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Financial Accounting: The Impact on Decision Makers

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.17E

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The following selected transactions occurred in Trouble Company during the
year ended December 31, 2020:
Gross sales (cash and credit)
Collections from credit customers, net of 2% cash
P750,000
245,000
discount
Cash sales
150,000
Uncollectible accounts written off
16,000
Sales returns and allowances
8,400
Recoveries on accounts receivable written off in prior
years (not included in cash received stated above)
5,421
At year-end, the company provides for estimated bad debt losses by crediting
Allowance for Bad Debts for 2% of its net credit sales for the year. What is the
bad debt expense for 2020?
P11,732
P14,732
P15,000
P12,000

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Inferring Accounts Receivable Amounts At the end of 2019, Karras Inc. had a debit balance of 141,120 in its accounts receivable. Additionally, Karras had a credit balance in its allowance for doubtful accounts of 4,350 and 9,420 at the beginning and end of the year, respectively. During the year, Karras made credit sales of 1,530,000, collected receivables in the amount of 1,445,700, and recorded bad debt expense of 83, 750. Required: Next Level Compute the amount of accounts receivable that Karras wrote off during the year and the amount of accounts receivable at the beginning of the year.
Cash Receipts from Customers Singleton Inc. had accounts receivable of $22,150 at January 1, 2019, and $26,850 at December 31, 2019. Net income for 2019 was $125,300 and sales revenue was $1,240,000. Required: Compute the amount of cash collected from customers using the direct method.
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Smoltz Company reported the following information for the current year: cost of goods sold, $252,500; increase in inventory, $21,700; and increase in accounts payable, $12,200. What is the amount of cash paid to suppliers that Smoltz would report on its statement of cash flows under the direct method? a. $218,600 c. $262,000 b. $243,000 d. $286,400
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Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Estimating Bad Debts from Receivables Balances The following information is extracted from Shelton Corporations accounting records at the beginning of 2019: During 2019, sales on credit amounted to 575,000, 557,400 was collected on outstanding receivables and 2,600 of receivables were written off as uncollectible. On December 31, 2019, Shell on estimastes its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Sheltons estimate of bad debt expense for 2019. 2. Prepare the Accounts Receivable section of Shelton's December 31, 2019, balance sheet. 3. Compute Shelton's receivables turnover. (Round to one decimal place.) 4. It Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?
McKinney Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made credit sales of 1,500,000 in 2019. McKinney estimates 2.5% of its sales will be uncollectible. Prepare the journal entry to record bad debt expense for McKinney at the end of 2019.
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The following data relate to accounts receivable of Ritsu Company for 2019: Accounts Receivable, Jan. 1 650,000 Credit Sales 2,700,000 Sales Return 75,000 Accounts Written Off 40,000 Collections from customers 2,150,000 Estimated future sales return at December 31 50,000 Estimated uncollectible accounts at 12/31 per aging 110,000 What amount should Ritsu report as net realizable value of accounts receivable on December 31, 2019?
The following selected transactions occurred during the year ended December 31, 2026 of RANOA COMPANY: Gross sales (cash and credit) P900,736.80 Collections from credit customers, net of 2% cash discount 294,000.00 Cash sales 180,000.00 Uncollectible accounts written off 19,200.00 Credit memos issued to credit customers for sales ret./allow. 10,080.00 Cash refunds given to cash customers for sales ret./allow. 15,168.00 Recoveries on accounts receivable written-off in prior years (not included in cash received stated above) 6,505.20 At year-end, the company provides for estimated bad debts losses by crediting the Allowance for Bad Debts account for 2% of its net credit sales for the year. The allowance for bad debts at the beginning of the year is P19,327.20. 9. How much is the RANOA COMPANY’s gross sales? 10. RANOA credit sales at December 31, 2026 is: 11. How much is the RANOA COMPANY’s net credit sales? 12. The Bad Debts Expense of RANOA COMPANY at December 31,…

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