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    Mohsin Hassan Bba Iib BUS-19F-044 Principle of Accounting

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    Mohsin Hassan
    The document provides accounting information for Tiggy Company and its purchase of a machine. It includes: 1) The total cost of the machine purchased by Tiggy Company for $40,000 which was recorded through a journal entry on January 1, 2012 debiting Equipment for $40,000 and crediting Cash for $40,000. 2) The machine is being depreciated over 5 years with an annual depreciation of $7,000 using the straight-line method. 3) Additional information is provided about depreciation calculations using the declining balance method for another asset over 4 years.

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    Mohsin Hassan Bba Iib BUS-19F-044 Principle of Accounting

    Uploaded by

    Mohsin Hassan
    62 views7 pages
    The document provides accounting information for Tiggy Company and its purchase of a machine. It includes: 1) The total cost of the machine purchased by Tiggy Company for $40,000 which was recorded through a journal entry on January 1, 2012 debiting Equipment for $40,000 and crediting Cash for $40,000. 2) The machine is being depreciated over 5 years with an annual depreciation of $7,000 using the straight-line method. 3) Additional information is provided about depreciation calculations using the declining balance method for another asset over 4 years.

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    Accounting (3)

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    The document provides accounting information for Tiggy Company and its purchase of a machine. It includes: 1) The total cost of the machine purchased by Tiggy Company for $40,000 which was recorded through a journal entry on January 1, 2012 debiting Equipment for $40,000 and crediting Cash for $40,000. 2) The machine is being depreciated over 5 years with an annual depreciation of $7,000 using the straight-line method. 3) Additional information is provided about depreciation calculations using the declining balance method for another asset over 4 years.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    62 views7 pages

    Mohsin Hassan Bba Iib BUS-19F-044 Principle of Accounting

    Uploaded by

    Mohsin Hassan
    The document provides accounting information for Tiggy Company and its purchase of a machine. It includes: 1) The total cost of the machine purchased by Tiggy Company for $40,000 which was recorded through a journal entry on January 1, 2012 debiting Equipment for $40,000 and crediting Cash for $40,000. 2) The machine is being depreciated over 5 years with an annual depreciation of $7,000 using the straight-line method. 3) Additional information is provided about depreciation calculations using the declining balance method for another asset over 4 years.

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    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

    Jan 1 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 31 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
    Declining Balance reported highest in first year
    Straight line method reported highest in last year
    Total for 4 year will remain same in all four years

    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

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