Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 9, Problem 11E
1)
To determine
Prepare the
2)
To determine
Prepare the adjusting entry to record bad debts expense assuming uncollectible are estimated to be 1% of total sales.
3)
To determine
Prepare the adjusting entry to record bad debts expense assuming uncollectible are estimated to be 6% of year-end
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At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December
31, it has outstanding accounts receivable of $55,000, and it estimates that 2% will be uncollectible.
Prepare the adjusting entry to record bad debts expense for the year ended December 31 under the assumption that the Allowance
for Doubtful Accounts has:
a) a $415 credit balance before the adjustment.
b) a $291 debit balance before the adjustment.
View transaction list
Journal entry worksheet
1
2
Prepare the adjusting entry to record bad debts expense for the year ended
December 31 under the assumption that the Allowance for Doubtful Accounts
has a $415 credit balance before the adjustment.
Note: Enter debits before credits.
General Journal
Credit
Date
Debit
Dec. 31
Record entry
Clear entry
View general journal
At December 31, Hawke Company reports the following results for its calendar year. In addition, its unadjusted trial balance includes the following items. Cash sales. $1,905,000 Credit sales. $5,682,000 Accounts receivable. $1,270,100 debit Allowance for doubtful accounts. $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. 2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part 1a. 3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part 1c.
Innovative Tech Inc. (ITI) has been using the percentage of credit sales method to estimate bad debts. During November, ITI sold services on account for $100,000 and estimated that ½ of 1 percent of those sales would be uncollectible.
Required:
Prepare the November adjusting entry for bad debts.
Starting in December, ITI switched to using the aging method. At its December 31 year-end, total Accounts Receivable is $89,000, aged as follows: (1) 1–30 days old, $75,000; (2) 31–90 days old, $10,000; and (3) more than 90 days old, $4,000. The average rate of uncollectibility for each age group is estimated to be (1) 10 percent, (2) 20 percent, and (3) 40 percent, respectively. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts.
Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $1,600 credit balance at December 31. Prepare the December 31 adjusting entry.
Show how the various accounts related…
Chapter 9 Solutions
Principles of Financial Accounting.
Ch. 9 - A companys Accounts Receivable balance at its...Ch. 9 - A companys Accounts Receivable balance at its...Ch. 9 - Total interest to be earned on a 7,500, 5%, 90-day...Ch. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Prob. 1DQCh. 9 - Why does the direct write-off method of accounting...Ch. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQ
Ch. 9 - Why does the Bad Debts Expense account usually not...Ch. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQCh. 9 - Prob. 1QSCh. 9 - Prob. 2QSCh. 9 - Recovering a bad debt Solstice Company determines...Ch. 9 - Indicate whether each statement best describes the...Ch. 9 - Allowance method for bad debts Gomez Corp. uses...Ch. 9 - On December 31 of Swift Co.s first year, 50,000 of...Ch. 9 - Percent of accounts receivable method Warner...Ch. 9 - Percent of sales method Warner Companys year-end...Ch. 9 - Net Zero Products, a wholesaler of sustainable raw...Ch. 9 - Prob. 10QSCh. 9 - Prob. 11QSCh. 9 - Prob. 12QSCh. 9 - On December 1, Daw Co. accepts a 10,000, 45-day,...Ch. 9 - Prob. 14QSCh. 9 - Prob. 15QSCh. 9 - Prob. 16QSCh. 9 - Prob. 17QSCh. 9 - Prob. 1ECh. 9 - Levine Company uses the perpetual inventory...Ch. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prepare journal entries to record transactions for...Ch. 9 - Prob. 15ECh. 9 - On November 30, Petrov Co. has 128,700 of accounts...Ch. 9 - The following information is from the annual...Ch. 9 - Prob. 1APCh. 9 - At December 31, Hawke Company reports the...Ch. 9 - On December 31, Jarden Co.s Allowance for Doubtful...Ch. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Archer Co. completed the following transactions...Ch. 9 - At December 31, Ingleton Company reports the...Ch. 9 - Prob. 3BPCh. 9 - Prob. 4BPCh. 9 - Prob. 5BPCh. 9 - Prob. 9SPCh. 9 - Prob. 1AACh. 9 - Prob. 2AACh. 9 - Prob. 3AACh. 9 - ETHICS CHALLENGE Anton Blair is the manager of a...Ch. 9 - Prob. 2BTNCh. 9 - Access eBays February 6, 2017, filing of its 10-K...Ch. 9 - Prob. 5BTNCh. 9 - Prob. 6BTN
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- The following accounts receivable information pertains to Marshall Inc. Determine the estimated uncollectible bad debt from Marshall Inc. using the balance sheet aging of receivables method, and record the year-end adjusting journal entry for bad debt.arrow_forwardCasebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?arrow_forwardA company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit. Based on past experience, the company estimates that 0.3% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?arrow_forward
- Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $64,000, and it estimates that 6% 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 $1,088 credit balance before the adjustment. (b) a $320 debit balance before the adjustment. View transaction list Journal entry worksheet 1 2 Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has a $1,088 credit balance before the adjustment. Note: Enter debits before credits. Transaction (a) General Journal Bad debts expense Debit Creditarrow_forwardInnovative Tech Inc. (ITI) has been using the percentage of credit sales method to estimate bad debts. During November, ITI sold services on account for $130,000 and estimated that 3/4 of 1 percent of those sales would be uncollectible. Required: 1. Prepare the November adjusting entry for bad debts. 2. Starting in December, ITI switched to using the aging method. At its December 31 year-end, total Accounts Receivable is $89,900, aged as follows: (1) 1–30 days old, $74,000; (2) 31–90 days old, $12,000; and (3) more than 90 days old, $3,900. The average rate of uncollectibility for each age group is estimated to be (1) 12 percent, (2) 24 percent, and (3) 48 percent, respectively. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts. 3. Before the end-of-year adjusting entry is made, the Allowance for Doubtful Accounts has a $1,550 credit balance at December 31. Prepare the December 31 adjusting entry. 4. Show how the various accounts…arrow_forwardAt December 31, 2018, the Accounts Receivable balance of Solar Energy Manufacturing is $205,000. The Allowance for Bad Debts account has a $8,050 debit balance. Solar Energy Manufacturing prepares the following aging schedule for its accounts receivable: Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018. Begin by determining the target balance of Allowance for Bad Debts by using the age of each account. Age of Accounts 1-30 31-60 61-90 Over 90 Total Days Days Days Days Balance Accounts Receivable $70,000 $85,000 $45,000 $5,000 Estimated percent uncollectible 0.5 % 5.0 % 7.0 % 46.0 % Estimated total uncollectible Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and…arrow_forward
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