1) Nelsa’s Cleaning Company’s balance sheet dated December 31, 2014 reported Accounts Receivable of $500,000 and a credit balance in Allowance for Doubtful Accounts of $42,000. During 2015, Nelsa’s Cleaning had the following transactions: sales on account $2,500,000; sales returns and allowances, $60,000; collections from customers, $2,250,000; accounts written off $46,000; previously written off accounts of $7,000 were collected.

 

Instructions

(a) Prepare the journal entries for the 2015 transactions.

(b) If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 4% of net sales to be uncollectible, what is the adjusting entry at December 31, 2015?

(c) If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 9% of accounts receivable, what is the adjusting entry at December 31, 2014?

 

 

2) Molly Transport Inc. had the following transactions related to accounts and notes receivable.

 

Apr. 1, 2013 Accepted Juno Company's 1-year, 12% note in settlement of a $35,000 account receivable.

July 1, 2013 Loaned $25,000 cash to Griffon Kyle on a 9-month, 10% note.

Dec. 31, 2013 Accrued interest on all notes receivable.

Apr. 1, 2014 Received principal plus interest on the Juno note.

Apr. 1, 2014 Griffon Kyle dishonored its note: Molly Transport, Inc. expects it will eventually collect.

 

Instructions

Prepare journal entries to record the transactions. Molly Transport Inc. prepares adjusting entries once a year on December 31.

 

 

3) On January 2nd Loosey Company borrows $22,500.00 cash on a note payable from Doney Financial Company with terms 90 days, 12%. Loosey Company and Doney Financial Company uses a 360 day year for interest calculations. Loosey Company makes adjusting entries at the end of each calendar quarter. Prepare the journal entries for Loosey Company for (a) the initiation of the loan, (b) the recognition of interest expense for the quarter and (c) the payment of the note on its due date.

 

 

4) The following is a summary of Major Trucking Company’s payroll for the monthly pay period ending July 15 indicated the following:

 

Sales salaries	$225,000
Federal income tax withheld	42,300
Office salaries	40,000
Medical insurance withheld	8,370
Social security tax withheld	11,200
Medicare tax withheld	3,550

 

On the answer sheet provided, prepare the journal entries to record (a) the payroll and (b) the employer's payroll tax expense for the month. The state unemployment tax rate is 3.1%, and the federal unemployment tax rate is 0.8%. Only $40,000 of salaries are subject to unemployment taxes.

 

 

Please provide step-by-step instructions and answers to all of the following questions. Thank you.