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Chapter 08 - Receivables
DIFFICULTY:
Easy
Bloom's: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-04 - LO: 08-04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
159. At the end of the current year, Accounts Receivable has a balance of $700,000; Allowance for Doubtful Accounts
has a credit balance of $5,500; and sales for the year total $3,500,000. Bad debt expense is estimated at 1/2 of 1% of net
sales.
Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted balances of Accounts Receivable,
Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable.
ANSWER:
(a)
$17,500 ($3,500,000 × 0.005)
Adjusted Balance
(b)
Accounts Receivable
$700,000
Allowance for Doubtful Accounts ($5,500 + $17,500)
23,000
Bad Debt Expense
17,500
(c)
Net realizable value ($700,000 – $23,000)
$677,000
POINTS:
1
DIFFICULTY:
Moderate
Bloom's: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-04 - LO: 08-04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
Chapter 08 - Receivables
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Page 70
ANSWER:
(a)
(1)
Bad Debt Expense
18,600
Allowance for Doubtful Accounts
18,600
(2)
Allowance for Doubtful Accounts
350
Accounts Receivable—Fronk Co.
350
(3)
Accounts Receivable—Fronk Co.
200
Allowance for Doubtful Accounts
200
Cash
200
Accounts Receivable—Fronk Co.
200
(4)
Cash
400
Allowance for Doubtful Accounts
200
Accounts Receivable—Dodger Co.
600
(b)
(2)
Bad Debt Expense
350
Accounts Receivable—Fronk Co.
350
(3)
Accounts Receivable—Fronk Co.
200
Bad Debt Expense
200
Cash
200
(4)
Cash
400
Bad Debt Expense
200
Accounts Receivable—Dodger Co.
600
POINTS:
1
DIFFICULTY:
Moderate
Bloom's: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.08-04 - LO: 08-04
FNMN.WAJO.19.08-05 - LO: 08-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.12 - Receivables Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:23 PM
DATE MODIFIED:
10/16/2017 5:23 PM
173. Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.
(a)
Determine the due date of the note.
(b)
Determine the maturity value of the note.
(c)
Journalize the entry to record the receipt of the payment of the note at maturity.
ANSWER:
(a)
August 10 determined as follows:
