Accounting Al Example no 1 On January 1 2012 DeCarlo Company

Accounting Al Example no 1: On January 1, 2012, DeCarlo Company had Accounts Receivable $98,000 and Allowance for Doubtful Accounts $8,100. DeCarlo Company prepares financial statements annually. During the year, the following selected transactions occurred Jan. 5 Sold $10,800 of merchandise to Kelly Company, terms 2/15, n/30. Feb. 2 Accepted a $10,800, 4-month, 10% promissory note from Kelly Company for the balance due Sold S13,500 of merchandise to Raymond Company and accepted Raymond\'s $13,500, 2-month, 10% note for the balance due. 12 26 Sold $7,000 of merchandise to Ringspin Co,.terms n/10 5 Accepted a $7,000, 3-month, 8% note from Ringspin Co. for the balance due. Collected Raymond Company note in full. Apr. June 2 Collected Kelly Company note in full. July 5 Ringspin Co. dishonors its note of April 5. It is expected that 15 Sold $12,000 of merchandise to Butter Co. and accepted Butter\'s 15 Butter Co.\'s note was dishonored. Butter Co. is bankrupt, and there Ringspin will eventually pay the amount owed. $12,000, 3-month, 12% note for the amount due. is no hope of future settlement. Oct. Instructions (a) Journalize the transactions. b) Enter the beginning balances in the ledger accounts and post the January transactions. (e) Prepare a balance sheet and income statement on October 31, 2012. Example no 2:

Solution

a) Journal Entries :

b) Ledger accounts :

(c) Abstract of Income Statement and balance sheet on Oct 31, 2012 :

Income Statement account:

Balance Sheet :

Date	Accounts Titles and description	Debit $	Credit $
Jan 5	AR	10800
	Sales		10800
Feb 2	Note Receivable - Kelly	10800
	AR		10800
Feb 12	Note Receivable-Reymond	13500
	Sales		13500
Feb 26	AR	7000
	Sales		7000
Apr 5	Note Receivable- Ringspin	7000
	AR		7000
Apr 12	Cash	13725
	Note Receivable - Reymond		13500
	Interest revenue		225
	(13500+13500*10%*2/12=13725)
Jun 2	Cash	11160
	Note Receivable - Kelly		10800
	Interest revenue		360
	(10800+10800*10%*4/12=11160)
July 5	AR	7140
	Note Receivable - Ringspin		7000
	Interest revenue		140
	(7000+7000*8%*3/12=7140)
July 15	Note Receivable - Butter	12000
	Sales		12000
Oct 15	AR	12360
	Note Receivable - Butter		12000
	Interest revenue		360
	(12000+12000*12%*3/12=12360)
Oct 15	Allowance for Doubtful Debts	8100
	Bad Debts	4260
	AR		12360
	(being butter dues written off)