Assignment #3 Problem #1 Farm Fresh Produce Co. sells produce

 

Assignment #3

Problem #1

Farm Fresh Produce Co. sells produce wholesale to local groceries on account. The accounts receivable

department had the following information on December 31, 2009:

Total Credit sales

$400,000.00

Balance of allowance for doubtful accounts ($950.00)

Bad debt as a percentage of credit sales 0.50%

Days Past Due

Amount

J Company 34

5,000.00

H Company 74

950.00

L Company 18

32,000.00

T Company 22

4,350.00

F Company 61

2,000.00

B Company 145

1,750.00

Age Class

Percentage Uncollectible

0-30

2%

30-60

5%

60-90

12%

90-120

20%

120+

75%

Instructions:

1. Create an aging of receivable report and determine the allowance for doubtful accounts.

2. Determine the allowance for doubtful accounts based on the percentage of sales method.

3. Illustrate the effects on the accounts and financial statements using both methods.

4. Illustrate the effects on the accounts and financial statements assuming Farm Fresh Produce Co.

wrote off the balance of T Company on April 3, 2010.

5. Illustrate the effects on the accounts and financial statements assuming that T Company paid off

its account on May 22, 2010.

Problem #2

Health Guard Labs, a pharmaceutical company, recently purchased a new pill dispensing machine. The

purchase price was $24,500, the estimated residual value was $10,000, and the estimated useful life is

five years. Additional expenditures during the first year of use were as follows:

1. Sales tax $750

2. Assembly $450

3. Maintenance repairs $2,500

4. Replacement parts $3,600

5. New battery to increase energy efficiency $670

Instructions:

1. Determine the machine asset value at year end of year one.

2. Create a depreciation schedule for year one and two for the dispensing machine by using

the straight line method.

3. Create a depreciation schedule for year one and two for the dispensing machine by using

the double declining method.

Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!