Complete the journal entry in proper form

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Reference no: EM131021302

For all questions, assume no other transactions or activities have taken place during the period except as noted. Answer all questions!

Prepare and present calculations for partial credits for questions with calculations and presentations.

Q 1 and Q2

On July 1, 2014 Linked Up Inc. acquired a new machine at a cost of $15,000 with a residual value of $3,000. The estimated useful life is 5 years and 100,000 units. For the year ending June 30, 2015 the machine produced 15,000 units. For the year ending June 30, 2016, the machine produced 10,000 units.

1. Using the three depreciation methods (straight line, units of production, and double decline balancing) calculate the depreciation for the year ending 6/30/15 and present each of the three journal entries in proper form.

2. On July 1, 2016 the machine is sold for $10,000. Complete the journal entry in proper form based on your calculations under each of the three depreciation methods (see item 1 in this problem). You will present three separate, independent journal entries.

Q3

United Beverage Company owns a delivery truck with an original cost of $50,000 and an accumulated depreciation value of $20,000. The estimated residual value remains $4,000. Consider each of the independent situations below and present the required journal entry to record the sale or disposal of the truck, using proper format.

A. Sold for $30,000
B. Sold for $26,000
C. Sold for $34,000
D. Is totaled in a collision with no scrap value and no insurance (no proceeds will be received)

Q4 Accounts Receivable and Uncollectible Accounts

Logistics Incorporated uses the direct write off method. Their customer, Software Sales, has declared bankruptcy with no assets to pay off creditors. Present the journal entry, in proper format to record the necessary adjustment for the $22,000 remaining in the Accounts Receivable Subsidiary ledger from Software Sales.

Q5 Accounts Receivable and Uncollectible Accounts

US Weekly uses the allowance method for accounts receivable uncollectible accounts. Carnival Cruise Company has closed its business, left no forwarding address, and has not made any payments on account for over two years. Present the journal entry, in proper form, to write off the remaining accounts receivable of $34,000.

Q6 Accounts Receivable and Uncollectible Accounts

Left Field Inc. uses the allowance method for uncollectible accounts. A former customer, John Madden Sports, is seeking to return to good standing and begin doing business with the company again. As part of the agreement, on March 31, 2015, John Madden Sports paid Left Field Inc. the $64,500 balance due (Left Field Inc. wrote this value off three years ago). Present the required journal entry or entries to record this transaction.

Q7 Bank Reconciliation

As a new business manager you are concerned that the bank reconciliation is not being completed and presented to you each month. Explain why this is important and how you would select someone in your organization to complete this task. You have a sales clerk, an accountant, an executive secretary for your office, an accounts payable clerk, an accounts receivable specialist, and a credit manager (6 employees total plus you).

Q8 Management of Cash Functions and other issues of Internal Control

You are president of your local division, responsible for cash receipts and disbursements. The bank made a presentation to you and suggests your division use electronic processing for cash transactions. Accounts payable payments would be processed using the bank's system with an interface into your accounting system to meet your needs. Your invoices would reference a post office box managed by the bank who would open all mail. The cash receipts (checks from the customers) would be retained and processed, with copies provided to you electronically. All non cash receipt mail would be forwarded to you based on the advice of your legal counsel. Your paragraph should explain the pros and cons of this system, as it relates to cash receipts and cash disbursements.

Q9 Bank Reconciliation

The Bank Balance presented on the bank statement totals $10,000 while the general ledger cash balance for this account, on the same date, the last day of the month, displays a value of $12,255.

Please explain the issues related to this difference and how they would be resolved. Use you experience in creating a bank reconciliation to assist you in considering the variables.

Q10 Petty Cash

The auditors arrived to check the petty cash balance in your office. The account has a balance of $85 and the receipts not yet presented for reimbursement total $62. The Petty Cash Fund was issued several years ago for $150. How would you explain the current situation to the auditor? What might cause the balance to be off?

Verified Expert

This accountancy assignment deals with calculation of depreciation using various methods and also the recording of transactions in the event of the asset being liquidated before its estimated life. In addition, it contains various accounting treatment for uncollected accounts and also includes the importance of bank reconciliation statement, electronic processing system and petty cash fund.

Reference no: EM131021302

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