Chao Corporation uses the accounts receivable
hao Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Chao’s accountant prepared the following data about ending receivables: $40,000 was not yet due (1 percent expected not to be collected), $20,000 was 1-60 days past due (4 percent expected not to be collected), and $4,000 was over 60 days past due (8 percent expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $400. In the journal provided, prepare Chao’s end-of-period adjustment for estimated uncollectible accounts. Also prepare the entry that would have been made had the credit balance instead been a debit balance. Assuming a perpetual inventory system is used, use the following information to calculate cost of goods sold on an average-cost basis. Dec. 1 Beginning inventory 50 units @ $22 9 Purchases 50 units @ $24 17 Sales 25 units 22 Purchases 75 units @ $27 27 Sales 40 units Prepare journal entries for the following transactions involving notes payable for Homer Company, whose fiscal year ends June 30. Omit explanations. June 20 Paid a trade account payable with a 90-day, 9 percent $60,000 note. Interest is in addition to the face value. 30 Made end-of-year adjusting entry to accrue interest expense for the note. 30 Made end-of-year closing entry pertaining to interest expense. Sept. 18 Paid amount due on note, plus interest.
