Exercise 7-6 (Concluded)
b.
Dec. 31 Bad Debts Expense……………..……………….………. 8,220
Allowance for Doubtful Accounts…………..… 8,220
To record estimated bad debts.*
c.
Dec. 31 Bad Debts Expense……………..……………….………. 11,920
Allowance for Doubtful Accounts…………..… 11,920
To record estimated bad debts.*
Exercise 7-7 (25 minutes)
a. Computation of the estimated balance of the allowance for uncollectibles:
b.
Dec. 31 Bad Debts Expense……………..……………….………. 13,650
Allowance for Doubtful Accounts…………..… 13,650
To record estimated bad debts.*
c.
Dec. 31 Bad Debts Expense……………..……………….………. 26,650
Allowance for Doubtful Accounts…………..… 26,650
To record estimated bad debts.*
Exercise 7-8 (20 minutes)
Feb. 1 Allowance for Doubtful Accounts……………….….….... 6,800
Accounts Receivable—Oakley Co…..….…..…...... 900
Accounts Receivable—Brookes Co………………… 5,900
To write off specific accounts.
Exercise 7-9 (25 minutes)
a. Expense is 3.0% of credit sales
Dec. 31 Bad Debts Expense…………….……………….…..….… 9,000
Allowance for Doubtful Accounts……………... 9,000
b. Expense is 1.0% of total sales
Dec. 31 Bad Debts Expense…………….……………….…..….… 12,000
Allowance for Doubtful Accounts……………... 12,000
c. Allowance is 6% of accounts receivable
Dec. 31 Bad Debts Expense…………….……………….…..….… 12,500
Allowance for Doubtful Accounts……………... 12,500
To record estimated bad debts.*
Exercise 7-10 (10 minutes)
2014
Dec. 13 Notes Receivable—M. Lee……………………… 9,500
Accounts Receivable—M. Lee.............. 9,500
To record receipt of note on account.
Dec. 31 Interest Receivable…………..………………..….. 38
Interest Revenue…….…..….….…..…..…... 38
To record interest earned [$9,500 x .08 x 18/360].
Exercise 7-11 (15 minutes)
2015
Jan. 27 Cash………..…………………..……………..………………... 9,595
Interest Revenue*…………………………..….…..… 57
Mar. 3 Notes Receivable—Tomas Co……………………..…. 5,000
Accounts Receivable-Tomas Co………..….….. 5,000
To record receipt of note on account.
May 1 Allowance for Doubtful Accounts…………………... 2,015
Accounts Receivable—H. Cheng……….….….. 2,015
To write off account.
June 1 Cash………………………………………….………………….. 5,125
Exercise 7-12 (15 minutes)
Nov. 1 Notes Receivable—K. White………..….…..….…... 6,000
Accounts Receivable—K. White…………..…. 6,000
To record receipt of note on account.
Dec. 31 Interest Receivable…………..…………..…..….….…. 80
Apr. 30 Cash………………………..………………….….….…..….. 6,240
Exercise 7-13 (20 minutes)
Mar. 21 Notes Receivable—T. Jackson…………………….…. 9,500
Accounts Receivable—T. Jackson…............. 9,500
To record receipt of note on account.
Dec. 31 Allowance for Doubtful Accounts…………………... 9,880
Accounts Receivable—T. Jackson................ 9,880
To write off an account.
Exercise 7-14 (20 minutes)
4 Cost of Goods Sold………………………..……….….…..…...5,000
Merchandise Inventory……………..…………………..… 5,000
To record cost of sales.
17 Cash………….………………………………………………….. 5,859
Accounts Receivable…………..….…..…..….…... 5,859
To record cash received on account.
27 Cash………….………………………………………………….. 10,000
Exercise 7-15 (15 minutes)
Year 2014 accounts receivable turnover:
= 8.8 times
$335,280
($41,400 + $34,800)/2
PROBLEM SET A
Problem 7-1A (30 minutes)
June 4 Accounts Receivable—N. Morris…….……………….… 650
To record sales on credit.
4 Cost of Goods Sold…………………..………..………………….. 400
Merchandise Inventory…………………………………..….. 400
To record cost of sales.
5 Cash…………………………………………….…….…….……… 6,693
5 Cost of Goods Sold…………………..………..…………………..4,200
Merchandise Inventory…………………………………..….. 4,200
To record cost of sales.
6 Cost of Goods Sold…………………..………..…………………..3,800
Merchandise Inventory…………………………………..….. 3,800
To record cost of sales.
8 Cost of Goods Sold…………………..………..…………………..2,900
Merchandise Inventory…………………………………..….. 2,900
To record cost of sales.
10 No journal entry required.
18 Cash………………………………………….…….…….…….….. 637
Sales Discounts*……………………..………………….……. 13
Accounts Receivable—N. Morris………………..... 650
To record cash received less discount. *($650 x .02)
Problem 7-2A (35 minutes)
Part 1
a. Expense is 1.5% of credit sales
b. Expense is 1% of total sales
Dec. 31 Bad Debts Expense…………….……………….…..….…75,870
Allowance for Doubtful Accounts……………... 75,870
To record estimated bad debts
[($1,905,000 + $5,682,000) x .01].
c. Allowance is 5% of accounts receivable
Dec. 31 Bad Debts Expense…………….……………….…..….…80,085
Part 2
Current assets
Part 3
Current assets
Accounts receivable……….…………………….….….$1,270,100
Less allowance for doubtful accts……….….…... (63,505)** $1,206,595
Or:Accounts receivable (net of $63,505**
uncollectible accounts)……………..………………. $1,206,595
** See computations in Part 1c.