CHAPTER 9
SOLUTIONS TO PROBLEMS: SET B
PROBLEM 9-1B
(a) 1. Accounts Receivable …………………………….. 2,600,000
Sales Revenue ……………………………….. 2,600,000
2. Sales Returns and Allowances ………………. 45,000
Accounts Receivable ……………………… 45,000
(b)
Accounts Receivable
Allowance for Doubtful Accounts
(5) 3,000
Bal. 250,000
(1) 2,600,000
(2) 45,000
(3) 2,250,000
(4) 10,000
Bal. 15,000
(5) 3,000
(c) Balance before adjustment [see (b)] …………………………..…. $ 8,000
Balance needed …………………………..………………………………. 22,000
Adjustment required …………………………………………………….. $14,000
$2,600,000 – $45,000
$2,555,000
PROBLEM 9-2B
(a) $22,150.
(b) $20,000 ($1,000,000 X 2%).
(c) $14,450 [($369,000 X 5%) – $4,000].
PROBLEM 9-3B
(a) Dec. 31 Bad Debt Expense ……………………………… 31,970
Bad Debt Expense
Date
Explanation
Ref.
Debit
Credit
Balance
2017
Dec. 31
Adjusting
31,970
31,970
Allowance for Doubtful Accounts
Date
Explanation
Ref.
Debit
Credit
Balance
May 1
1,900
47,970
2017
(b) 2018
(1)
Mar. 1 Allowance for Doubtful Accounts ………… 1,900
Accounts Receivable ……………………. 1,900
(2)
(c) 2018
Dec. 31 Bad Debt Expense ………………………………. 40,300
PROBLEM 9-4B
(a) Total estimated bad debts
Number of Days Outstanding
Total
0–30
31–60
61–90
91–120
Over 120
$10,000
% uncollectible
Estimated
$ 11,600
$ 2,200
$ 3,600
$ 2,000
$ 800
$ 3,000
Accounts
$220,000
$90,000
$40,000
$15,000
(b) Bad Debt Expense ……………………………………………. 8,600
(c) Allowance for Doubtful Accounts ……………………… 1,600
Accounts Receivable ………………………………….. 1,600
(e) When an allowance account is used, an adjusting journal entry
is made at the end of each accounting period. This entry
PROBLEM 9-5B
(a) (1) Dec. 31 Bad Debt Expense
($13,500 – $1,100) ……………………. 12,400
Allowance for Doubtful
Accounts ………………………….. 12,400
(b) (1) Dec. 31 Bad Debt Expense
($13,500 + $1,100) ……………………. 14,600
Allowance for Doubtful
Accounts ………………………….. 14,600
(c) Allowance for Doubtful Accounts ………………………. 3,200
Accounts Receivable ………………………………….. 3,200
(d) Bad Debt Expense …………………………………………….. 3,200
Accounts Receivable ………………………………….. 3,200
(e) The advantages of the allowance method over the direct
write-off method are:
(2) It attempts to show the cash realizable value of the
accounts receivable on the balance sheet.
PROBLEM 9-6B
(a) July 5 Accounts Receivable ………………………….. 7,200
Sales Revenue …………………………….. 7,200
15 Cash ………………………………………………….. 12,140
Notes Receivable …………………………. 12,000
Interest Receivable
($12,000 X 7% X 45/360) …………….. 105
Interest Revenue
($12,000 X 7% X 15/360) …………….. 35
(b)
Notes Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
15
Balance
12,000
47,000
35,000
PROBLEM 9-6B (Continued)
Accounts Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
July 5
7,200
7,200
Interest Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
15
Balance
105
285
180
(c) Current assets
Notes receivable ……………………………………………………… $15,000
Accounts receivable ……………………………………………….. 28,010
PROBLEM 9-7B
Jan. 5 Accounts Receivable—Motte
Company ……………………………………………….. 10,800
Sales Revenue …………………………………….. 10,800
12 Notes Receivable …………………………..…………… 13,500
Sales Revenue …………………………………….. 13,500
26 Accounts Receivable—Benedict Co. …………… 9,000
Sales Revenue …………………………………….. 9,000
June 2 Cash ($10,800 + $324) ………………………………… 11,124
Notes Receivable ………………………………… 10,800
Interest Revenue
($10,800 X 9% X 4/12) ……………………….. 324
Oct. 15 Allowance for Doubtful Accounts ……………….. 12,000
Notes Receivable ………………………………… 12,000