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PROBLEM 8-3B
(a) Dec. 31 Bad Debt Expense .................................... 31,970
(a) & (b)
Bad Debt Expense
Date
Explanation
Ref.
Debit
Credit
Balance
2015
Dec. 31
Adjusting
31,970
31,970
Allowance for Doubtful Accounts
Date
Explanation
Ref.
Debit
Credit
Balance
2015
Dec. 31
31
2016
Mar. 1
May 1
Balance
Adjusting
1,900
31,970
1,900
16,000
47,970
46,070
47,970
(b) 2016
(1)
Mar. 1 Allowance for Doubtful Accounts ............ 1,900
(2)
May 1 Accounts Receivable ................................ 1,900
(c) 2016
Dec. 31 Bad Debt Expense ..................................... 40,300
PROBLEM 8-4B
(a) Total estimated bad debts
Number of Days Outstanding
Total
0–30
31–60
61–90
91–120
Over 120
Accounts
receivable
$375,000
$220,000
$90,000
$40,000
$10,000
$15,000
% uncollectible
1%
4%
5%
8%
20%
Estimated
Bad debts
$ 11,600
$ 2,200
$ 3,600
$ 2,000
$ 800
$ 3,000
(b) Bad Debt Expense .................................................... 8,600
(c) Allowance for Doubtful Accounts ............................ 1,600
(d) Accounts Receivable ................................................ 700
Cash ........................................................................... 700
which the sales occur.
PROBLEM 8-5B
(a) (1) Dec. 31 Bad Debt Expense
(2) Dec. 31 Bad Debt Expense
(b) Dec. 31 Bad Debt Expense
(c) Allowance for Doubtful Accounts ............................ 3,200
percentage of sales method.
(d) Bad Debt Expense ..................................................... 3,200
(e) The advantages of the allowance method over the direct write-off
method are:
PROBLEM 8-6B
(a) July 5 Accounts Receivable ................................. 7,200
14 Cash ($1,000 – $30) .................................... 970
14 Accounts Receivable ................................. 510
15 Cash ............................................................ 12,140
Notes Receivable ............................... 12,000
24 Accounts Receivable—Masasi ................. 20,300
31 Interest Receivable
(b)
Notes Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
15
24
Balance
12,000
20,000
47,000
35,000
15,000
PROBLEM 8-6B (Continued)
Accounts Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
July 5
14
24
7,200
510
20,300
7,200
7,710
28,010
Interest Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
15
24
31
Balance
Adjusting
100
105
180
285
180
0
100
(c) Current assets
Notes receivable ............................................................... $15,000
PROBLEM 8-7B
Jan. 5 Accounts Receivable—Motte
12 Notes Receivable .............................................. 13,500
26 Accounts Receivable—Benedict Co. ............... 9,000
Apr. 5 Notes Receivable .............................................. 9,000
12 Cash ($13,500 + $180) ....................................... 13,680
June 2 Cash ($10,800 + $324) ....................................... 11,124
July 5 Accounts Receivable—Benedict Co.
($9,000 + $180) .............................................. 9,180
15 Notes Receivable .............................................. 12,000
Oct. 15 Allowance for Doubtful Accounts.................... 12,000
COMPREHENSIVE PROBLEM SOLUTION
(a)
Jan. 1
Notes Receivable ...........................................
Accounts Receivable—
Merando Company ..............................
1,200
1,200
3
Allowance for Doubtful Accounts ................
Accounts Receivable .............................
730
730
8
Inventory ........................................................
Accounts Payable ..................................
17,200
17,200
11
Accounts Receivable ....................................
Sales Revenue .......................................
Cost of Goods Sold .......................................
Inventory ................................................
28,000
19,600
28,000
19,600
15
Cash ...............................................................
Service Charge Expense ...............................
Sales Revenue .......................................
Cost of Goods Sold .......................................
Inventory ................................................
970
30
700
1,000
700
17
Cash ...............................................................
Accounts Receivable .............................
22,900
22,900
21
Accounts Payable .........................................
Cash ........................................................
14,300
14,300
24
Accounts Receivable ....................................
Allowance for Doubtful Accounts .........
Cash ...............................................................
Accounts Receivable .............................
280
280
280
280
27
Supplies .........................................................
Cash ........................................................
1,400
1,400
31
Other Operating Expenses ...........................
Cash ........................................................
3,718
3,718
COMPREHENSIVE PROBLEM SOLUTION (Continued)
Adjusting Entries
Jan. 31
Interest Receivable ........................................
Interest Revenue ($1,200 X 8% X 1/12) .......
8
8
31
Bad Debt Expense [($22,950 X 6%) –
($800 – $730 + $280)] ..................................
Allowance for Doubtful Accounts..........
1,027
1,027
31
Supplies Expense ..........................................
Supplies ($1,400 – $560) ........................
840
840
(b) WINTER COMPANY
Adjusted Trial Balance
January 31, 2015
Debit
Credit
Cash ............................................................
$17,832
Notes Receivable .......................................
1,200
Accounts Receivable .................................
22,950
Allowance for Doubtful Accounts .............
1,377
Interest Receivable ....................................
8
Inventory .....................................................
6,300
Supplies ......................................................
560
Accounts Payable ......................................
11,650
Common Stock ...........................................
20,000
Retained Earnings ......................................
12,730
Sales Revenue ............................................
29,000
Cost of Goods Sold ....................................
20,300
Supplies Expense ......................................
840
Bad Debt Expense......................................
1,027
Service Charge Expense ...........................
30
Other Operating Expenses ........................
3,718
Interest Revenue ........................................
8
$74,765
$74,765
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(b) Optional T accounts for accounts with multiple transactions
Cash
1/1 Bal. 13,100
1/15 970
1/17 22,900
1/24 280
1/21 14,300
1/27 1,400
1/31 3,718
1/31 Bal. 17,832
Accounts Receivable
1/1 Bal. 19,780
1/11 28,000
1/24 280
1/1 1,200
1/3 730
1/17 22,900
1/24 280
1/31 Bal. 22,950
Allowance for Doubtful Accounts
1/3 730
1/1 Bal. 800
1/24 280
1/31 1,027
1/31 Bal. 1,377
Inventory
1/1 Bal. 9,400
1/8 17,200
1/11 19,600
1/15 700
1/31 Bal. 6,300
Supplies
1/27 1,400
1/31 840
1/31 Bal. 560
Accounts Payable
1/21 14,300
1/1 Bal. 8,750
1/8 17,200
1/31 Bal. 11,650
Sales Revenue
1/11 28,000
1/15 1,000
1/31 Bal. 29,000
Cost of Goods Sold
1/11 19,600
1/15 700
1/31 Bal. 20,300
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(c) WINTER COMPANY
Income Statement
For the Month Ending January 31, 2015
Sales revenue ..................................................
$29,000
Cost of goods sold ..........................................
20,300
Gross profit .....................................................
8,700
Operating expenses ........................................
Other operating expenses .......................
$3,718
Bad debt expense ....................................
1,027
Supplies expense ....................................
840
Service charge expense ..........................
30
Total operating expenses ...............................
5,615
Income from operations .................................
3,085
Other revenues and gains ..............................
Interest revenue .......................................
8
Net Income.......................................................
$ 3,093
