Mohsin Hassan

BBA IIB
BUS-19F-044
Principle of Accounting

Assignment 04
Submitted to: Miss Sundus Rahim Memon
 Submitted From : Mohsin
Hassan
 TIGGY COMPANY
(A1)
Purchase Price $           38,000
Sales Tax $             1,700
Shipping cost $                150
Insurance on Shipping $                  80
Installation and Testing $                  70

Total Cost of Machine $           40,000

Date Account Debit Credit

2012 Equipment $40,000

     Cash $      40,000
Part
A2
Total Cost of Machine $           40,000
Less: Residual Value $           (5,000)
Depreciable Value $           35,000
Life 5 Years
Annual Depreciation $             7,000

Date Account Debit Credit

Dec 2012 Depreciation Expense $  7,000

     Accumulated Depreciation $             7,000

Part
B1
 $          
Annual Depreciation 160,000
$          
Less: Residual Value (10,000)
$          
Depreciable Value 150,000
Life 4 Years
Annual Depreciation $           37,500

Part
B2
Year Book value at beginning DDB Rate 100%/4 Years*2 Annual Dep Acc Dep

$                                                     
2012 160,000 50% $           80,000 $    80,000
$   
2013 $                                                      80,000 50% $           40,000 120,000
$   
2014 $                                                      40,000 50% $           20,000 140,000
$   
2015 $                                                      20,000 50% $           10,000 150,000

Part
B3
Depreciaton per unit $150,000/125,000 Units $               1.2

Year

$                                          
2012 45,000*$1.2 54,000
$                                          
2013 35,000*$1.2 42,000
$                                          
2014 25,000*$1.2 30,000
$                                          
2015 20,000*$1.2 24,000

Part C
 The greatest amount of depreciation expense in 2012 80000
The greatest amount of depreciation expense in year 4 is 37500 in the
straight line
The highest total amount over the 4 year period is 150000 in all the methods

2•BE9-3 During its first year of operations, Parot Company had credit
sales of $3,000,000; $600,000 remained uncollected at year-end. The
credit manager estimates that $35,000 of these receivables will become
uncollectible.
•(a) Prepare the journal entry to record the estimated uncollectibles.
•(b) Prepare the current assets section of the balance sheet for Parot
Company. Assume that in addition to the receivables it has cash of
$90,000, inventory of $130,000, and prepaid insurance of $7,500.

(A)
Journal Entry
Cash received from sales = 3000000 – 600000(account receivables)
Accounts Receivable = 600000 - 35000 (as a reserve or allowance)

Sales = ..........................................$3,000,000........ Credit

Cash Received = .............................$2,400,000........ Debit
Accounts Receivable =........................$565,000.........Debit
Allowance for noncollectible Receivables..$35,000............Debit

(B)

Current assets
Cash $90,000
Merchandise inventory $130,000
Prepaid expenses $7,500
Accounts Receivable $600,000
Less: Allowance for noncollectible Receivables $35,000
Total current assets $792,500

3•BE9-4 At the end of 2012, Henderson Co. has accounts receivable of $700,000
and an allowance for doubtful accounts of $54,000. On January 24, 2013, the
company learns that its receivable from Jaime Lynn is not collectible, and
management authorizes a write-off of $5,400.

•(a) Prepare the journal entry to record the write-off.

• (b) What is the cash realizable value of the accounts receivable (1) before the
write-off and (2) after the write-off?

(A)
Journal Entries

Date                     Account title and Explanation                                Debit                

Credit
(a)         Allowance for doubtful accounts                                          $5400
                         Accounts receivable                             $5400      
(To record writing off of uncollectable accounts)

(B)
Cash Realizable Value of Accounts Receivables

Before Write Off After Write Off

       Accounts Receivable $700,000                                          $700,000

                  ($700,000-$5400)                            $694,600          

      Less Allowance for doubtful Accounts $54,000                      $54,000

                  ($54,000-$5400)                            $48,600        
Cash Realize Value $646,000 $646,000