Hachey Company has accounts receivable of $95,100 at March 31, 2007

Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysis of the accounts shows these amounts.

Balance, March 31
Month of Sale 2007 2006
March $65,000 $75,000
February 12,600 8,000
December and January 10,100 2,400
November and October 7,400 1,100
$95,100 $86,500

Credit terms are 2/10, n/30. At March 31, 2007, there is a $2,200 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage of receivables basis for estimating uncollectible accounts. The company’s estimates of bad debts are as shown below.

Estimated Percentage
Age of Accounts Uncollectible
Current 2%
1–30 days past due 7
31–90 days past due 30
Over 90 days 50

Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31, 2007, to record bad debts expense.
(c) Discuss the implications of the changes in the aging schedule from 2006 to 2007.


Click here for the solution: Hachey Company has accounts receivable of $95,100 at March 31, 2007

Imperial Carpet has the following unadjusted trial balance as of March 31, 2012

Problem 2-6A Corrected Trial Balance

Imperial Carpet has the following unadjusted trial balance as of March 31, 2012.

AND SO ON

The debit and credit totals are not equal as a result of the following errors:
a. The balance of cash was understated by $12,000.
b. A cash receipt of $13,900 was posted as a debit to Cash of $19,300.
c. A debit of $15,000 to Accounts Receivable was not posted.
d. A return of $90 of defective supplies was erroneously posted as a $900 credit to Supplies.
e. An insurance policy acquired at a cost of $2,500 was posted as a credit to Prepaid Insurance.
f. The balance of Notes Payable was understated by $35,200.
g. A credit of $7,600 in Accounts Payable was overlooked when determining the balance of the account.
h. A debit of $10,000 for a withdrawal by the owner was posted as a credit to Leonardo Pepin, Capital.
i. The balance of $116,200 in Rent Expense was entered as $112,600 in the trial balance.
j. Gas, Electricity, and Water Expense, with a balance of $48,300 was omitted from the trial balance.

Required:
1. Prepare a corrected unadjusted trial balance as of March 31, 2012.
2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.

Check: 1. Total of Debit Column: $1,400,000

Click here for the solution: Imperial Carpet has the following unadjusted trial balance as of March 31, 2012

The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared

E3-5 (Adjusting Entries) The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

Debit Credit
Prepaid Insurance $ 3,600
Supplies 2,800
Equipment 25,000
Accumulated Depreciation—Equipment $ 8,400
Notes Payable 20,000
Unearned Rent Revenue 6,300
Rent Revenue 60,000
Interest Expense –0–
Wage Expense 14,000

An analysis of the accounts shows the following.
1. The equipment depreciates $250 per month.
2. One-third of the unearned rent was earned during the quarter.
3. Interest of $500 is accrued on the notes payable.
4. Supplies on hand total $650.
5. Insurance expires at the rate of $300 per month.

Instructions
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense; Insurance Expense; Interest Payable; and Supplies Expense. (Omit explanations.)

Click here for the solution: The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared