Timken Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the year, $22,500 of accounts receivable were written off as being uncollectible. In addition, $13,500 of the accounts that were written off in 2015 were unexpectedly collected. At its' year-end December 31, 2016, Timken had $225,000 of accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $13,500 credit at December 31, 2015.
|
Age (days)
|
Accounts
Receivable
|
|
1-30
|
$ 90,000
|
|
31-60
|
45,000
|
|
61-90
|
22,500
|
|
91-120
|
54,000
|
|
Over 120
|
13,500
|
|
Total
|
$225,000
|
Required:
Prepare journal entries to record the following 2016 transactions:The write-off of $22,500 The recovery of $13,500 Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2016.The estimated uncollectible accounts at December 31, 2016 are calculated as follows:
|
Age (days)
|
Estimated
Loss
percentage
|
|
1-30
|
1.5%
|
|
31-60
|
3%
|
|
61-90
|
4%
|
|
91-120
|
9%
|
|
Over 120
|
45%
|
Required: Prepare the adjusting entry required at December 31, 2016.
and
Lexington Heating LLC records cash receipts deposited on a daily basis. All cash disbursements are made by checks. These disbursements are also recorded on a daily basis.
The following information is provided for July 2016:
Lexington general ledger checking account balance at July 31, 2016 was $4,634.
The bank statement checking account balance was $4,884 at July 31, 2016.
Cash receipts recorded for July 2016 in Lexington's accounting records, but did not appear on the bank statement, totaled $487.
Bank memos previously not available to Lexington are included in the bank statement. These memos includes a NSF check received from a customer for $143. Also, the were bank services charges of $11 for new checks ordered. Another memo advices Lexington that $543 has been deposited in their checking account ($550 less the bank charge of $7). This represents the net proceeds of a collection the bank had made on behalf of Lexington on a $550 note receivable.
Checks written and recorded during July in Lexington's accounting, but not included in the bank statement includes the following checks:
Ck no. 1311 $ 59
Ck no. 1312 $ 91
Ck no. 1313 $120
Ck no. 1314 $ 74
Ck no. 1315 $ 35
Check 1146 was recorded in Lexington's accounting recordings at $345 and listed in the bank statement at $543. This was not a bank error.
Checks that were outstanding as of 30 June 2016 included check no. 1115 $167 and check no. 1118 $197. Check no. 1118 was paid in the bank statement and check 1115 was not.
Required: Prepare a bank reconciliation at July 31, 2016.