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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This note was uploaded on 03/06/2011 for the course ECON 435 taught by Professor Galven during the Spring '11 term at Ill. Chicago.

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ACTG 500 Practice Problems 5 Accounts Receivable -...

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