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Exercise 9-6 (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 9-7 (25 minutes)
a. Computation of the estimated balance of the allowance for uncollectibles:
b.
To record estimated bad debts.*
c.
To record estimated bad debts.*
Exercise 9-8 (20 minutes)
Feb. 1 Allowance for Doubtful Accounts............................. 6,800
Accounts Receivable—Oakley Co....................... 900
Exercise 9-9 (25 minutes)
a. Expense is 3.0% of credit sales
Dec. 31 Bad Debts Expense.............................................. 9,000
b. Expense is 1.0% of total sales
Dec. 31 Bad Debts Expense.............................................. 12,000
c. Allowance is 6% of accounts receivable
Dec. 31 Bad Debts Expense.............................................. 12,500
Exercise 9-10 (10 minutes)
2014
Dec. 13 Notes Receivable—M. Lee.......................... 9,500
Exercise 9-11 (15 minutes)
2015
Jan. 27 Cash...................................................................... 9,595
Interest Revenue*........................................... 57
Mar. 3 Notes Receivable—Tomas Co............................. 5,000
17 Notes Receivable—H. Cheng.............................. 2,000
Accounts Receivable—H. Cheng.................. 2,000
To record receipt of note on account.
Apr. 16 Accounts Receivable—H. Cheng........................ 2,015
May 1 Allowance for Doubtful Accounts....................... 2,015
June 1 Cash...................................................................... 5,125
Exercise 9-12 (15 minutes)
Nov. 1 Notes Receivable—K. White............................. 6,000
Dec. 31 Interest Receivable............................................ 80
Apr. 30 Cash................................................................... 6,240
Notes Receivable—K. White....................... 6,000
Exercise 9-13 (20 minutes)
Mar. 21 Notes Receivable—T. Jackson............................ 9,500
Sept. 17 Accounts Receivable—T. Jackson...................... 9,880
Interest Revenue............................................ 380
Dec. 31 Allowance for Doubtful Accounts....................... 9,880
Exercise 9-14 (20 minutes)
July 4 Accounts Receivable........................................... 7,245
Sales............................................................... 7,245
To record sales on credit.
4 Cost of Goods Sold.....................................................5,000
Note to Financial Statements
Accounts receivable in the amount of $12,500 are pledged
as security for a $10,000 note payable to Main Bank.
Exercise 9-15 (15 minutes)
Year 2014 accounts receivable turnover:
Year 2015 accounts receivable turnover:
Analysis: Raheem Company turned over its accounts receivable 0.6 (9.4 – 8.8)
times more in 2015 than in 2014. This may indicate that the company has
tightened its credit policy or has improved its collection efforts. Also, relative to
competitors’ turnover of 11, Raheem is performing worse than average.
Exercise 9-16 (25 minutes)
(¥ in millions)
a. Expense is 0.4% of total revenues
Dec. 31 Bad Debts Expense.............................................. 36,164
b. Allowance is 2.0% of trade receivables, gross
Dec. 31 Bad Debts Expense.............................................. 40,000
Allowance for Doubtful Accounts................. 40,000
To record estimated bad debts.*
*Unadjusted balance....................................................... 10,000 credit
Estimated balance (2,500,000 x 0.02)............................ 50,000 credit
Required adjustment...................................................... 40,000 credit
$335,280
($41,400 + $34,800)/2
$405,140
($44,800 + $41,400)/2
PROBLEM SET A
Problem 9-1A (30 minutes)
June 4 Accounts Receivable—N. Morris............................. 650
Sales..................................................................... 650
To record sales on credit.
4 Cost of Goods Sold......................................................... 400
Merchandise Inventory.............................................. 400
To record cost of sales.
10 No journal entry required.
13 Allowance for Doubtful Accounts............................ 429
Accounts Receivable—A. McKee....................... 429
To write off account due.
17 Cash........................................................................... 9,996
Accounts Receivable—Access.......................... 9,996
To record cash received from credit card co. ($5,733+$4,263)
Problem 9-2A (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
c. Allowance is 5% of accounts receivable
Dec. 31 Bad Debts Expense..............................................80,085
Allowance for Doubtful Accounts................. 80,085
Part 2
Current assets
Part 3
Current assets
