Solution allowance for doubtful accounts 900000

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Solution: Allowance for doubtful accounts- December 31, 2009 900,000 Doubtful accounts expense 160,000 Total 1,060,000 Accounts written off (squeeze) (60,000) Allowance for doubtful accounts- December 31, 2010 1,000,000 14. Oriental Company follows the procedure of debiting bad debt expense for 2% of all new sales. Sales for three consecutive years and year-end allowance account balances were as follows: Sales Allowance for bad debts 2008 3,000,000 40,000 2009 2,800,000 60,000 2010 3,500,000 80,000 What is the amount of accounts written off in 2010? Solution: Allowance for bad debts – December 31, 2009 60,000 Bad debt expense for 2010 (25x3,500,000) 70,000 Total 130,000 Allowance for bad debts- December 31, 2010 80,000 Accounts written off in 2010 50,000 15. Easy company sells directly to retail customers. On January 1, 2010, the balance of the accounts receivable was P2,070,000 while the allowance for doubtful accounts was a credit of P78,000. The following data are gathered: Credit sales Write offs Recoveries 2007 11,100,000 260,000 22,000 2008 12,250,000 295,000 37,000 2009 14,650,000 300,000 36,000 2010 15,000,000 310,000 42,000 Doubtful accounts are provided for as a percentage of credit sales. The accountant calculates the percentage annually by using the experience of the three years prior to the current year. What amount should be recorded as doubtful accounts expense for 2010?
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Solution: Credit sales Write offs Recoveries 2007 11,100,000 260,000 22,000 2008 12,250,000 295,000 37,000 2009 14,650,000 300,000 36,000 38,000,000 855,000 95,000 Rate = (855,000-95,000)/38,000,000 = .02 Doubtful accounts expense for 2010 (15,000,000x.02) 300,000 Allowance for doubtful accounts – December 31, 2010 (78,000+300,000+42,000-310,000) 110,000
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