Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.
At the end of 2012, accounts receivable were dollar 586.000 and the allowance account had a credit balance of dollar 50,000. Accounts receivable activity for 2013 was as follows:
| Beginning balance | $586,000 |
|---|---|
| Credit sales | 2,680,000 |
| Collictions | (2,543,000) |
| Write-offs | (45,000) |
| Ending balance | $678,000 |
The company's controller prepared the following aging summary of year-end accounts receivable:
| Summary | ||
|---|---|---|
| Age Group | Amount | Percent Uncollectible |
| 0 -60 days | $400,000 | 4% |
| 61-90 days | 95,000 | 15 |
| 91-120 days | 55,000 | 25 |
| Over 120 days | 128,000 | 36 |
| Total | $678,000 |
Required:
1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)
2. Prepare the necessary year-end adjusting entry for bad debt expense. (If no entry is required for an event, select "No journal entry required" in the first account field.)
3.1 What is total bad debt expense for 2013?
3.2 Calculate the amount of accounts receivable that would appear in the 2013 balance sheet?
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $588,000 and the
allowance account had a credit balance of $52,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 588,000 | ||
| Credit sales | 2,690,000 | |||
| Collections | (2,553,000 | ) | ||
| Write-offs | (46,000 | ) | ||
| Ending balance | $ | 679,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 405,000 | 3 | % |
| 61−90 days | 96,000 | 10 | ||
| 91−120 days | 56,000 | 26 | ||
| Over 120 days | 122,000 | 37 | ||
| Total | $ | 679,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,800 | Machine hours | 2,200 | |
| Cooking | 12,900 | Machine hours | 2,200 | |||
| Product testing | 113,800 | Batches | 1,000 | |||
| $ | 132,500 | |||||
| Department 2 | Machine calibration | $ | 315,000 | Production runs | 500 | |
| Labeling | 20,000 | Cases of output | 145,000 | |||
| Defects | 9,000 | Cases of output | 145,000 | |||
| $ | 344,000 | |||||
| Support | Recipe formulation | $ | 82,000 | Focus groups | 40 | |
| Heat, lights, and water | 33,000 | Machine hours | 2,200 | |||
| Materials handling | 78,000 | Container types | 8 | |||
| $ | 193,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 33,000 | cases | 112,000 | cases |
| Batches | 330 | batches | 670 | batches |
| Machine hours | 900 | MH | 1,300 | MH |
| Focus groups | 30 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 240 | runs | 260 | runs |
Required:
1. Using a plantwide overhead rate based on cases,
compute the overhead cost that is assigned to each case of Extra
Fine Salsa and each case of Family Style Salsa.
2. Using the plantwide overhead rate, determine
the total cost per case for the two products if the direct
materials and direct labor cost is $9 per case of Extra Fine and $8
per case of Family Style.
3.a. If the market price of Extra Fine Salsa is
$18 per case and the market price of Family Style Salsa is $12 per
case, determine the gross profit per case for each product.
3.b. What might management conclude about the
Family Style Salsa product line?
In: Accounting
Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,800 | Machine hours | 2,200 | |
| Cooking | 12,900 | Machine hours | 2,200 | |||
| Product testing | 113,800 | Batches | 1,000 | |||
| $ | 132,500 | |||||
| Department 2 | Machine calibration | $ | 315,000 | Production runs | 500 | |
| Labeling | 20,000 | Cases of output | 145,000 | |||
| Defects | 9,000 | Cases of output | 145,000 | |||
| $ | 344,000 | |||||
| Support | Recipe formulation | $ | 82,000 | Focus groups | 40 | |
| Heat, lights, and water | 33,000 | Machine hours | 2,200 | |||
| Materials handling | 78,000 | Container types | 8 | |||
| $ | 193,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 33,000 | cases | 112,000 | cases |
| Batches | 330 | batches | 670 | batches |
| Machine hours | 900 | MH | 1,300 | MH |
| Focus groups | 30 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 240 | runs | 260 | runs |
4. Using ABC, compute the total cost per case
for each product type if the direct labor and direct materials cost
is $9 per case of Extra Fine and $8 per case of Family Style.
(Round your intermediate calculations to 2 decimal places.
Round "Activity Rate" and "Overhead cost per unit" answers to 2
decimal places.)
