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Accounting Problem
The Question asked is as follows: Assume the following events for the year 2008. 1. Credit sales $900,000 2. Cash sales 300,000 3. Accounts receivable balance 1/1/08 56,000 4. Accounts written off during the year were 8,000 5. Allowance for Uncollectibles balance 1/1/08 6,300 6. Seventy percent (70%) of this year's credit sales are collected during the year. Scenario One Use the above data set. Assume that the company estimates its annual bad debt expense at 3% of credit sales. 1. The adjusting entry to recognize the bad debt expense would be a) Bad debt ex 8,000 Allow for bad debts 8,000 b) Allow for bad debts 17,000 A/R 17,000 c) Bad debt ex 36,000 Allow for bad debts 36,000 d) Bad debt ex 27,000 Allow for bad debts 27,000 I choose d because 900,000 * .03 = 27,000. And we know that Bad Deb Expense is journalized debit to Bad debt ex and credit to Allowance for bad debts. 2. The write-off of delinquent accounts would be a) A/R 8,000 Allow for bad debts 8,000 b) Allow for bad debts 8,000 A/R 8,000 c) Bad debt ex 8,000 Allow for bad debts 8,000 d) Allow for bad debts 8,000 Bad debt ex 8,000 The write off would be Allowance for bad debts 8,000 making my answer B A/R 8,000 3. The net accounts receivable figure at the end of the year would be a) 292,700 b) 318,000 c) 300,700 d) 283,700 This one was tricky for me. A/R began with 56,000 + 270,000 from the 30% of sales giving me 326,000 allowance for for uncollectibles were 6300 + 27,000 giving me 33,300 326,000-33,300 is 292,700 which makes my answer A. But this was confusing for me. Somehow I think I got it wrong. Scenario Two Use the above data set. Ignore Scenario One. Assume that the company estimates its annual bad debt expense at 5% of accounts receivable. 4. The adjusting entry to recognize the bad debt expense would be a) Bad debt ex 15,900 Allow for bad debts 15,900 b) Allow for bad debts 17,600 A/R 17,600 c) Bad debt ex 17,600 Allow for bad debts 17,600 d) Bad debt ex 8,000 Allow for bad debts 8,000 I couldn't figure this out for the life of me. I know its a Debit to Bad deb exp and a credit to allowance for bad debts but beyond that I have no clue. 5. The write-off of delinquent accounts would be a) A/R 8,000 Allow for bad debts 8,000 b) Allow for bad debts 8,000 A/R 8,000 c) Bad debt ex 8,000 Allow for bad debts 8,000 d) Allow for bad debts 8,000 Bad debt ex 8,000 I know write offs mean Allowance for Bad Debts 8,000 A/R 8,000 so this one wasnt too bad 6. The net accounts receivable figure ate the end of the year would be a) 302,100 b) 301,400 c) 310,000 d) 283,700 This one kept giving me heartache since there was no way to figure it out for me. I really hate the notion of net accounts receivable. I know its A/R - Allowance for Uncollectibles but still.... ساعد في نشر والارتقاء بنا عبر مشاركة رأيك في الفيس بوك |
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