Exam 2 Review Problems SOLUTIONS - Exam 2 Review Problems...

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Exam 2 Review Problems Godfrey, Inc. wrote off the $1,000 account balance owed by the customer Jacobs. What was effect of this transaction? a. Decrease in Total Assets, decrease in Total Liabilities, no effect on Total Equity b. No effect on Total Assets, Total Liabilities and Total Equity c. Decrease in Total Assets, no effect in Total Liabilities, decrease in Total Equity d. No effect on Total Assets, increase in Total Liabilities, decrease in Total Equity e. None of the above answers are correct Journal Entry: Allowance for Uncollectible Accounts (+A) 1,000 Accounts Receivable (-A) 1,000 Kirkwood Corp. estimates bad debt based on the aging of Account Receivable balance at the end of each year. The Allowance for Bad Debt account at 12/31/2011 was $60. The amount of uncollectible account balances identified and written off during the year were $40. On 12/31/2012, Kirkwood Corp.’s A/R balance is as follows: A/R ages A/R balance % estimated uncollectible > 12 months $200 20% 6-12 months $450 10% 3-6 months $200 5% Less than 3 months $250 2% Total 1,100 How much was total bad debt expense for Kirkwood in 2012? Allowance for DA 100 At the beginning of 2014, Bryan Inc. has a balance of $10,000 in its Accounts Receivable account and of $500 in its Allowance for Doubtful Accounts. Total credit sales during 2014 were $50,000, of which $35,000 was collected. The company estimates that 6% of credit sales will be uncollectible. During 2014, Bryan Inc. had $1,800 of write-offs during the year. What was the ending amount of Net Accounts Receivable for 2014? Allowance for DA Acct Receivable 500 10,000 1,800 3,000 50,000 35,000 1,700 1,800 23,200 A/R ages A/R balance % estimated uncollectible > 12 months $200 20% $40 6-12 months $450 10% $45 3-6 months $200 5% $10 < 3 months $250 2% $5 Total 1,100 $100
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A/R 23,200 Allowance 1,700 21,500 On 6/13/2013 Jane Company sells $12,000 worth of goods to Kate Incorporated on account. On 7/1/2013, Kate discovers that 50% of the products delivered were the wrong products. Jane Company offers Kate Incorporated a 30% discount off of the price paid for the incorrect goods if Kate will keep them rather than return them. Kate accepts the offer that same day but does not pay for the goods until 7/25/2013.
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