Question

In: Accounting

On July 9, 2018, Omar Co. purchased a machine for 260,000 SA from Saudi Machine Company...

On July 9, 2018, Omar Co. purchased a machine for 260,000 SA from Saudi Machine Company (SMC). Omar gave SMC 7% note due in 120 days in payment for the machine. (5 Points)

What is the maturity date of the note?

How much interest will Omar pay to SMC on this note?

Pass the Journal entry for Notes Receivable transaction.

On October 16, 2018, Omar informs us that the company is unable to pay the note or interest?

What adjusting entry is required on December 2018?

On October 31, 2017, Aziz Company sells a truck that originally cost 140,000 SA for 95,000 SA cash. The truck was placed in service on January 1, 2012. It was depreciated using the straight-line method with an estimated salvage value of 28,000 and a useful life of 10 years. Record all the transactions? (2.5 points)

The trial balance before adjustment of XYZ Company reports the following balances: (2.5 points)

                                                                                        Dr.                  Cr.   

Accounts receivable                                                 $100,000

Allowance for doubtful accounts                                                    $    2,500

Sales (all on credit)                                                                            750,000

Sales returns and allowances                                       40,000

Instructions

            Pass the journal entries for estimated bad debts assuming that doubtful debts accounts are estimated to be

(1)        6% of gross accounts receivable and

(2)        1% of net sales.

Solutions

Expert Solution

What is the maturity date of the note?

Maturity date of Note is 6th Nov 2018

(9-7-2018 + 120 days)

How much interest will Omar pay to SMC on this note?

=260000*7%/365*120=5983.56

Pass the Journal entry for Notes Receivable transaction.

DR CR
Cash 265,983.56
Interest Revenue 5,983.56
Notes Receivable 260000

What adjusting entry is required on December 2018?

DR CR
Notes Receivable 260000
Allowance for bad debts 260000

On October 31, 2017, Aziz Company sells a truck that originally cost 140,000 SA for 95,000 SA cash.

DR CR
Cash 95000
Accumulated Depreciation 54,133.33
Gain on sale 9,133.33
truck 140000

Depreciation calculation

2012 (140000-28000)/10 11200
2014 11200
2015 11200
2016 11200
2017 11200*10/12 9,333.33
Total Depreciation 54,133.33

he trial balance before adjustment of XYZ Company

1

DR CR
Bad debt expense 100000*.06-2500 3500
Allowance for doubtful accounts 3500

2

DR CR
Bad debt expense (750000-40000)*1% 7100
Allowance for doubtful accounts 7100

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

On July 15, 2018, the Nixon Car Company purchased 2,300 tires from the Harwell Company for $35 each. The terms of the sa...
On July 15, 2018, the Nixon Car Company purchased 2,300 tires from the Harwell Company for $35 each. The terms of the sale were 4/10, n/30. Nixon uses a periodic inventory system and the net method of accounting for purchase discounts. Required: 1. Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2018. 2. Prepare the journal entry to record the payment on August 15, 2018. 3. If Nixon instead uses a perpetual...
Duluth Ranch, Inc. purchased a machine on July 1, 2018. The cost of the machine was...
Duluth Ranch, Inc. purchased a machine on July 1, 2018. The cost of the machine was $34,000. Its estimated residual value was $10,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 2,500 units in 2018 and 3,200 units in 2019. Required: Part A - Calculate depreciation expense for 2018 and 2019 using the straight-line method. Part B - Calculate the depreciation expense for 2018 and 2019 using...
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine...
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000. Required: 1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method. 2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine...
On January 1, 2018, A Co. purchased a machine at a cost of $84,000. The machine is expected to last 5 years and has a residual value of $14,000. Required: 1. Compute depreciation for the five year periods ending December 31 using the straight-line, sum-of-the-years digits and DDB method. straight-line: sum-of-the-years digits: DDB method: 2. The machine is sold on January 1,2020 for $40,000. Compute the gain or loss for each method.
Cominsky Company purchased a machine on July 1, 2018, for $28,000. Cominsky paid $200 in title...
Cominsky Company purchased a machine on July 1, 2018, for $28,000. Cominsky paid $200 in title fees and county property tax of $125 on the machine. In addition, Cominsky paid $500 shipping charges for delivery, and $475 was paid to a local contractor to build and wire a platform for the machine on the plant floor. The machine has an estimated useful life of 6 years with a salvage value of $3,000. Determine the depreciation base of Cominsky’s new machine....
On July 15, 2018, the Nixon Car Company purchased 3,000 tires from the Harwell Company for...
On July 15, 2018, the Nixon Car Company purchased 3,000 tires from the Harwell Company for $30 each. The terms of the sale were 2/10, n/30. Nixon uses a periodic inventory system and the net method of accounting for purchase discounts. Required: 1. Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2018. 2. Prepare the journal entry to record the payment on August 15, 2018. 3. If Nixon instead uses a perpetual...
9, Dawn (single) purchased her home on July 1, 2008. On July 1, 2018, Dawn moved...
9, Dawn (single) purchased her home on July 1, 2008. On July 1, 2018, Dawn moved out of the home. She rented out the home until July 1, 2019, when she sold the home and realized a $230,000 gain (assume none of the gain was attributable to depreciation). What amount of the gain is Dawn allowed to exclude from her 2019 gross income? Multiple Choice $0. $23,000. $207,000. $230,000. 13, Harvey rents his second home. During the year, Harvey reported...
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The...
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2022. Bonita Company uses the effective-interest method to amortize discount or premium. On January 1, 2019, Bonita Company sold the bonds for $240,370 after receiving interest to meet its liquidity needs. Prepare the amortization schedule for the bonds.
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The...
On January 1, 2017, Bonita Company purchased $260,000, 6% bonds of Aguirre Co. for $238,911. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2022. Bonita Company uses the effective-interest method to amortize discount or premium. On January 1, 2019, Bonita Company sold the bonds for $240,370 after receiving interest to meet its liquidity needs. (c) Prepare the journal entries to record the semiannual interest...
Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of...
Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of $49,000. The machine has an estimated life of five years and an estimated salvage value of $6,700. Required: a-1. Calculate the depreciation expense for each year of the asset's life using Straight-line depreciation. Year Depreciation Expense 1 $8,460 2 $8,460 3 $8,460 4 $8,460 5 $8,460 a-2. Calculate the depreciation expense for each year of the asset's life using Double-declining-balance depreciation. Year Depreciation Expense...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT