# ACT300 Module 6 The Smith Company Case

## ACT300 Module 6 The Smith Company Case

ACT300 Module 6 The Smith Company Case
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The following was taken from the records of Smith Company in the year ending December 31, 2014. Journalize the following transactions in an Excel spreadsheet for year-end 2014 using the aging method. Assume that the allowance for doubtful accounts has a beginning credit balance of \$18,000 on January 1, 2014.
Label the events below as journal entries #1 to #4, along with the dates of the entries:
1. February 20, 2014: Wrote off Jones account: \$7,250.
2. May 20, 2014: Received \$4,050 as partial payment on the \$8,000 account receivable due from Garcia.
3. August 10, 2014: Received \$7,250 from Jones on the account written off on February 20, 2014.
4. September 15: Wrote off the individual account receivables for the following customers as payment not expected in future: Tang: \$4,400; Mulaka: \$2,210; Quan: \$1,375.

December 31, 2014: Smith Company prepared the following aging schedule for it accounts receivables:
• \$160,000 of Accounts Receivable (A/R) are 0-30 days late: 3% probability of not being paid.
• \$40,000 of A/R are 31-60 days late: 10% probability of not being paid.
• \$18,000 of A/R are 61-90 days late: 20% probability of not being paid.
• \$1,500 of A/R are later than 90 days late: 50% probability of not being paid.

Instructions:
Submit the following items in an Excel spreadsheet, labeling each as 1, 2, 3, and 4:
1. The four journal entries (1 to 4 above) with a one-sentence description for each
2. The allowance for doubtful accounts T-account
3. The journal entry to record bad debt expense
4. The balance sheet presentation of net realizable value, including gross accounts receivables of \$219,500
ACT300 Module 6 The Smith Company Case
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