Question 1: The ledger of Salizer Company at the end of the current year shows Accounts Receivable 110,000 , Sales 840,000, and sales Returns and Allowances 40,000.
Instructions :
A) If Allowances for Doubtful Accounts has a credit balance of 2,500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
B) If Allowance for Doubtful Accounts has a debit balance of 500.00 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales, and (2) 6% of accounts receivable.
Question 2: Presented below are two independent situations.
A) On March 3, Lisa Ceja Appliances sells $700,000 of its receivables to Horatio Factors Inc. Horatio Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the entry on Lisa Ceja Appliances' books to record the sale of the receivables.
B) On May 10,Worthy Company sold merchandise for $4,000 and accepted the customer's Firstar Bank Mastercard. At the end of the day, the Firstar Bank Mastercard receipts were deposited in the company's bank account. Firstar Bank charges a 4% service charge for credit card sales. Prepare the entry on Worthy Company's books to record the sale of merchandise.