INTERMEDIATE ACCTI (LL) W/ ACCESS >CST
8th Edition
ISBN: 9781259717680
Author: SPICELAND
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Textbook Question
Chapter 7, Problem 7.10BE
Uncollectible accounts; balance sheet approach
• LO7–5, LO7–6
Refer to the situation described in BE 7–9. Answer the two questions assuming the company estimates that future
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12.10 Doubtful debts – ageing method *
LO3
On 1 June, McLean, Roberts and Associates had Accounts Receivable and Allowance for
Doubtful Debts accounts as set out below. Ignore GST.
Accounts Receivable
1/6
Balance
847 000
Allowance for Doubtful Debts
1/6
Balance
12 250
During June, the following transactions occurred:
1. fees earned on credit, $1 200 000
2. fees refunded, $25 000
3. accounts receivable collected, $1450 000
4. accounts written off as uncollectable, $14 740.
Based on an ageing of accounts receivable on 30 June, the firm decided that the Allowance
for Doubtful Debts account should have a credit balance of $13 000 on the balance sheet as at
30 June.
Required
(a) Prepare general journal entries to record the four transactions above and to adjust the
Allowance for Doubtful Debts account.
(b) Show how accounts receivable and the allowance for doubtful debts would appear on the
balance sheet at 30 June.
(c) On 29 July, Blundell Ltd, whose $1870 account had been written off as…
Problem 8-12 (IAA)
31:
Accounts receivable-unassigned
Accounts receivable-assigned
Allowance for doubtful accounts-January 1
Receivable from factor
Note payable-bank
1,000,000
300,000
30,000
40,000
240,000
During the current year, the entity found itself in financial
distress and decided to resort to receivable financing.
On June 30, the entity factored P200,000 of accounts
receivable to a finance entity.
The finance entity charged a factoring fee of 5% of the
accounts factored and withheld 20% of the amount factored.
On December 31, the entity assigned P300,000 of accounts
receivable to a bank under a nonnotification basis.
The bank advanced 80% less a service fee of 5% of the accounts
assigned. The entity signed a promissory note for the loan.
On December 31, it is estimated that 5% of the outstanding
accounts receivable may prove uncollectible.
Required:
1. Prepare journal entry to record the factoring.
2. Prepare journal entry to record the assignment.
3. Prepare journal entry to…
Question 4 of 18
Which of the following is not an acceptable balance sheet presentation of receivables?
Select the correct response
O trade notes receivable are combined with trade accounts receivable
cash advances to officers which are due after one year but within the entity's 18-month operating cycle, are reported as current assets
the allowance for bad debts is not offset against the related receivables but rather shown in a parenthetical notation as deduction to receivables
unearned finance charges included in the face amount of receivables are presented as deduction from the related receivables
( Previous
Chapter 7 Solutions
INTERMEDIATE ACCTI (LL) W/ ACCESS >CST
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Distinguish between the gross and net methods of...Ch. 7 - Briefly explain the accounting treatment for sales...Ch. 7 - Explain the typical way companies account for...Ch. 7 - Briefly explain the difference between the income...
