FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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QS 9-3 (Algo) Recovering a bad debt LO P1
Solstice Company determines on October 1 that it cannot collect $55,000 of its
Record Solstice’s entries for recovery of this bad debt.
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- Please do not give salutations in image format thankuharrow_forwardes E6-11 (Algo) Determining Financial Statement Effects of Bad Debts Using the Percentage of Credit Sales Method LO6-2 During the current year, Sun Electronics, Incorporated, recorded credit sales of $740,000. Based on prior experience, it estimates a 2 percent bad debt rate on credit sales. a. On November 13 of the current year, an account receivable for $270 from a prior year was determined to be uncollectible and was written off. b. At year-end, the appropriate bad debt expense adjustment was recorded for the current year. Required: Indicate the effects of the transactions in the following table. Indicate the accounts affected and enter decreases to account categories with a minus sign. Transaction a. a. b. b. Assets Liabilities Stockholders' Equityarrow_forward8 Homework E8-5 (Algo) Determining Financial Statement Effects of Write-Offs and Recoveries [LO 8-2] Prior to recording the following, Elite Electronics, Incorporated, had a credit balance of $3,200 in its Allowance for Doubtful Accounts a. On August 31, a customer balance for $420 from a prior year was determined to be uncollectible and was written off b. On December 15, the customer balance for $420 written off on August 31 was collected in full. Required: For each transaction listed above, indicate the amount and direction (+ or -) of effects on the financial statement accounts and on the overall accounting equation. Hint: On December 15th, first reinstate the Accounts receivable and then record the collection of cash (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.) n B. b(1) b(1) b(2) b(2) Assets Help - Liabilities Save & Exit Stockholders' Equity Submitarrow_forward
- Exercise 7-13 (Algo) Percent of accounts receivable method LO P3 Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $112,500, and it estimates that 5% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,913 credit balance before the adjustment. (b) a $563 debit balance before the adjustment. View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 1 Bad debts expense 7,538 Allowance for doubtful accountsarrow_forwardDengararrow_forwardProblem 7-4 (Bad Debt Reporting) From inception of operations to 31 December 2019, Fortner Corporation provided for uncollectible accounts receivable under the allowance method. The provisions were recorded based on analysis of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account; and no year-end adjustments to the allowance account were made. Fortner's usual credit terms are net 30 days. The balance in Allowance for Doubtful Accounts was $130,000 at 1 January 2019. During 2019, credit sales totalled $9,000,000, the provision for doubtful accounts was determined to be $180,000, $90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,000. Fortner installed a computer system in November 2019, and an aging of accounts receivable was prepared for the first time as of 31 December 2019. A summary of the…arrow_forward
- Exercise 7-4 (Algo) Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $10,000 of its accounts receivable from Leer Company. March 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.arrow_forwardNonearrow_forward450 000 Bad Debts A company does not adjust its accounts receivable by estimating bad debts at the end of the fiscal period. It uses a method called direct write-off. With this method accounts receivable are written off when they are determined to be uncollectible For example, on January 31, 20-2, a debt of $1500 was determined to be uncol. lectible because the customer, P. Kully, had declared bankruptcy. The sale of $1500 had been made in the previous fiscal period. This entry was made on January 31, 20-2: Jan. 31 Bad Debts Expense 150000 Accounts Receivable/P. Kully To write off account of bankrupt customer. 150000 Questions 1. How does the fact that an adjustment for estimated bad debts was not made in 20-1 affect the financial statements for that year? 2. How does the write-off entry affect the financial statements of 20-2?arrow_forward
- Nonearrow_forwardPlease help mearrow_forward! Required information Problem 7-2A (Static) Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $ 1,905,000 $ 5,682,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts Problem 7-2A (Static) Part 1 $ 1,270,100 debit $ 16,580 debit Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts are estimated to be 1.5% of credit sales. b. Bad debts are estimated to be 1% of total sales. c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31).arrow_forward
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