Required:

130. Use a t- account to show the balances and changes during 2004 in Plank Breweries:

Fixed assets account and Accumulated depreciation—fixed assets account (in $ thousands).

Answer:

	Fixed assets				Acc.Deprec.--	Fixed assets
Beg. Balance	28,750						7,625	Beg. Balance
Purchases	1,279	Disposals	254		Acc. Deprec.		2,121	Depreciation Exp.
					on disposals	191
End. Balance	29,775						9,555	End. Balance

Learning Objective: 1 Level of Learning: 3

131. Show the journal entry to record Plank's disposal of the fixed assets during 2004.

Answer:

Cash	15
Acc. Deprec.	191
Loss on disposal	47
Fixed assets		253

Learning Objective: 1 Level of Learning: 3

132. In its 2004 annual report to shareholders, Custard Cup Inc. disclosed the following footnote:

Note 4 Property, Plant and Equipment

Property, plant and equipment (PPE) at December 31, 2004, and December 31, 2003, consisted of the following:

	2001	2000
(In millions)
Machinery and equipment	$244	$237
Buildings and	90	89
improvements
Office furniture and	6	6
fixtures	_______	_______
	340	332
Less: Accumulated	183	165
depreciation and
amortization	_______	_______
	157	167
Land	15	15
Construction in progress	24	6
	$196	$188

Depreciation expense for property, plant and equipment was $26 million in 2004.

Required: Compute the Accumulated depreciation on PPE disposed of by Custard Cup during 2004.

Answer:

Acc.Deprec.--	Property Plant & Equipment (in millions)
		165	Beg. Balance
Acc. Deprec.		26	Depreciation Exp.
On disposals	8
		183	End. Balance

On May 12, 2006, Falwell Computing sold five computers to Computing Plus for $10,000, subject to terms 3/10, n30. Falwell uses the net method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2006.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2006.

Answer:

(a.)	Accounts receivable	9,700
	Sales revenue		9,700
(b.)	Cash	9,700
	Accounts receivable		9,700
(c.)	Cash	10,000
	Accounts receivable		9,700
	Interest revenue		300

Learning Objective: 3 Level of Learning: 3

92. On July 18, 2006, Philly Furniture Factory sold twenty reclining rockers to Dave's Discount Furniture for $8,000, subject to terms 2/10, n30. Philly uses the net method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on July 26, 2006.

3. Prepare the journal entry to record receipt of the payment assuming the correct amount was received on August 15, 2006.

Answer:

(a.)	Accounts receivable	7,840
	Sales revenue		7,840
(b.)	Cash	7,840
	Accounts receivable		7,840
(c.)	Cash	8,000
	Accounts receivable		7,840
	Interest revenue		160

Learning Objective: 3 Level of Learning: 3

93. On March 12, 2006, Admiral Electronics sold 20 fax machines to Cool Stuff Co. for $10,000, subject to terms 2/10, n30. Admiral uses the gross method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March 20, 2006.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on April 5, 2006.

Answer:

(a.)	Accounts receivable	10,000
	Sales revenue		10,000
(b.)	Cash	9,800
	Sales discounts	200
	Accounts receivable		10,000
(c.)	Cash	10,000
	Accounts receivable		10,000

Learning Objective: 3 Level of Learning: 3

94. On October 18, 2006, Flying Chicken sold 2,000 pounds of chicken to Healthier Grocery for $3,400, subject to terms 2/10, n30. Flying Chicken uses the gross method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on October 26, 2006.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on November 15, 2006.

Answer:

(a.)	Accounts receivable	3,400
	Sales revenue		3,400
(b.)	Cash	3,332
	Sales discounts	68
	Accounts receivable		3,400
(c.)	Cash	3,400
	Accounts receivable		3,400

Learning Objective: 3 Level of Learning: 3

95. On June 14, 2006, Rumsfeld Company sold 100 air conditioning units to Powell Heating and Cooling. The units list for $600 each but Powell was granted a 25% trade discount. All of Rumfeld's sales are subject to terms 2/10, n30. Rumsfeld uses the gross method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 22, 2006.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on July 10, 2006.

Answer:

(a.)	Accounts receivable	45,000
	Sales revenue		45,000
(b.)	Cash	44,100
	Sales discounts	900
	Accounts receivable		45,000
(c.)	Cash	45,000
	Accounts receivable		45,000

Learning Objective: 3 Level of Learning: 3

96. On February 14, 2006, Prime Company sold 50 air conditioning units to L&P Heating and Cooling. The units list for $700 each but L&P was granted a 30% trade discount. All of Prime's sales are subject to terms 2/10, n30. Prime uses the net method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on February 22, 2006.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March 10, 2006.

Answer:

(a.)	Accounts receivable	24,010
	Sales revenue		24,010
(b.)	Cash	24,010
	Accounts receivable		24,010
(c.)	Cash	24,500
	Accounts receivable		24,010
	Interest revenue		490

Learning Objective: 3 Level of Learning: 3

97. Beethoven Music Company started business in March, 2006. Sales for its first year were $400,000. Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars. Industry statistics suggest that a 10% of the merchandise sold to customers will be returned later. Beethoven estimated its sales returns based on the industry average. During the year, customers returned $30,000 in sales. Beethoven uses a perpetual inventory system.

Required:

Prepare summary journal entries to record (1) sales, (2) sales returns, and (3) the year-end adjusting entry for estimated sales returns.

Answer:

(1)	Accounts receivable	400,000
	Sales revenue		400,000
	Cost of goods sold	220,000
	Inventory		220,000
(2)	Sales returns	30,000
	Accounts receivable		30,000
	Inventory	16,500
	Cost of goods sold		16,500
(3)	Sales returns	10,000
	Allowance for sales returns		10,000
	Inventory-estimated returns	5,500
	Cost of goods sold		5,500

Learning Objective: 4 Level of Learning: 3

98. During Burns Company's first year of operations, credit sales totaled $140,000 and collections on credit sales totaled $105,000. Burns estimates that bad debt losses will be 1.5% of credit sales. By year-end, Burns had written off $300 of specific accounts as uncollectible.

Required:

1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.

2. Show the year-end balance sheet presentation for accounts receivable.

Answer:

(a.)	Allowance for uncollectible accounts	300
	Accounts receivable		300
	Bad debt expense	2,100
	Allowance for uncollectible accounts		2,100
(b.)	Partial balance sheet presentation:
	Accounts receivable	$34,700
	Less: Allowance for uncollectible accounts	1,800	$32,900	(A/R at net realizable value)

Learning Objective: 5 Level of Learning: 3

99. During Bricker Company's first year of operations, credit sales totaled $200,000 and collections on credit sales totaled $145,000. Bricker estimates that $1,000 of its ending accounts receivable balance will not be collected. By year-end, Bricker had written off $330 of specific accounts as uncollectible.

Required:

1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.

2. Show the year-end balance sheet presentation for accounts receivable.

Answer:

(a.)	Allowance for uncollectible accounts	330
	Accounts receivable		330
	Bad debt expense	1,330
	Allowance for uncollectible accounts		1,330
(b.)	Partial balance sheet presentation:
	Accounts receivable	$54,670
	Less: Allowance for uncollectible accounts	1,000	$53,670	(A/R at net realizable value)

Learning Objective: 5 Level of Learning: 3