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Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited a. when a credit sale is past due.
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journal entries to record the following transactions: January 5 Sold merchandise to Sue Land for $1,800, terms n/15. April 15 Received $400 from Sue Land on account. August 21 Wrote off as uncollectible the balance of the Sue Land account when she declared bankruptcy. October 5 Unexpectedly received a check for $650 from Sue Land.
A. A $9,000, 6%, 3-month note dated July 20. Maturity value $____________. B. A $16,000, 9%, 150-day note dated August 5. Maturity value $____________. Date Debit Credit
following aging schedule of Accounts Receivable: Customer Total Number of Days Past Due Not yet due 1 – 30 31 – 60 61 – 90 Over 90 K. Brant $500 $300 $ D. Eaton 300 100 200 S Klein 150 50 100 C. Sheen 200 200 ? 300 300 250 200 100 % uncollectible 1% 5% 10% 25% 50% Total Estimated Uncollectible Amounts?????? (a) Compute the total estimated uncollectible amounts. (b) Compute the net receivables based on the above information at the end of December (There was no beginning balance in the Allowance for Doubtful Accounts).
Company: 20X June 1 Received a $10,000, 6%, 1-year note from Dan Gore as full payment on his account. Nov. 1 Sold merchandise on account to Barlow, Inc., for $14,000, terms 2/10, n/30. Nov. 5 Barlow, Inc., returned merchandise worth $1,000. Nov. 9 Received payment in full from Barlow, Inc. Dec. 31 Accrued interest on Gore's note. 20X June 1 Dan Gore honored his promissory note by sending the face amount plus interest. Date Debit Credit
6. Erickson Company had a $300 credit balance in Allowance for Doubtful Accounts at December 31, 20XX, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts $170,000 1% 1 – 30 days past due 15,000 3% 31 – 60 days past due 12,000 6% 61 – 90 days past due 5,000 15% Over 90 days past due 9,000 30% Total Accounts Receivable $211, (a) Prepare the adjusting entry on December 31, 20XX, to recognize bad debts expense. (b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $300 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts. Date Debit Credit Date Debit Credit
A. Maturity value: $9,
$135 + $9,000 = $9,135 (Face val. + (Face val. × 6% × 3/12) B. Maturity value: $16,
$600 + $16,000 = $16,600 (Face val. + (Face val. × 9% × 150/360) 3. Customer Total Not yet due Number of Days Past Due 1 – 30 31 – 60 61 – 90 Over 90 K. Brant $500 $300 $ D. Eaton 300 100 200 S Klein 150 50 100 C. Sheen 200 200 1,150 300 300 250 200 100 % uncollectible 1% 5% 10% 25% 50% Total Estimated Uncollectible Amounts (a) $143 $3 $15 $25 $ 50 $ (b) $1,150 – $143 = $1,
4. (a) Debit Credit Accounts Receivable 1,550, Sales Revenue 1,550, (To record credit sales) Sales Returns and Allowances 100, Accounts Receivable 100, (To record credits to customers) Cash 1,250, Accounts Receivable 1,250, (To record collection of receivables) Allowance for Doubtful Accounts 35, Accounts Receivable 35, (To write off specific accounts) Accounts Receivable 8, Allowance for Doubtful Accounts 8, (To reverse write-off of account) Cash 8, Accounts Receivable 8, (To record collection of account)
Estimated Percentage Estimated Uncollectible Uncollectible Current Accounts $170,000 1% $1, 1 – 30 days past due 15,000 3% 450 31 – 60 days past due 12,000 6% 720 61 – 90 days past due 5,000 15% 750 Over 90 days past due 9,000 30% 2, Total Accounts Receivable $211,000 $6,320* **(A/R amounts × est. uncoll. %) (a) Bad Debt Expense ..................................................................................... 6, Allowance for Doubtful Accounts ($6,320 – $300) ........................ 6, (To adjust the allowance account to total estimated uncollectible) (Est. uncoll. amount – end. ADA bal.) (b) Bad Debt Expense ..................................................................................... 6, Allowance for Doubtful Accounts ($6,320 + $300) ........................ 6, (To adjust the allowance account to total estimated uncollectible)