Ch 6 (Allowance for Doubtful Accounts and Bad Debt Expense) Class Note Practice Problems with SOLUTI

Ch 6 (Allowance for Doubtful Accounts and Bad Debt Expense) Class Note Practice Problems with SOLUTI

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Chapter 6 Additional Practice (Accounts Receivable) 1. Barney Stinson, Inc. begins its operations on 1/1/2013. The company uses the percentage credit sales method to assess the collectability of its accounts. Barney Stinson had total credit sales during the year of $500,000 during the first quarter of 2013. The company estimates that 4% of its credit sales will be uncollectible. Assuming the company had no write-offs during the first quarter, what is the adjusting journal entry it will record for Bad Debt Expense on March 31, 2013? Bad Debt Expense 20,000 Allowance (DA) 20,000 Assuming the company had credit sales of $600,000 and write-offs of $8,000 during the second quarter (April 1, 2013 to June 30, 2013), what will be the ending balance in the Allowance (D.A.) on the company’s June 30, 2013 balance sheet? 600,000 * .04 = 24,000 20,000 – 8,000 = Prelim = 12,000 + 24,000 = 36,000 2. As of 1/1/2014 the balance in Sven Corporation’s Allowance for Doubtful Accounts was
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Unformatted text preview: $94,000. During 2014, the company had write-offs of $48,000. The company updates its estimates of uncollectibility on a yearly basis using the Aging Method. As of 12/31/2014, the company had the following A/R aging and estimated % uncollectible: 12/31/14 Estimated % Uncollectible Current A/R $2,000,000 1% A/R less than 30 days past due 500,000 2% A/R 31-60 days past due 400,000 4% A/R over 60 days past due 250,000 7% Total Accounts Receivable What is the company’s Bad Debt Expense for the year ended 12/31/2014? 20,000 + 10,000 + 16,000 + 17,500 = 63,500 94,000 – 48,000 = Prelim. Allow = 46,000 + X = 63,500; Bad Debt Expense = 17,500 What is the net amount of accounts receivable that will be reported on the company’s balance sheet as of 12/31/2014? 2,000,000 + 500,000 + 400,000 + 250,000 = 3,150,000 Total A/R 3,150,000 – 63,500 = 3,086,500 1...
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