PROBLEM 8-1A (Continued)
(c) Balance before adjustment [see (b)] ……………………………… $ 19,000
The journal entry would therefore be as follows:
(d)
$3,700,000–$50,000
880 595
($ ,000+$1, ,000) ÷ 2
=
$3,650,000
1,237 5
$ , 00
= 2.95 times
PROBLEM 8-2A
(a) $33,000.
(e) The weakness of the direct write-off method is two-fold. First, it does not
PROBLEM 8-3A
(a) Dec. 31 Bad Debt Expense ……………………………… 26,610
(a) & (b)
Bad Debt Expense
Date
Explanation
Ref.
Debit
Credit
Balance
2015
Dec. 31
Adjusting
26,610
26,610
Allowance for Doubtful Accounts
Date
Explanation
Ref.
Debit
Credit
Balance
2015
Dec. 31
31
2016
Mar. 31
May 31
Balance
Adjusting
1,000
26,610
1,000
12,000
38,610
37,610
38,610
(b) 2016
(1)
Mar. 31 Allowance for Doubtful Accounts ……….. 1,000
(2)
May 31 Accounts Receivable …………………………. 1,000
31 Cash …………………………………………………. 1,000
(c) 2016
Dec. 31 Bad Debt Expense ……………………………… 32,400
PROBLEM 8-4A
(a) Total estimated bad debts
Number of Days Outstanding
Total
0–30
31–60
61–90
91–120
Over 120
Accounts
receivable
$200,000
$77,000
$46,000
$39,000
$23,000
$15,000
% uncollectible
1%
4%
5%
8%
20%
Estimated
Bad debts
$ 9,400
$ 770
$ 1,840
$ 1,950
$ 1,840
$ 3,000
(b) Bad Debt Expense ……………………………………………. 17,400
Allowance for Doubtful Accounts
(c) Allowance for Doubtful Accounts ………………………. 5,000
(d) Accounts Receivable ………………………………………… 5,000
Cash …………………………..……………………………………. 5,000
Aging the individual accounts rather than applying a percentage to the
PROBLEM 8-5A
(a) The allowance method. Since the balance in the allowance for doubtful
(b) (1) Dec. 31 Bad Debt Expense
($11,750 – $1,000) ……………………. 10,750
(2) Dec. 31 Bad Debt Expense
($970,000 X 1%) ……………………….. 9,700
(c) (1) Dec. 31 Bad Debt Expense
($11,750 + $1,000) ……………………. 12,750
(2) Dec. 31 Bad Debt Expense ………………………. 9,700
(d) Allowance for Doubtful Accounts ………………………. 3,000
percentage of sales method.
(e) Bad Debt Expense …………………………………………….. 3,000
PROBLEM 8-6A
(a) Oct. 7 Accounts Receivable …………………………….. 6,900
12 Cash ($900 – $27) ………………………………….. 873
Service Charge Expense
15 Accounts Receivable …………………………….. 460
15 Cash …………………………………………………….. 12,160
24 Accounts Receivable—Holt …………………… 9,105
31 Interest Receivable
($16,000 X 9% X 1/12)…………………………. 120
(b)
Notes Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
Oct. 1
15
24
Balance
12,000
9,000
37,000
25,000
16,000
PROBLEM 8-6A (Continued)
Accounts Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
Oct. 7
15
24
6,900
460
9,105
6,900
7,360
16,465
Interest Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
Oct. 1
15
24
31
Balance
120
120
63
183
63
0
120
(c) Current assets
Notes receivable ……………………………………………………… $16,000
Accounts receivable ……………………………………………….. 16,465
PROBLEM 8-7A
Jan. 5 Accounts Receivable—Sheldon Company ……… 20,000
20 Notes Receivable ……………………………………….. 20,000
Feb. 18 Notes Receivable ……………………………………….. 8,000
Apr. 20 Cash ($20,000 + $400) …………………………………. 20,400
30 Cash ($25,000 + $ 750) ………………………………… 25,750
Interest Revenue
May 25 Notes Receivable …………………………..…………… 6,000
Aug. 18 Cash ($8,000 + $360) …………………………………… 8,360
25 Accounts Receivable—Potter Inc.
($6,000 + $105) …………………………..…………… 6,105
Sept. 1 Notes Receivable ……………………………………….. 12,000
PROBLEM 8-1B
(a) 1. Accounts Receivable …………………………….. 2,600,000
2. Sales Returns and Allowances ………………. 45,000
3. Cash …………………………………………………….. 2,250,000
4. Allowance for Doubtful Accounts …………… 10,000
5. Accounts Receivable …………………………….. 3,000
Allowance for Doubtful
Cash …………………………………………………….. 3,000
(b)
Accounts Receivable
Allowance for Doubtful Accounts
Bal. 250,000
(1) 2,600,000
(5) 3,000
(2) 45,000
(3) 2,250,000
(4) 10,000
(5) 3,000
(4) 10,000
Bal. 15,000
(5) 3,000
Bal. 545,000
Bal. 8,000
Bad Debt Expense ……………………………………… 14,000
(d)
$2,600,000 – $45,000
523 235
($ ,000 + $ ,000) ÷ 2
=
$2,555,000
379 0
$ , 00
= 6.74 times
PROBLEM 8-2B
sheet date.