Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Chapter 9, Problem P9.35BPGB
Accounting for uncollectible accounts using the allowance (percent-of-sales) and direct write-off methods and reporting receivables on the
| Learning Objectives 1, 2, 3 1. Sep. 30 Bal. |
On August 31. 2018, Forget-Me-Not Floral Supply had a $140,000 debit balance in Accounts Receivable and a $5,600 credit balance in Allowance for
• Sales on account, $530,000. Ignore Cost of Goods Sold.
• Collections on account, $573,000.
• Write-offs of uncollectible receivables, $6,000.
Requirements
1. Journalize all September entries using the allowance method. Bad debts expense was estimated at 2% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts).
2. Using the same facts, assume that Forget-Me-Not used the direct write-off method to account for uncollectible receivables. Journalize all September entries using the direct write-off method. Post to Accounts Receivable and Bad Debts Expense, and show their balances at September 30, 2018.
3. What amount of Bad Debts Expense would Forget-Me-Not report on its September income statement under each of the two methods? Which amount better matches expense with revenue? Give your reason.
4. What amount of net accounts receivable would Forget-Me-Not report on its September 30, 2018, balance sheet under each of the two methods? Which amount is more realistic? Give your reason.
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(Learning Objectives 4, 5: Account for accounts receivable and uncollectible receivables) On November 30, Palmer Party Planners had a $41,000 balance in Accounts Receivableand a $3,584 credit balance in Allowance for Uncollectible Accounts. During December, Palmermade credit sales of $200,000. December collections on account were $168,000, and write-offsof uncollectible receivables totaled $2,910. Uncollectible-account expense is estimated as 1% ofcredit sales. No sales returns are expected. Ignore cost of goods sold.Requirements1. Journalize sales, collections, write-offs of uncollectibles, and uncollectible-accountexpense by the allowance method during December. Explanations are not required.2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts,and Net Accounts Receivable at December 31. How much does Palmer expect to collect?3. Show how Palmer Party Planners will report Accounts Receivable and net sales on itsDecember 31 balance sheet and income…
F9-20 Accounting for uncollectible accounts using the allowance method
(aging-of-receivables) and reporting receivables on the balance sheet
At December 31, 2018, the Accounts Receivable balance of GPS Technology is
$200,000. The Allowance for Bad Debts account has a $24,110 debit balance. GPS
Technology prepares the following aging schedule for its accounts receivable:
Learning Objective 3
2. Allowance CR Bal. $25,360
Age of Acco
1-30 Days
31-60 Days
61-90 Days Over 90 Days
Accounts Receivable
$ 65,000
$ 50,000
$ 40,000
$ 45,000
Estimated percent uncollectible
0.4%
3.0%
5.0%
48.0%
P9-28A Accounting for uncollectible accounts using the allowance method (aging-of-receivables)
and reporting receivables on the balance sheet
Learning Objective 3
2. Allowance CR Bal. $7,539 at Dec. 31, 2016
At September 30, 2016, the accounts of Park Terrace Medical Center (PTMC) include the following:
Accounts Receivable
$ 143,000
Allowance for Bad Debts (credit balance)
3,300
During the last quarter of 2016, PTMC completed the following selected transactions:
Dec. 28 Wrote off accounts receivable as uncollectible: Silver, Co., $1,200; Oscar
Wells, $1,000; and Rain Company $600
31
Recorded bad debts expense based on the aging of accounts receivable,
as follows:
Age of Accounts
1-30 Days
31-60 Days
61-90 Days
Over 90 Days
Accounts Receivable
$ 103,000
$ 41,000
$ 13,000
$ 6,000
Estimated percent uncollectible
0.3%
3%
30%
35%
Requirements
1. Journalize the transactions.
2. Open the Allowance for Bad Debts T-account, and post entries affecting that account.
Keep a running balance.
3.…
Chapter 9 Solutions
Horngren's Accounting (12th Edition)
Ch. 9 - 1. With good internal controls, the person who...Ch. 9 - Which of the following is a limitation of the...Ch. 9 - 3. The entry to record a write-off of an...Ch. 9 - Brickman Company uses the allowance method to...Ch. 9 - Brickman’s ending balance of accounts Receivable...Ch. 9 - During the year, Bernard Company had net credit...Ch. 9 - At December 31 year-end, Crain Company has an...Ch. 9 - Using the data in the preceding question, what...Ch. 9 - At year-end, Schultz Company has cash of $11,600,...Ch. 9 - Using the data in the preceding question, assume...
Ch. 9 - What is the difference between accounts receivable...Ch. 9 - List some common examples of other receivables,...Ch. 9 - Prob. 3RQCh. 9 - When dealing with receivables, give an example of...Ch. 9 - What type of account must the sum of all...Ch. 9 - Prob. 6RQCh. 9 - What occurs when a business factors its...Ch. 9 - What occurs when a business pledges its...Ch. 9 - What is the expense account associated with the...Ch. 9 - When is bad debts expense recorded when using the...Ch. 9 - What are some limitations of using the direct...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - When using the allowance method, what account is...Ch. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - How do the percent-of-receivables and...Ch. 9 - What is the difference between the...Ch. 9 - In accounting for bad debts, how do the income...Ch. 9 - What is the formula to compute interest on a note...Ch. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. S9.1SECh. 9 - Recording credit sales and collections Learning...Ch. 9 - Applying the direct write-off method to account...Ch. 9 - Collecting a receivable previously written...Ch. 9 - Applying the allowance method to account for...Ch. 9 - Applying the allowance method (percent-of-sales)...Ch. 9 - Applying the allowance method...Ch. 9 - Applying the allowance method...Ch. 9 - Computing interest amounts on notes receivable...Ch. 9 - Accounting for a note receivable Learning...Ch. 9 - Accruing interest revenue and recording collection...Ch. 9 - Recording a dishonored note receivable Learning...Ch. 9 - Prob. S9.13SECh. 9 - Defining common receivables terms Learning...Ch. 9 - E9-15 Identifying and correcting internal control...Ch. 9 - Recording credit sales and collections Learning...Ch. 9 - Journalizing transactions using the direct...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. E9.21ECh. 9 - Journalizing credit sales, note receivable...Ch. 9 - Journalizing note receivable transactions...Ch. 9 - Journalizing note receivable transactions Learning...Ch. 9 - Journalizing note receivable transactions Learning...Ch. 9 - Evaluating ratio data Learning Objective 5 Abanaki...Ch. 9 - Computing the collection period for receivables...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.31APGACh. 9 - Accounting for notes receivable and accruing...Ch. 9 - Prob. P9.33APGACh. 9 - Using ratio data to evaluate a company’s financial...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.37BPGBCh. 9 - Prob. P9.38BPGBCh. 9 - Prob. P9.39BPGBCh. 9 - Accounting for notes receivable, dishonored notes,...Ch. 9 - Using ratio data to evaluate a company’s financial...Ch. 9 - Prob. P9.42CTCh. 9 - Prob. P9.43CPCh. 9 - Prob. P9.44PSCh. 9 - Prob. 9.1TIATCCh. 9 - Decision Case 9-1 Weddings on Demand sells on...Ch. 9 - Decision Case 9-2 Pauline’s Pottery has always...Ch. 9 - Prob. 9.1FCCh. 9 - Financial Statement Case 9-1 Use Target...
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