ACTG 1P12 Lecture : Chapter 7 Notes - Class 2.docx

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14 Apr 2012

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Must be presented on balance sheet at their recoverable amount / realizable value. Trade receivables should be separately disclosed from: related party receivables, notes receivables. Direct write-off method: only account for uncollectible accounts receivables with they are identified (as they occur) and record bad debt expense at that time, not gaap, only appropriate when uncollectible accounts are very small. If subsequent collection arises: xx xx xx xx. Allowance for doubtful accounts xx xx: accounts receivable (aging) method, balance sheet approach, aims to calculate best estimate of the allowance for doubtful accounts (so that. Abrams co. has an aged a/r schedule that show the following balances at december 31: Note: if allowance has a debit balance prior to the allowance for doubtful accounts adjustment entry, we must add this amount to the target allowance for doubtful accounts balance calculated to get the required adjustment amount.

Related Questions

Adham Sdn. Bhd. accounts for its uncollectible accounts usingthe allowance method. The company reported the following accountbalances at 31 December 2017.

	RM
Accounts receivable	250,000
Less: Allowance for doubtful accounts	12,500

During the year 2017, the company had the following transactionsrelated to receivables.

	RM
1.Credit sales	600,000
3.Collections of accounts receivable	680,000
4.Write-offs of accounts receivable	10,800
5.Recovery of bad debts previously written off	3,000

Required:

a) Journalise transactions 1 - 5 above.

b) Post the entries to the two accounts: Accounts receivable andAllowance for doubtful account.

c) Record the bad debt expense for 2017 (in T-account) undereach of the following independent assumptions:

i. The company estimates its bad debt expense based on 5% ofoutstanding account receivable balance.

ii. The company bad debt estimate is 1% of its credit sales.

d) What is the net realisable value of Accounts Receivable at 31December 2017 under assumption (i) above.

carminesalmon51

E8-3

Journalize receivablestransactions.

(LO 2,3),AP

At the beginning of the current period, Griffey Corp. had balancesin Accounts Receivable of $200,000 and in Allowance for DoubtfulAccounts of $9,000 (credit). During the period, it had net creditsales of $800,000 and collections of $763,000. It wrote off asuncollectible accounts receivable of $7,300. However, a $3,100account previously written off as uncollectible was recoveredbefore the end of the current period. Uncollectible accounts areestimated to total $25,000 at the end of the period. (Omit cost ofgoods sold entries.)

Instructions

1.	Prepare the entries to record sales and collections during theperiod.

2.	Prepare the entry to record the write-off of uncollectibleaccounts during the period.

3.	Prepare the entries to record the recovery of theuncollectible account during the period.

4.	Prepare the entry to record bad debt expense for theperiod.

5.	Determine the ending balances in Accounts Receivable andAllowance for Doubtful Accounts.

6.	What is the net realizable value of the receivables at the endof the period?

olivecicada717

Question 14 pts

The five components to a system of internal controls include all of the following except:

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Question 24 pts

An automobile company testing brakes on new vehicles is part of:

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Question 34 pts

Which account would we debit to open a new petty cash fund?

cash

petty cash

miscellaneous expense

petty cash expense

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Question 44 pts

Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?

a credit to petty cash for $127

a debit to travel expenses for $125

a credit to cash over and short for $2

a credit to cash for $125

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Question 54 pts

On a bank reconciliation, which of the following will not appear as a deduction on a bank statement?

deposit

NSF check (non-sufficient funds)

service charge

Payments made by EFT (electronic fund transfer)

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Question 64 pts

Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $2,000 and a deposit in transit of $1,000. What is the adjusted bank balance after we complete the bank reconciliation?

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Question 74 pts

Our company has decided to write off an uncollectible account of $3,000. What account would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?

bad debt expense

accounts receivable

allowance for doubtful accounts

cash

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Question 84 pts

Where does allowance for doubtful accounts appear on our financial statements?

on balance sheet as a current liability

on income statement as part of cost of goods sold

on balance sheet as a contra asset related to accounts receivable

on the statement of retained earnings as a deduction from net income

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Question 94 pts

At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?

bad debt expense, $30,000

allowance for doubtful accounts, $30,000

bad debt expense, $20,000

accounts receivable, $20,000

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Question 104 pts

On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we debit when we record the year-end adjusting entry on December 31, 2017?

interest revenue, $300

interest revenue, $350

interest receivable, $300

interest receivable, $350

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ACTG 1P12 Lecture : Chapter 7 Notes - Class 2.docx

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