The following information is from the records of armadillo camera shop:

Accounting Principles 101- Test #5

Chapter 8

Businsky – Spring 2013

Name: ______________________________ Date: _______________

Problem

Points Possible

Points Received

1

8 Points

2

3 Points

3

3 Points

4

2 Points

5

2 Points

6

4 Points

7

4 Points

8

4 Points

9

10 Points

10

4 Points

11

3 Points

12

3 Points

Total

50 Points

Problem #1 (8 points)

JarJar Company had the following series of transactions:

11/01/11 JarJar Company borrowed $18,000 by issuing a 12%, 1 year note.

12/1/11 JarJar Company borrowed $25,000 by issuing a 8%, 6 month note.

5/1/12 JarJar paid the full payment due of Note 2.

11/01/12 JarJar paid the full payment due of Note 1

Directions:

1) Record all necessary journal entries for JarJar Company for 2011

2) Record all necessary journal entries for JarJar Company for 2012

Explanations are not required.

DATE

DESCRIPTION

REF

DEBIT

CREDIT

Problem #2 (3 points)

Tarheel Services is holding a note receivable from one of its customers and wishes to collect the cash earlier than the maturity date of the note. The note is for $1,000 and carries a rate of 4%. Tarheel sells the note to a bank for $950. Please provide the journal entry which Tarheel makes to record this transaction. (Dates and Explanations are not required.)

Problem #3 (3 points)

Clockwise Services is holding a note receivable from one of its customers and wishes to collect the cash earlier than the maturity date of the note. The note is for $1,000 and carries a rate of 4%. Clockwise sells the note to a bank for $1,080. Please provide the journal entry with Clockwise makes to record this transaction. (Dates and Explanations are not required.)

Problem #4 (2 points)

The following information is from the 2013 records of Armadillo Camera Shop:

Accounts receivable, December 31, 2013

$20,000 (debit)

Allowance for uncollectible accounts, December 31, 2013

prior to adjustment

600 (debit)

Net credit sales for 2013

95,000

Accounts written off as uncollectible during 2013

7,000

Cash sales during 2013

27,000

Uncollectible accounts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of Uncollectible accounts expense?

A) $7,000

B) $3,450

C) $2,250

D) $2,850

Problem #5 (2 points)

The following information is from the 2013 records of Armadillo Camera Shop:

Accounts receivable, December 31, 2013

$20,000 (debit)

Allowance for uncollectible accounts, December 31, 2013

prior to adjustment

600 (debit)

Net credit sales for 2013

95,000

Accounts written off as uncollectible during 2013

7,000

Cash sales during 2013

27,000

Uncollectible accounts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the balance of the Allowance for uncollectible accounts after adjustment?

A) $7,000

B) $3,450

C) $2,850

D) $2,250

Problem #6 (4 points)

The following information is from the 2013 records of Armadillo Camera Shop:

Accounts receivable, December 31, 2013

$20,000 (debit)

Allowance for uncollectible accounts, December 31, 2013

prior to adjustment

600 (debit)

Net credit sales for 2013

95,000

Accounts written off as uncollectible during 2013

7,000

Cash sales during 2013

27,000

Uncollectible accounts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of net Accounts receivable after adjustment?

A) $16,550

B) $17,750

C) $17,150

D) $13,000

Problem #7 (4 points)

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the percent-of-sales method to account for uncollectible account expense, and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense. At the end of the year, what is the balance in Uncollectible account expense?

A) $150

B) $800

C) $250

D) $1,450

Problem #8 (4 points)

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the percent-of-sales method to account for uncollectible account expense, and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense. At the end of the year, what is the balance in Uncollectible account expense?

A) $150

B) $800

C) $250

D) $1,450

Problem #9 (10 points)

At the beginning of 2014, Mark's sales had the following ledger balances:

image1.jpg

During the year there were $450,000 of credit sales, $460,000 of collections, and $3,700 of write-offs. At the end of the year, Mark's adjusted for uncollectible account expense using the percent-of-sales method, and applied a rate, based on past history, of 1.2%. At the end of the year, what was the balance in the Accounts receivable?

A) $10,300

B) $3,700

C) $14,000

D) $21,300

Problem #10 (4 points)

As Perry Materials Supply was preparing for the year-end close, their balances were as follows:

image2.jpg

Perry Materials uses the aging method and has completed the following analysis of the accounts receivable:

Customer

1-30 Days

31-60 Days

61-90 Days

Over 90 Days

Total Balance

Johnson

$4,600

$3,200

$7,800

Hot Pots, Inc.

800

1,000

1,800

Potter

40,000

550

40,550

Harrison

3,600

900

4,500

Marx

2,000

50

2,050

Younger

65,000

65,000

Merry Maids

5,900

5,900

Acher

12,000

6,400

18,400

Totals

$127,500

$13,750

$3,700

$1,050

$146,000

Uncollectible percentage

2%

10%

20%

40%

Estimated uncollectible amount

$2,550

$1,375

$740

$420

$5,085

How much will the Uncollectible account expense for the year be?

A) $2,550

B) $1,115

C) $5,085

D) $11,285

Problem #11 (3 points)

On October 1, 2014, Allen Jewelry Company accepted a 4-month, 10% note for $2,400 in settlement of an overdue account receivable. If the company accrues interest at year-end only, how much interest revenue should be accrued on December 31, 2014?

A) $80

B) $60

C) $240

D) $40

Problem #12 (3 points)

On March 1, 2014, Bayonne Services made a loan to one of its officers. The officer signed a 6-month note for $4,000 at 8%. Bayonne generally accrues interest at year-end only, so at the time the note matured, Bayonne had not accrued any interest revenue. On August 1 when the note matured, the officer settled in full with the company. How much interest revenue did Bayonne record?

A) $320

B) $4,160

C) $160

D) $4,000

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