FA08HW3 - 6-59(30 min.) 1. The bad debt expense is .014 x...

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Unformatted text preview: 6-59(30 min.) 1. The bad debt expense is .014 x $6,000,000 = $84,000. Accounts receivable $470,000 Less: Allowance for bad debts (84,000 1,200) 82,800Net accounts receivable $387,200Journal entry: Bad debt expense 84,000 Allowance for bad debts 84,000 To recognize bad debt expenses for 20X7 2. The ending balance in the allowance for bad debts account should be .18 x $470,000 = $84,600. Accounts receivable $470,000 Less: Allowance for bad debts 84,600Net accounts receivable $385,400Journal entry: Bad debt expense 85,800 Allowance for bad debts 85,800 To recognize bad debt expenses for 20X7 The entry of $85,800 is to create a balance of $84,600. It must also offset the existing $1,200 debit balance. 3. The percentage of ending accounts receivable is usually more accurate. It focuses specifically on accounts that are still outstanding at the end of the year. (The aging method would go a step further by looking at the length of time each ending account receivable has been outstanding.) It appears that the collection experience on Tetons sales early in 20X7 has been slightly worse than usual. 2 7-67(30-40 min.) 1. See Exhibit 7-67 on the following page. 2. a. Income before income taxes will be lower under LIFO than under FIFO: $149,000 $124,000 = $25,000. The income tax will be lower by .40 x $25,000 = $10,000. tax will be lower by ....
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This note was uploaded on 01/20/2012 for the course ACCOUNTING 101 taught by Professor Unknown during the Spring '08 term at Carnegie Mellon.

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FA08HW3 - 6-59(30 min.) 1. The bad debt expense is .014 x...

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