Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
13
Accounting for
1. The matching principle estimates the bad expense in the same period the sale is made, although the
write-off of the actual bad debt may not occur until future periods.
2. The Allowance for Doubtful Accounts accumulates estimated accounts receivable that will not be
3. Accounts Receivable
5. It has the opposite balance of accounts receivable. It shows the doubtful accounts that are not
expected to be collected.
7. Disagree. The income statement approach is based on the net credit sales on the income statement.
9. A company would age its accounts receivable to identify uncollected amounts to individual
10. Write-off:
Allowance for Doubtful Accounts
11. Both the Allowance account and Accounts Receivable are decreasing by same amount.
12. The direct write-off method recognizes a Bad Debts Expense when a receivable is deemed
14. Pete could avoid bad debts by accepting the use of credit cards by customers. It is common practice
to pass on the cost of credit cards to customers.
SOLUTIONS TO CONCEPT CHECKS
Account Category Increase/Decrease
1.
a. Bad Debts Expense
Expense
↑
Debit
Accounts Receivable
Asset
↓
Credit
b.
Bad Debt Expense will appear on the
income statement.
Accounts Receivable will appear on the
balance sheet.
2.
It is ignored in the income statement approach. If the credit balance in the Allowance for
Doubtful Accounts is $200 and the new estimate is $400, the $400 should be added to the
Allowance account balance for a total of $600.
3.
a. Bad Debts Expense
680
Allowance for Doubtful Accounts
680
Estimate of Bad Debts
b. Bad Debts Expense
330
Allowance for Doubtful Accounts
330
Estimate of Bad Debts
4. #1
Allowance for Doubtful Accounts
100
Accounts Receivable, Janice Lake
100
Wrote off Lake account
#2
Accounts Receivable, Janice Lake
100
Allowance for Doubtful Accounts
100
Reinstated Lake Account
Cash
100
Accounts Receivable, Janice Lake
100
Collected from Lake
5. #1 Bad Debt Expense 100
Accounts Receivable, Janice Lake 100
SOLUTIONS TO SET A EXERCISES
13A-1.
ACRES.COM
PARTIAL BALANCE SHEET
DECEMBER 31, 2015
Current Assets:
Cash
$126
0
0
0
00
Petty Cash
7
2
00
Accounts Receivable
$68
0
0
0
00
Less: Allowance for Doubtful Accounts
10
0
0
0
00
58
0
0
0
00
Merchandise Inventory
20
0
0
0
00
Total Current Assets
$204
0
7
2
00
13A-2.
Dec.
31
Bad Debts Expense
8
7
5
8
80
Allowance for Doubtful Accounts
8
7
5
8
80
Estimate for Bad Debts
13A-3.
Dec.
31
Bad Debts Expense
3
9
0
0
00
Allowance for Doubtful Accounts
3
9
0
0
00
Estimate for Bad Debts
EXERCISES (CONTINUED)
13A-4.
(a)
2015
Dec.
31
Bad Debts Expense
12
3
0
0
00
Allowance for Doubtful Accounts
12
3
0
0
00
Estimate of Bad Debts
2016
Apr.
3
Allowance for Doubtful Accounts
3
6
0
0
00
Accounts Receivable—George Lake
3
6
0
0
00
Wrote off Customer Account
Jun.
4
Allowance for Doubtful Accounts
2
7
0
0
00
Accounts Receivable—Peter Sweet
2
7
0
0
00
Wrote off Customer Account
2017
Aug.
5
Accounts Receivable —Peter Sweet
5
0
0
00
Allowance for Doubtful Accounts
5
0
0
00
Reinstate Customer
5
Cash
5
0
0
00
Accounts Receivable —Peter Sweet
5
0
0
00
Collected from Customer
(b )
2016
Jun.
4
Bad Debts Expense
2
7
0
0
00
Accounts Receivable —Peter Sweet
2
7
0
0
00
Wrote off Customer Account
2017
Aug.
5
Accounts Receivable—Peter Sweet
5
0
0
00
Bad Debts Recovered
5
0
0
00
Reinstate Customer
5
Cash
5
0
0
00
Accounts Receivable—Peter Sweet
5
0
0
00
Collected from Customer
EXERCISES (CONTINUED)
13A-5.
(a)
Dec.
31
Bad Debts Expense
3
1
5
0
00
Allowance for Doubtful Accounts
3
1
5
0
00
Estimate for Bad Debts
(b)
Dec.
31
Bad Debts Expense
3
3
7
0
00
Allowance for Doubtful Accounts
3
3
7
0
00
Estimate for Bad Debts
SOLUTIONS TO SET B EXERCISES
13B-1.