In: Accounting
Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,800 | Machine hours | 2,200 | |
| Cooking | 12,900 | Machine hours | 2,200 | |||
| Product testing | 113,800 | Batches | 1,000 | |||
| $ | 132,500 | |||||
| Department 2 | Machine calibration | $ | 315,000 | Production runs | 500 | |
| Labeling | 20,000 | Cases of output | 145,000 | |||
| Defects | 9,000 | Cases of output | 145,000 | |||
| $ | 344,000 | |||||
| Support | Recipe formulation | $ | 82,000 | Focus groups | 40 | |
| Heat, lights, and water | 33,000 | Machine hours | 2,200 | |||
| Materials handling | 78,000 | Container types | 8 | |||
| $ | 193,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 33,000 | cases | 112,000 | cases |
| Batches | 330 | batches | 670 | batches |
| Machine hours | 900 | MH | 1,300 | MH |
| Focus groups | 30 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 240 | runs | 260 | runs |
5. If the market price is $18 per case of Extra
Fine and $12 per case of Family Style, determine the gross profit
per case for each product. (Round your intermediate
calculations and final answers to 2 decimal
places.)
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $596,000 and the
allowance account had a credit balance of $60,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 596,000 | ||
| Credit sales | 2,730,000 | |||
| Collections | (2,593,000 | ) | ||
| Write-offs | (50,000 | ) | ||
| Ending balance | $ | 683,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 425,000 | 5 | % |
| 61−90 days | 91,000 | 14 | ||
| 91−120 days | 60,000 | 30 | ||
| Over 120 days | 107,000 | 41 | ||
| Total | $ | 683,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $610,000 and the
allowance account had a credit balance of $74,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 610,000 | ||
| Credit sales | 2,800,000 | |||
| Collections | (2,663,000 | ) | ||
| Write-offs | (57,000 | ) | ||
| Ending balance | $ | 690,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 460,000 | 4 | % |
| 61−90 days | 78,000 | 15 | ||
| 91−120 days | 67,000 | 26 | ||
| Over 120 days | 85,000 | 41 | ||
| Total | $ | 690,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
Swathmore Clothing
Corporation grants its customers 30 days’ credit. The company uses
the allowance method for its uncollectible accounts receivable.
During the year, a monthly bad debt accrual is made by multiplying
2% times the amount of credit sales for the month. At the fiscal
year-end of December 31, an aging of accounts receivable schedule
is prepared and the allowance for uncollectible accounts is
adjusted accordingly.
At the end of 2020, accounts receivable were $594,000 and the
allowance account had a credit balance of $58,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 594,000 | ||
| Credit sales | 2,720,000 | |||
| Collections | (2,583,000 | ) | ||
| Write-offs | (49,000 | ) | ||
| Ending balance | $ | 682,000 | ||
The company’s
controller prepared the following aging summary of year-end
accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 420,000 | 3 | % |
| 61−90 days | 90,000 | 13 | ||
| 91−120 days | 59,000 | 29 | ||
| Over 120 days | 113,000 | 40 | ||
| Total | $ | 682,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
14.
Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,200 | Machine hours | 1,600 | |
| Cooking | 10,800 | Machine hours | 1,600 | |||
| Product testing | 113,200 | Batches | 500 | |||
| $ | 129,200 | |||||
| Department 2 | Machine calibration | $ | 285,000 | Production runs | 750 | |
| Labeling | 10,500 | Cases of output | 155,000 | |||
| Defects | 5,000 | Cases of output | 155,000 | |||
| $ | 300,500 | |||||
| Support | Recipe formulation | $ | 97,000 | Focus groups | 50 | |
| Heat, lights, and water | 34,000 | Machine hours | 1,600 | |||
| Materials handling | 72,000 | Container types | 8 | |||
| $ | 203,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 27,000 | cases | 128,000 | cases |
| Batches | 270 | batches | 230 | batches |
| Machine hours | 600 | MH | 1,000 | MH |
| Focus groups | 40 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 270 | runs | 480 | runs |
4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $10 per case of Extra Fine and $9 per case of Family Style. (Round your intermediate calculations to 2 decimal places. Round "Activity Rate" and "Overhead cost per unit" answers to 2 decimal places.)
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In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2017, accounts receivable were $606,000 and the
allowance account had a credit balance of $70,000. Accounts
receivable activity for 2018 was as follows:
| Beginning balance | $ | 606,000 | ||
| Credit sales | 2,780,000 | |||
| Collections | (2,643,000 | ) | ||
| Write-offs | (55,000 | ) | ||
| Ending balance | $ | 688,000 | ||
The company’s controller prepared the following aging summary of year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0–60 days | $ | 450,000 | 3 | % |
| 61–90 days | 74,000 | 13 | ||
| 91–120 days | 65,000 | 24 | ||
| Over 120 days | 99,000 | 39 | ||
| Total | $ | 688,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2018?
3-b. How would accounts receivable appear in the
2018 balance sheet?
In: Accounting