1.

2.

3. TNS company has $90,000 in outstanding accounts receivable in the end of reporting period
and it uses the allowance method to account for uncollectible accounts. Experience
suggests that 6% of outstanding receivables are uncollectible. The debit balance (before
adjustments) in the allowance for doubtful accounts on December 31, 2015 is $800.

On January 20, 2016 TNS company wrote off $24,000 uncollectible account of its
customer Delta Co.

On March 3, 2016 TNS received payment of $21,000 from Delta Co. written off
on January 20.

On April 3, 2016 TNS sold $30,000 of its account receivables to Bank of America.
The Bank charges a 2% of factoring fee

On August 4, 2016 TNS borrowed $55,000 cash from Bank of America, pledging
$60,000 worth of accounts receivable as collateral for the loan
 On September 1, 2016 TNS received $3,800, 6%, 5 month note in exchange of
services provided to customer.

On January 31, 2017 TNS received a full payment of the note plus accrued
interest.

Prepare the following entries:

a) adjusting journal entry on December 31, 2015 to record bad debts expense for
2015; (5 points)
b) journal entries on January 20; March 3; April 3; August 4; September 1; (39
points)
c) adjusting journal entry on December 31, 2016 to record accrued interest on a note;
(6 points)
d) journal entry on January 31, 2017 (12 points)

4. A company's property records revealed the following information about its plant assets:

Estimated Useful
Machine # Cost Salvage value Purchase date Capacity Units produced Depreciation Method
life
1 $39,000 $3,000 Apr. 1, 2008 6 years - - Straight-line
2 90,000 8,600 Aug. 1, 2008 5 years - - Double-declining balance
5,000 in 2008 /
3 80,000 2,000 Aug. 1, 2008 10 years 39,000 units Units of production
8,500 in 2009

Calculate the depreciation expense for each machine for the year ended December 31,
2008, and for the year ended December 31, 2009.

Machine 1:
2008 _______________________

2009 _______________________

Machine 2:
2008 _______________________

2009 _______________________

Machine 3:
2008 _______________________

2009 ____________________
5. On May 1, 20015, a company sold the equipment that cost $10,600 and that had a useful
life of 5 years and a salvage value of $4,000. The company received $5,200 cash from sale
of the equipment. Using straight-line depreciation, the accumulated depreciation as of
December 31, 2014 was $5,280.

a. Prepare the journal entry to record depreciation up to the date of sale of the equipment
(from December 31, 2014 till the date of sale )
b. Prepare the journal entry to record the sale of the equipment

6.

7.

8.
9.

10.
11.

12. ABC Company purchased merchandise from SUNSKY on November 1 of the

current year. ABC accepted SUNSKY’s $5,000, 70-day, 10% note as payment.
What entry should SUNSKY make on November 1, on December 31, and on January
9 of the next year when the note is paid?

13. Prepare the company's following transactions for June.

Ju n e 2 S o ld m e r c h a n d is e o n a c c o u n t, $ 1 4 ,0 0 0
Ju n e 8 S o ld $ 1 5 ,0 0 0 w o r th o f a c c o u n ts r e c e iv a b le to F ir s t B a n k . F ir s t B a n k
c h a rg e d a 3 % fa c to rin g fe e .
Ju n e 2 0 B o r r o w e d $ 3 0 ,0 0 0 c a s h f r o m F ir s t B a n k , p le d g in g $ 3 1 ,5 0 0 w o r th o f
a c c o u n ts re c e iv a b le a s c o lla te ra l fo r th e lo a n .

14. Home Depot sells materials on August 31 for $6,000 cash that are subject to a 5%
sales tax. Please prepare the journal entry for this transaction.
15. On December 1, 2007 Gates Company borrowed $45,000 cash from FirstBank on a
90-day, 9% note payable.

a. Prepare Gate's general journal entry to record the issuance of the note payable.
b. Prepare Gate's general journal entry to record the accrued interest due at December
31, 2007.
c. Prepare Gate's general journal entry to record the payment of the note on March 1,
2008.

16. A company issued 5-year, 7% bonds with a par value of $100,000. The company
received $97,947 for the bonds. Using the straight-line method, calculate the amount
of interest expense for the first semiannual interest period.

(a) Prepare the general journal entry to record the issuance of the bonds.
(b) Prepare the general journal entry to record the first interest payment.

17. A company issued 18-year, 6% bonds with a par value of $750,000. The company
received $761,736 cash for the bonds. Using the straight-line method, calculate the
amount of interest expense for the first semiannual interest period.
(a) Prepare the general journal entry to record the issuance of the bonds.
(b) Prepare the general journal entry to record the first interest payment.

18. On April 1, 2014 a corporation borrowed $125,000 cash by signing a 5-year, 9%

installment note requiring annual payments each December 31 of accrued interest plus
equal amounts of principal.
Prepare corporation’s journal entries on April 1, 2014; December 31, 2014 and
December 31, 2015.

19. On January 1, 2009, Merrill Company borrowed $100,000 on a 10-year, 7%

installment note payable. The terms of the note require Merrill to pay 10 equal
payments of $14,238 each December 31 for 10 years.
Prepare the required general journal entry to record the payment on the note on
December 31, 2009; December 31, 2010; December 31, 2011.
Group work – team 1
Use the following financial statements and additional information to prepare a statement of
cash flows for the year ended December 31, 2009 using the indirect method

Additional Information
a. Sold equipment with original cost of $46,500 for cash
b. Purchased equipment by paying $25,000 cash and signing long-term note payable for balance
c. Paid cash to reduce long term note payable
d. Borrowed cash by signing short term note payable
e. Issued 2,350 shares of common stock for cash
f. Declared and paid cash dividends
Group Work – team 2
Use the following financial statements and additional information to prepare a statement of
cash flows for the year ended December 31, 2009 using the indirect method

Additional Information:
1. Furniture costing $100,000 is sold (all in cash) at its book value in 2009.
2. Additional (new) furniture was purchased (with cash.
3. Common stock was issued for cash.
4. Cash dividends were paid.
5. No additional notes payable were issued. Cash was paid to reduce Notes Payable
balance.
Group Work – team 3
Use the following financial statements and additional information to prepare a statement of
cash flows for the year ended June 30, 2009 using the indirect method

Additional Information
a. A note payable is retired at its book value in exchange for cash
b. The only changes affecting retained earnings are net income and dividend declaration
c. New equipment is purchased for cash
d. Received cash for the sale of equipment that had original cost $98,145
Group work – team 4

Use the following financial statements and additional information to prepare a statement of
cash flows for the year ended December 31, 2009 using the indirect method

Additional Information

1. Equipment costing $21,375 is sold for cash

2. New Equipment purchases are for cash
3. The balance of Retained Earnings is affected by cash dividend and net income