Ch. 7 - Prob. 7.11QCh. 7 - Is any special accounting treatment required for...Ch. 7 - Explain any possible differences between...Ch. 7 - Prob. 7.14QCh. 7 - What is meant by the discounting of a note...Ch. 7 - What are the key variables that influence a...Ch. 7 - Explain how the CECL model (introduced in ASU No....Ch. 7 - Prob. 7.18QCh. 7 - Prob. 7.19QCh. 7 - (Based on Appendix 7B) Marshall Companies, Inc.,...Ch. 7 - Prob. 7.21QCh. 7 - Prob. 7.1BECh. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Cash discounts; gross method LO73 On December 28,...Ch. 7 - Prob. 7.5BECh. 7 - Sales re turns LO74 During 2018, its first year...Ch. 7 - Sales re turns LO74 Refer to the situation...Ch. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Uncollectible accounts; balance sheet approach ...Ch. 7 - Uncollectible accounts; solving for unknown LO75,...Ch. 7 - Prob. 7.12BECh. 7 - Note receivable LO77 On December 1, 2018,...Ch. 7 - Long-term notes receivable LO74 On April 19,...Ch. 7 - Prob. 7.15BECh. 7 - Factoring of accounts receivable LO78 Refer to...Ch. 7 - Prob. 7.17BECh. 7 - Discounting a note LO78 On March 31, Dower...Ch. 7 - Receivables turnover LO78 Camden Hardwares credit...Ch. 7 - Prob. 7.20BECh. 7 - Prob. 7.21BECh. 7 - Impairments of Accounts Receivable Appendix 7B...Ch. 7 - Credit Losses on Accounts Receivable (CECL Model) ...Ch. 7 - Prob. 7.1ECh. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Trade and cash discounts; the gross method and the...Ch. 7 - Prob. 7.6ECh. 7 - Cash discounts; the net method LO73 [This is a...Ch. 7 - Sales returns LO74 Halifax Manufacturing allows...Ch. 7 - Prob. 7.9ECh. 7 - Prob. 7.10ECh. 7 - Uncollectible accounts; allowance method; balance...Ch. 7 - Uncollectible accounts; allowance method and...Ch. 7 - Uncollectible accounts; allowance method; solving...Ch. 7 - Note receivable LO77 On June 30, 2018, the...Ch. 7 - Noninterest-bearing note receivable LO77 [This is...Ch. 7 - Long-term notes receivable LO77 On January 1,...Ch. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Factoring of accounts receivable with recourse ...Ch. 7 - Factoring of accounts receivable with recourse...Ch. 7 - Discounting a note receivable LO78 Selkirk...Ch. 7 - Concepts; terminology LO71 through LO78 Listed...Ch. 7 - Receivables; transaction analysis LO73, LO75...Ch. 7 - Prob. 7.25ECh. 7 - Prob. 7.26ECh. 7 - Prob. 7.27ECh. 7 - Prob. 7.28ECh. 7 - Prob. 7.29ECh. 7 - Prob. 7.30ECh. 7 - Impairments of Notes Receivable Appendix 7B At...Ch. 7 - Prob. 7.32ECh. 7 - Prob. 7.33ECh. 7 - Prob. 7.34ECh. 7 - Uncollectible accounts; allowance method; income...Ch. 7 - Uncollectible accounts; Amdahl LO75 Real World...Ch. 7 - Bad debts; Nike, Inc. LO75 Real World Financials...Ch. 7 - Uncollectible accounts LO75, LO76 Raintree...Ch. 7 - Prob. 7.5PCh. 7 - Notes receivable; solving for unknowns LO77...Ch. 7 - Prob. 7.7PCh. 7 - Prob. 7.8PCh. 7 - Prob. 7.9PCh. 7 - Prob. 7.10PCh. 7 - Prob. 7.11PCh. 7 - Accounts and notes receivable; discounting a note...Ch. 7 - Prob. 7.13PCh. 7 - Prob. 7.14PCh. 7 - Prob. 7.15PCh. 7 - Prob. 7.16PCh. 7 - Prob. 7.17PCh. 7 - Prob. 7.1BYPCh. 7 - Prob. 7.2BYPCh. 7 - Prob. 7.3BYPCh. 7 - Real World Case 74 Sales returns; Green Mountain...Ch. 7 - Ethics Case 75 Uncollectible accounts LO75 You...Ch. 7 - Prob. 7.6BYPCh. 7 - Prob. 7.7BYPCh. 7 - Prob. 7.8BYPCh. 7 - Prob. 7.9BYPCh. 7 - Prob. 7.10BYPCh. 7 - Prob. 7.11BYPCh. 7 - Prob. 1CCTC
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- Multiple Choice Question 110 Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $45000. If the balance of the Allowance for Doubtful Accounts is an $9000 debit before adjustment, what is the amount of bad debt expense for that period? $9000 $54000 $45000 $36000arrow_forwardQuestion 15 A company has provided the following information for Allowance for Doubtful Accounts: Allowance for Doubtful Accounts Beginning Balance = $2,700 Wrote-off $2,100 of uncollectible accounts Allowance for Doubtful Accounts Ending Balance = 3,200 How much did the company record as Bad Debt Expense? $3,800 None of these are correct. $2,600 $500 O $1,600arrow_forwardQuestion 8 of 8 -/ 20 View Policies Current Attempt in Progress Select financial information from Marshall Inc. is shown below: 2022 2021 Receivables $423,018 $376,089 less allowance for doubtful accounts 45,890 32,236 Receivables, net 377,128 343,853 Credit sales 5,245,000 4,846,300 Calculate the receivables turnover and the collection period for 2022. (Round answers to 1 decimal place, e.g. 12.3.) Receivables Turnover Ratio times Average Collection Period days Save for Later Attempts: 0 of 1 used Submit Answer IIarrow_forward
