48) The following information is from the 2020 records of R & S Commercial Plumbing Company:
Accounts receivable, December 31, 2020
$45,000 (debit)
Allowance for Bad Debts, December 31, 2020
prior to adjustment
1,300 (debit)
Net credit sales for 2020
180,000
Accounts written off as uncollectible during
2017
14,000
Cash sales during 2020
26,000
Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net
credit sales will be uncollectible. Calculate the amount of bad debts expense for 2020.
A) $5,400
B) $4,050
C) $6,180
D) $4,100
49) The following information is from the 2019 records of Albert Book Shop:
Accounts receivable, December 31, 2019
$48,000 (debit)
Allowance for Bad Debts, December 31, 2019
prior to adjustment
2,000 (debit)
Net credit sales for 2019
179,000
Accounts written off as uncollectible during
2017
17,000
Cash sales during 2019
29,000
Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $5,100 of
accounts receivable will be uncollectible. Calculate the amount of bad debts expense for 2019.
A) $6,900
B) $7,100
C) $3,100
D) $5,350
50) The following information is from the 2019 records of Uptown Antique Shop:
Accounts receivable, December 31, 2019
$43,000 (debit)
Allowance for Bad Debts, December 31, 2019
prior to adjustment
1,500 (debit)
Net credit sales for 2019
180,000
Accounts written off as uncollectible during
2019
11,000
Cash sales during 2019
28,000
Bad debts expense is estimated by the percent-of–sales method. Management estimates that 3% of net
credit sales will be uncollectible. The ending balance of the Allowance for Bad Debts account after
adjustment will be ________.
A) $6,900
B) $4,740
C) $7,740
D) $3,900
51) The following information is from the 2019 records of Fast Lane Racing Gear:
Accounts receivable, December 31, 2019
$40,000 (debit)
Allowance for Bad Debts, December 31, 2019
prior to adjustment
1,700 (debit)
Net credit sales for 2019
178,000
Accounts written off as uncollectible during
2019
17,000
Cash sales during 2019
32,000
Bad debts expense is estimated by the aging-of-receivables method. Management estimates that $7,000 of
accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after
the adjustment for bad debts expense, at December 31, 2019.
A) $5,340
B) $10,400
C) $8,000
D) $7,000
52) A & B Commercial Cleaning is a new business. During its first year of operations, credit sales were
$40,000 and collections from credit sales were $35,000. One account for $650 was written off. Management
uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be
uncollectible. What is the balance of Accounts Receivable at the end of the first year?
A) $5,000
B) $3,550
C) $4,350
D) $4,200
53) Historical Art is a new business. During its first year of operations, credit sales were $50,000 and
collections on credit sales were $34,000. One account of $500 was written off. Management uses the
percent-of-sales method to account for bad debts expense and estimates 3% of credit sales to be
uncollectible. The ending balance of Allowance for Bad Debts account is ________.
A) $1,000
B) $1,500
C) $465
D) $2,505
54) Modern Designs is a new business. During its first year of operations, credit sales were $45,000 and
collections of credit sales were $34,000. One account, $700, was written off. Management uses the percent–
of-sales method to account for bad debts expense and estimates 3% of credit sales to be uncollectible. Bad
debts expense for the first year of operations is ________.
A) $650
B) $1,350
C) $700
D) $2,370
55) Industrial Equipment Supply is a new business. During its first year of operations, credit sales were
$44,000 and collections of credit sales were $37,000. One account, $650, was written off. Management uses
the aging-of-receivables method to account for bad debts expense and estimated $575 as uncollectible at
year end. The ending balance of the Allowance for Bad Debts is ________.
A) $230
B) $880
C) $1,225
D) $575
56) A newly created design business, Teri’s Art, is finishing its first year of operations. During the year,
credit sales were $43,000 and collections of credit sales were $34,000. One account for $675 was written
off. Teri’s Art uses the aging-of–receivables method to account for bad debts expense. It has estimated
$200 as uncollectible at year-end. What is the amount of the Bad Debts Expense for the first year of
operations?
A) $8,125
B) $675
C) $200
D) $875
57) At the beginning of 2019, Statewide Delivery, Inc. has the following account balances:
Accounts Receivable $42,000 (debit balance)
Allowance for Bad Debts $9,000 (credit balance)
Bad Debts Expense $0
During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $790,000,
and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense
using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The ending balance
of Accounts Receivable is ________.
A) $42,000
B) $34,000
C) $57,120
D) $18,000
58) At the beginning of 2019, Elliott, Inc. has the following account balances:
Accounts Receivable $41,000 (debit balance)
Allowance for Bad Debts $6,000 (credit balance)
Bad Debts Expense $0
During the year, credit sales amounted to $820,000. Cash collected on credit sales amounted to $780,000,
and $15,000 has been written off. At the end of the year, the company adjusted for bad debts expense
using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance
in the Allowance for Bad Debts is ________.
A) $6,000
B) $5,500
C) $10,500
D) $11,500
59) At the beginning of 2019, Patriots, Inc. has the following account balances:
Accounts Receivable $45,000 (Debit)
Allowance for Bad Debts $8,000 (Credit)
Bad Debts Expense $0
During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $770,000,
and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense
using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The amount of bad
debts expense for 2019 is ________.
A) $28,350
B) $56,875
C) $18,000
D) $18,350
60) At the beginning of 2019, Gourmet Cupcakes, Inc. has the following ledger balances:
Accounts Receivable $42,000 (Debit)
Allowance for Bad Debts $6,000 (Credit)
During the year, credit sales amounted to $840,000. Cash collected on credit sales amounted to $750,000,
and $17,000 has been written off. Gourmet Cupcakes uses the aging-of-receivables method to record bad
debts expense. The estimate of uncollectible accounts was $28,000. The ending balance in the Allowance
for Bad Debts is ________.
A) $39,000
B) $17,000
C) $28,000
D) $22,000
61) At the beginning of 2018, Uptown Travel, Inc. has the following account balances:
Accounts receivable $45,000 (Debit)
Allowance for Bad Debts $5,000 (Credit)
During the year, credit sales were $810,000. Cash collected on credit sales was $760,000, and $18,000 was
written off. Uptown uses the aging-of-receivables method to record bad debts expense. The amount
estimated as uncollectible was $30,000. The amount of Bad Debts Expense for 2018 is ________.
A) $43,000
B) $30,000
C) $13,000
D) $12,000
62) On January 1, 2019, Triangle Corp. has the following account balances:
Accounts Receivable
19,000
Allowance for Bad Debts
1,600
Bad Debts Expense
During the year, Triangle has $155,000 of credit sales, collections of credit sales of $142,000, and write-offs
of $3,400. It records bad debts expense at the end of the year using the aging-of-receivables method. At
the end of the year, the aging analysis shows that $2,000 is the estimate of uncollectible accounts. Before
the year-end entry to adjust the bad debts expense is made, the balance in the Allowance for Bad Debts is
________.
A) a debit of $1,800
B) a credit of $5,000
C) a zero balance
D) a debit of $3,400
63) Fleet Transportation is a new business. During its first year of operations, credit sales were $40,000
and collections of credit sales were $36,000. One account, $650, was written off. Management uses the
percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be
uncollectible. Prepare the entry to record bad debts expense. Omit explanation.
Bad Debts Expense
800
Allowance for Bad Debts
800
Bad Debts Expense = $40,000 × .02
Diff: 1
LO: 8-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Estimating and Recording Bad Debt Expense – Allowance Method