Principles Of Accounting Directions: Be Sure To Save

Principles Of Accounting Idirections Be Sure To Sa

Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Answer in complete sentences, using correct English, spelling, and grammar. Sources must be cited in APA format. Your response should be four (4) double-spaced pages; refer to the "Assignment Format" page located on the Course Home page for specific format requirements.

Paper For Above instruction

Part A: Journal Entries for Harris Company

In this section, we will prepare the journal entries related to Harris Company’s accounts receivable adjustments and write-offs. The company employs the balance sheet approach to record bad debts expense, which emphasizes estimating uncollectible accounts and adjusting the Allowance for Doubtful Accounts accordingly.

December 31, 2010, Harris Company records bad debts expense based on an estimate of uncollectible accounts. This establishes a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts, aligning with the company’s accounting approach.

On January 3, Harris wrote off Jal's account of $60 as uncollectible, which involves debiting the Allowance for Doubtful Accounts and crediting Accounts Receivable, reflecting the removal of Jal's receivable from the books.

Similarly, on March 4, the write-off of Hall's account of $75 is recorded by debiting Allowance for Doubtful Accounts and crediting Accounts Receivable.

On July 5, Harris recovered $45 from Hall. Since the account was previously written off, the recovery involves debiting Accounts Receivable and crediting Allowance for Doubtful Accounts, followed by debiting Cash and crediting Accounts Receivable for the collection of the recovered amount.

On August 19, Wilson's account of $100 is written off as uncollectible, decreasing accounts receivable and allowances accordingly.

Finally, on November 7, Harris recovered $25 from Jal, which involves the re-establishment of the receivable, then collection, recording cash received and clearing the receivable.

These journal entries illustrate the application of the balance sheet approach, focusing on estimating uncollectible accounts and managing receivables accordingly.

Part B: Accounts Classification and Characteristics

These classifications reflect the typical account categories, their normal balances, where they are reported, and whether they are temporary or permanent accounts. Interest payable and interest receivable are related to accrued interest and typically have credit and debit normal balances, respectively. Discount on notes payable is a contra-liability account, decreasing the total liabilities. Store equipment is a long-term asset reported on the balance sheet.

Part C: Asset Exchanges and Vehicle Expenditures

1. Exchange of Computer Server System

The old system was purchased for $210,000 and has accumulated depreciation of $147,000, resulting in a book value of $63,000 ($210,000 - $147,000). The system is exchanged for a new system with a fair market value of $235,000, while Harris Company provides $180,000 in cash. The journal entry records the disposal of the old asset, the acquisition of the new asset, and the cash involved.

The entry is as follows:

Debit: Computer Equipment (New) — $235,000
Debit: Accumulated Depreciation — $147,000
Credit: Old Computer Equipment — $210,000
Credit: Cash — $180,000
Credit: Gain on Disposal of Asset — $52,000

This entry recognizes the sale or trade of the old asset, the acquisition cost of the new system, and cash paid, along with recording any gains resulting from the exchange.

2. Vehicle Repairs and Improvements

For Bartz, Inc., the expenditures for vehicle maintenance and improvements are accounted for as follows:

• May 11: Replacing the engine in Van #1 for $5,400 cash increases the asset account "Vehicle" to reflect an improved or improved engine.
• May 18: Tune-up costing $570 is considered maintenance expense, debited to Repairs and Maintenance Expense, as it restores operational capacity without adding significant value.
• May 29: Adding a lift to Van #2 for $3,700 is a capital improvement, capitalized as an addition to the vehicle asset account.

The journal entries are as follows:

May 11:
Debit: Vehicle — $5,400
Credit: Cash — $5,400
May 18:
Debit: Repairs and Maintenance Expense — $570
Credit: Cash — $570
May 29:
Debit: Vehicle — $3,700
Credit: Cash — $3,700

These entries align with accounting principles, whereby major upgrades are capitalized while routine maintenance expenses are expensed immediately.

Conclusion

In conclusion, the accounting for receivables, asset exchanges, and vehicle expenditures requires a thorough understanding of the relevant principles and appropriate journal entries. Harris Company's approach to bad debts emphasizes estimation and allowance adjustments, ensuring financial statements accurately reflect expected uncollectible accounts. Asset exchanges involve evaluating fair value, accumulated depreciation, and recognizing gains or losses. Vehicle repair and enhancement costs are classified based on their effect on asset value or expense recognition. Proper application of these accounting procedures ensures transparency and compliance with Generally Accepted Accounting Principles (GAAP).

References

• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (16th ed.). McGraw-Hill Education.
• Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (16th ed.). Wiley.
• Schmidt, J. (2020). Accounting principles: A practical approach. Pearson.
• Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2019). Introduction to financial accounting (11th ed.). Pearson.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial accounting (10th ed.). Wiley.
• International Financial Reporting Standards (IFRS). (2020). IFRS Foundation Publications.
• Accounting Standards Codification. (2023). Financial Accounting Standards Board.
• Ray, E. M. (2021). Principles of accounting. South-Western College Publishing.
• Rue, L. W., & McAnally, M. L. (2020). Principles of financial accounting. Cengage Learning.
• Lev, B. (2019). Financial statement analysis: A practitioner's guide. Cambridge University Press.