Part A (30 points)

Prepare general journal entries to record the following transactions for the Harris Company. (The company uses the balance sheet approach for recording bad debts expense.)

2010

Dec.       31           Recorded Bad Debts Expense, $800

2011

Jan.        3              Wrote off Jal’s account as uncollectible, $60

Mar.      4              Wrote off Hall’s account as  uncollectible, $75

Jul.         5              Recovered $45 from Hall

Aug.       19           Wrote off M. Wilson’s account as uncollectible, $100

Nov.      7              Recovered $25 from Jal

 

Part B (10 points each for a possible total of 40 points)

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account’s nature (temporary/permanent).

(1)

Column 1

Column 2

Column 3

Column 4

Interest payable

(2)

Column 1

Column 2

Column 3

Column 4

Interest receivable

(3)

Column 1

Column 2

Column 3

Column 4

Discount on notes payable

(4)

Column 1

Column 2

Column 3

Column 4

Store equipment

Part C (15 points each for a possible total of 30 points)

(1)   A computer server system, which had cost $210,000 and had accumulated depreciation of $147,000, was traded for a new system with a fair market value of $235,000. The old system and cash of $180,000 were given for the new system. Prepare the journal entry for the exchange of these similar assets.

(2)  Prepare journal entries for the following for Bartz, Inc.

May 11 Replaced the engine in a Van #1, paying cash of $5,400.

May 18 Paid cash for a tune-up of the engine in Van #2 of $570.

May 29 Paid cash to add a lift to Van #2 of $3,700

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