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Assignment 3 - question 1

Req. 1: record the transactions in the journal

Date Accounts Debit Credit


Allowance for
uncollectible
1-Dec accounts 2,000
Accounts
receivable 2,000

Uncollectible Rex. Credit balance


accounts in allowance for
31-Dec expence 4,890 doubtful accounts
Allowance for
uncollectible Credit balance
accounts 4,890 before 31/dec

Req. 2: prepare a T-account for the allowance

1/12/2019: write-offs 2000 30/11/2019: balance 8200


31/12/2019: adjusting 4890
31/12: Balance 11090

Req. 3: balance sheet for 2011 and 2010


Perfecto communications
Comparative balance sheet (partial)
December 31, 2011 en 2010
2,011 2,010
Accounts receivab 248,000 214,000
Less: Allowance 11,090 4,600
Net accounts rece 236,910 209,400

Req. 4: why benefit from speedy collections + how to improve?


Why? Lower working capital requirement.
Less chance that you don't get money back
Do what? To a bank --> they are responsible to get the money back
Send reminders to the client
Give discount if they pay back fast
Credit entry needed
to produced required
11090 credit balance 4890

6200
Req. 1: journalize the issuance of ordinary shares
Accounts titles and Debit Credit
Capital Nate Smith 25,000
Capital Darla Jones 25,000
Common stock 50,000

Req.2: journalize the issuance of shares to the outsiders


Account titles and explanation
Debit Credit
plan 1
Cash 80,000
Preferred stock (800x100 $) 80,000

plan 2
Cash 55,000
Preferred stock 55,000
Cash 35,000
Common stock 35,000

Req.3: equity section if net income = $ 120,000


Stockholders' equity (plan 1)
Preferred stock, 6%, 80,000
Common stock, 50000 50,000
Retained earnings (= 90,000
Total equity 220,000
Stockholders' equity (plan 1)
Preferred stock 55,000
Common stock 85,000
Retained earnings (= 90,000
Total equity 230,000

Req. 4: which plan?


Plan 1 Number of votes external Smith and Jones hve all the voting shares
Preferred stockholde -

Plan 2 Number of votes external Smith and Jones only have 50000 voting shares
Common votes 35,000
Preferred votes (500 25000
And only 10 000 more
Par value gives no clue as to the stock’s market value.

Par value gives the accountant a constant amount at which to


record capital stock issuances in the capital stock accounts. As
stated earlier, the total par value of all issued shares is generally
the legal capital of the corporation.

00 voting shares