Connect Access Card for Financial Accounting: Information and Decisions
8th Edition
ISBN: 9781259662966
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 7, Problem 4PSA
Summary Introduction
Introduction: A doubtful debt is an account receivable that may become bad debt at a point of time in future. A bad debt is an expense stating that a debt has become bad and is uncollectible.
To Determine:
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Liang Company began operations on January 1, 2014. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
2014
a.
Sold $1,351,900 of merchandise (that had cost $978,700) on credit, terms n/30.
b.
Wrote off $18,200 of uncollectible accounts receivable.
c.
Received $666,100 cash in payment of accounts receivable.
d.
In adjusting the accounts on December 31, the company estimated that 3.10% of accounts receivable will be uncollectible.
2015
e.
Sold $1,563,700 of merchandise (that had cost $1,310,900) on credit, terms n/30.
f.
Wrote off $28,900 of uncollectible accounts receivable.
g.
Received $1,248,800 cash in payment of accounts receivable.
h.
In adjusting the accounts on December 31, the company estimated that 3.10% of accounts receivable will be uncollectible.
Required:
Prepare journal entries to…
Accounts Receivable
$67,000
Allowance for Doubtful Accounts
1,300
(credit)
During 2016, sales on credit amounted to $582,000, $552,800 was collected on outstanding receivables and $2,600 of receivables were written off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance.
Required:
1.
Prepare the journal entry necessary to record Shelton’s estimate of bad debt expense for 2016.
2.
Prepare the Accounts Receivable section of Shelton’s December 31, 2016, balance sheet.
3.
Compute Shelton’s receivables turnover. (Round to one decimal place.)
4.
If Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?
Problems
1. For the year ended December 31, 2017, Casey Company estimated its allowance for
uncollectible accounts using the year-end aging of accounts receivable. The following
data are available:
Allowance for uncollectible accounts, 1/1/17
800,000
Provision for uncollectible accounts during 2017
(2% on credit sales of P20,000,000)
400,000
Uncollectible accounts written off, 11/30/17
300,000
Recovery of accounts considered worthless
Estimated uncollectible accounts per aging, 12/31/17
100,000
1,150,000
After year-end adjustment, the uncollectible accounts expense for 2017 should be
а. 300,000
b. 600,000
150,000
d. 550,000
С.
Chapter 7 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 1QSCh. 7 - Solstice Company determines on October 1 that it...Ch. 7 - Solstice Company determines on October 1 that it...Ch. 7 - The following list describes aspects of either the...Ch. 7 - Gomez Corp. uses the allowance method to account...Ch. 7 - Prob. 6QSCh. 7 - Prob. 7QSCh. 7 - Prob. 8QSCh. 7 - Prob. 9QSCh. 7 - Prob. 10QSCh. 7 - Prob. 11QSCh. 7 - Prob. 12QSCh. 7 - Prob. 13QSCh. 7 - Accounts receivable subsidiary ledger; schedule of...Ch. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Percent of accounts receivable method P2 At each...Ch. 7 - Aging of receivables method P2 Daley Company...Ch. 7 - Percent of receivables method P2 Refer to the...Ch. 7 - Writing off receivables P2 Refer to the...Ch. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Notes receivable transactions P3 Refer to the...Ch. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Sales on account and credit card sales C1 Mayfair...Ch. 7 - Estimating and reporting bad debts P2 At December...Ch. 7 - Aging accounts receivable and accounting for bad...Ch. 7 - Prob. 4PSACh. 7 - Prob. 5PSACh. 7 - Prob. 1PSBCh. 7 - Prob. 2PSBCh. 7 - Prob. 3PSBCh. 7 - Prob. 4PSBCh. 7 - Prob. 5PSBCh. 7 - Santana Rey, owner of Business Solutions, realizes...Ch. 7 - Comparative figures for Apple and Google follow....Ch. 7 - Anton Blair is the manager of a medium-size...Ch. 7 - As the accountant for Pure-Air Distributing, you...Ch. 7 - Access eBays February 6, 2015, filing of its 10-K...Ch. 7 - Prob. 7BTNCh. 7 - Prob. 9BTN
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- Allowance Method for Accounting for Bad Debts At the beginning of 2016, EZ Tech Companys Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350 (Cr.). EZ Techs sales in 2016 were $1,050,000, 80% of which were on credit. Collections on account during the year were $670,000. The company wrote off $4,000 of uncollectible accounts during the year. Required Prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2016. Prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. What is the net realizable value of accounts receivable on December 31, 2016, under each assumption in part (2)? What effect does the recognition of bad debts expense have on the net realizable value? What effect does the write-off of accounts have on the net realizable value?arrow_forwardMcKinney Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made credit sales of 1,500,000 in 2019. McKinney estimates 2.5% of its sales will be uncollectible. Prepare the journal entry to record bad debt expense for McKinney at the end of 2019.arrow_forwardAccounts Receivable Balance Hart Inc. began the year with $315,700 of accounts receivable. During the year, Hart sold a considerable amount of merchandise on credit and collected $2,427,000 of its credit sales. At the end of the year, the accounts receivable balance is $16,800 lower than the beginning balance. Required: Calculate the amount of credit sales during the period.arrow_forward
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