Extra Problems for Prelim 2

Extra Problems for Prelim 2 - AEM 2210 Spring 2009 Extra...

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AEM 2210 Spring, 2009 Extra Problems: Estimating Bad Debt Expense Problem 1: ASH Co. uses the aging of accounts receivable method to estimate bad debt expense at the end of each accounting year. Credit sales have terms n/45. The balance of each account receivable is aged on the basis of the following three time periods: (1) not yet due, (2) up to one month past due, (3) more then one month past due. The estimated average loss rate of the receivables at year-end due to uncollectability is (1) 1%, (2) 8%, (3) 20%. At December 31, 2009 (end of current accounting year), the Accounts Receivable balance was $90,000, and the Allowance for Doubtful Accounts balance was $7,500. The details of each of their 3 customer accounts is below: Date Explanation Debit Credit Balance Sarah – Account Receivable 1/10/09 Sale 50,000 50,000 1/20/09 Collection 30,000 20,000 10/20/09 Sale 35,000 55,000 Shane – Account Receivable 4/30/09 Sale 20,000 20,000 5/05/09 Collection 10,000 10,000 7/23/09 Sale 25,000
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Extra Problems for Prelim 2 - AEM 2210 Spring 2009 Extra...

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