ORIE_3150_homework_3_draft_Solutions

ORIE_3150_homework_3_draft_Solutions - ORIE 3150 Homework...

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ORIE 3150 Homework #3, Fall 2008 Due September 23, 2008 1. On Dec. 31, 2006, Long Company was preparing to adjust the accounts receivable account. Accounts Receivable balance, January 1, 2006 $35,500 debit Allowance for Uncollectible Accounts balance, January 1, 2006 $6,500 credit Sales Revenue, year ended December 31, 2006 $480,000 Uncollectible accounts written off during fiscal 2006 $6,800 Cash payments collected on accounts, fiscal 2006 $185,000 60% of the Sales Revenue in 2006 was for cash sales, the remainder was on account. Long Company uses the percentage of net credit sales method. They estimate that 4% of their sales on account will become uncollectible. a. How much Bad Debt Expense will Long Company show on their fiscal 2006 income statement? $7,680 (This is 4% of their credit sales. Credit sales were $192,000) b. Show the adjusting journal entry needed to record Bad Debt Expense for fiscal 2006. Dr Cr Dec. 31, 2006 Bad Debt Expense $7,680 Allowance for Uncollectible Accounts $7,680 c. What are the balances in Accounts Receivable and Allowance for Uncollectible Accounts (after adjustments) on December 31, 2006? Accounts Receivable Allowance for Uncollectible Accounts 35,50 0 6,50 0 185,00 0 6,80 0 6,80 0 7,68 0 192,00 0 35,70 0 7,38 0
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2. Precision Build Construction Incorporated uses the aging method for estimating uncollectible accounts. On November 1, 2005, Accounts Receivable had a debit balance
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ORIE_3150_homework_3_draft_Solutions - ORIE 3150 Homework...

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