Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
24th Edition
ISBN: 9781260158557
Author: Wild
Publisher: Mcgraw Hill Publishers
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Chapter 9, Problem 4BPSB
To determine

Concept Introduction:

Allowance method:

Under the Allowance method the estimated bad debts expenses are recorded using the Allowance for doubtful account and the actual bad debts written off using this account. Allowance for doubtful accounts represents the amount of expected bad debts or uncollectable accounts. This account is made as a provision for future bad debts.

To Prepare:

The Journal entries for the given transactions

Expert Solution & Answer
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Answer to Problem 4BPSB

The Journal entries for the given transactions are as follows:

    Sherman Co.
    Journal Entries
    DateAccount titlesDebitCredit
    Year 1
    a.
    Accounts Receivable
    $ 685,350
    Sales Revenue
    $ 685,350
    Cost of Goods Sold
    $ 500,000
    Merchandise Inventory
    $ 500,000
    b.
    Cash
    $ 482,300
    Accounts Receivable
    $ 482,300
    c.
    Allowance for doubtful accounts
    $ 9,350
    Accounts Receivable
    $ 9,350
    d.
    Bad Debts Expense
    $ 11,287
    Allowance for doubtful accounts
    $ 11,287
    Year 2
    e
    Accounts Receivable
    $ 870,220
    Sales Revenue
    $ 870,220
    Cost of Goods Sold
    $ 650,000
    Merchandise Inventory
    $ 650,000
    f.
    Cash
    $ 990,800
    Accounts Receivable
    $ 990,800
    g.
    Allowance for doubtful accounts
    $ 11,090
    Accounts Receivable
    $ 11,090
    h.
    Bad Debts Expense
    $ 9,773
    Allowance for doubtful accounts
    $ 9,773

Explanation of Solution

The Journal entries for the given transactions are explained as follows:

    Sherman Co.
    Journal Entries
    DateAccount titlesDebitCredit
    Year 1
    a.
    Accounts Receivable
    $ 685,350
    Sales Revenue
    $ 685,350
    (Being merchandise sold on account)
    Cost of Goods Sold
    $ 500,000
    Merchandise Inventory
    $ 500,000
    (Being merchandise sold)
    b.
    Cash
    $ 482,300
    Accounts Receivable
    $ 482,300
    (Being payment received)
    c.
    Allowance for doubtful accounts
    $ 9,350
    Accounts Receivable
    $ 9,350
    (Being account written off)
    d.
    Bad Debts Expense
    $ 11,287
    Allowance for doubtful accounts
    $ 11,287
    (Being adjustment made for Bad debts Expense)
    Note: Calculation of Bad debts Expense:
    Ending Accounts Receivable (A) (685350-482300-9350)
    $ 193,700
    Estimated bad debts (B) = (A*1% )
    $ 1,937
    Balance in Allowance for doubtful accounts (C)
    $ 9,350
    Debit
    Bad debts Expense (B+C)$ 11,287
    Year 2
    e
    Accounts Receivable
    $ 870,220
    Sales Revenue
    $ 870,220
    (Being merchandise sold on account)
    Cost of Goods Sold
    $ 650,000
    Merchandise Inventory
    $ 650,000
    (Being merchandise sold)
    f.
    Cash
    $ 990,800
    Accounts Receivable
    $ 990,800
    (Being payment received)
    g.
    Allowance for doubtful accounts
    $ 11,090
    Accounts Receivable
    $ 11,090
    (Being account written off)
    h.
    Bad Debts Expense
    $ 9,773
    Allowance for doubtful accounts
    $ 9,773
    (Being adjustment made for Bad debts Expense)
    Note: Calculation of Bad debts Expense:
    Ending Accounts Receivable (A) (193700+870220-990800-11090)
    $ 62,030
    Estimated bad debts (B) = (A*1% )
    $ 620
    Balance in Allowance for doubtful accounts (C) (11090-1937)
    $ 9,153
    Debit
    Bad debts Expense (B+C)$ 9,773

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Chapter 9 Solutions

Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf

Ch. 9 - Credit card sales Prepare journal entries for the...Ch. 9 - Direct write-off method P1 Solstice Company...Ch. 9 - Recovering a bad debt P1 Solstice Company...Ch. 9 - Distinguishing between allowance method and direct...Ch. 9 - Allowance method for bad debts P2 Gomez Corp. uses...Ch. 9 - Reporting allowance for doubtful accounts P2 On...Ch. 9 - Prob. 7QSCh. 9 - Prob. 8QSCh. 9 - Aging of receivables method P3 ^ Net Zero...Ch. 9 - Prob. 10QSCh. 9 - Prob. 11QSCh. 9 - QS 9-9 Note receivable honored P4 On August 2, Jun...Ch. 9 - Prob. 13QSCh. 9 - Prob. 14QSCh. 9 - Prob. 15QSCh. 9 - Prob. 16QSCh. 9 - Prob. 17QSCh. 9 - Exercise 9-1 Accounts receivable subsidiary...Ch. 9 - Prob. 2ECh. 9 - Exercise 9-3 Sales on store credit card C1 Z-Mart...Ch. 9 - Exercise 9-4 Direct write-off method Dexter...Ch. 9 - Exercise 9-5 Writing off receivables P2 On January...Ch. 9 - Exercise 9-6 Percent of sales method; write-off...Ch. 9 - Exercise 9-7 Percent of accounts receivable...Ch. 9 - Exercise 9-8 Aging of receivables method P3 Daley...Ch. 9 - Exercise 9-9 Percent of receivables method...Ch. 9 - Exercise 9-10 Aging of receivables schedule...Ch. 9 - Exercise 9-10 Estimating bad debts P3 At December...Ch. 9 - Exercise 9-11 Notes receivable...Ch. 9 - Exercise 9-12 Notes receivable transactions...Ch. 9 - Exercise 9-14 Honoring a note P4 Prepare journal...Ch. 9 - Exercise 9-15 Dishonoring a note P4 Prepare...Ch. 9 - Exercise 9-16 Selling and pledging accounts...Ch. 9 - Exercise 9-17 Accounts receivable turnover A1 Q...Ch. 9 - Problem 9-1A Sales on account and credit card...Ch. 9 - Problem 9-2A Estimating and reporting bad debts P2...Ch. 9 - Problem 9-3A Aging accounts receivable and...Ch. 9 - Problem 9-4A Accounts receivable transactions and...Ch. 9 - Problem 9-5A Analyzing and journalizing notes...Ch. 9 - Problem 9-1B Sales on account and credit card...Ch. 9 - Problem 9-2B Estimating and reporting bad debts P2...Ch. 9 - Problem 9-3B Aging accounts receivable and...Ch. 9 - Problem 9-4B Accounts receivable transactions and...Ch. 9 - Prob. 5BPSBCh. 9 - SP 9 Santana Rey: owner of Business Solutions,...Ch. 9 - Prob. 1GLPCh. 9 - Prob. 1AACh. 9 - Prob. 2AACh. 9 - Prob. 3AACh. 9 - Anton Blair is the manager of a medium-size...Ch. 9 - Prob. 2BTNCh. 9 - Prob. 3BTNCh. 9 - Prob. 4BTNCh. 9 - Prob. 5BTNCh. 9 - Many commercials ¡include comments similar to the...
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