ACORN.COM
PARTIAL BALANCE SHEET
DECEMBER 31, 2015
Current Assets:
Cash
$124
0
0
0
00
Petty Cash
6
8
00
Accounts Receivable
$66
0
0
0
00
Less: Allowance for Doubtful Accounts
13
0
0
0
00
53
0
0
0
00
Merchandise Inventory
15
0
0
0
00
Total Current Assets
$192
0
6
8
00
13B-2.
Dec.
31
Bad Debts Expense
2
8
4
7
30
Allowance for Doubtful Accounts
2
8
4
7
30
Estimate for Bad Debts
13B-3.
Dec.
31
Bad Debts Expense
3
2
0
0
00
Allowance for Doubtful Accounts
3
2
0
0
00
Estimate for Bad Debts
EXERCISES (CONTINUED)
13B-4.
(a)
2015
Dec.
31
Bad Debts Expense
11
6
0
0
00
Allowance for Doubtful Accounts
11
6
0
0
00
Estimate of Bad Debts
2016
Apr.
3
Allowance for Doubtful Accounts
4
3
0
0
00
Accounts Receivable—Frank
Jefferson
4
3
0
0
00
Wrote off Customer Account
Jun.
4
Allowance for Doubtful Accounts
2
8
0
0
00
Accounts Receivable—Paul
Stevenson
2
8
0
0
00
Wrote off Customer Account
2017
Aug.
5
Accounts Receivable —Paul Stevenson
4
9
0
00
Allowance for Doubtful Accounts
4
9
0
00
Reinstate Customer
5
Cash
4
9
0
00
Accounts Receivable —Paul
Stevenson
4
9
0
00
Collected from Customer
(b)
2016
Jun.
4
Bad Debts Expense
2
8
0
0
00
Accounts Receivable —Paul
Stevenson
2
8
0
0
00
Wrote off Customer Account
2017
Aug.
5
Accounts Receivable—Paul Stevenson
4
9
0
00
Bad Debts Recovered
4
9
0
00
Reinstate Customer
5
Cash
4
9
0
00
Accounts Receivable—Paul
Stevenson
4
9
0
00
Collected from Customer
EXERCISES (CONTINUED)
13B-5.
(a)
Dec.
31
Bad Debts Expense
4
4
0
0
00
Allowance for Doubtful Accounts
4
4
0
0
00
Estimate for Bad Debts
(b)
Dec.
31
Bad Debts Expense
3
6
1
0
00
Allowance for Doubtful Accounts
3
6
1
0
00
Estimate for Bad Debts
SOLUTIONS TO SET A PROBLEMS
PROBLEM 13A-1
LAMBERT CO.
GENERAL JOURNAL
PAGE 3
Date
Account Titles and Description
PR
Dr.
Cr.
2015
Dec.
31
Bad Debts Expense
11
0
0
0
00
Allowance for Doubtful Accounts
11
0
0
0
00
Adjustment for Bad Debts
2016
Jan.
7
Allowance for Doubtful Accounts
8
0
0
00
Accounts Receivable—Gene Savage
8
0
0
00
To Write off Customer Account
Mar.
5
Allowance for Doubtful Accounts
1
1
0
0
00
Accounts Receivable—Paul Jones
1
1
0
0
00
To Write off Customer Account
Jul.
8
Accounts Receivable—Paul Jones
4
0
0
00
Allowance for Doubtful Accounts
4
0
0
00
To restore collectible portion
8
Cash
4
0
0
00
Accounts Receivable—Paul Jones
4
0
0
00
Collected from customer
Aug.
19
Allowance for Doubtful Accounts
1
0
0
0
00
Accounts Receivable—Bob Shiffer
1
0
0
0
00
To Write off Customer Account
24
Allowance for Doubtful Accounts
9
0
0
00
Accounts Receivable—Jill Neeson
9
0
0
00
To Write off Customer Account
Nov.
19
Accounts Receivable—Bob Shiffer
4
0
0
00
Allowance for Doubtful Accounts
4
0
0
00
To restore collectible portion
19
Cash
4
0
0
00
Accounts Receivable—Bob Shiffer
4
0
0
00
Collected from customer
PROBLEM 13A-2
Barney Co.
December 31, 2015
Amount
Estimated Percent Considered to be Bad
Debts Expense
Estimated Amount Needed
in Allowance for Doubtful
Accounts
Not yet due
$ 180,000
3%
$ 5,400
0-60
14,000
7%
980
61-180
12,000
16%
1,920
Over 6 months
9,000
37%
3,330
$ 215,000
$ 11,630
BARNEY CO.
GENERAL JOURNAL