- Problem 7-8 (Algo) Factoring of accounts receivable; without recourse [LO7-8] Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2021, the company transferred $890,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits 90% of the factored amount and retains 10%. When Milpitas collects the receivables, it remits to Samson the retained amount less a 4% fee (4% of the total factored amount). Samson estimates the fair value of the last 10% of its receivables to be $69,000. Required: Prepare the journal entry for Samson Wholesale Beverage for the transfer of accounts receivable on April 30, assuming the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) O Answer is not complete. No Event General Journal Debit Credit 1 Cash 801,000 Loss on sale of receivables 59,720 X Receivable from factor…arrow_forwardExercise 7-13 (Algo) Percent of accounts receivable method LO P3 Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $137,000, and it estimates that 3% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $2,329 credit balance before the adjustment. (b) a $685 debit balance before the adjustment. View transaction list Journal entry worksheet Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has a $2,329 credit balance before the adjustment. 2 Note: Enter debits before credits. Transaction (0) Record entry General Journal Clear entry Debit Credit View general journal >arrow_forwardExercise 9-13 (Algo) Percent of accounts receivable method LO P3 Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $120,000, and it estimates that 2% will be uncollectible.Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has:(a) a $2,040 credit balance before the adjustment.(b) a $600 debit balance before the adjustment.arrow_forward
- Exercise 7-13 (Algo) Percent of accounts receivable method LO P3 Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $112,500, and it estimates that 5% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,913 credit balance before the adjustment. (b) a $563 debit balance before the adjustment. View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 1 Bad debts expense 7,538 Allowance for doubtful accountsarrow_forwardQuestion 17 of 20 0/1 View Policies Show Attempt History Current Attempt in Progress X Your answer is incorrect. Using the percentage-of-receivables method for recording bad debts expense, estimated uncollectible accounts are $33300. If the balance of the Allowance for Doubtful Accounts is $7570 debit before adjustment, what is the amount of bad debt expense for that period? O $40870 O $7570 O $33300 O $25730 eTextbook and Media Attempts: 1 of 2 used Submit Answer Save for Later 回可arrow_forwardQ 26 Question 26 Assuming that the Rector Company uses the Balance Sheet Approach to estimate bad debt expense. Based on aging of accounts receivable management estimates that the desired balance in the allowance for uncollectible accounts should be $18,000. The balance in the allowance for uncollectible accounts before the adjusting entry is made is $1,000 CREDIT balance. The entry to record bad debt expense would be: Select one: a. Dr. Allowance for Uncollectible Accounts 17,000 and Cr. Accounts Receivable 17,000 b. Bad Debt Expense 17,000 and Cr. Allowance for Uncollectible Accounts 17,000 c. Dr. Allowance for Uncollectible Accounts 18,000 and Cr. Accounts Receivable 18,000 d. Dr. Bad Debt Expense 18,000 and Cr. Allowance for Uncollectible Accounts 18,000arrow_forward
- Problem 6-4: The Northrock Corporation The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on October 31, 2021: Year A/R at Year end Uncollectible and written off in subsequent years 2018 14000 700 2019 10000 1000 2020 12000 600 2021 4000 200 Required 1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of total A/R. Round your calculation to two decimal places. 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1. 3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 4. Scenario B: On October 31, 2021 the unadjusted Allowance for…arrow_forward00:58: 44 Question 1/18 Ann, Inc. uses the percentage of sales basis to estimate its bad debts, For the year ended December 31, 2020, Ann Co. total sales are €700,000. Management of the company estimates that 1% of credit sales will Allowances for Doubtful Accounts is a debit balance of €1,250. The Accounts Receivable bal realizable value of Accounts Receivable reported on the statement of financial position at December 31. 2020 is ollectible. The existing balance in the 31. 2020 is €68,400. The cash 1. O€75.400 2 O€61,250. 3.N0€60,150. 4.D€62,650. Nextarrow_forwardQUESTION 28 An aging of a company's accounts receivable indicates that $5,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a debit to Allowance for Doubtful Accounts for $4, 100. credit to Allowance for Doubtful Accounts for $5,000. debit to Bad Debt Expense for $4,100. debit to Bad Debt Expense for $5,000. QUESTION 29arrow_forward
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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License