ACG301: FALL 2021
ASSIGNMENT 2 (25 POINTS)
GENERAL INFORMATION
(1) This assignment is due on Wednesday, December 1 at the start of class. I strongly
encourage you to complete and submit this assignment before the actual due date.
DO NOT EMAIL YOUR ASSIGNMEN TO ME UNLESS I PROVIDE PERMISSION TO YOU
BECAUSE OF UNUSUAL CIRCUMSTANCES!
(2) You can work this assignment with one and only one other student and turn in a joint
solution with both of your names on the assignment.
(3) Other than your partner, if worked jointly, and your instructor in this course, you should
not receive assistance from any other person when working this assignment.
(4) Except for the T-accounts (if used), nothing else should be hand-written.
(5) Be sure to staple pages together. Present your solution in the order of the questions
asked. Your T-accounts or how you represent a subsidiary ledger should be the last
page or two of what you turn in.
GENERAL INFORMATION
Red Raider Corporation sells high-end electronics to several clients. Use the information
provided and complete the following requirements. All sales are credit sales.
REQUIRED
(1) Prepare journal entries for December transactions (1-12 on next page). Include dates.
(2) Post the accounts receivable portion of the journal entries to T-accounts for each customer
of Red Raider or something that reflects a subsidiary ledger. You should start with the
December 1 balance for customers with an account balance at that date. These postings
are only required for accounts receivable as reflected in a subsidiary ledger. I do
recommend you set up something similar for the allowance for doubtful accounts.
(3) Prepare a schedule of December 31, 2021, accounts receivable. (See the 12/1/2021
schedule, presented below, as an example).
(4) Prepare the December 31 adjusting journal entry (see information at bottom of next page).
Be sure to show your work.
(5) Determine Red Raider’s net sales revenue for December of 2021. I will provide net sales
revenue as a check figure. Thus, you need to show three items: gross sales revenue, sales
discounts, and sales returns, arriving at net sales revenue.
(6) Assume that all December 31 accounts receivable are sold with recourse on January 2,
2022, to Factor Company. Factor charges a 2% fee based on total receivables before the
allowance balance and withholds $10,000 for possible sales returns. Red Raider estimates
the recourse liability to be $2,400. [Hint: remove the allowance for doubtful accounts
balance as part of this entry]. Show your work as I anticipate providing a check figure for
this part.
As of December 1, 2021, Red Raider Corporation has the following balances:
Accounts Receivable
Allowance for Doubtful Accounts
$44,000
(1,000) credit balance
RED RAIDER CORPORATION
ACCOUNTS RECEIVABLE SCHEDULE AS OF DECEMBER 1, 2021
Accounts receivable, Longhorn Corporation………………. $15,000
Accounts Receivable, Horned Frog Corporation…………. 9,000
Accounts Receivable, Mustang Corporation………..…….. 13,000
Accounts Receivable, Aggie Corporation…………………….. 7,000
TOTAL ACCOUNTS RECEIVABLE…………………………………… $44,000
Red Raider has the following transactions for the month of December. All sales are credit
sales.
(1) On December 6, Red Raider collects $15,000 from Longhorn Corporation in payment of
its accounts receivable balance.
(2) On December 7, Red Raider collects $9,000 from Horned Frog Corporation in payment
of its accounts receivable balance.
(3) On December 9, Red Raider makes a sale to Longhorn Corporation and bills Longhorn
$50,000.
(4) On December 10, Red raider makes a sale to Horned Frog Corporation and bills Horned
Frog $25,000.
(5) On December 11, Red Raider learns that Aggie Corporation has filed for bankruptcy. It is
decided that this $7,000 account should be written off. The account is written off.
(6) On December 13, Red Raider makes a sale to Tiger Corporation and bills Tiger $40,000.
(7) On December 14, Red Raider collects $30,000 of the $50,000 from Longhorn for the sale
made on December 9.
(8) On December 15, Red Raider makes a sale to Buckeye Corporation and bills Buckeye
$90,000.
(9) On December 16, Red Raider makes a sale to Bulldog Corporation for $20,000, terms,
1/10, n/30.
(10)
On December 22, Red Raider receives full payment, net of discount, from Bulldog
Corporation for the sale made on December 16.
(11)
On December 23, Bulldog returns the merchandise purchased from Red Raider
and receives a full refund of the cash paid.
(12)
On December 30, Red Raider unexpectedly receives a $1,000 check from Aggie
Corporation with a note that this is the final amount Aggie will pay Red Raider. (Prepare
two journal entries).
ADJUSTING JOURNAL ENTRY INFORMATION
Based on historical experience, current conditions, and reasonable expectations about the
future, Red Raider uses the following information to estimate its December 31, 2021, accounts
receivable that are likely to be uncollectible.
a. About 1% of December 31 accounts receivable that are less than 30 days old are
estimated to be uncollectible.
b. About 5% of December 31 accounts receivable that are more than 30 days old are
estimated to be uncollectible.