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Unformatted text preview: SP6-1: ESTIMATES OF UNCOLLECTIBLE ACCOUNTS (HS) James River Enterprises has made an analysis of its sales and accounts receivable for the past five years. Assume that all accounts written off in any year related to sales of the preceding year, and were part of the accounts receivable at the end of that preceding year. No account is written off before the end of the year of the sale, and all accounts remaining unpaid are written off before the end of the year following the sale. EXAMPLE: The $12,500 written off in 1996 related to 1995 sales, and was included in the ending accounts receivable for 1995. The analysis showed the following: The balance in Allowance for Uncollectible Accounts on December 31, 1998, was $16,000. 1. Determine the bad debts expense for 1999 and the balance of the Allowance for Uncollectible Accounts for December 31, 1999, using the percentage of sales method. 2. Repeat requirement 1, using the percentage of ending Accounts Receivable method. Check figures: 1. Bad debt expense = $17,000 2. Bad debt expense= $18,100 SALES ENDING ACCOUNTS BAD DEBTS WRITTEN RECEIVABLE OFF DURING THE YEAR 1995 $680,000 $90,000 $12,000 1996 750,000 97,000 12,500 1997 750,000 103,000 14,000 1998 850,000 114,000 16,500 1999 850,000 110,000 17,600 SP7-1: IMPACT OF INVENTORY METHOD ON REPORTED EARNINGS (HS) James River Enterprises began business on January 1, 1997. Information about its inventories under different valuation methods is shown below. Using this information, you are to choose the phrase that best answers each of the f6llowing questions. [HINT. Use the formulae for cost of goods sold and gross profit to work out your answers.] Date Inventory Value (using four alternative accounting Methods) Method A Method B Method C Method D December 31, 1997 $8,800 $8,000 $7,400 $6,600 December 31,...
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This note was uploaded on 02/29/2012 for the course AC 221 taught by Professor Albuquerque during the Fall '08 term at BU.
- Fall '08