Reference no: EM131613914
Q1. Smart Calendars is a new business. During its first year of operations, credit sales were $40,000, and collections of credit sales were $36,000. One account, $650, was written off. Using the aging-of -receivables method, management calculates $200 as its estimate of uncollectible amounts at year end. Prepare the journal entry to record bad debts expense.
Q2. The cost of an asset is $10,000,000, and its residual value is $100,000. Estimated useful life of the asset is four years. Prepare the schedule of depreciation using the double-declining-balance method of accounting.
Q3. Redribbon Gallery reported the following assets on its December 31, 2017 balance sheet:
Dec. 31, 2017 Dec. 31, 2016
Cash $35,000 $28,000
Accounts Receivable 97,000 85,000
Merchandise Inventory 80,000 62,000
Prepaid Expenses 29,000 20,000
Property, Plant, and Equipment, net 30,000 18,000
If the net sales for the year amounted to $850,000, what is the asset turnover ratio for 2017?