ACCO 240 Lecture : bad debts recovered_1.docx
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Jan. 19. | Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalize the receipt of $2,120 cash in full payment of Arleneâs account. |
Apr. 3. | Wrote off the $12,150 balance owed by Premier GS Co., which is bankrupt. |
July 16. | Received 30% of the $21,800 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible. |
Nov. 23. | Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $3,455 cash in full payment. |
Dec. 31. | Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $9,135 ; Fogle Co., $2,715 ; Lake Furniture, $ 6,975 ; Melinda Shryer, $1,970. |
Dec. 31. | Based on an analysis of the $1,074,100 of accounts receivable, it was estimated that $46,700 will be uncollectible. Journalize the adjusting entry. |
Required:
1. Record the January 1 credit balance of $44,500 in a T account presented below in requirement 2b for Allowance for Doubtful Accounts.
2. a. Journalize the transactions. If an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $1,074,100 balance in accounts receivable reflects the adjustments made during the year.
Jan. 19-reinstate | Accounts Receivable-Arlene Gurley | ||
Allowance for Doubtful Accounts | |||
Jan. 19-collection | Cash | ||
Accounts Receivable-Arlene Gurley | |||
Apr. 3 | Allowance for Doubtful Accounts | ||
Accounts Receivable-Premier GS Co. | |||
July 16 | Cash | ||
Allowance for Doubtful Accounts | |||
Accounts Receivable-Hayden Co. | |||
Nov. 23-reinstate | Accounts Receivable-Harry Carr | ||
Allowance for Doubtful Accounts | |||
Nov. 23-collection | Cash | ||
Accounts Receivable-Harry Carr | |||
Dec. 31-write-off | Allowance for Doubtful Accounts | ||
Accounts Receivable-Cavey Co. | |||
Accounts Receivable-Fogle Co. | |||
Accounts Receivable-Lake Furniture | |||
Accounts Payable-Melinda Shryer | |||
Dec. 31-adjusting | Bad Debt Expense | ||
Allowance for Doubtful Accounts |
Feedback
Set up T accounts.
Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable.
In such cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off entry. Then record the receipt of cash as payment for the account.
The amount of bad debt expense is affected by the balance in the allowance account.
Learning Objective 4.
2. b. Post each entry that affects the following T accounts and determine the new balances:
Allowance for Doubtful Accounts | |||
---|---|---|---|
Apr. 3 | Jan. 1 Balance | ||
July 16 | Jan. 19 | ||
Dec. 31 | Nov. 23 | ||
Dec. 31 Unadjusted Balance | |||
Dec. 31 Adjusting Entry | |||
Dec. 31 Adjusted Balance |
Bad Debt Expense | |||
---|---|---|---|
Feedback
Set up T accounts.
Recall that under the allowance method, the entry to write off an account debits Allowance for Doubtful Accounts and credits Accounts Receivable.
In such cases where an account receivable that has been written off is later collected, the account is reinstated by an entry that reverses the write-off entry. Then record the receipt of cash as payment for the account.
The amount of bad debt expense is affected by the balance in the allowance account.
Learning Objective 4.
3. Determine the expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
$
4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ½ of 1% of the sales of $6,630,000 for the year, determine the following:
a. Bad debt expense for the year.
$
b. Balance in the allowance account after the adjustment of December 31.
$
c. Expected net realizable value of the accounts receivable as of December 31 (after all of the adjustments and the adjusting entry).
$
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Question 14 pts
The five components to a system of internal controls include all of the following except:
control procedure |
risk assessment |
safeguarding assets |
monitoring controls |
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Question 24 pts
An automobile company testing brakes on new vehicles is part of:
control procedure |
risk assessment |
information systems |
monitoring controls |
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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?
$7,000 |
$9,000 |
$11,000 |
$13,000 |
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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 |