Business
Business, 17.02.2021 14:10, bighoneypadrick

Johnson Corp. uses the balance sheet approach to estimate uncollectible account expense. At year-end an aging of the accounts receivable produced the following five groups:

1. Not yet due $6,000
2. 1-30 days past due $5,000
3. 31-60 days past due$3,000
4. 61-90 days past due$2,000
5. Over 90 days past due$2,800
Total $18,800
On the basis of past experience, the company estimated the percentages probably uncollectible for the
above five age groups to be as follows: Group 1: 3%, Group 2: 5%, Group 3: 20%, Group 4: 30%, Group5: 50%.
The allowance for doubtful accounts before adjustments at December 31 showed a credit balance of $2,500
a. Prepare the aging schedule and compute the uncollectible amount. (5 points)
Days Due Amounts Percentages Uncollectible amount Totals

b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper
amount. (6 points)

c. On July 28 of the following year, company learned that an existed doubtful account receivable
from last year with the amount of $800 became worthless because of the bankruptcy of the client,
Ms. Barnes. Prepare the journal entry required on July 28 to write-off this account’s balance. (6
points)

d. Two years later, Ms. Barnes who owed $800 to company paid the full amount.
Prepare the journal entry of the debt recovery. (8 points)

Faculty of Economics and Administrative Sciences
Business Administration Department
BUS 231 – Financial Accounting

EU-FRM-010-002-EN Pub. Date: 19/11/2019 Upd: 02
5. Merk & Co. Corp. purchases 600 Amazon stocks on December 16, 2019. The corporation paid
$40 per share.
a. Record the purchase of these stocks on December 4.(5 points)

b. On December 21, company sells 200 shares at a price of $30 per share. Record the sale of
marketable securities on December 21.(5 points)

c. On December 25, company sells 300 stocks more for $50 per share. Record the sale of
marketable securities on December 25.(5 points)

d. On December 31, 2019 one Amazon stock closing price is $39 at New York Stock Exchange
(NYSE). Record the necessary mark-to-market adjustment on December 31.

answer
Answers: 2

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