Bad$Debt$Expense$
$
XYZ$Incorporated$uses$the$aging$method$to$estimate$bad$debt$expense,$and$amounts$ for$receivables$along$with$bad$debt$rates$are$shown$in$the$table$below.$ $
The$opening$balance$in$the$Allowance$for$Doubtful$Accounts$at$January$1,$2012$is$
$10,000$and$there$have$been$writeFoffs$during$the$year$in$the$amount$of$$3,500.$$$
$
Determine$the$amount$of$bad$debt$expense$for$the$2012$year$and$prepare$the$ journal$entry$to$record$2012$bad$debt$expense.$Fill$in$the$“Estimated$Bad$Debt$ Amount”$column.$
$
$
Trade$Receivables$ Estimated$Bad$Debt$ Estimated$Bad$Debt$
Balance$
Rate$
Amount$
Not$yet$due$
$80,000$
1%#
$
Past$due$up$to$30$days$
$23,000$
3%#
$
Past$due$31$F$90$days$
$85,000$
10%#
$
Past$due$>$90$days$
$32,000$
25%#
$
Total$
$220,000$
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Bonds$
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Holiday$Company$issued$a$$5,000,000$bond$on$January$1,$2013.$The$bond$is$due$in$
10$years,$has$an$interest$rate$of$5%$and$pays$interest$semiFannually$on$June$30th$
and$December$31st.$The$market$interest$rate$is$6%.$The$company$uses$the$effective$ interest$rate$method$of$amortization.$Prepare$the$entry$to$record$the$issue$of$the$ January 1, 2013 bond$on$April$30,$2013$and$the$entry$to$record$the$first$interest$payment$on$June$ th$2013.$
30
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Statement$of$Financial$Position$(Balance$Sheet)$
$
XYZ$Corporation$
Statement$of$Financial$Position$
As$At$December$31,$2013$
$
Current$Assets:$
$
Cash$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$
$
200,000$
$
Trade$Receivable$(Net$of$AFDA)$ $
$
$$$$
$$$$3,000$
$
Inventory$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$
$
$$$$9,000$
$
Prepaid$expenses$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $
$
$$$$6,000$
$
Total$Current$Assets$
$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$218,000$
$
Long$Term$Assets:$
$
Property$Plant$&$Equipment$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $
2,000,000$
$
Less:$Accumulated$Depreciation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $(1,000,000)$
$
Total$Assets$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$1,218,000$$$
$
Current$Liabilities:$
$
Trade$Payables$
$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$100,000$
$
Accrued$Liabilities$ $
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$25,000$
$
Long$Term$Liabilities:$
$
Bonds$payable$
$
$
$
$
$$$$$$$$$$$$$$$$$$$$$$25,000$
$
Shareholder’s$Equity:$
$
Common$Shares$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$
$$$$$$$1,000,000$
$
Retained$Earnings$ $
$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$68,000$
$
Total$Liabilities$and$Shareholder’s$Equity$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$1,218,000$
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Inventory
Hampton$Corporation$uses$FIFO$costing$and$there$was$a$yearFend$inventory$count$
that$determined$there$were$23$units$on$hand$on$December$31,$2012.$$$The$following$ is$the$inventory$information$for$the$year:$ $
Opening$inventory$(Dec$1,$2012)$
125$units$@$$200$$ $25,000$
Purchase$February$
$
$
34$units$@$$240$
$8,160$
Purchase$June$ $
$$
$
20$units$@$$250$
$5,000$
$
Required:$Find$Cost$of$Goods$Sold$for$the$year$ended$Dec$31,$2012.$
$
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