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Final

UGBA 102A Lecture Notes - Lecture 6: Accounts Receivable, Net IncomeExam


Department
Business Administration Undergraduate Program
Course Code
UGBA 102A
Professor
Briginshaw
Study Guide
Final

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Kousha Modanlou
UGBA 102A
October 5, 2018
Chapter 6 Homework: Page 309 Q7,9; Page 310-311 MC1,5; Page 312, 314, 315 E6-2, E6-7,
E6-13
Page 309
Q7: The allowance method of accounting for bad debts is designed to satisfy the matching
principle by basing the bad debt expense on an estimate of uncollectible accounts.
Q9: The write-off of bad debts using the allowance method causes
a. Net income to be unaffected
b. Net accounts receivable to be unaffected because asset and contra-asset are both
decreased
Page 310-311
MC1: B
MC5: C
Page 312, 314, 315
E6-2: Sales Revenue = ($3000 + $9000 + $4000)= $16,000
Less: Sales discounts ($9,000 x 0.03) + (4000 x 0.03)= $390
Less: Credit card discounts ($3000 x 0.02)= 60
Thus, Net sales: $16,000-390-60= $15,550
E6-7
a. Sept. 29 Allowance for doubtful accounts (-XA, +A) $4000
Accounts Receivable (-A) $4000
To write off a specific bad debt
b. Bad debt expense (+E, -SE) ($1,300,000 x 0.01)= $13,000
Allowance for doubtful accounts (+XA, -A) $13,000
To record estimated bad debt expense
E6-13
Aged Accounts Receivable Estimated % Uncollectible Estimated Amount Uncollectible
Not yet due 2.5 $7375
Up to 120 days past due 11 $6050
More than 120 days past due 30 $ 5400
Estimated Balance in Allowance for Doubtful Accounts $18,825
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