Accountingblock3study

# Accountingblock3study - Ch 8 \$800,000.\$160,000..5%ofthe...

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Ch. 8 Net credit sales for the month are \$800,000. The accounts receivable balance is \$160,000. The allowance is calculated as 7.5% of the  receivables balance using the percentage of receivables basis. If the Allowance for Doubtful Accounts has a credit balance of \$5,000 before  adjustment, what is the balance after adjustment?  \$12,000 \$31,000 \$7,000 \$17,000 Notes: Don’t increase allowance for doubtful debts just add the amount needed to equal what expected losses are. If it’s at 5,000 and you calculate 12,000 dollars off losses add 7,000 to get 12,000 not 12,000 to get 17,000. In 2010 Patterson Wholesale Company had net credit sales of \$750,000. On January 1, 2010, Allowance for Doubtful Accounts had a credit  balance of \$18,000. During 2010, \$30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance  should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was  \$200,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2010? \$75,000 \$30,000 \$20,000 \$32,000 Notes: Add the written off accounts to the difference of the balance of doubtful accounts and estimated doubtful accounts. (30,000 + 20,000 – 18,000)= 32,000. Prall Corporation sells its goods on terms of 2/10, n/30. It has a receivables turnover ratio of 7. What is its average collection period (days)? 30 52 210 2,555 Notes: terms of selling doesn’t matter. 365/ receivables turnover ratio. Good Stuff Retailers accepted \$50,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit  card use. The entry to record this transaction by Good Stuff Retailers will include a credit to Sales of \$50,000 and a debit(s) to:

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