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ACTG 500 Practice Problems 5 Accounts Receivable

# ACTG 500 Practice Problems 5 Accounts Receivable -...

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1 University of Illinois at Chicago College of Business Administration ACTG 500: I NTRODUCTION TO F INANCIAL A CCOUNTING Fall 2009 Practice Problems 5: Accounts Receivable E 6-22 a. 2009 bad debts expense computation \$90,000 × 1% = \$ 900 20,000 × 2% = 400 11,000 × 5% = 550 6,000 × 10% = 600 4,000 × 25% = 1,000 \$3,450 Less: Unused balance before adjustment 520 Bad debt expense for 2009 \$2,930 b. Balance Sheet Income Statement Transactio n Cash Asset + Noncash Assets = Liabil- ities + Contrib. Capital + Earned Capital Rev- enues Expen- ses = Net Income BDE 2,930 AU 2,930 2,930 2,930 BDE AU Record bad debt expense -2,930 Allowance for Uncollectible Accounts = -2,930 Retaine d Earning s +2,930 Bad Debt Expense = -2,930 c. Accounts receivable, net = \$131,000 - \$3,450 = \$127,550 Reported in the balance sheet as follows: Accounts receivable, net of allowance of \$3,450 . ................................... \$127,550

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2 E 6-23 The ending balance of Penman’s accounts receivable and allowance accounts are as follows. Accounts receivable \$138,100 Less allowance for uncollectible accounts 10,384 \$127,716 Computations Accounts Allowance for Receivable Uncollectible Accounts Beginning balance . .................................. \$ 122,000 \$ 7,900 Sales . ...................................................... 1,173,000 Collections . .............................................. (1,150,000) Write-offs* . .............................................. (6,900) (6,900) Bad debt expense**. ................................ _________ 9,384 Ending balance . ...................................... \$ 138,100 \$ 10,384 * Write offs = \$3,600 + \$2,400 + \$900 = \$6,900 ** Bad debt expense = \$1,173,000 × 0.8% = \$9,384 E 6-24 a,b. (\$ millions) 2007 2006 Accounts receivable (net) . .................................. \$13,420 \$10,873 Allowance for uncollectible accounts . ................. 226 220 Gross accounts receivable . ................................ \$13,646 \$11,093 Percentage of uncollectible accounts to gross accounts receivable . .......................... 1.66%
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ACTG 500 Practice Problems 5 Accounts Receivable -...

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