Solution

QUESTION 2
2006
Jan. 09 Delivery Truck......................................................... 38,000
Cash................................................................. 38,000

Mar 15 Maintenance and Repairs Expense....................... 180

Cash................................................................. 180

Dec. 31 Depreciation Expense-Delivery Truck.................... 9,500

Accumulated Depreciation- Delivery Truck..... 9,500
2007
Jan 03 Truck....................................................................... 62,500
Cash................................................................. 62,500

Feb 20 Maintenance and Repairs Expense....................... 150

Cash................................................................. 150

Apr. 30 Depreciation Expense-Delivery Truck.................... 2,375

Accumulated Depreciation- Delivery Truck..... 2,375

Cash....................................................................... 25,000
Accumulated Depreciation- Delivery Truck............ 11,875
Loss on Disposal of Delivery Truck........................ 1,125
Delivery Truck.................................................. 38,000

Dec. 31 Depreciation Expense-Truck.................................. 12,500

Accumulated Depreciation-Truck.................... 12,500
2008
July 01 Truck....................................................................... 70,000
Cash................................................................. 70,000

Oct 06 Depreciation Expense-Truck.................................. 7,500

Accumulated Depreciation-Truck.................... 7,500

Cash....................................................................... 43,900
Accumulated Depreciation-Truck........................... 20,000
Gain on Disposal of Truck............................... 1,400
Delivery Truck.................................................. 62,500

Dec. 31 Depreciation Expense-Truck.................................. 7,000

 Accumulated Depreciation-Truck.................... 7,000

QUESTION 3

Mar 01 Merchandise Inventory........................................... 50,000

Account Payable-Kelvin Co............................. 50,000

Apr 10 Account Payable-Kelvin Co.................................... 50,000

Note Payable................................................... 50,000

June 09 Note Payable.......................................................... 50,000

Interest Expense..................................................... 1,000
Cash................................................................. 51,000
Aug 01 Building................................................................... 48,125
Interest Expense..................................................... 1,875
Note Payable................................................... 50,000

Oct 30 Note Payable.......................................................... 50,000

Cash................................................................. 50,000

Dec 27 Sales Salaries Expense.......................................... 63,400

Officers Salaries Expense...................................... 36,600
Office Salaries Expense......................................... 10,000
Social Security Tax Payable............................ 5,050
Medicare Tax Payable..................................... 1,650
Employees Federal Income Tax Payable........ 17,600
Employees State Income Tax Payable........... 4,950
Bond Deductions Payable............................... 850
Medical Insurance Payable............................. 1,120
Salaries Payable.............................................. 78,780

Dec 30 Employees Federal Income Tax Payable.............. 17,600

Social Security Tax Payable................................... 10,100
Medicare Tax Payable............................................ 3,300
Cash................................................................. 31,000

Dec. 31 Pension Expense.................................................... 9,500

Cash................................................................. 9,500

Dec. 31 Vacation Pay Expense........................................... 36,100

Vacation Pay Payable...................................... 36,100
Dec. 31 Product Warranty Expense..................................... 37,240
Product Warranty Payable............................... 37,240

QUESTION 4

2006
Mar. 15 Cash....................................................................... 11,100
Accounts Receivable—Bimba Co.................... 11,100

15 Allowance for Doubtful Accounts............................ 7,400

Accounts Receivable—Bimba Co.................... 7,400

Apr. 16 Accounts Receivable—Tom Miner......................... 5,782

Allowance for Doubtful Accounts..................... 5,782
16 Cash....................................................................... 5,782
Accounts Receivable—Tom Miner.................. 5,782

July 20 Allowance for Doubtful Accounts............................ 5,500

Accounts Receivable—Martz Co..................... 5,500

Oct. 31 Accounts Receivable—Two Bit Saloon Co............ 6,100

Allowance for Doubtful Accounts..................... 6,100
31 Cash....................................................................... 6,100
Accounts Receivable—Two Bit Saloon Co..... 6,100

Dec. 31 Allowance for Doubtful Accounts............................ 9,250

Accounts Receivable—Asche Co.................... 950
Dorsch Co................ 4,600
Krebs Distributors.... 2,500
J. J. Levi................... 1,200
31 Uncollectible Accounts Expense............................ 11,918
Allowance for Doubtful Accounts..................... 11,918
31 Income Summary................................................... 11,918
Uncollectible Accounts Expense..................... 11,918
Number 1 and 2.
Allowance for Doubtful Accounts 115
Balance
Date Item Dr. Cr. Dr. Cr.

2006
Jan. 1 Balance........................... ................ ................ ................ 12,050
Mar. 15 ........................................ 7,400 ................ ................ 4,650
Apr. 16 ........................................ ................ 5,782 ................ 10,432
July 20 ........................................ 5,500 ................ ................ 4,932
Oct. 31 ........................................ ................ 6,100 ................ 11,032
Dec. 31 ........................................ 9,250 ................ ................ 1,782
31 ........................................ ................ 11,918 ................ 13,700

Income Summary 313

2006
Dec. 31 .................................... 11,918 .............. 11,918 ..............

Uncollectible Accounts Expense 718

2006
Dec. 31 .................................... 11,918 .............. 11,918 ..............
31 .................................... .............. 11,918 — —

3. $524,050 ($537,750 – $13,700)

4. a. $15,500 ($3,100,000 × 0.005)

b. $17,282 ($15,500 + $1,782)
c. $520,468 ($537,750 – $17,282)