful Accounts is a _____________ account which is ______________ from


    Accounts Receivable on the balance sheet.

    7. When the allowance method is used to account for uncollectible accounts, ____________ is
    debited when an account is determined to be uncollectible.

    8. The _________________ basis of estimating uncollectibles normally results in the best


    approximation of _______________ value.

    9. A 75-day note receivable dated July 5 would mature on ______________.

    10. Collection of a note receivable will result in a credit to ______________ for the face value of the
    note and a credit to ______________.

    11. A note that is not paid on the maturity date is said to be ______________.

    12. A concentration of ______________ is a threat of nonpayment from a single customer or class of


    customers.

    13. Ratios used to assess the liquidity of accounts receivable are ______________ and
    _______________.

    14. A finance company or bank that purchases receivables from businesses is known as a
    ______________.
    Q5:
    Company Net Credit Beginning Ending
    Name Sales Net Receivables Net Receivables
    Brown $180,000 $ 5,000 $30,000
    Pink $400,000 $52,000 $42,000
    Yellow $ 75,000 $ 5,400 $ 5,800
    (a) Which company is doing the best job of managing its accounts receivable? Why? Be sure to support
    your answer with computations.
    (b) What are your concerns about these companies?

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