ACC 557 Week 5, Chapter 8 (E8-3, E8-5, E8-14, P8-7A) 100% ACCURRATE

EXERCISE 8-3

(a) Dec. 31 Bad Debt Expense 1,400
Accounts Receivable—T.Thum 1,400

(b) (1) Dec. 31 Bad Debt Expense
  [($840,000 – $28,000) X 1%] 8,120
Allowance for Doubtful
  Accounts 8,120

(2) Dec. 31 Bad Debt Expense 8,900
Allowance for Doubtful Accounts
  [($110,000 X 10%) – $2,100] 8,900

(c) (1) Dec. 31 Bad Debt Expense
  [($840,000 – $28,000) X .75%] 6,090
Allowance for Doubtful
  Accounts 6,090

(2) Dec. 31 Bad Debt Expense 6,800
Allowance for Doubtful Accounts
  [($110,000 X 6%) + $200]
EXERCISE 8-5

Allowance for Doubtful Accounts 14,100
Accounts Receivable 14,100

Accounts Receivable 1,800
Allowance for Doubtful Accounts 1,800

Cash 1,800
Accounts Receivable 1,800

Bad Debt Expense 16,300
Allowance for Doubtful Accounts
[$19,000 – ($15,000 – $14,100 + $1,800)] 16,300
EXERCISE 8-14

(a) Beginning accounts receivable $ 100,000
Net credit sales 1,000,000
Cash collections (920,000)
Accounts written off (30,000)
Ending accounts receivable $ 150,000

(b) $1,000,000/[($100,000 + $150,000)/2] = 8

(c) 365/8 = 45.6 days

PROBLEM 8-7A


Jan. 5 Accounts Receivable—Zwingle Company 24,000
Sales Revenue 24,000

20 Notes Receivable 24,000
Accounts Receivable— Zwingle
  Company 24,000

Feb. 18 Notes Receivable 8,000
Sales Revenue 8,000

Apr. 20 Cash ($24,000 + $540) 24,540
Notes Receivable 24,000
Interest Revenue
  ($24,000 X 9% X 3/12) 540

30 Cash ($30,000 + $1,200) 31,200
Notes Receivable 30,000
Interest Revenue
  ($30,000 X 12% X 4/12) 1,200

May 25 Notes Receivable 4,000
Accounts Receivable— Isabella Inc. 4,000

Aug. 18 Cash ($8,000 + $360) 8,320
Notes Receivable 8,000
Interest Revenue
  ($8,000 X 8% X 6/12) 320

25 Accounts Receivable—Isabella Inc.
  ($4,000 + $70) 4,070
Notes Receivable 4,000
Interest Revenue
  ($4,000 X 7% X 3/12) 70

Sept. 1 Notes Receivable 12,000
Sales Revenue 12,000

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