Question

During January 2021, the following transactions occur: January 1 Purchase equipment for $20,600. The company estimates a residual value of $2,600 and a five-year service life. January 4 Pay cash on accounts payable, $10,600. January 8 Purchase additional inventory on account, $93,900. January 15 Receive cash on accounts receivable, $23,100. January 19 Pay cash for salaries, $30,900. January 28 Pay cash for January utilities, $17,600. January 30 Sales for January total $231,000. All of these sales are on account. The cost of the units sold is $120,500. The following information is available on January 31, 2021. Depreciation on the equipment for the month of January is calculated using the straight-line method. The company estimates future uncollectible accounts. The company determines $4,100 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest revenue on notes receivable for January. Unpaid salaries at the end of January are $33,700. Accrued income taxes at the end of January are $10,100.

Answer 1

Step-by-step explanation:

Jan 1 - Dr Equipment - $20,600

Cr Cash/Bank - $20,600

Jan 4 - Dr Accounts Payable - $10,600

Cr Cash - $10,600

Jan 8 - Dr Inventory - $93,900

Cr Cask/Bank - $93,900

Jan 15 - Dr Cash - $23,100

Cr Accounts Receivable - $23,100

Jan 19 - Dr Salaries - $30,900

Cr Cash - $30,900

Jan 28 - Dr Utilities - $17,600

Cr Cash - $17,600

Jan 30 - Dr Accounts Receivable - $231,000

Cr Sales - $231,000

Jan 31 - Dr COGS - $120,500

Cr Inventory - $120,500

Jan 31 - Dr Depreciation - $3,600 - Depreciation = ($20,600 - $2,600)/5 = $3,600

Cr Accumulated Depreciation - $3,600

Jan 31 - Dr Salaries - $33,700

Cr Salaries Payable - $33,700

Jan 31 - Dr Income Tax - $10,100

Cr Accrued income taxes - $10,100

Jan 31 - Dr Allowance for doubtful debts - $8,980 - ($4,100 x 50%) = $2,050 + ($231,000 x 3%) = $6,930 = $8,980

Cr Accounts Receivable. - $8,980