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1) On December 31, of the current year, a company's unadjusted trial balance revealed
the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75%
were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance).
Prepare the adjusting journal entry to record the estimate for bad debts assuming:
1> 6.0% of the accounts receivable balance is assumed to be uncollectible.
2> Bad debts expense is estimated to be 1.5% of credit sales.
3> Show how Accounts Receivable and the Allowance for Doubtful Accounts would
appear on the balance sheet after adjustment.
4> Prepare the entry to write off a $1,500 account receivable on January 1 of the next
year.
5> Show how Accounts Receivable and the Allowance for Doubtful Accounts would
appear on the balance sheet immediately after writing off the account in part 2.
2) Long-term investments in held-to-maturity debt securities are accounted for using the
__________________________.
3) During the closing process, each partner's withdrawals account is closed to
_______________.
4) What costs are assigned to merchandise inventory? Identify all costs including the
incidental costs.
5) A company reported net income of $318,000, operating cash flows of $218,000, total
cash flows of $184,000, and average total assets of $898,000. Calculate its cash flow on
total assets ratio.
6) A _________________ cost changes in proportion to changes in the volume of
activity.
